Cayman Engley - Audit Report / Information 2018

Cayman Engley Industrial CO., LTD and its Subsidiaries Consolidated Financial Statements for the Years 2017 & 2018 and Independent Auditors’ Report (Stock Code: 2239)

Address ： The Grand Pavilion Commercial Centre, Oleander Way, 802 West Bay Road, P.O. Box 32052, Grand Cayman KY1-1208, Cayman Islands

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Cayman Engley Industrial CO., LTD and its Subsidiaries 2017 & 2018 Consolidated Financial Statement and Audit Report of Independent Accountants Table of Contents

	Contents	Pages
I.	Cover	1
II.	Table of Contents	2-3
III.	Audit Report of Independent Accountants	4-8
IV.	Consolidated balance sheet	9-10
V.	Consolidated Comprehensive Profit or Loss Statement	11
VI.	Consolidated Statement of Changes in Equities	12
VII	Consolidated Cash Flow Table	13 ~ 14
VIII.	Consolidated Financial Statements Notes	15 ~ 86
	(I) Company History	15
	(ii) Adoption Date of Financial Reports and its Procedures	15
	(iii) Newly Issued or Revised Standards and Interpretations	15 ~ 16
	(iv) Major Accounting Summary Explanation of Policy	18 ~ 34
	(v) Major Sources of Significant Accounting Judgment,	34
	Estimation and Hypothetical Uncertainty
	(vi) Contents of Significant Accountings	34 ~ 65
	(vii) Related Party Transactions	65 ~ 68
	(viii) Assets Pledged as Collaterals	68
	(ix) Commitments and Contingencies	69

Contents (x) Losses Due to Major Disasters (xi) Significant Subsequent Events (xii) Others (xiii) Other Disclosure (xiv) Information of Segment in Operation	Pages 69 69 69 - 83 83 - 84 84 - 86

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** These financial statements are translated from the traditional Chinese version and are unaudited by a CPA.

Cayman Engley Industrial CO., LTD. and its Subsidiaries

Independent Auditors’ Report

PWCR 18003754

To the Board of Directors and Shareholders of Cayman Engley Industrial CO., LTD.

Opinion

We have audited the accompanying consolidated balance sheets of Cayman Engley Industrial Co., Ltd. and its subsidiaries (the “Company”) as at December 31, 2018 and 2017, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparations of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of Parent Company and its Subsidiaries Consolidated Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certifies 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 judgement, were of most significance in our audit of the consolidated financial statements of the parent company and its subseries

consolidated financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters. The Closing Time of the Recognition of the Revenue

Description

For the accounting policies on the recognition of the revenue, please refer to Note 4 (27) in the consolidated financial report. For the explanation of the sales revenues accounting, please refer to Note 6 (23) in the consolidated financial statement. The operating income of Cayman Engley Industrial CO., LTD. and its subsidiaries are mainly derived from the sales transactions with the car-assembly manufacturers. Since the automobile industry is the buyer's market, the recognition of the revenue comes into effect after the customer has accepted the goods and confirmed the transferring control of the products.

It is known that the impact of revenue on the overall financial statements is enormous, the revenue recognition is based on the customer’s acceptance completion time, plus revenue recognition usually involves many manual controls which may increase the risk that revenue recognition is not recorded in the correct period, furthermore, compromises the correctness of the revenue recognition deadline. Therefore, the accountants listed the sales revenue recognition as one of the most key matters for auditing.

To response to audit procedures the accountants has implemented the following procedures for the implementation of the specific aspects specified in the key audit matters listed below:

Understand the sales revenue operating procedures, evaluation, and test of the Cayman Engley Industrial CO., LTD. car-assembly manufacturers, and the car-assembly manufacturers’ revenue recognition related effectiveness of internal control system design and implementation.
Verify a certain period before and after the date of the balance sheet, audit the verification of transferring control of the good provided by the car-assembly manufacturers to confirm the correctness of the transaction recognition deadline.

