ANDERSON — Audit Report / Information 2018

Nov 12, 2018

Anderson Industrial Corporation

Financial Statements for the Years Ended December 31, 2018 and 2017 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Anderson Industrial Corporation

Opinion

We have audited the accompanying financial statements of Anderson Industrial Corporation (the “Company”), which comprise the balance sheets as of December 31, 2018 and 2017, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (refer to the Other Matter paragraph) the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

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

Key audit matters for the Company’s financial statements for year 2018 are stated as follows:

Inventory Provision

As of December 31, 2018, the balance of inventory held by the Company was $291,161 thousand, which was a significant amount and represented 7% of total assets. Because an assessment of the net realizable value of inventory involves the Company’s significant judgement based on IAS 12 “Inventory”, we believe that inventory provision is one of key audit matters. Refer to Notes 5 and 8 to the financial statements.

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Our primary audit procedures in respect of this area included understanding the appropriateness of inventory provisioning policy, assessing the reasonableness of net realizable value by performing tests of samples of sales, reviewing and implementing year-end inventory count, assessing the condition of the inventory and recalculating the amount of inventory provision.

Estimated Impairment of Accounts Receivable

As of December 31, 2018, the balance of accounts receivable held by the Company was $783,472 thousand, which was a significant amount and represented 18% of total assets. The management applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected credit losses for all accounts receivables. The expected credit losses on accounts receivables are estimated by considering past default experience of the debtor, an analysis of the debtor’s current financial position and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. The evaluation of accounts receivable provision for loss, credit risk and appropriateness of provisioning policy involves significant judgment; therefore, we believe that the estimated impairment of accounts receivable is a key audit matter. Refer to Notes 5 and 7 to the financial statements.

Our primary audit procedures in respect of this area included assessing the appropriateness of accounts receivable provisioning policy, testing the validity of the aging reports, analyzing circumstances of accounts receivable movements and significant past due accounts receivable, assessing the reasonableness of individual accounts receivable impairment, confirming whether there is any sign of impairment or not at the end of the year. Recoverability was also tested by vouching cash receipts after the year end date.

Other Matter

As mentioned in the Opinion paragraph, the financial statements of Sogotec Enterprise Co., Ltd. (Sogotec) are audited by other independent auditors. As of December 31, 2018, the investment in Sogotec, which was accounted for using the equity method, amounted to $408,797 thousand, constituting 10% of total assets of the Company, and related investment gain amounted to $74,367 thousand, representing 312% of total pre-tax profit of the Company.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including supervisors, are responsible for overseeing the Company’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

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

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

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

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the 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.

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Wen Chin Lin and Li Wen Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

March 11, 2019

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

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ANDERSON INDUSTRIAL CORPORATION

BALANCE SHEETS DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Note 4) Available-for-sale financial assets - current (Note 4) Financial assets at amortized cost - current (Note 4) Debt investments with no active market - current (Note 4) Notes receivable, net (Notes 4 and 7) Accounts receivable - non-related parties (Notes 4 and 7) Accounts receivable - related parties (Notes 4, 7 and 24) Other receivables (Notes 4 and 24) Current tax assets (Note 4) Inventories (Notes 4 and 8) Prepayments (Note 24) Other current assets Total current assets NON-CURRENT ASSETS Investments accounted for using the equity method (Notes 4 and 9) Property, plant and equipment (Notes 4, 10, 24 and 25) Intangible assets (Notes 4 and 11) Deferred tax assets (Notes 4 and 18) Other non-current assets (Notes 24 and 25) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 12 and 25) Contract liabilities (Note 4) Accounts payable (Note 24) Other payables (Notes 13 and 24) Provisions - current (Note 4) Current portion of long-term borrowings (Notes 12 and 25) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 12 and 25) Net defined benefit liabilities (Notes 4 and 14) Guarantee deposits Total non-current liabilities Total liabilities EQUITY (Note 15) Share capital Common stock Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating the financial statements of foreign operations Unrealized gain (loss) on financial assets at fair value through other comprehensive income Unrealized gain (loss) on available-for-sale financial assets Total other equity Treasury shares Total equity TOTAL		2018 Amount % $ 38,014 1 17,474 1 - - 5,004 - - - 39,610 1 85,270 2 653,202 16 134,910 3 4,856 - 291,161 7 12,033 - 1,277 - 1,282,811 31 1,974,864 48 722,926 18 39,192 1 45,858 1 52,824 1 2,835,664 69 $ 4,118,475 100 $ 773,637 19 33,828 1 170,634 4 70,999 2 9,910 - 172,611 4 6,827 - 1,238,446 30 247,917 6 54,419 1 445 - 302,781 7 1,541,227 37 1,998,810 49 369,134 9 182,567 5 58,067 1 48,762 1 289,396 7 (75,980) (2) 802 - - - (75,178) (2) (4,914) - 2,577,248 63 $ 4,118,475 100		2017
				Amount % $ 95,975 2 - - 19,124 - - - 10,000 - 30,865 1 87,117 2 628,434 16 237,247 6 - - 311,555 8 21,520 1 774 - 1,442,611 36 1,722,893 43 714,185 18 38,653 1 29,214 1 21,452 1 2,526,397 64 $ 3,969,008 100 $ 590,240 15 - - 225,021 6 99,226 2 11,782 - 360,834 9 42,449 1 1,329,552 33 276,528 7 62,212 2 344 - 339,084 9 1,668,636 42 1,800,000 45 266,674 7 172,915 4 50,624 1 103,198 3 326,737 8 (55,000) (1) - - (3,067) - (58,067) (1) (34,972) (1) 2,300,372 58 $ 3,969,008 100

The accompanying notes are an integral part of the financial statements.

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ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 16 and 24) OPERATING COSTS (Notes 8, 17 and 24) GROSS PROFIT UNREALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES REALIZED GAIN ON TRANSACTIONS WITH SUBSIDIARIES REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4 and 17) Selling and marketing expenses General and administrative expenses Research and development expenses Reversal of expected credit loss Total operating expenses LOSS FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4 and 17) Other income (Note 24) Other gains and losses Finance costs (Note 24) Share of profits of subsidiaries accounted for using the equity method (Note 9) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX BENEFIT (EXPENSE) (Notes 4 and 18) NET PROFIT FOR THE YEAR		2018 Amount % $ 1,096,280 100 801,446 73 294,834 27 (13,018) (2) - - 281,816 25 135,202 12 137,233 12 51,061 5 (2,727) - 320,769 29 (38,953) (4) 47,035 4 8,857 1 (18,304) (1) 25,248 2 62,836 6 23,883 2 17,094 2 40,977 4		2017
				Amount % $ 1,113,662 100 804,485 72 309,177 28 - - 5,700 - 314,877 28 124,074 11 168,923 15 54,063 5 - - 347,060 31 (32,183) (3) 55,347 5 (16,344) (1) (18,062) (2) 114,668 10 135,609 12 103,426 9 (6,905) - 96,521 9 (Continued)

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ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive loss of subsidiaries accounted for using the equity method Income tax expense relating to items that will not be reclassified subsequently (Note 18) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Unrealized gain on available-for-sale financial assets Share of the other comprehensive income of subsidiaries accounted for using the equity method Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 19) Basic Diluted		2018 Amount % $ 6,543 - 1,229 - (145) - (1,377) - (20,980) (2) - - - - (14,730) (2) $ 26,247 2 $ 0.22 $ 0.22		2017
				Amount % $ 3,343 - - - (1,156) - (568) - (11,427) (1) 371 - 3,613 - (5,824) (1) $ 90,697 8 $ 0.55 $ 0.55
		$		$

The accompanying notes are an integral part of the financial statements.

(Concluded)

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ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

Common Stock Capital Surplus BALANCE AT JANUARY 1, 2017 $ 1,800,000 $ 319,573 Appropriation of 2016 earnings Legal reserve - - Special reserve - - Cash dividends distributed by the Company - NT$0.2 per share - - Cash dividends distributed from capital surplus - (52,899 ) Net profit for the year ended December 31, 2017 - - Other comprehensive income (loss) for the year ended December 31, 2017 - - Total comprehensive income (loss) for the year ended December 31, 2017 - - BALANCE AT DECEMBER 31, 2017 1,800,000 266,674 Effect of retrospective application and retrospective restatement - - ADJUSTED BALANCE, JANUARY 1, 2018 1,800,000 266,674 Appropriation of 2017 earnings Legal reserve - - Special reserve - - Cash dividends distributed by the Company - NT$0.45 per share - - Cash dividends distributed from capital surplus - (8,967 ) Net profit for the year ended December 31, 2018 - - Other comprehensive income (loss) for the year ended December 31, 2018 - - Total comprehensive income (loss) for the year ended December 31, 2018 - - Issuance of ordinary shares for cash 200,000 60,000 Disposals of treasury shares - - Cancellation of treasury shares (1,190 ) 82 Actual disposals of interests in subsidiaries - 12,201 Changes in percentage of ownership interests in subsidiaries - 32,794 Share-based payment - 6,350 Subsidiaries disposed the investments in equity instruments designated as at fair value through other comprehensive income - - BALANCE AT DECEMBER 31, 2018 $ 1,998,810 $ 369,134	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 163,053 $ - $ 100,810 9,862 - (9,862 ) - 50,624 (50,624 ) - - (35,266 ) - - - - - 96,521 - - 1,619 - - 98,140 172,915 50,624 103,198 - - (2,684) 172,915 50,624 100,514 9,652 - (9,652 ) - 7,443 (7,443 ) - - (80,699 ) - - - - - 40,977 - - 5,021 - - 45,998 - - - - - - - - - - - - - - - - - - - - 44 $ 182,567 $ 58,067 $ 48,762	Other Equity Exchange Unrealized Gain Differences on (Loss) on Financial Translating the Assets at Fair Financial Value Through Unrealized Gain Statements of Other (Loss) on Foreign Comprehensive Available-for- sale Operations Income Financial Assets Treasury Shares $ (43,573 ) $ - $ (7,051 ) $ (34,972 ) - - - - - - - - - - - - - - - - - - - - (11,427) - 3,984 - (11,427) - 3,984 - (55,000 ) - (3,067 ) (34,972 ) - (383) 3,067 - (55,000) (383) - (34,972) - - - - - - - - - - - - - - - - - - - - (20,980) 1,229 - - (20,980) 1,229 - - - - - - - - - 28,950 - - - 1,108 - - - - - - - - - - - - - (44) - - $ (75,980) $ 802 $ - $ (4,914)	Total Equity $ 2,297,840 - - (35,266 ) (52,899 ) 96,521 (5,824) 90,697 2,300,372 - 2,300,372 - - (80,699 ) (8,967 ) 40,977 (14,730) 26,247 260,000 28,950 - 12,201 32,794 6,350 - $ 2,577,248

The accompanying notes are an integral part of the financial statements.