Evaluation of Allowance for Inventory Valuation Losses Description

For the accounting policy of inventory evaluation, please refer to the note 4 (XI) in the consolidate the financial report; for the uncertainty of the accounting estimates and assumptions of the inventory evaluation, please refer to Note 5 (II) in the consolidate the financial report; for the description of the inventory accounting subject, please refer Note 6 (IV) in the consolidate the financial report. The balance of the loss of stock and allowance for the assessment of the end of December 31, 2018 is NT $5,753,475 and NT $255,066 respectively.

Cayman Engley Industrial CO., LTD. and its subsidiaries are principally engaged in the manufacture and sale of auto parts. The value of inventories is subject to be fluctuated by the demand market and rapid changes in technology, which may result in higher inventory depreciation losses or outdated risks, taking into account the significant impact on the financial statements of the Inventory of the Cayman Engley Industrial CO., LTD. and its subsidiaries and the loss of its allowance. The net realization value used in inventory evaluation often involves subjective judgment and thus has a high estimation of uncertainty; therefore, the accountant will be the inventory of the loss of the price of the assessment as one of the most important matters to check.

How our audit addressed the matter

Our key audit procedures performed in respect of the above area included the following:

Understand and evaluate the rationality of the company's inventory evaluation policy.
Obtain the inventory age statement, check inventory items randomly examine inventory age

calculation logic and information correctness to ensure appropriate inventory age 。 3. As for the net of realizable value assessed of the inventory item, discussed with the management and obtained supporting documentation to assess the reasonableness of the decision to offset the loss.

Responsibilities of Management and Those Charge with Governance for the Parent Company and its Subsidiaries Consolidated Financial Statements

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

In preparing the parent company consolidated 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 members of the Audit committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Parent Company and its subsidiaries Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company and its subsidiaries consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance 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 parent company and its subsidiaries consolidated financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the parent company and its subsidiaries consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery , intentional omissions, misrepresentations, or the override of internal control.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 parent company and its subsidiaries consolidated financial statements or, if such disclosures are inadequate, to modify our opinions. 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.
Evaluate the overall presentations, structure and content of the parent company and its subsidiaries consolidated financial statements, including the disclosures, and whether the parent company and its subsidiaries consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the parent company and its subsidiaries consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated those charged with governance, we determine those mattes that were of most significance in the audit of the parent company and its subsidiaries consolidated 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 matters 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 YANG, MING-CHING and LIMEI-LAN.

PricewaterhouseCoopers Taiwan

Yang, Ming-Ching

Certified Public Accountants

Liu, Mei-Lan

PricewaterhouseCoopers, Taiwan March 25, 2019

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

Assets	Assets	Assets
	Balance Sheet December31,2018and December31,2017 December 31, 2018 NOTES Amount% 6 (1) $ 3 ,241,253 6 (2) & 12 (4) 1,320 6 (3) & 8 1,113,140 6 (3) & 8 4,072,463 7 (3) 2,655 7 (3) 121,925 6 (4) 5,498,409 6 (5) & 7 (3) 701,854 6 (6) & 8 1,483,236 16,236,255 6 (7) 1,356,176 6(8) & 8 8,808,774 6 (9) 1,469,390 6 (29) 232,304 6 (10) & 8 2,915,599 14,782,243 $ 31,018,498
	NOTES
Current Assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable - related parties, net 1200 Other receivables 130X Inventory 1410 Prepayments 1470 Other current assets 11XX Total Current Assets Non-current Assets 1550 Investment accounted for using equity method 1600 Property, plant and equipment 1780 Intangible assets 1840 Deferred Income tax assets 1900 Other non-current assets 15XX Total Non-current Assets 1XXX Total Assets	6 (1) 6 (2) & 12 (4) 6 (3) & 8 6 (3) & 8 7 (3) 7 (3) 6 (4) 6 (5) & 7 (3) 6 (6) & 8 6 (7) 6(8) & 8 6 (9) 6 (29) 6 (10) & 8	$



		$

(Continued)

Cayman Engley Industrial CO., LTD. and its Subsidiaries

				Balance Sheet	Balance Sheet	Balance Sheet
			December31,2018 andDecember31,2017								Unit：NTD (k)
							December 31, 2018				December 31, 2017
	Liabilities and Equity			NOTES				Amount	%		Amount	%
	Current Liabilities
2100	Short-term borrowings	6	(12)			$		2,337,360	8	$	1,668,176	7
2130	Contract Liabilities - Current	6	(23)					522,570	2		-	-
2150	Notes payable							1,586,937	5		1,246,532	5
2160	Notes payable – related	7	(3)					114,506	-		114,014	-
	parties
2170	Accounts Payable							3,726,869	12		3,276,205	13
2180	Accounts Payable - related	7	(3)					596,057	2		470,368	2
	parties
2200	Other Payables	6	(13)					1,916,100	6		1,469,536	6
2220	Others payables - related	7	(3)					7,725	-		58,060	-
	parties
2230	Income tax payable							120,846	-		117,890	-
2300	Other current liabilities	6	(14)(15)(16) & 7		(3)			2,712,619	9		909,581	4
21XX	Total Current Liabilities							13,641,589	44		9,330,362	37
	Non-current liabilities
2530	Bonds payables	6	(14)					388,218	1		1,067,186	4
2540	Long-term borrowings	6	(15)					2,902,863	9		2,469,602	10
2570	Deferred income tax	6	(29)					454,159	2		472,609	2
	liabilities
2600	Other non-current liabilities	6	(16)	& 7 (3)				232,196	1		585,507	2
25XX	Total Non-Current							3,977,436	13		4,594,904	18
	Liabilities
2XXX	Total Liabilities						17,619,025		57		13,925,266	55
	EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT
3110	Common stock	6	(19)					1,190,000	4		1,100,000	4
	Capital Surplus	6	(20)
3200	Capital surplus							7,969,511	25		7,053,536	28
	Retained earnings	6	(21)
3310	Legal reserve							330,069	1		196,082	1
3320	Special reserve							898,592	3		807,592	3
3350	Unappropriated retained earnings							1,858,830	6		1,389,417	6
	Other Interest
3400	Other				(			1,179,819) (	4) (		898,592) (	4)
3500	Treasury stock	6	(19)		(			80,438)	-		-	-
31XX	TOTAL EQUITY
	ATTRIBUTABLE TO						10,986,745		35		9,648,035	38
	SHAREHOLDERS OF THE
	PARENT
36XX	Non-controlling interests	6	(22)					2,412,728	8		1,813,574	7
3XXX	Total equity						13,399,473		43		11,461,609	45
	Significant contingent liabilities and	9
	unrecognized contract
	Commitments	11
	Significant events after the balance
	sheet date
3X2X	Total Liabilities and Interests					$	31,018,498		100	$	25,386,875	100

Please refer to the accompanying notes, an integral part of the parent company and its subsidiaries consolidated financial statements.

Accounting Supervisor: Yang, Cheng-Feng

Chairman ： Lin, Chi-Pin

General manager Lin, Chi-Pin

Cayman Engley Industrial CO., LTD. and its Subsidiaries

Consolidated Comprehensive Profit or Loss Statement January 1 to December 31, 2018 and January 1 to December 31, 2017

	anuaryto ecemer	,an anuaryto e	,an anuaryto e	,an anuaryto e	,
Items	Notes	2018					393,168) ( 2) 955,542) ( 5) 577,548) ( 3) - - Unit：NTD (k) (Except Earnings per Share) 2017 Amount % 18,879,842 100 14,945,824) ( 79) 3,934,018 21 1,926,258)( 10) 2,007,760 11 109,674 - 182,578) ( 1) 220,288) ( 1) 9,669 - 283,523) ( 2) 1,724,237 9 370,066)( 2) 1,354,171 7 118,278 ) - 567) - 118,845) - 1,235,326 7 1,072,177 6 281,994 1 1,354,171 7 979,268 6 256,058 1 1,235,326 7 9.75 9.35
						$	393,168) ( 955,542) ( 577,548) ( - Amount 18,879,842 14,945,824) ( 3,934,018 1,926,258)( 2,007,760 109,674 182,578) ( 220,288) ( 9,669 283,523) ( 1,724,237 370,066)( 1,354,171 118,278 ) 567)
Operating Expenses 6 (27) 6100 Selling Expenses ( 6200 Administrative Expenses ( 6300 Research and Development Expenses ( 6450 Impairment loss (impairment gain and reversal of impairment loss) determined in accordance with IFRS 9 ( 4000 Operating income 6 (23) & 7 (3) 5000 Operating costs 6 (4) & 7(3) 5900 Operating Gross Income 6000 Total Operating Expenses ( 6900 Net operating income Non-Operating Income and Expenses 7010 Other incomes 6 (25) 7020 Other profit and loss 6 (24) ( 7050 Finance cost 6 (26) ( 7060 Share of profits of associates and joint ventures accounted for using equity method 6 (7) 7000 Non-Operating Income and Expense ( 7900 Income (Loss) before tax 7950 Income Tax Expense 6 (29) ( 8200 Net Income (Loss) Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, component of other comprehensive income that will be reclassified to profit or loss 6 (7) ( 8300 Other Comprehensive Income/Loss (Net) ( 8500 Comprehensive income For the year Net (loss) attributable to: 8610 Shareholders of the parent 8620 Non-controlling interests NET FOR THE YEAR Comprehensive Income/Loss (Net) attributable to: 8710 Shareholders of the parent 8720 Non-controlling interests Total Comprehensive incomer of the year 9750 Earnings per share Basic earnings per share 6 (30) 9850 Diluted earnings per share