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ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss reversed on accounts receivables Impairment loss recognized on accounts receivable Finance costs Interest income Compensation costs of employee share options Share of profit of subsidiaries accounted for using the equity method (Gain) loss on disposal of property, plant and equipment Write-downs of inventories Unrealized gain on transactions with subsidiaries Realized gain on transactions with subsidiaries (Gain) loss on foreign currency exchange Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Inventories Prepayments Other current assets Contract liabilities Notes payable Accounts payable Other payables Provisions Other liabilities Net defined benefit liabilities Cash generated from (used in) operations Interest received Interest paid Income tax paid Net cash generated from (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at amortized cost Purchase of investments accounted for using the equity method Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment	2018 $ 23,883 60,009 1,442 (2,727) - 18,304 (939) 6,350 (25,248) (16) 3,813 13,018 - (8,480) 1,650 (8,745) 6,388 (17,727) 102,367 16,581 9,487 (503) 5,020 - (54,445) (28,556) (1,872) (7,335) (1,250) 110,469 954 (18,489) (5,783) 87,151 4,996 (239,217) (67,280) 100	2017 $ 103,426 62,039 1,377 - 96 18,062 (4,938) - (114,668) 36 1,434 - (5,700) 27,046 - (11,114) 46,930 (199,338) (71,546) (58,297) (3,500) (204) - (2,331) 7,883 (40) (1,293) 12,895 (551) (192,296) 4,944 (17,883) (16,362) (221,597) - (137,506) (18,064) 56 (Continued)

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ANDERSON INDUSTRIAL CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

Decrease in refundable deposits Payments for intangible assets Decrease (increase) in non-current assets Increase in prepayments for equipment Dividends received from subsidiaries Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term borrowings Proceeds from long-term borrowings Repayment of long-term borrowings Cash dividends paid Proceeds from issuance of ordinary shares Proceeds from disposal of treasury shares Net cash generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2018 $ 1,066 (381) 2,377 (37,969) 24,575 (311,733) 183,391 150,000 (366,834) (89,666) 260,000 28,950 165,841 780 (57,961) 95,975 $ 38,014	2017 $ 1,714 - (2,019) (9,550) 115,326 (50,043) 330,046 200,000 (185,125) (88,165) - - 256,756 (1,376) (16,260) 112,235 $ 95,975

The accompanying notes are an integral part of the financial statements.

(Concluded)

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NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

ANDERSON INDUSTRIAL CORPORATION

1. GENERAL INFORMATION

Anderson Industrial Company (the “Company”) was incorporated in the Republic of China (ROC) in July 1972. The Company is mainly engaged in the design, manufacture, sale and import and export of computer numerical control (CNC) machinery, tooling, lumber, wood panels, and building materials.

Since October 11, 2000, the Company’s shares have been listed on the Taiwan Stock Exchange (TWSE).

The financial statements are presented in the Company’s functional currency, New Taiwan dollars.

2. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Company’s board of directors on March 11, 2019.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

• a. Application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC) and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the Financial Supervisory Commission (the “FSC”)

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Company’s accounting policies:

• 1) IFRS 9 “Financial Instruments” and related amendments

IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and hedge accounting. Refer to Note 4 for information relating to the relevant accounting policies

Classification, measurement and impairment of financial assets

On the basis of the facts and circumstances that existed as of January 1, 2018, the Company has performed an assessment of the classification of recognized financial assets and has elected not to restate prior reporting periods.

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The following table shows the original measurement categories and carrying amount under IAS 39 and the new measurement categories and carrying amount under IFRS 9 for each class of the Company’s financial assets as of January 1, 2018.

			Measurement Category	Measurement Category	Measurement Category	Measurement Category		Carrying Amount	Carrying Amount
Financial Assets		IAS	39			IFRS 9		IAS 39	IFRS 9	Remark
Cash and cash equivalents	Loans and receivables				Amortized cost			$ 95,975	$ 95,975	-
Beneficiary certificates	Available‑for‑sale				Mandatorily at fair value			19,124	19,124	a)
						through profit or loss
						(“FVTPL”)
Time deposits with original	Loans and receivables				Amortized cost			10,000	10,000	b)
maturities of more than 3 months
Notes receivable, accounts	Loans and receivables				Amortized cost			983,663	983,663	c)
receivable and other receivables
								Retained
	IAS 39 Carrying					IFRS 9 Carrying		Earnings	Other Equity
	Amount as of					Amount as of		Effect on	Effect on
Financial Assets	January 1, 2018		Reclassifications			January 1, 2018	January 1, 2018		January 1, 2018	Remark
Financial assets at FVTPL
Add: Reclassification from
available-for-sale (IAS 39)
Required reclassification	$	-	$	19,124		$ 19,124		$ (2,684)	$ 2,684	a)
		-		19,124		38,248		(2,684)	2,684
Financial assets at amortized cost
Add: Reclassification from loans and		-		10,000		10,000		-	-	b)
receivables (IAS 39)
	$ 19,124		$	29,124		$ 48,248		$ (2,684)	$ 2,684

• a) Beneficiary certificates previously classified as available-for-sale under IAS 39 were classified mandatorily as at FVTPL under IFRS 9, because the contractual cash flows are not solely payments of principal and interest on the principal outstanding and they are not equity instruments. The retrospective adjustment resulted in an increase of $2,684 thousand in other equity - unrealized gain on available-for-sale financial assets and a decrease of $2,684 thousand in retained earnings on January 1, 2018.

• b) Debt investments previously classified as debt investments with no active market and measured at amortized cost under IAS 39 were classified as at amortized cost with an assessment of expected credit losses under IFRS 9, because on January 1, 2018, the contractual cash flows were solely payments of principal and interest on the principal outstanding and these investments were held within a business model whose objective is to collect contractual cash flows.

• c) Notes receivable, accounts receivable and other receivables that were previously classified as loans and receivables under IAS 39 were classified as at amortized cost with an assessment of expected credit losses under IFRS 9.

• 2) IFRS 15 “Revenue from Contracts with Customers” and related amendments

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers and supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations. Refer to Note 4 for related accounting policies.

Under IFRS 15, the net effect of revenue recognized and consideration received and receivable is recognized as a contract asset or a contract liability. Prior to the application of IFRS 15, receivables were recognized or deferred revenue was reduced when revenue was recognized for the relevant contract under IAS 18. Therefore, the other current liabilities of $28,808 thousand prior to restatement is reclassified as contract liabilities.

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• b. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by the FSC for application starting from 2019

New, Amended or Revised Standards and Interpretations Effective Date (the “New IFRSs”) Announced by IASB (Note 1) Annual Improvements to IFRSs 2015-2017 Cycle January 1, 2019 Amendments to IFRS 9 “Prepayment Features with Negative January 1, 2019 (Note 2) Compensation” IFRS 16 “Leases” January 1, 2019 Amendments to IAS 19 “Plan Amendment, Curtailment or January 1, 2019 (Note 3) Settlement” Amendments to IAS 28 “Long-term Interests in Associates and Joint January 1, 2019 Ventures” IFRIC 23 “Uncertainty over Income Tax Treatments” January 1, 2019

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

• Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.

• Note 3: The Company shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.

IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, and a number of related interpretations.

Definition of a lease

Upon initial application of IFRS 16, the Company will elect to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

The Company as lessee

Upon initial application of IFRS 16, the Company will recognize right-of-use assets, or investment properties if the right-of-use assets meet the definition of investment properties, and lease liabilities for all leases on the balance sheets except for those whose payments under low-value asset and short-term leases will be recognized as expenses on a straight-line basis. On the statements of comprehensive income, the Company will present the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the statements of cash flows, cash payments for the principal portion of lease liabilities will be classified within financing activities; cash payments for the interest portion will be classified within operating activities. Prior to the application of IFRS 16, payments under operating lease contracts are recognized as expenses on a straight-line basis. Cash flows for operating leases are classified within operating activities on the statements of cash flows.

The Company anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information will not be restated.

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Lease liabilities will be recognized on January 1, 2019 for leases currently classified as operating leases with the application of IAS 17. Lease liabilities will be measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets will be measured at the amount equal to the lease liabilities. The Company will apply IAS 36 to all right-of-use assets.

For leases currently classified as finance leases under IAS 17, the carrying amounts of right-of-use assets and lease liabilities on January 1, 2019 will be determined as at the carrying amounts of the respective leased assets and finance lease payables as of December 31, 2018.

The Company expects to apply a single discount rate to measure lease liabilities.

The Company as lessor

Except for sublease transactions, the Company will not make any adjustments for leases in which it is a lessor and will account for those leases with the application of IFRS 16 starting from January 1, 2019.

The Company subleased its leasehold to a third party. Such sublease is classified as an operating lease under IAS 17. The Company will assess the sublease classification on the basis of the remaining contractual terms and conditions of the head lease and sublease on January 1, 2019.

The Company will evaluate the lease contracts belonging to lessees in accordance with IFRS 16, and will not restate prior year financial statements. As for January 1, 2019, the right-of-use assets and lease liabilities might increase by $24,843 thousand.

Except for the above impact, as of the date the financial statements were authorized for issue, the Company had assessed that the application of other standards and interpretations would not have significant impacts on the Company’s financial position and financial performance.

• c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

Effective Date New IFRSs Announced by IASB (Note 1) Amendments to IFRS 3 “Definition of a Business” January 1, 2020 (Note 2) Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets To be determined by IASB between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 and IAS 8 “Definition of Material” January 1, 2020 (Note 3)

• Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.

• Note 2: The Company shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.

• Note 3: The Company shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

As of the date the financial statements were authorized for issue, the Company is continuously assessing the possible impact that the application of other standards, interpretations and amendments will have on the Company’s financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• a. Statement of compliance

The parent company only financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers,

• b. Basis of preparation

The financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

• 1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

• 2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

• 3) Level 3 inputs are unobservable inputs for the asset or liability.

When preparing its parent company only financial statements, the Company used the equity method to account for its investments in subsidiaries and associates. In order for the amounts of the net profit for the year, other comprehensive income for the year and total equity in the parent company only financial statements to be the same as the amounts attributable to the owners of the Company in its consolidated financial statements, adjustments arising from the differences in the accounting treatment between the parent company only basis and the consolidated basis were made to investments accounted for by equity method, share of profit or loss of subsidiaries and associates, share of other comprehensive income of subsidiaries and associates and related equity items, as appropriate, in the parent company only financial statements.

• c. Classification of current and non-current assets and liabilities

Current assets include:

• 1) Assets held primarily for the purpose of trading;

• 2) Assets expected to be realized within twelve months after the reporting period; and

• 3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

Current liabilities include:

• 1) Liabilities held primarily for the purpose of trading;

• 2) Liabilities due to be settled within twelve months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the financial statements are authorized for issue; and

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• 3) Liabilities for which the Company does not have an unconditional right to defer settlement for at least twelve months after the reporting period. 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.

Assets and liabilities that are not classified as current are classified as non-current.

• d. Foreign currencies

In preparing the Company’s financial statements, transactions in currencies other than the Company’s functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are not retranslated.