		2,290,476)( 1,952,400 116,337 89,018) 259,699) 20,885
					( (			( ( ( ( )

		211,495)					283,523)
		1,740,905 289,578)			(		1,724,237 370,066)
		$ 1,451,327 ($ 301,950) 6,537)				$	1,354,171 118,278 ) 567
						($
		$ 308,487)	(	2) 5 5 2 7 4 1 5 9.89 9.41	($		118,845)
		$ 1,142,840 $ 1,123,400 327,927				$	1,235,326 1,072,177 281,994
						$
		$ 1,451,327 $ 842,173 300,667				$	1,354,171 979,268 256,058
						$
		$ 1,142,840 $ $				$	1,235,326
						$
						$

Please refer to the accompanying notes, an integral part of the parent company and its subsidiaries consolidated financial statements.

Chairman ： Lin, Chi-Pin General manager Lin, Chi-Pin

Accounting Supervisor: Yang, Cheng-Feng

Cayman Engley Industrial CO., LTD. and its Subsidiaries

Consolidated Statement of Changes in Equity Jan. 1[st] to Dec. 31 ~~[st]~~ , 2018 and Jan. 1 ~~[st]~~ to Dec. 31[st] , 2017

Unit ： NTD (k)

EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT


Notes Jan. 1stto Dec. 31st, 2017 Balance on Jan. 1st, 2017 Total consolidated profit and loss for the year Other comprehensive profit and loss for the year Total comprehensive profit and loss for the year Appropriation and distribution of retained earnings in 2016 6 (21) Legal reserve Special reserve Cash dividend Functional currency conversion produces exchange rate differences 4 (4) Issuance of convertible corporate bonds Recognition of equity components 6 (14) Increase in non-controlling interests 6 (22) from non-control interests of purchased subsidiaries 6 (31) Balance on Dec. 31st, 2017 Jan. 1stto Dec. 31st, 2018 Balance on Jan. 1~~st~~, 2018 Total consolidated profit and loss for the year Other comprehensive profit and loss for the year Total comprehensive profit and loss for the year Appropriation and distribution of retained earnings in 2017 Legal reserve Special reserve Cash dividend Capital Increased by Cash The project consisting of the recognition of equity in the issua Convertible corporate bonds 6 14) Adjustments to share of changes in equities of associates Non-controlling interests changes 6 (31) Acquisition of subsidiary additional Equity agreement 6 (20) Treasury shares bought back 6 (21)10) Balance on Dec. 31st, 2018	Notes	Capital Stock-			~~Surplus~~		~~Retained Earnings~~		Exchange differences on translation of Unappropriated foreign financial	Treasury Stock Non-controlling		Total
					Capital Stock-	Capital Stock-	Legal	Special Capital
		C	ommon Equity		Amount	Other	Reserve	Reserve	Earnings statements	Total	Interests	Equity
		nc	$ 1,100,000 - - - - - - - - - - ~~$ 1,100,000~~ $ 1,100,000 - - - 6(21) - - - 90,000 e of - - - - - $ 1,190,000	$ 6,963,239 - - - - - - 28,455 - - - ~~$ 6,991,694~~ $ 6,991,694 - - - - - - 1,233,000 - - - ( 457,600 ) - $ 7,767,094		$ 16,728 - - - - - - 219 44,895 - - ~~$~~ ~~61,842~~ $ 61,842 - - - - - - - 13,352 16,555 110,668 - - $ 202,417	$ 69,448 - - - 125,474 - - 1,160 - - - ~~$ 196,082~~ $ 196,082 - - - 133,987 - - - - - - - - $ 330,069	$ - $ 9,181,640 - 1,072,177 ~~-~~ ( 92,909 ) ( - 979,268 $ 114,291 $ 1,723,617 ($ 805,683 ) - 1,072,177 - - - ( 92,909 ) - 1,072,177 ( 92,909 ) - ( 125,474 ) - - - 691,392 ( 691,392 ) - - - - ( 495,000 ) - - ( 495,000 ) 1,909 35,929 - - 67,672 - - - - 44,895 - - - - - - ( 130,440) - - ( 130,440)( ~~$ 807,592~~ ~~$ 1,389,417~~ (~~$~~ ~~898,592 )~~$ ~~-~~ ~~$ 9,648,035~~ $ 807,592 $ 1,389,417 ($ 898,592 ) $ - $ 9,648,035 - 1,123,400 - - 1,123,400 - - ( 281,227 ) - ( 281,227 ) ( - 1,123,400 ( 281,227) - 842,173 - ( 133,987 ) - - - 91,000 ( 91,000 ) - - - - ( 429,000 ) - - ( 429,000 ) ( - - - - 1,323,000 - - - 13,352 - - - 16,555 - - - - 110,668 - - - - ( 457,600 ) - - - ( 80,438 ) ( 80,438 ) $ 898,592 $ 1,858,830 ($ 1,179,819 ) ($ 80,438 ) $ 10,986,745			$ 1,291,267 $ 10,472,907 281,994 1,354,171 25,936 ) ( 118,845 256,058 1,235,326 ) - - - - - ( 495,000 ) - 67,672 - 44,895 325,292 325,292 59,043)( 189,483) ~~$ 1,813,574~~ ~~$ 11,461,609~~ $ 1,813,574 $ 11,461,609 327,927 1,451,327 27,260 ) ( 308,487 ) 300,667 1,142,840 - - - - 144,370 ) ( 573,370 ) - 1,323,000 - 13,352 - 16,555 442,857 553,525 - ( 457,600 ) - ( 80,438 ) $ 2,412,728 $ 13,399,473

Please refer to the accompanying notes, an integral part of the parent company and its subsidiaries consolidated financial statements.

Chairman: Lin, Chi-Pin

General manager: Lin, Chi-Pin

Accounting Supervisor: Yang, Cheng-Feng

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Cayman Engley Industrial CO., LTD. and its Subsidiaries Consolidated Cash Flow

2018 & 2017

	2018 & 2017
Income before income tax Adjustments for: Depreciation expense Rent of land use right Financial assets at fair value through evaluation of profit and loss Share of profits of subsidiaries and associates Loss on disposal of property, plant and equipment, net Impairment loss on property, plant and equipment Expected credit impairment (interest) loss Amortization expense Interest income Interest cost Proceeds from government grants Notes payable Notes payable –related parties Accounts payable Accounts payable - related parties Other payables Other payables- related parties Receipts in advance Other current liabilities Contract liabilities Other non-current liabilities 產 Net cash flows from operating activities CASH FLOW FROM OPERATING ACTIVITIES Changes in operating assets Notes reveiveable Accounts receivable, net Accounts receivable - related parties Other receivable Other receivable- related parties Prepayments Inventory Other current assets Other non-current assets Changes in operating liabilities Cash inflow generated from operations Interests received Interests paid Income taxes paid	Notes	( ( ( ( ( ( ( ( ( ( ( (	$ 1,740,905 $ 1,724,237 888,347 732,251 27,000 27,297 1,369 20,885 ) ( 9,669 ) 8,175 5,794 8,540 67,899 1,977 27,555 113,479 105,574 16,030 ) ( 16,403 ) 259,699 220,288 6,247 ) ( 4,313 ) 340,405 177,185 492 38,501 450,664 84,801 125,689 134,069 28,794 116,338 ( 50,335 ) ( 68,423 ) - 71,746 51,889 ) ( 37,027 ) 1,757,761 2,287,438 16,030 19,039 244,822 ) ( 208,422 ) 362,342)( 258,862) ~~1,166,627~~ 1,839,193 Unit：NTD (k) 2018 2017 291,326 ) 532,026 306,882 ) ( 776,646 ) 2,956 ( 5,611 ) 20,229 ) 23,794 840 ( 814 ) 217,661 ( 50,072 ) 1,426,953 ) ( 652,143 ) 245,434 ) ( 193,261 ) 23,021 ) 2,855
	6 (8)(27) 6 (10) 6 (2) 6 (7) 6 (24) 6 (24) 12 (2)(4) 6 (9)(27) 6 (26) 6 (16)