For the purpose of presenting the company’s financial statements, the functional currencies of the Group entities (including subsidiaries in other countries that use currency different from the currency of the Company) are translated into the presentation currency - New Taiwan dollars as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income.

Goodwill and fair value adjustments on identifiable assets and liabilities acquired in the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange prevailing at the end of each reporting period. Exchange differences arising are recognized in other comprehensive income.

• e. Inventories

Inventories, which comprise finished goods, work-in-process, raw materials and merchandise, are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at weighted-average cost.

• f. Investments in subsidiaries

The Company uses the equity method to account for its investments in subsidiaries.

Subsidiary is an entity that is controlled by the Company.

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Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted thereafter to recognize the Company’s share of the profit or loss and other comprehensive income of the subsidiary. The Company also recognizes the changes in the Company’s share in the equity of subsidiaries attributable to the Company.

Changes in the Company’s ownership interest in a subsidiary that do not result in the Company losing control of the subsidiary are equity transactions. The Company recognizes directly in equity any difference between the carrying amount of the investment and the fair value of the consideration paid or received.

When the Company’s share in losses of a subsidiary exceeds the interest in that subsidiary (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Company’s net investment in the subsidiary), the Company continues recognizing its share of further losses.

Any excess of the cost of acquisition over the Company’s share of the net fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition is recognized as goodwill, which is included within the carrying amount of the investment and is not amortized. Any excess of the Company’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognized immediately in profit or loss.

The Company assesses its investment for any impairment by comparing the carrying amount with the estimated recoverable amount as assessed based on the entire financial statements of the invested company. Impairment loss is recognized when the carrying amount exceeds the recoverable amount. If the recoverable amount of the investment subsequently increases, the Company recognizes the reversal of the impairment loss; the adjusted post-reversal carrying amount should not exceed the carrying amount that would have been recognized (net of amortization or depreciation) had no impairment loss been recognized in prior years. An impairment loss recognized on goodwill cannot be reversed in a subsequent period.

When the Company loses control of a subsidiary, it recognizes the investment retained in the former subsidiary at its fair value at the date when control is lost. The difference between the fair value of the retained investment plus any consideration received and the carrying amount of the previous investment at the date when control is lost is recognized as a gain or loss in profit or loss. Besides, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

Profits or losses resulting from downstream transactions are eliminated in full only in the parent company’s financial statements. Profits and losses resulting from upstream transactions and transactions between subsidiaries are recognized only in the parent company’s financial statements only to the extent of interests in the subsidiaries of parties that are not related to the Company.

g. Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment loss.

Depreciation on property, plant and equipment is recognized using the straight-line method. Each significant part is depreciated separately. If the lease term is shorter than the useful lives, assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

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h. Intangible assets

1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual value, and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are measured at cost less accumulated impairment loss.

• 2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset is recognized in profit or loss.

• i. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the individual cash-generating units on a reasonable and consistent basis of allocation.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment at least annually, and whenever there is an indication that the assets may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

When an impairment loss is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized on the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

j. Financial instruments

Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

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1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

• a) Measurement categories

2018

Financial assets are classified into the following categories: Financial assets at FVTPL and financial assets at amortized cost.

• i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified or designated as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at fair value through other comprehensive income (“FVTOCI”) and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 23.

• ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

• i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, financial assets at amortized cost, notes and accounts receivables (including long-term receivables) and other receivables, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset.

Cash equivalents include time deposits with original maturities within 3 months from the date of acquisition, which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

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2017

Financial assets are classified into the following categories: Available-for-sale financial assets and loans and receivables.

i. Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at FVTPL.

Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale monetary financial assets relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Company’s right to receive the dividends is established.

Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are presented in a separate line item as financial assets carried at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between carrying amount and fair value is recognized in other comprehensive income on financial assets. Any impairment losses are recognized in profit and loss.

ii. Loans and receivables

Loans and receivables (including cash and cash equivalent, debt investments with no active market, notes and accounts receivables (including long-term receivables) and other receivables) are measured at amortized cost using the effective interest method, less any impairment, except for short-term receivables when the effect of discounting is immaterial.

Cash equivalent includes time deposits with original maturities within three months from the date of acquisition, highly liquid, readily convertible to a known amount of cash and subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

• b) Impairment of financial assets

2018

The Company recognizes a loss allowance for expected credit losses (“ECL”) on financial assets at amortized cost, including accounts receivables and other receivables.

The Company always recognizes lifetime ECLs for accounts receivables and other receivables. For all other financial instruments, the Company recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Company measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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ECLs reflect the weighted average of credit losses with the respective risks of default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Company recognizes an impairment loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

2017

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For financial assets at amortized cost, such as notes and accounts receivable (including long-term receivables), are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Company’s past experience with non-collection of payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets at amortized cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event that occurred after the impairment was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortized cost would have been had the impairment not been recognized.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract, such as a default or delinquency in interest or principal payments, it is becoming probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active market for that financial asset because of financial difficulties.

When an available-for-sale financial asset is considered to be impaired, cumulative losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss are not reversible through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income. In respect of available-for-sale debt securities, the impairment loss is subsequently reversed through profit or loss if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss.

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The carrying amount of a financial asset is reduced by the impairment loss directly for all financial assets with the exception of accounts receivable where the carrying amount is reduced through the use of an allowance account. When accounts receivable and other receivables are considered uncollectable, they are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectible accounts receivable that are written off against the allowance account.

• c) Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

Before 2018, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. Starting from 2018, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss which had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss which had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Financial liabilities

• a) Subsequent measurement

Financial liabilities are measured at amortized cost using the effective interest method.

• b) Derecognition of financial liabilities

The difference between the carrying amount of the financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

• k. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Provisions for the expected cost of warranty obligations are recognized at the date of sale of the relevant products, at the best estimate of the expenditure required to settle the Company’s obligation by the management of the Company.

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• l. Revenue recognition

2018

The Company identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied.

• 1) Revenue from the sale of goods

Revenue from the sale of goods comes from sales of precision machineries. Sales of precision machineries is recognized as revenue when the goods are shipped or accepted, and accounts receivables are recognized concurrently.

The Company does not recognize revenue on materials delivered to subcontractors because this delivery does not involve a transfer of control.

• 2) Revenue from the rendering of services

Revenue from the rendering of services comes from the repair services and hardware installation services.

As the Company provides repair services and hardware installation services. Consequently, the related revenue is recognized when services are rendered.

2017

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar allowances. Allowance for sales returns and liability for returns are recognized at the time of sale based on the seller’s reliable estimate of future returns and based on past experience and other relevant factors.

• 1) Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

• a) The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;

• b) The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• c) The amount of revenue can be measured reliably;

• d) It is probable that the economic benefits associated with the transaction will flow to the Company; and

• e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.

The Company does not recognize sales revenue on materials delivered to subcontractors because this delivery does not involve a transfer of risks and rewards of materials ownership.

2) Rendering of services

Service income is recognized when services are provided.

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Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract.

• 3) Dividend and interest income

Dividend income from investments is recognized when the shareholder’s right to receive payment has been established provided that it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and applicable effective interest rate.

• m. Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

• 1) The Company as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

• 2) The Company as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

n. Employee benefits

• 1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service costs, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service costs (including current service costs) and net interest on a net defined benefit liability (asset) are recognized as employee benefits expenses in the period that they occur. Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

The net defined benefit liability (asset) represents the actual deficit (surplus) in the Company’s defined benefit plan. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

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3) Termination benefits

A liability for termination benefits is recognized at the earlier of when the Company can no longer withdraw the offer of the termination benefits and when the Company recognizes any related restructuring costs.

• o. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

An additional surtax on unappropriated earnings, computed according to the ROC Income Tax Act, is recognized in current taxes in the year of approval by a stockholders’ meeting resolution.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

• 2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for deductible temporary differences or unused loss carryforward to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except where the Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary differences and that they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and is reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which a liability is settled or an asset is realized, based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

• 3) Current tax and deferred tax for the year

Current tax and deferred tax are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity; in which case, the current tax and deferred tax are also recognized in other comprehensive income or directly in equity respectively.

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5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

a. Estimated impairment of financial assets - 2018

The provision for impairment of accounts receivable is based on assumptions about risk of default and expected loss rates. The Company uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Company’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Note 7. Where the actual future cash inflows are less than expected, a material impairment loss may arise.

• b. Estimated impairment of accounts receivable - 2017

When there is objective evidence of impairment loss of receivables, the Company takes into consideration the estimation of the future cash flows of such assets. The amount of the impairment loss is measured as the difference between an asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. Where the actual future cash flows are less than expected, a material impairment loss may arise.

c. Write-down of inventory

Net realizable value of inventory is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and the historical experience of selling products of a similar nature. Changes in market conditions may have a material impact on the estimation of net realizable value.

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Deposit in transit		December	31
		2018 $ 1,393 36,621 - $ 38,014	2017 $ 1,316 83,988 10,671 $ 95,975

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The market rate intervals of cash in bank at the end of the reporting period were as follows:

Bank balance	December 31
	2018 2017 0.001%-0.48% 0.05%-0.35%

7. NOTES AND ACCOUNTS RECEIVABLES (INCLUDING RELATED PARTIES)

Notes receivable Accounts receivable At amortized cost Gross carrying amount Less: Allowance for impairment loss		December 31	December 31
		2018 $ 39,610 $ 740,657 (2,185) $ 738,472	2017 $ 30,865 $ 720,463 (4,912) $ 715,551

Accounts Receivable

In 2018

The average credit period of sales of goods was 90-180 days. The Company applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected credit losses for all accounts receivables. The expected credit losses on accounts receivables are estimated by reference to past collecting and default experiences of the debtor, an increase in deferred or overdue payments over average credit term and an analysis of the debtors’ current financial position, adjusted for general economic conditions of the industries in which the debtors operate. As the Company’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not further distinguished according to the Company’s different customer base.

The Company writes off an accounts receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. For accounts receivables that have been written off, the Company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of accounts receivables.

December 31, 2018

Gross carrying amount Loss allowance (Lifetime ECL) Amortized cost	Under 180 Days $ 779,817 (1,760) $ 778,057	181 to 365 Days Over 365 Days $ 61 $ 389 (49) (376) $ 12 $ 13	Total $ 780,267 (2,185) $ 778,082

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The ECL ratios of each of the Group’s accounts receivable aging is shown below, excluding individually assessed or abnormal transactions which their loss allowances have been recognized in their entirety. The ECL ratio for aging segment from the invoice date less than 180 days is less than 5%, while the ECL ratio for aging segment from the invoice date more than 181 days is between 20%-100%.

The movements of the loss allowance of accounts receivables were as follows:

Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 Less: Reversal Balance at December 31, 2018	2018 $ 4,912 - 4,912 (2,727) $ 2,185

In 2017

The Company’s credit policy in 2017 was the same as the aforementioned credit policy in 2018. For some accounts receivables balances that were past due at the end of the reporting period, the Company did not recognize an allowance for impairment loss because there was no significant change in credit quality and the amounts were still considered recoverable. The Company did not hold any collateral or other credit enhancements for these balances.