(Continued)

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Cayman Engley Industrial CO., LTD. and its Subsidiaries Consolidated Cash Flow 2018 &2017 Unit：NTD (k) Notes 2018 2017 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of Investments accounted for using equity method 6 (7) $ - ($ 517,532 ) Acquisition of property, plant and equipment 6 (34) ( 2,319,497 ) ( 2,318,909 ) Proceeds from disposal or redemption of property, plant and equipment 21,755 10,282 Acquisition of intangible assets 6 (9) ( 66,399 ) ( 60,430 ) increase in refundable deposits ( 325,605 ) ( 334,165 ) Acquisition of subsidiary investment (net of cash) 6 (32) - ( 253,384 ) Decrease in other current assets - 234,461 Dividends received from investments accounted for using equity method 6 (7) - 2,580 Net cash used in investing activities ( 2,689,746)( 3,237,097) CASH FLOWS FROM FINANCING ACTIVITIES Increase(Repay) in short-term loans 6(35) 694,617 ( 342,096) Decrease lease payable ( 100,071 ) ( 30,293 ) Decrease other borrowing 6(35) ( 96,162 ) ( 91,452 ) Issuance of convertible bonds 6(14) 400,000 1,100,000 Proceed from long-term borrowing 2,120,537 1,675,938 Repayment of long-term loans ( 481,330 ) ( 342,106 ) Issuance of non-controlling equity cash dividends 6(22) ( 144,370 ) - Capital Increased by Cash 1,323,000 - Cash dividends 6(21) ( 429,000 ) ( 495,000 ) Acquisition of the non-controlling interest of the subsidiary 6(31) - ( 189,483 ) Change in non-controlling interests 6(31) 553,525 - Buy back treasury shares 6 (19) ( 80,438 ) - Net cash inflow from financing activities 3,760,308 1,285,508 Exchange rate changes ( 158,784 ) ( 18,966 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,078,405 ( 131,362 ) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 6 (1) 1,162,848 1,294,210 CASH AND CASH EQUIVALENTS, END OF YEAR 6 (1) $ 3,241,253 $ 1,162,848	Cayman Engley Industrial CO., LTD. and its Subsidiaries Consolidated Cash Flow 2018 &2017 Unit：NTD (k) Notes 2018 2017 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of Investments accounted for using equity method 6 (7) $ - ($ 517,532 ) Acquisition of property, plant and equipment 6 (34) ( 2,319,497 ) ( 2,318,909 ) Proceeds from disposal or redemption of property, plant and equipment 21,755 10,282 Acquisition of intangible assets 6 (9) ( 66,399 ) ( 60,430 ) increase in refundable deposits ( 325,605 ) ( 334,165 ) Acquisition of subsidiary investment (net of cash) 6 (32) - ( 253,384 ) Decrease in other current assets - 234,461 Dividends received from investments accounted for using equity method 6 (7) - 2,580 Net cash used in investing activities ( 2,689,746)( 3,237,097) CASH FLOWS FROM FINANCING ACTIVITIES Increase(Repay) in short-term loans 6(35) 694,617 ( 342,096) Decrease lease payable ( 100,071 ) ( 30,293 ) Decrease other borrowing 6(35) ( 96,162 ) ( 91,452 ) Issuance of convertible bonds 6(14) 400,000 1,100,000 Proceed from long-term borrowing 2,120,537 1,675,938 Repayment of long-term loans ( 481,330 ) ( 342,106 ) Issuance of non-controlling equity cash dividends 6(22) ( 144,370 ) - Capital Increased by Cash 1,323,000 - Cash dividends 6(21) ( 429,000 ) ( 495,000 ) Acquisition of the non-controlling interest of the subsidiary 6(31) - ( 189,483 ) Change in non-controlling interests 6(31) 553,525 - Buy back treasury shares 6 (19) ( 80,438 ) - Net cash inflow from financing activities 3,760,308 