The aging of receivables was as follows:

	December 31,
	2017
Less than 180 days	$ 715,817
181-365 days	238
More than 365 days	4,408
	$ 720,463

The above aging schedule was based on the invoice date.

The Company had no accounts receivables that were past due but not impaired.

The movements of the allowance for doubtful accounts receivable were as follows:

Individually Assessed for Impairment Collectively Assessed for Impairment Balance at January 1, 2017 $ 443 $ 4,543 Add: Impairment losses (reversed) recognized on receivables (202) 298 Less: Amounts written off during the year as uncollectable (170) - Balance at December 31, 2017 $ 71 $ 4,841	Total $ 4,986 96 (170) $ 4,912

• 28 -

8. INVENTORIES

Finished goods Work in progress Raw materials Merchandise		December 31	December 31
		2018 $ 12,928 160,471 105,538 12,224 $ 291,161	2017 $ 13,176 156,152 124,864 17,363 $ 311,555

The cost of goods sold for the years ended December 31, 2018 and 2017 included inventory write-downs of $3,813 thousand and $1,434 thousand, respectively.

9. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD

Investments in subsidiaries Investments in Subsidiaries		**December 31 **	**December 31 **
		2018 $ 1,974,864	2017 $ 1,722,893

Investments in Subsidiaries
Anderson Industrial (Hong Kong) Ltd. (Anderson Industrial) Anderson Europe GmbH Anderson America Corporation (U.S.A.) (Anderson America) Anderson Logistics Corporation (Anderson Logistics) Giben Holdings Co., Ltd. (BVI) (Giben BVI) Giben Holdings Co., Ltd. (SAMOA) (Giben SAMOA) Anderson Merchandise Corporation (Anderson Merchandise) Sogotec Enterprise Co., Ltd. (Sogotec) CNT Industrial (Shanghai) Co., Ltd. (CNT) Jentec Machinery (Shanghai) Co., Ltd. (Jentec)		December 31
		2018 $ 32,577 435,985 55,752 256,771 224,550 176,510 144,354 284,642 303,481 60,242 $ 1,974,864	2017 $ 33,255 305,231 16,226 218,498 273,901 183,994 134,731 182,988 313,390 60,679 $ 1,722,893

At the end of the reporting period, the proportion of ownership and voting rights in subsidiaries held by the Company were as follows:

Name of Subsidiaries Anderson Industrial Anderson Europe GmbH Anderson America Anderson Logistics Giben BVI Giben SAMOA Anderson Merchandise Sogotec CNT Jentec	December 31
	2018 2017 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 65.53% 70.63% 100.00% 100.00% 100.00% 100.00%

• 29 -

Sogotec issued new shares for capital increase via cash in June and July 2018. The Company did not purchase additional shares based on its percentage of ownership. Therefore, the Company’s percentage of ownership in Sogotec decreased to 65.53%.

On May 10, 2016, the board of directors of Anderson Industrial resolved to liquidate the Company. As of December 31, 2018, the process of liquidation was still ongoing.

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2018 and 2017 were based on the subsidiaries’ financial statements audited by auditors for the same years.

10. PROPERTY, PLANT AND EQUIPMENT

Freehold Land Cost Balance at January 1, 2017 $ 124,258 Additions 381 Disposals - Reclassification 6,598 Balance at December 31, 2017 131,237 Accumulated depreciation and impairment Balance at January 1, 2017 - Disposals - Depreciation - Reclassification - Balance at December 31, 2017 - Carrying amounts at December 31, 2017 $ 131,237 Cost Balance at January 1, 2018 $ 131,237 Additions - Disposals - Reclassification - Balance at December 31, 2018 131,237 Accumulated depreciation and impairment Balance at January 1, 2018 - Disposals - Depreciation - Balance at December 31, 2018 - Carrying amounts at December 31, 2018 $ 131,237	Buildings $ 786,803 8,319 (28,827 ) 6,098 772,393 265,296 (28,775 ) 33,365 - 269,886 $ 502,507 $ 772,393 26,004 (4,125 ) - 794,272 269,886 (4,076 ) 34,096 299,906 $ 494,366	Machinery Research and Development Equipment $ 121,180 $ 52,925 4,071 - (11,268 ) (650 ) 22,420 - 136,403 52,275 80,382 27,608 (11,255 ) (650 ) 14,857 10,396 (1,630) - 82,354 37,354 $ 54,049 $ 14,921 $ 136,403 $ 52,275 29,715 103 (44,192 ) (8,021 ) 1,040 - 122,966 44,357 82,354 37,354 (44,160 ) (8,022 ) 10,925 10,125 49,119 39,457 $ 73,847 $ 4,900	Other Equipment $ 64,502 5,293 (2,197 ) 2,624 70,222 57,500 (2,170 ) 3,421 - 58,751 $ 11,471 $ 70,222 11,458 (19,027 ) 514 63,167 58,751 (19,023 ) 4,863 44,591 $ 18,576	Total $ 1,149,668 18,064 (42,942 ) 37,740 1,162,530 430,786 (42,850 ) 62,039 (1,630) 448,345 $ 714,185 $ 1,162,530 67,280 (75,365 ) 1,554 1,155,999 448,345 (75,281 ) 60,009 433,073 $ 722,926

The above items of property, plant and equipment are depreciated on a straight-line basis over the estimated useful lives as follows:

Building 3-55 years Machinery 5-16 years Research and development equipment 3-11 years Other equipment 2-17 years

• 30 -

In August 1996, the Company purchased land in Houlong Township of Miaoli Country for $11,000 thousand. However, due to the statutory restrictions on the transfer of farmland, the title deed has not been legally transferred to the Company; therefore, the Company made a contract with the seller to prevent any future claims on the land by the seller, the seller’s heir at law, or any other third parties. In addition, if the land zoning is changed, the seller is obligated to transfer the title immediately. Accordingly, the farmland is recorded under other non-current assets. In March 2005, the Company applied to the Land Office for the modification of land usage and changed parts of the land’s zoning designation from farmland to construction use, which amounted to $4,518 thousand. Accordingly, the Company has been registered as the legal owner, and has reclassified such land to property, plant and equipment.

Property, plant and equipment pledged as collateral for bank borrowings were set out in Note 25.

11. INTANGIBLE ASSETS

Cost Balance at January 1, 2017 Additions Balance at December 31, 2017 Accumulated amortization and impairment Balance at January 1, 2017 Amortization expense Balance at December 31, 2017 Carrying amounts at December 31, 2017 Cost Balance at January 1, 2018 Additions Reclassification Balance at December 31, 2018 Accumulated amortization and impairment Balance at January 1, 2018 Amortization expense Balance at December 31, 2018 Carrying amounts at December 31, 2018	Patent Trademark $ 49,850 $ 33,664 - - 49,850 33,664 43,484 - 1,377 - 44,861 - $ 4,989 $ 33,664 $ 49,850 $ 33,664 - - - - 49,850 33,664 44,861 - 1,378 - 46,239 - $ 3,611 $ 33,664	Software $ - - - - - - $ - $ - 381 1,600 1,981 - 64 64 $ 1,917	Total $ 83,514 - 83,514 43,484 1,377 44,861 $ 38,653 $ 83,514 381 1,600 85,495 44,861 1,442 46,303 $ 39,192

The above items of intangible asset are depreciated on a straight-line basis over the estimated useful lives as follows:

Patent 20 years Software 3-5 years

• 31 -

Management believes the Company will renew the trademark continuously and has the ability to do so. Various studies including studies about product life cycle, market, competitive and environmental trends, and brand extension opportunities have been performed by management of the Company, which supported their opinion that there is no foreseeable limit to the period over which the trademarked products are expected to generate net cash flows. Therefore, the trademark is considered to have an indefinite useful life. The trademark will not be amortized until its useful life is determined to be finite. Instead it will be tested for impairment annually and whenever there is an indication that it may be impaired.

12. BORROWINGS

a. Short-term borrowings

Secured borrowings (Note 25) Bank loans Unsecured borrowings Line of credit borrowings		**December 31 **	**December 31 **
		2018 $ 160,000 613,637 $ 773,637	2017 $ - 590,240 $ 590,240

The ranges of interest rates on bank loans were 0.899%-1.340% and 1.086%-1.336% per annum as of December 31, 2018 and 2017, respectively.

• b. Long-term borrowings

Secured borrowings (Note 25) Bank loans Unsecured borrowings Bank loans Less: Current portion Long-term borrowings		December 31	December 31
		2018 $ 359,417 61,111 420,528 (172,611) $ 247,917	2017 $ 352,917 284,445 637,362 (360,834) $ 276,528

As of December 31, 2018 and 2017, the interest rates of the bank borrowings secured by the Company’s freehold land and building (see Note 25) were 1.7%-1.75% and 1.60%-1.72% per annum, respectively. The bank borrowings are due in February 2021 to September 2023.

• 32 -

13. OTHER LIABILITIES

Other payables Payables for salaries and bonuses Payables for commission Payable for employees’ compensation and remuneration of directors and supervisors Payables for interest Others		December	31
		2018 $ 44,651 4,213 2,191 631 19,313 $ 70,999	2017 $ 56,682 10,496 3,334 816 27,898 $ 99,226

14. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

b. Defined benefit plans

The defined benefit plans adopted by the Company in accordance with the Labor Standards Law are operated by the government. Pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. The Company contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Company assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Company is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Company has no right to influence the investment policy and strategy.

The amounts included in the balance sheets in respect of the Company’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan asset Net defined benefit liability		**December 31 **	**December 31 **
		2018 $ 113,514 (59,095) $ 54,419	2017 $ 129,914 (67,702) $ 62,212

• 33 -

Movements in net defined benefit liability were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of		Benefit
	Obligation	the Plan Assets	Liability
Balance at January 1, 2017	$ 134,753	$ (68,647)	$	66,106
Service cost
Current service cost	1,490	-		1,490
Net interest expense (income)	1,684	(875)		809
Recognized in profit or loss	3,174	(875)		2,299
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	240		240
Actuarial loss - changes in demographic
assumptions	1,132	-		1,132
Actuarial gain - experience adjustments	(4,789)	-		(4,789)
Recognized in other comprehensive income	(3,657)	240		(3,417)
Contributions from the employer	-	(2,776)		(2,776)
Benefits paid from plan assets	(4,356)	4,356		-
	(4,356)	1,580		(2,776)
Balance at December 31, 2017	129,914	(67,702)		62,212
Service cost
Current service cost	1,110	-		1,110
Net interest expense (income)	1,624	(868)		756
Recognized in profit or loss	2,734	(868)		1,866
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(1,912)		(1,912)
Actuarial loss - changes in demographic
assumptions	163	-		163
Actuarial loss - Changes in financial
assumptions	1,604	-		1,604
Actuarial gain - experience adjustments	(6,347)	-		(6,347)
Recognized in other comprehensive income	(4,580)	(1,912)		(6,492)
Contributions from the employer	-	(3,167)		(3,167)
Benefits paid from plan assets	(14,554)	14,554		-
	(14,554)	11,387		(3,167)
Balance at December 31, 2018	$ 113,514	$ (59,095)	$	54,419

Through the defined benefit plans under the Labor Standards Law, the Company is exposed to the following risks:

• 1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.

• 2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.

• 34 -

• 3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rate(s) Expected rates of salary increase	**December 31 **
	2018 2017 1.125% 1.25% 3.000% 3.00%

If possible reasonable change in each of the significant actuarial assumptions will occur and all other assumptions will remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rate(s) 0.25% increase 0.25% decrease Expected rate(s) of salary increase 0.25% increase 0.25% decrease		**December **	**31 **
		2018 $ (3,177) $ 3,301 $ 3,182 $ (3,080)	2017 $ (3,709) $ 3,855 $ 3,723 $ (3,601)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		**December **	**31 **
		2018 2017 $ 3,120 $ 3,432 11.4 years 11.58 years

15. EQUITY

• a. Share capital

Common stocks

Number of shares authorized (in thousand) Shares authorized Number of shares issued and fully paid (in thousand) Shares issued		December 31	December 31
		2018 200,000 $ 2,000,000 199,881 $ 1,998,810	2017 200,000 $ 2,000,000 180,000 $ 1,800,000

A holder of issued common stock with par value of NT$10 per share is entitled to vote and to receive dividends.

• 35 -

On May 14, 2018, the Company’s board of directors resolved to issue 20,000 thousand ordinary shares, with a par value of NT$10, for a consideration of NT$13 per share, which increased the share capital issued and fully paid to $2,000,000 thousand. On July 6, 2018, the above transaction was approved by the FSC, and the subscription base date was determined as at August 5, 2018 by the board of directors.

On December 12, 2018, the Company’s board of directors resolved to cancel 119 thousand treasury shares, and the cancellation base date was determined as at December 7, 2018.

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Issuance of common stocks Conversion of bonds Treasury share transactions Difference between consideration and carrying amount arising from the disposal of subsidiaries’ stock May be used to offset a deficit only Changes in percentage of ownership interests in subsidiaries (2) May not be used for any purpose Employee share options		**December 31 **	**December 31 **
		2018 $ 165,391 99,979 58,585 12,201 32,794 184 $ 369,134	2017 $ 114,441 99,979 52,254 - - - $ 266,674

• 1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and to once a year).

• 2) Such capital surplus arises from the effect of changes in ownership interests in subsidiaries resulting from equity transactions other than actual disposals or acquisitions, or from changes in capital surplus of subsidiaries accounted for using the equity method.

c. Retained earnings and dividend policy

Under the dividends policy as set forth in the amended Articles, where the Company made a profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as a legal reserve of 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan with a proportion of no less than 10%, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors and supervisors after the amendment, refer to employees’ compensation and remuneration of directors and supervisors in Note 17-f.

According to the Articles, 30%-100% of dividends are to be distributed as cash dividends and 0%-70% as stock dividends.

• 36 -

An appropriation of earnings to a legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 issued by the FSC and in the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The appropriations of earnings for 2017 and 2016 were approved in the shareholders’ meetings on May 29, 2018 and June 19, 2017, respectively, were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2017 2016 $ 9,652 $ 9,862 7,443 50,624 80,699 35,266	Dividends Per Share (NT$)
		For the Year Ended **December 31 **
		2017 2016 $ 0.45 $ 0.2

In the shareholders’ meeting on May 29, 2018 and June 19, 2017, the Company’s shareholders resolved to issue cash dividends from capital surplus of $8,967 thousand ($0.05 per share) and $52,899 thousand ($0.3 per share), respectively.

The appropriation of earnings for 2018 had been proposed by the Company’s board of directors on March 11, 2019. The appropriation and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per	Dividends Per
	of	Earnings	Share	(NT$)
Legal reserve	$	4,098
Special reserve		17,111
Cash dividends		19,933	$	0.1

The appropriations of earnings for 2018 are subject to the resolution of the shareholders’ meeting to be held on May 30, 2019.

• d. Treasury shares

Purpose of Buy-back Number of Shares at January 1 Shares Transferred to Employees 2018 Shares transferred to employees (in thousands of shares) 3,669 (3,000) 2017 Shares transferred to employees (in thousands of shares) 3,669 -	Shares Cancelled Number of Shares at December 31 (119) 550 - 3,669

• 37 -

On January 12, 2018, the Company’s board of directors resolved to transfer 3,000 thousand treasury shares to employees at $9.65 per share with total value of $28,950 thousand. The base date for employee share option was determined at January 12, 2018. The Company had recognized $6,150 thousand of capital surplus - treasury share transaction on the date of transfer. Refer to Note 20 for relevant information.

Under the Securities and Exchange Act, the Company shall neither pledge treasury shares nor exercise shareholders’ rights on these shares, such as rights to dividends and to vote.

16. REVENUE

Revenue from the sale of machinery Revenue from the rendering of services Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 1,077,121 19,159 - $ 1,096,280	2017 $ 865,740 247,895 27 $ 1,113,662

• 1) Refer to Note 4-l for information about disaggregation of revenue.

• 2) Contract balances: as of December 31, 2018, the balance for contract liabilities is $33,828 thousand, which is mainly constituted by unearned receipts.

• 3) Contract liabilities in the beginning of the year have been recognized as sales revenue during the year.

17. NET PROFIT AND OTHER COMPREHENSIVE INCOME (LOSS)

• a. Other income

Rental income Interest income Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2018 $ 29,361 939 16,735 $ 47,035	2017 $ 26,337 4,938 24,072 $ 55,347

• b. Other gains and losses

Gain (loss) on disposal of property, plant and equipment Net foreign exchange gains (losses) Net loss on financial assets at FVTPL Others	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2018 $ 16 10,495 (1,649) (5) $ 8,857	2017 $ (36) (14,029) - (2,279) $ (16,344)

• 38 -

c. Finance costs

Interest on bank loans d. Depreciation and amortization Property, plant and equipment Intangible assets An analysis of depreciation by function Operating costs Operating expenses An analysis of amortization by function Operating expenses e. Employee benefits expense Short-term benefits Salaries Insurance Post-employment benefits Defined contribution plans Defined benefit plans (Note 14) Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating costs Operating expenses	For the Year Ended	For the Year Ended	December 31
	2018 $ 18,304 For the Year Ended		2017 $ 18,062 December 31
	2018 $ 60,009 1,442 $ 61,451 $ 19,713 40,296 $ 60,009 $ 1,442 For the Year Ended		2017 $ 62,039 1,377 $ 63,416 $ 22,637 39,402 $ 62,039 $ 1,377 December 31
		2018 $ 197,298 17,936 215,234 9,100 1,866 10,966 1,927 $ 228,127 $ 94,347 133,780 $ 228,127	2017 $ 213,338 17,832 231,170 8,137 2,299 10,436 1,602 $ 243,208 $ 91,932 151,276 $ 243,208

• 39 -

Salaries Insurance Pension Compensation of directors Other employee benefits			For	the Year Ended December 31	the Year Ended December 31	the Year Ended December 31	the Year Ended December 31
			2018	Total $ 185,362 17,936 10,966 11,936 1,927 $ 228,127			2017
		Operating Cost $ 79,664 8,109 5,354 - 1,220 $ 94,347	Operating Expense $ 105,698 9,827 5,612 11,936 707 $ 133,780			Operating Cost $ 78,623 7,460 4,986 - 863 $ 91,932	Operating Expense $ 123,285 10,372 5,450 11,430 739 $ 151,276	Total $ 201,908 17,832 10,436 11,430 1,602 $ 243,208

As of December 31, 2018 and 2017, the numbers of employees were 282 and 285, respectively, and the numbers of directors who did not serve concurrently as employees were 6 in both years. The basis of calculation is consistent with that of employee benefits expense.

• f. Employees’ compensation and remuneration of directors and supervisors

According to the Articles of Incorporation of the Company, the Company accrued employees’ compensation and remuneration of directors and supervisors at the rates between 1%-10% and no higher than 3%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors and supervisors. The employees’ compensation and remuneration of directors and supervisors for the years ended December 31, 2018 and 2017 which have been approved by the Company’s board of directors on March 11, 2019 and March 22, 2018, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors and supervisors Amount	For the Year Ended December 31
	2018 2017 2% 1% 2% 1%

Employees’ compensation Remuneration of directors and supervisors	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 Cash $ 569 $ 569		2017
				Cash $ 1,054 $ 1,054

If there is a change in the amounts after the annual financial statements were authorized for issue, the differences are recorded as a change in the accounting estimate next year.

There was no difference between the actual amounts of employees’ compensation and remuneration to directors and supervisors paid and the amounts recognized in the financial statements for the year ended December 31, 2017 and 2016.

Information on the employees’ compensation and remuneration of directors and supervisors resolved by the Company’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

• 40 -

18. INCOME TAXES

a. Major components of tax (benefit) expense recognized in profit or loss

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years Deferred tax In respect of the current year Change in tax rates Income tax (benefit) expense recognized in profit or loss	**For the Year Ended December 31 **	**For the Year Ended December 31 **	**For the Year Ended December 31 **
		2018 $ 892 35 - (12,798) (5,223) $ (17,094)	2017 $ 10,356 226 5,780 (9,457) - $ 6,905

A reconciliation of accounting profit and income tax (benefit) expense is as follows:

Profit before income tax Income tax expense calculated at the statutory rate Adjustment in determining taxable income Temporary differences Loss carryforward Income tax on unappropriated earnings Adjustments for prior years’ tax Change in tax rates Income tax (benefit) expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2018 $ 23,883 $ 4,777 (16,179) 1,331 (1,835) 35 (5,223) $ (17,094)	2017 $ 103,426 $ 17,582 (18,894) (3,639) 5,850 226 5,780 - $ 6,905

In 2017, the applicable corporate income tax rate used by the Company is 17%. However, the Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%, effective in 2018. The effect of such tax rate change on deferred income tax was recognized in profit or loss this current year. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%.

As the status of the 2019 appropriation of earnings is uncertain, the potential income tax consequences of the 2018 unappropriated earnings are not reliably determinable.