1,285,508 Exchange rate changes ( 158,784 ) ( 18,966 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,078,405 ( 131,362 ) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 6 (1) 1,162,848 1,294,210 CASH AND CASH EQUIVALENTS, END OF YEAR 6 (1) $ 3,241,253 $ 1,162,848	Cayman Engley Industrial CO., LTD. and its Subsidiaries Consolidated Cash Flow 2018 &2017 Unit：NTD (k) Notes 2018 2017 CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of Investments accounted for using equity method 6 (7) $ - ($ 517,532 ) Acquisition of property, plant and equipment 6 (34) ( 2,319,497 ) ( 2,318,909 ) Proceeds from disposal or redemption of property, plant and equipment 21,755 10,282 Acquisition of intangible assets 6 (9) ( 66,399 ) ( 60,430 ) increase in refundable deposits ( 325,605 ) ( 334,165 ) Acquisition of subsidiary investment (net of cash) 6 (32) - ( 253,384 ) Decrease in other current assets - 234,461 Dividends received from investments accounted for using equity method 6 (7) - 2,580 Net cash used in investing activities ( 2,689,746)( 3,237,097) CASH FLOWS FROM FINANCING ACTIVITIES Increase(Repay) in short-term loans 6(35) 694,617 ( 342,096) Decrease lease payable ( 100,071 ) ( 30,293 ) Decrease other borrowing 6(35) ( 96,162 ) ( 91,452 ) Issuance of convertible bonds 6(14) 400,000 1,100,000 Proceed from long-term borrowing 2,120,537 1,675,938 Repayment of long-term loans ( 481,330 ) ( 342,106 ) Issuance of non-controlling equity cash dividends 6(22) ( 144,370 ) - Capital Increased by Cash 1,323,000 - Cash dividends 6(21) ( 429,000 ) ( 495,000 ) Acquisition of the non-controlling interest of the subsidiary 6(31) - ( 189,483 ) Change in non-controlling interests 6(31) 553,525 - Buy back treasury shares 6 (19) ( 80,438 ) - Net cash inflow from financing activities 3,760,308 1,285,508 Exchange rate changes ( 158,784 ) ( 18,966 ) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,078,405 ( 131,362 ) CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 6 (1) 1,162,848 1,294,210 CASH AND CASH EQUIVALENTS, END OF YEAR 6 (1) $ 3,241,253 $ 1,162,848


(
	2,078,405 ( 1,162,848	131,362 ) 1,294,210
$ 3,241,253 $ 1,162,848

Please refer to the accompanying notes, an integral part of the parent company and its subsidiaries consolidated financial statements. Chairman: Lin, Chi-Pin General manager: Lin, Chi-Pin Accounting Supervisor: Yang, Cheng-Feng

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Cayman Engley Industrial CO., LTD Consolidated Financial Statements Notes December 31, 2017 to December 31, 2018

Unit : TWD(in thousands) (Unless Specified Otherwise )

1. Company History

‘Cayman Engley Industrial CO., LTD.’ (collectively as the “Company”) was incorporated in January, 2015 in British Cayman Islands, as the controlling company for the reorganization of the organizational structure of the application for listing in Taiwan. The Company held a 100% shareholding in Changchun Engley Auto Industrial CO., LTD on May 5, 2004 in the form of a capital increase and a share swap. Changchun Engley Auto Industrial CO., LTD has increased its capital in December, 2018, has not changed its shareholding ratio by 9 6.57%. The company and its subsidiaries (collectively as the “Company”) were dedicated to production of automobile parts, stamping products, hot-pressed products, mold design, manufacturing and related technical consulting services.