• b. Income tax recognized in other comprehensive income

Deferred tax Effect of change in tax rate In respect of the current period Remeasurement on defined benefit plan	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 68 1,309 $ 1,377	2017 $ - 568 $ 568

• 41 -

c. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2018

Deferred tax assets Defined benefit obligation Unrealized gain on transactions with associates Loss carryforward Share of loss of subsidiaries accounted for using the equity method Others	Recognized in Other Recognized Compre- Opening in Profit hensive Balance or Loss Income $ 10,576 $ 2,409 $ (1,377) 505 2,693 - 6,927 3,057 - 3,292 9,711 - 7,914 151 - $ 29,214 $ 18,021 $ (1,377)	Closing Balance $ 11,608 3,198 9,984 13,003 8,065 $ 45,858

For the year ended December 31, 2017

Deferred tax assets Defined benefit obligation Unrealized gain on transactions with associates Loss carryforward Share of loss of subsidiaries accounted for using the equity method Others Deferred tax liabilities Share of income of subsidiaries accounted for using the equity method	Recognized in Other Recognized Compre- Opening in Profit hensive Reclassifi- Balance or Loss Income cation $ 11,231 $ (87) $ (568) $ - 1,474 (969) - - 12,777 (5,850) - - - - - 3,292 8,755 (841) - - $ 34,237 $ (7,747) $ (568) $ 3,292 $ 13,912 $ (17,204) $ - $ 3,292	Closing Balance $ 10,576 505 6,927 3,292 7,914 $ 29,214 $ -

• d. Income tax returns through 2015 were examined and cleared by the tax authorities.

• 42 -

19. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share Diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 0.22 $ 0.22	2017 $ 0.55 $ 0.55

The earnings and weighted average number of common stocks outstanding in the computation of earnings per share were as follows:

Net Profit for the Year

Earnings used in the computation of basic/diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 40,977	2017 $ 96,521

Weighted average number of ordinary shares outstanding (in thousand shares):

Weighted average number of ordinary shares in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation or bonus issue to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 186,100 75 186,175	2017 176,331 100 176,431

Since the Company offered to settle compensation or bonuses paid to employees in cash or shares, the Company assumed the entire amount of the compensation or bonus will be settled in shares and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

20. SHARE-BASED PAYMENT ARRANGEMENTS

On January 12, 2018, the Company’s board of directors resolved to transfer 3,000 thousand treasury shares to qualified employees of the Company and its subsidiaries.

In May 2018, the Company’s board of directors resolved to issue ordinary shares for capital increase via cash and reserved 10% of the new shares issued for employees subscription in accordance with the Company Act of the ROC.

Options were priced using the Black-Scholes pricing model, and the inputs to the model are as follows:

	July 23, 2018	January 12, 2018
Grant-date share price (NT$)	$11.95	$11.67
Exercise price (NT$)	$13.00	$9.65
Expected volatility	32.93%	32.84%
Risk-free interest rate	0.4%	0.26%

• 43 -

Compensation costs recognized were $6,350 thousand for the year ended December 31, 2018.

21. OPERATING LEASE ARRANGEMENTS

The Company as Lessee

Operating leases relate to leases of office and plant with lease terms between 1 and 5 years.

The future minimum lease payments of non-cancellable operating lease commitments were as follows:

Not later than 1 year Later than 1 year and not later than 5 years Later than 5 years		December	31
		2018 $ 4,868 14,407 8,404 $ 27,679	2017 $ 7,253 15,658 12,006 $ 34,917

22. CAPITAL MANAGEMENT

The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings offset by cash and cash equivalents) and equity of the Company (comprising issued capital, reserves, retained earnings, other equity and non-controlling interests).

Key management personnel of the Company review the capital structure on a quarterly basis. As part of this review, the key management personnel consider the cost of capital and the risks associated with each class of capital. Based on recommendations of the key management personnel, in order to balance the overall capital structure, the Company may adjust the amount of dividends paid to shareholders, the number of new shares issued or repurchased, and the amount of new debt issued or existing debt redeemed.

The Company is not subject to any externally imposed capital requirements.

23. FINANCIAL INSTRUMENTS

• a. Fair value of financial instruments that are not measured at fair value

The Company’s management considers the carrying amounts recognized in the consolidated financial statements for financial assets and financial liabilities not carried at fair value to approximate their fair values or their fair values cannot be reliably measured.

• 44 -

• b. Fair value of financial instruments that are measured at fair value on a recurring basis

Fair value hierarchy

December 31, 2018 Financial assets at FVTPL Beneficiary certificates December 31, 2017 Available-for-sale financial assets Beneficiary certificates	Level 1 $ 17,474 Level 1 $ 19,124	Level 2 $ - Level 2 $ -	Level 3 $ - Level 3 $ -	Total $ 17,474 Total $ 19,124

There were no transfers between Levels 1 and 2 in the current and prior periods.

• c. Categories of financial instruments

Financial assets Loans and receivables (1) Available-for-sale financial assets (2) Financial assets at FVTPL Financial assets at amortized cost (3) Financial liabilities Financial liabilities at amortized cost (4)	**December 31 **
	2018 2017 $ - $ 1,089,638 - 19,124 17,474 - 956,010 - 1,435,798 1,551,849

• 1) The balances included loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market - current, notes receivable, accounts receivable and other receivables.

• 2) The balances included the carrying amount of available-for-sale financial assets.

• 3) The balances include financial assets at amortized cost, which comprise cash and cash equivalents, time deposits with original maturity of more than 3 months, notes receivable, accounts receivable and other receivables.

• 4) The balances included financial liabilities measured at amortized cost, which comprise short-term borrowings, notes payable, accounts payable, other payables and long-term borrowings.

• 45 -

d. Financial risk management objectives and policies

The Company’s major financial instruments include beneficiary certificates, accounts receivable, accounts payable and short-term and long-term borrowings. The Company’s corporate treasury function provides services to the business, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

The Company’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates (see (a) below) and interest rates (see (b) below).

There had been no change to the Company’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Company had foreign currency sales and purchases, which were exposed to foreign currency risk. To protect against reductions in value and the volatility of future cash flows caused by changes in foreign exchange rates, the Company managed the risk by balancing positions of assets and liabilities denominated in foreign currencies.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities and of the derivatives exposed to foreign currency risk at the end of the reporting period are set out in Note 26.

Sensitivity analysis

The Company was mainly exposed to the currency USD, currency RMB and currency EUR.

The following table details the Company’s sensitivity to a 1% increase and decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. The rate of 1% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the reporting period for a 1% change in foreign currency rates. A positive number below indicates an increase in pre-tax profit and other equity assuming New Taiwan dollars strengthened by 1% against the relevant currency. For a 1% weakening of New Taiwan dollars against the relevant currency, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit or loss	Currency USD Impact For the Year Ended December 31 2018 2017 $ 4,990 $ 5,158	Currency RMB Impact For the Year Ended December 31 2018 2017 $ 1,219 $ 556	Currency EUR Impact
			For the Year Ended December 31
			2018 2017 $ 103 $ 1,299

b) Interest rate risk

The Company was exposed to interest rate risk because entities in the Company borrowed funds at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix of fixed and floating rate borrowings.

• 46 -

The carrying amounts of the Company’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Financial liabilities Cash flow interest rate risk Financial assets Financial liabilities	**December 31 **
	2018 2017 $ 5,004 $ 10,000 50,000 50,000 36,621 83,988 1,144,165 1,177,602

Sensitivity analysis

The sensitivity analyses below were determined based on the Company’s exposure to interest rates for both derivatives and non-derivative instruments at the end of the reporting period. For floating rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 10 basis points increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

The sensitivity analyses were determined based on the Company’s exposure to interest rates at the end of the reporting period. A 10 basis points increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 10 basis points higher/lower and all other variables were held constant, the Company’s pre-tax profit for the years ended December 31, 2018 and 2017 would decrease/increase by $1,108 thousand and $1,094 thousand, respectively, which was mainly attributable to the Company’s exposure to cash flow on its variable-rate bank borrowings.

• c) Other price risk

The Company was exposed to price risk through its investments in beneficiary certificates.

Sensitivity analysis

The sensitivity analyses below were determined based on the exposure to price risks at the end of the reporting period. If prices had been 10% higher/lower, pre-tax profit for year ended December 31, 2018 would have increased/decreased by $1,747 thousand, as a result of the changes in fair value of financial assets at FVTPL.

If prices had been 10% higher/lower, the total comprehensive income for the year ended December 31, 2017 would increase/decrease by $1,912 thousand, as a result of the changes in fair value of available-for-sale investments.

• 47 -

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. As at the end of the reporting period, the Company’s maximum exposure to credit risk which will cause a financial loss to the Company due to failure of counterparties to discharge an obligation and due to financial guarantees provided by the Company could arise from:

• a) The carrying amount of the respective recognized financial assets as stated in the balance sheets; and

• b) The amount of contingent liabilities in relation to financial guarantee issued by the Company.

The Company adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of excellent grade. This information is supplied by a rating agency where available and, if not available, the Company uses other publicly available financial information to rate its major customers. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

The Company did transactions with a large number of unrelated customers and, thus, no concentration of credit risk was observed.

3) Liquidity risk

Ultimate responsibility for liquidity risk management rests with the board of directors, which has built an appropriate liquidity risk management framework for the Company’s short, medium and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, and continuously monitoring forecast and actual cash flows as well as matching the maturity profiles of financial assets and liabilities. As of December 31, 2018 and 2017, the Company had available unutilized bank loan facilities set out in (b) below.

• a) Liquidity and interest rate risk tables for non-derivative financial liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables had been drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Company can be required to pay. Specifically, bank loans with a repayment on demand clause were included in the earliest time band regardless of the probability of the banks choosing to exercise their rights. The maturity dates for other non-derivative financial liabilities were based on the agreed repayment dates.

December 31, 2018

On Demand or Less than 1 Month 1-3 Months 3 Months to 1 Year Non-derivative financial liabilities Non-interest bearing $ - $ 241,633 $ - Variable interest rate liabilities 233,646 472,287 198,884 Fixed interest rate liabilities - 50,000 - $ 233,646 $ 763,920 $ 198,884	1-5 Years $ - 260,942 - $ 260,942	5+ Years $ - - -
		$ -

• 48 -

December 31, 2017

On Demand or Less than 1 Month 1-3 Months 3 Months to 1 Year Non-derivative financial liabilities Non-interest bearing $ - $ 324,247 $ - Variable interest rate liabilities 164,837 615,348 180,181 Fixed interest rate liabilities - 50,000 - $ 164,837 $ 989,595 $ 180,181	1-5 Years $ - 290,096 - $ 290,096	5+ Years $ - - - $ -

The amount included above for variable interest rate instruments for both non-derivative financial assets and liabilities was subject to change if changes in variable interest rates differ from those estimates of interest rates determined at the end of the reporting period.

b) Financing facilities

Unsecured bank overdraft facility, reviewed annually and payable at call: Amount used Amount unused Secured bank overdraft facility: Amount used		**December 31 **	**December 31 **
		2018 $ 674,748 1,118,815 $ 1,793,563 $ 519,417	2017 $ 830,353 707,047 $ 1,537,400 $ 727,000

24. TRANSACTIONS WITH RELATED PARTIES

The Company’s parent is Parpro Company, which held 20.02% of the ordinary shares of the Company as of December 31, 2018. Besides information disclosed elsewhere in the other notes, details of transactions between the Company and other related parties are disclosed below:

a. Related parties and their relationships with the Company:

Related Party Parpro Company (Parpro) Anderson Industrial Anderson Europe GmbH Anderson America CNT Jentec Anderson Merchandise Sogotec Giben America, Inc. (Giben America) Giben do Brasil Maquinas e Equipamentos Ltda (Giben Brasil) MATEC GmbH (MATEC) Monforts CNC Werkzeugmaschinentechnik GmbH (Monforts GmbH) EFA Electronics Corporation Verite Corporation	Relationship with the Company
	Parent entity Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Sub-subsidiary Sub-subsidiary Fellow subsidiary Associates

• 49 -

b. Sales

Related Party Line Items Categories/Names Sales of machinery Subsidiaries Anderson America CNT Others c. Purchase of goods Related Party Categories Subsidiaries Fellow subsidiary Parent entity d. Receivables from related parties Related Party Line Items Categories/Names Accounts receivable Subsidiaries Anderson America CNT Sogotec Giben America Others Other receivables Parent entity Subsidiaries CNT Sogotec Giben America MATEC Others	For the Year Ended	For the Year Ended	December 31
	2018 $ 342,245 63,996 82,278 $ 488,519 **For the Year Ended **		2017 $ 328,089 119,147 160,657 $ 607,893 **December 31 **
		2018 $ 15,234 2,638 - $ 17,872 December	2017 $ 13,923 1,411 2,311 $ 17,645 31
		2018 $ 285,080 64,327 142,722 100,319 60,754 $ 653,202 $ 32 52,529 52,136 22,909 1,194 3,513 $ 132,313	2017 $ 254,887 79,407 158,318 88,388 47,434 $ 628,434 $ 60 53,979 47,493 43,170 56,892 31,171 $ 232,765

• 50 -

e. Payables to related parties

Related Party Line Items Categories/Names Accounts payable Subsidiaries Fellow subsidiary Other payables Subsidiaries f. Prepayments Line Items Related Party Categories Prepayments for equipment (classified as other non- current assets) Subsidiaries Anderson Industrial Monforts GmbH Prepayments for goods Subsidiaries g. Acquisitions of property, plant and equipment Related Party Categories Subsidiaries MATEC		December 31	December 31
		2018 2017 $ 2,680 $ 684 726 1,481 $ 3,406 $ 2,165 $ 946 $ 1,620 December 31
	2018 $ 9,309 17,714 $ 27,023 $ - For the Year Ended		2017 $ - - $ - $ 3,889 December 31
		2018 $ 11,808	2017 $ -

• h. Endorsements and guarantees

Information of endorsements and guarantees for subsidiaries was disclosed in Table 2.

• i. Other transactions with related parties

Related Party Line Items Categories/Names Rental income Parent entity Subsidiaries Sogotec Anderson Merchandise Anderson America Associates	**For the Year Ended **	**For the Year Ended **	**December 31 **
		2018 $ 347 16,477 4,434 4,707 663 $ 26,628	2017 $ 395 7,259 11,392 4,751 395 $ 24,192 (Continued)

• 51 -

Related Party Line Items Categories/Names Management income Subsidiaries Anderson Merchandise Sogotec Interest income Subsidiaries Sogotec Monforts GmbH Anderson Europe MATEC Others Interest expense Parent entity j. Compensation of key management personnel Short-term employee benefits Post-employment benefits	**For the Year Ended **	**For the Year Ended **	**December 31 **
	2018 $ 7,701 - $ 7,701 $ - 300 90 275 71 $ 736 $ 735 For the Year Ended		2017 $ 7,273 9,092 $ 16,365 $ 1,053 2,305 502 798 - $ 4,658 $ 735 (Concluded) December 31
		2018 $ 22,494 683 $ 23,177	2017 $ 25,192 988 $ 26,180

The remuneration of directors and key executives was determined by the remuneration committee having regard to the performance of individuals and market trends.

25. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets at book value were provided as collateral for bank borrowings:

Freehold land Building Other non-current assets		**December 31 **	**December 31 **
		2018 $ 129,617 407,630 6,482 $ 543,729	2017 $ 129,617 419,349 6,482 $ 555,448

• 52 -

26. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The following information was aggregated by the foreign currencies other than functional currency of the Company and the exchange rates between foreign currencies and Company’s functional currency (“NTD”) were disclosed. The significant assets and liabilities denominated in foreign currencies were as follows:

December 31, 2018

		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	17,781	30.715 (USD:NTD)	$ 546,143
RMB		27,259	4.472 (RMB:NTD)	121,902
EUR		445	35.200 (EUR:NTD)	15,664
Financial liabilities
Monetary items
USD		1,536	30.715 (USD:NTD)	47,178
EUR		153	35.200 (EUR:NTD)	5,386
December 31, 2017
		Foreign		Carrying
	Currencies		Exchange Rate	Amount
Financial assets
Monetary items
USD	$	17,934	29.760 (USD:NTD)	$ 533,716
RMB		12,186	4.565 (RMB:NTD)	55,629
EUR		4,236	35.570 (EUR:NTD)	150,675
Financial liabilities
Monetary items
USD		601	29.760 (USD:NTD)	17,886
EUR		583	35.570 (EUR:NTD)	20,737

For the years ended December 31, 2018, realized and unrealized net foreign exchange gains were $10,495 thousand. For the years ended December 31, 2017, realized and unrealized net foreign exchange losses were $14,029 thousand. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions.

27. SEPARATELY DISCLOSED ITEMS

• a. Information about significant transactions and investees:

• 1) Financing provided to others. (Table 1)

• 2) Endorsements/guarantees provided. (Table 2)

• 53 -

• 3) Marketable securities held (excluding investment in subsidiaries, associates and joint ventures). (Table 3)

• 4) Marketable securities acquired and disposed at costs or prices at least NT$300 million or 20% of the paid-in capital. (None)

• 5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital. (None)

• 6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital. (None)

• 7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 4)

• 8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital. (Table 5)

• 9) Trading in derivative instruments. (None)

• 10) Information on investees. (Table 6)

• b. Information on investments in mainland China

• 1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area. (Table 7)

• 2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses. (None)

• 54 -

TABLE 1

ANDERSON INDUSTRIAL CORPORATION

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period (Note 1)	Ending Balance (Note 1)	Actual Borrowing Amount	Interest Rate	Nature of Financing	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	**Collateral **	**Collateral **	Financing Limit for Each Borrower (Notes 1and 3)	Aggregate Financing Limits (Notes 1 and 3)	Note
													Item	Value
0	The Company	Anderson Europe GmbH Giben America Monforts GmbH MATEC Sogotec	Accounts receivable - related parties Accounts receivable - related parties Accounts receivable - related parties Accounts receivable - related parties Accounts receivable - related parties	Yes Yes Yes Yes Yes	$ 152,208 30,830 54,360 126,840 100,000	$ - 30,715 35,200 - -	$ - 24,572 - - -	2.50% 2.50% 2.50% 2.50% 2.00%	Short-term financing Short-term financing Short-term financing Short-term financing Short-term financing	$ - - - - -	Operation requirements Operation requirements Operation requirements Operation requirements Operation requirements	$ - - - - -	- - - - -	$ - - - - -	$ 515,450 515,450 515,450 515,450 515,450	$ 1,030,899 1,030,899 1,030,899 1,030,899 1,030,899	2 2 2 2 2
1	CNT	The Company MATEC Shanghai	Accounts receivable - related parties Accounts receivable - related parties	Yes Yes	103,092 4,485	- 4,472	- 4,472	4.35% 5.00%	Short-term financing Short-term financing	- -	Operation requirements Operation requirements	- -	- -	- -	306,471 306,471	306,471 306,471	3 3
2	Anderson Europe GmbH	MATEC Monforts GmbH	Accounts receivable - related parties Accounts receivable - related parties	Yes Yes	35,200 35,200	35,200 35,200	- -	2.50% 2.50%	Short-term financing Short-term financing	- -	Operation requirements Operation requirements	- -	- -	- -	440,459 440,459	440,459 440,459	3 3

Note 1: The balance for the period and ending balance represent the amount approved by the board of directors.

Note 2: The loan limit should not exceed 40% of total equity of the Corporation. The loan limit to one party should not exceed 20% of the total equity or business transaction amount.

Note 3: The loan limit should not exceed 100% of total equity of the Corporation.

• 55 -

TABLE 2

ANDERSON INDUSTRIAL CORPORATION

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China	Note
		Name	Relationship (Note 3)
0	The Company	Anderson Europe GmbH MATEC Anderson Merchandise Sogotec	b b b b	$ 773,174 773,174 773,174 773,174	$ 43,994 181,200 425,000 350,000	$ 43,739 176,000 305,000 350,000	$ - 176,000 171,133 90,000	$ - - - -	2 7 12 14	$ 1,288,624 1,288,624 1,288,624 1,288,624	Yes Yes Yes Yes	- - - -	- - - -	- - - -

Note 1: The balance should not exceed 30% of total equity of the Company.

Note 2: The balance should not exceed 50% of total equity of the Company.

Note 3: The relationship is as follows:

• b. The Company controls over 50% of subsidiary’s ordinary shares directly.

• 56 -

TABLE 3

ANDERSON INDUSTRIAL CORPORATION

MARKETABLE SECURITIES HELD DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities (Note 1)	Relationship with the Holding Company	Financial Statement Account		December 31, 2018	December 31, 2018		Note
				Shares (In Thousands of Shares)	Carrying Amount	Percentage of Ownership	Fair Value
The Company CNT Anderson Logistics	Sinopac EMD & High Yield Bond Fund of Funds China Guangfa Bank “7 Day Notify Saving” Financial Product China Guangfa Bank “Xinjiaxin No. 16” Financial Product Bank of Communications “Yuntong Stable Wealth” 91 Day Financial Product Stock: Harbinger Technology Corporation	- - - - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current	1,645 - - - 1,732	$ 17,474 13,416 76,024 107,328 27,549	- - - - 8.5	$ 17,474 13,416 76,024 107,328 27,549	2 2 2 2 -

Note 1: Marketable securities in the table refer to stock, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9 “Financial Instruments”.

Note 2: Information on investments in subsidiaries and associates, see Table 6 and Table 7 for details.

Note 3: Fair value is measured based on the net asset value of the mutual funds on December 31, 2018.

• 57 -

TABLE 4

ANDERSON INDUSTRIAL CORPORATION

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST $100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Buyer	Related Party	Relationship		Transaction	Transaction	Details	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
The Company Sogotec	Anderson America Sogotec Shanghai	Subsidiaries Subsidiaries	Sale Sale	$ (342,245) (622,082)	(31) (63)	The same as other customer The same as other customer	$ - -	Note Note	$ 285,080 641,191	37 84	- -

Note: Collection depends on capital status.

• 58 -

TABLE 5

ANDERSON INDUSTRIAL CORPORATION

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Ending Balance	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
The Company Sogotec	Anderson America Giben America Sogotec Sogotec Shanghai	Subsidiaries Subsidiaries Subsidiaries Subsidiaries	Accounts receivable $ 285,080 Accounts receivable 100,319 Accounts receivable 142,722 Accounts receivable 641,191	1.27 0.37 0.23 1.06	$ - - - -	- - - -	$ 168,154 - 4,085 33,942	$ - - - -

• 59 -

TABLE 6

ANDERSON INDUSTRIAL CORPORATION

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Investor Company	Investee Company	Location	Main Businesses and Products	Original Investment Amount	Original Investment Amount	As of	December 31, 2018	December 31, 2018	Net Income (Loss) of the Investee	Share of Profits (Loss)	Note
				December 31, 2018	December 31, 2017	Shares (In Thousands of Shares)	%	Carrying Amount
The Company Anderson Merchandise Anderson Logistics Giben SAMOA Giben BVI Anderson Europe GmbH	Anderson Industrial Anderson Europe GmbH Anderson America Anderson Logistics Giben BVI Giben SAMOA Anderson Merchandise Sogotec Sogotec Sogotec Verite Giben America Giben Brasil Giben Brasil Monforts GmbH MATEC	Hong Kong Germany USA Taiwan British Virgin Islands Samoa Taiwan Taiwan Taiwan Taiwan Taiwan USA Brazil Brazil Germany Germany	Importing, exporting and general investing activities Manufacture and sale of machinery and service Sale of machinery and service Importing and Exporting Investment Investment Sale of wood panels and service Manufacture and sale of machinery Manufacture and sale of machinery Manufacture and sales of machinery Importing and Exporting Sale of machinery and service Manufacture and sale of machinery Manufacture and sale of machinery Manufacture and sale of machinery Manufacture and sale of machinery	$ 1,014 441,603 215,024 220,000 422,078 146,813 50,000 238,746 3,000 178,682 13,000 145,329 1,183 421,626 197,426 155,496	$ 1,014 314,868 165,197 220,000 407,501 146,772 50,000 190,709 - 171,961 10,000 145,329 1,142 407,049 125,006 101,181	300 - (Note) 1 22,000 10 10 5,000 11,796 50 4,461 1,300 - (Note) - (Note) - (Note) - (Note) - (Note)	100.00 100.00 100.00 100.00 100.00 100.00 100.00 65.53 0.28 24.78 33.33 100.00 0.28 99.72 100.00 100.00	$ 32,577 435,985 55,752 256,771 224,550 176,510 144,354 284,642 2,900 129,431 8,561 82,547 629 224,245 165,126 199,509	$ - 15,245 (2,086) 15,635 (53,807) (7,257) 11,151 71,216 71,216 71,216 (7,660) (35,513) (39,259) (39,259) (30,545) 27,630	$ - 10,876 (2,086) 15,635 (53,807) (7,257) 11,151 54,108 Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable	Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Associate Sub-subsidiary Sub-subsidiary Sub-subsidiary Sub-subsidiary Sub-subsidiary

Note: Limited company structure.

• 60 -

TABLE 7

ANDERSON INDUSTRIAL CORPORATION

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Investee Company	Main Businesses and Products	Main Businesses and Products	Paid-in Capital	Paid-in Capital	Method of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2018	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2018	Net Income (Loss) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss)	Carrying Amount as of December 31, 2018	Accumulated Repatriation of Investment Income as of December 31, 2018	Note
							Outflow	Inflow
CNT Jentec Chengdu ZhongDe Sogotec Shanghai MATEC Shanghai	Manufacture and sale of woodworking machinery Manufacture and sale of machinery Manufacture of woodworking machinery Sale of machinery and service Sale of machinery and service		$ 264,167 70,640 40,264 26,487 4,630		a a b c d	$ 264,167 70,640 - 26,487 -	$ - - - - -	$ - - - - -	$ 264,167 70,640 - 26,487 -	$ (3,772) 401 (2,183) 10,308 (4,117)	100 100 - 100 100	$ (3,772) 401 (1,463) 10,308 (4,117)	$ 303,481 60,242 - 27,493 (1,377)	$ 104,731 - - - -	2 and 4 2 2 and 5 2 2
Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2018		Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$ 361,294		$ 361,294		$ - (Note 3)

• Note 1: The methods of investment are as follows:

• a. Direct investment in mainland China.

• b. Indirect investment in mainland China through CNT. CNT has obtained 67% contribution for $26,977 thousand (RMB5,360 thousand). c. Sogotec has obtained 100% contribution for $26,487 thousand (US$800 thousand).

• d. MATEC has obtained 100% contribution for $4,630 thousand (EUR130 thousand).

Note 2: The amount was calculated using the equity method valuation and based on the audited financial statements.

Note 3: In accordance with “Examination Principles for Licensing Investment or Technical Cooperation in Mainland China” (revised by the MOEA on August 29, 2008), the Company has acquired certificate of operating scope, therefore the upper limit does not have to be calculated.

Note 4: As of December 31, 2018, CNT has remitted of investment income of RMB 23,109 thousand, equivalent to NT$104,731 thousand.

Note 5: Liquidation of Chengdu ZhongDe has been completed on December 13, 2018.

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ANDERSON INDUSTRIAL CORPORATION

THE CONTENTS OF STATEMENTS OF MAJOR ACCOUNTING ITEMS

Item Major Accounting Items in Assets, Liabilities and Equity Statement of cash and cash equivalents Statement of accounts receivable from non-related parties Statement of accounts receivable from related parties Statement of changes in investments accounted for using equity method Statement of changes in property, plant and equipment Statement of short-term borrowings Statement of long-term borrowings Major Accounting Items in Profit or Loss Statement of cost of revenue Statement of marketing, administrative, and development expenses

**Statement Index **

1 2 3 4 Note 10 Note 12 Note 12 5 6

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STATEMENT 1

ANDERSON INDUSTRIAL CORPORATION

STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

Item Description Cash in banks Demand deposits Foreign currency deposits Including US$238 thousand at the exchange rate of 30.715; RMB1 thousand at the exchange rate of 4.472; EUR291 thousand at the exchange rate of 35.2; JPY118 thousand at the exchange rate of 0.278. Cash on hand	Amount $ 19,005 17,616 36,621 1,393 $ 38,014

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STATEMENT 2

ANDERSON INDUSTRIAL CORPORATION

STATEMENT OF ACCOUNTS RECEIVABLE FROM NON-RELATED PARTIES DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Client Name Non-related parties Client A Client B Client C Client D Others (Note) Less: Allowance for doubtful accounts Net amount	Amount $ 30,470 5,925 4,725 4,565 41,770 87,455 (2,185) $ 85,270

Note: The amount of individual client included in Others does not exceed 5% of the account balance.

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STATEMENT 3

ANDERSON INDUSTRIAL CORPORATION

STATEMENT OF ACCOUNTS RECEIVABLE FROM RELATED PARTIES FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Client Name Related parties Anderson America Sogotec Giben America CNT Giben Brasil Less: Allowance for doubtful accounts Net amount	Amount $ 285,080 142,722 100,319 64,327 60,754 653,202 - $ 653,202

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STATEMENT 4

ANDERSON INDUSTRIAL CORPORATION

STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Investees Anderson Industrial Anderson Europe GmbH Anderson America Anderson Logistics Giben BVI Giben SAMOA Anderson Merchandise Sogotec CNT Jentec	Balance, January 1, 2018 Shares Amount 300,000 $ 33,255 Note1 305,231 700 16,226 22,000,000 218,498 10,000 273,901 10,000 183,994 5,000,000 134,731 10,594,927 182,988 Note1 313,390 Note1 60,679 $ 1,722,893	Additions in Investment Shares Amount - $ - - 126,735 - 49,827 - - - 14,577 - 41 - - 1,200,927 48,037 - - - - $ 239,217	Decrease in Investment Increase (Decrease) in Using Equity Method Amount Shares Amount (Note3) - $ - $ (677) - - 4,019 - - (10,302) - - 38,274 - - (63,927) - - (7,526) - - 9,623 - (24,575) 78,191 - - (9,909) - - (437) $ (24,575) $ 37,329	Balance, December 31, 2018 Shares % Amount 300,000 100.00 $ 32,577 Note1 100.00 435,985 700 100.00 55,752 22,000,000 100.00 256,771 10,000 100.00 224,550 10,000 100.00 176,510 5,000,000 100.00 144,354 11,795,854 65.53 284,642 Note1 100.00 303,481 Note1 100.00 60,242 $ 1,974,864	Net Assets Value (Note2) Collateral $ 32,577 - 440,459 - 66,604 - 256,771 - 244,550 - 179,566 - 145,882 - 322,383 - 306,471 - 57,142 - $ 2,052,405
	Shares 300,000 Note1 700 22,000,000 10,000 10,000 5,000,000 10,594,927 Note1 Note1	Shares - - - - - - - 1,200,927 - -	Shares - - - - - - - - - -	Shares % 300,000 100.00 Note1 100.00 700 100.00 22,000,000 100.00 10,000 100.00 10,000 100.00 5,000,000 100.00 11,795,854 65.53 Note1 100.00 Note1 100.00

Note 1: Limited company structure.

Note 2: The calculation of net assets value is based on the audited financial statement as of December 31, 2018.

Note 3:

a) Exchange differences on translating the financial statements of foreign operations b) Share of profits of subsidiaries accounted for using the equity method c) Unrealized loss on transactions with subsidiaries d) Changes in capital Surplus of subsidiaries accounted for using the equity method e) Changes in retained earnings of subsidiaries accounted for using the equity method f) Changes in other equity of subsidiaries accounted for using the equity method

$ (20,980) 25,248 (13,018) 44,995 (101) 1,185 $ 37,329

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STATEMENT 5

ANDERSON INDUSTRIAL CORPORATION

STATEMENT OF COST OF REVENUE DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Item Raw materials used Balance, beginning of year Add: Raw material purchased Less: Raw materials, end of year Less: Transferred to manufacturing expenses Direct materials consumption Direct labor Manufacturing expenses Manufacturing cost Work in process, beginning of year Less: Work in process, end of year Add: Others Cost of finished goods Finished goods and merchandise, beginning of year Merchandise purchased Less: Finished goods and merchandise, end of year Less: Transferred to materials Add: Others Cost of goods sold in finished goods and merchandise Write-down of inventories Total cost of revenue

Amount $ 140,444 580,271 (119,425) (61,760) 539,530 66,850 147,425 753,805 168,119 (171,542) 3,856 754,238 32,719 35,815 (29,476) (2,753) 7,090 797,633 3,813 $ 801,446

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STATEMENT 6

ANDERSON INDUSTRIAL CORPORATION

STATEMENT OF MARKETING, ADMINISTRATIVE AND DEVELOPMENT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Item Payroll Rent Insurance Depreciation Commission Importing and exporting Others (Note)	Selling Expenses General and Administrative Expenses Research and Development Expenses $ 48,133 $ 29,812 $ 34,800 1,341 9,057 59 5,541 2,811 3,150 4,121 33,391 2,784 16,149 - - 11,403 - - 48,514 62,162 10,268 $ 135,202 $ 137,233 $ 51,061	Total $ 112,745 10,457 11,502 40,296 16,149 11,403 120,944 $ 323,496

Note: The amount of each item in Others does not exceed 5% of the account balance.

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