On January 27, 2016, the Company’s shares were listed on the Taiwan Stock Exchange (TWSE).

2. THE AUTHORIZATION OF FINANCIAL STATEMENTS

The accompanying parent company and its subsidiaries consolidated financial statements were approved and authorized for issue by the Board of Directors on March 25, 2019.

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

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

New standards, interpretations and amendments endorsed by the FSC effective from 2017 are as follows: Effective Date Issued

New standards, interpretations and amendments endorsed by the FSC	effective from 2017 are
as follows:	Effective Date Issued
New, Revised or Amended Standards and Interpretations	by IASB
Amendments to IFRS2– Amended by Classification and	January 1, 2018
Measurement of Share-based Payment Transactions
IFRS 4 Amended by_Applying IFRS 9 ‘Financial instruments’ with_	January 1, 2018
IFRS 4 ‘Insurance Contracts’
IFRS 9 Financial Instruments	January 1, 2018
IFRS 15 Revenue from Contracts with Customers	January 1, 2018
Clarification to IFRS 15 ‘Revenue from Contracts with Customer’s	January 1, 2018
issued
IAS 7 Amended by_Disclosure Initiative (Amendments to IAS 7)_	January 1, 2017
IAS 12 Amended by_Recognition of Deferred Tax Assets for_	January 1, 2017
Unrealized Losses
IAS 40_Amended by Transfers of Investment Property (Amendments to_January 1, 2018
IAS 40)
IFRIC 22 Foreign Currency Transactions and Advance Consideration	January 1, 2018

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Effective Date Issued New, Revised or Amended Standards and Interpretations by IASB

Amended by_Annul Improvements to IFRS Standards_	January 1, 2018
2014-2016 Cycle(Deletion of short-term exactions for fist-time adopters)
IFRS 12 Amended by_Annual Improvements to IFRS Standards_	January 1, 2017
2014-2016 (Clarification of the scope of the Standard)
IAS 28 Amended by_Long-term Interests in Associates and Joint_	January 1, 2018
Ventures (Amendments to IAS 28)

None of the above guidelines and interpretations had a significant effect on the Company's financial statement.

In the case of the version of IFRSs approved by the FSC (R.O.C. Taiwan), the Company adopted and revised retrospective adjustments for IFRS 9 and IFRS 15 and the effects made since January 1, 2018 as follows:

Disclosure has been made in Note 12(IV) to the IFRS 9.
For the IFRS 15 Revenue from Contracts with Customers and related amendment, the contract of the contracted debts is based on the relevant provisions of the IFR S 15 , and the amendments to the assets of the Company are expressed in the balance sheet of the assets as follows:
- (1) Estimated sales discount The refunded liability recognized in accordance with IFRS 15 is expressed as other current liabilities in the past reporting period - payable sales deductions, with a balance of 0 TWD (in thousands) on January 1, 2018.
- (2) In accordance with the provisions of IF RS 15, the recognition of contractual liabilities relating to the product sales contract is expressed on the balance sheet as advance receipts (listed for other current liabilities) in the past reporting period, and the balance on January 1, 2018 is 574,459 TWD (in thousands).
Disclosure has been made in Note 12(V) to the IFRS 15 for the first adoption.
(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Company

Company
New standards, interpretations and amendments endorsed by the FSC	effective from 2018 are as
follows:	Effective Date Issued
New, Revised or Amended Standards and Interpretations	by IASB
IFRS 9 IASB_Prepayment Features with Negative_	January 1, 2019
Compensation (Amendments to IFRS 9)
IFRS 16_Leases published_	January 1, 2019
IAS 19 Amended by_Annual Improvements to IFRSs_(negative past	January 1, 2019
Service costs and curtailments)
IAS 28 Amended by_Long-term Interests in Associates and Joint_	January 1, 2019
Ventures (Amendments to IAS 28)
IFRIC 23_Uncertainty over Income Tax Treatments_issued	January 1, 2019
2015-2017 Cycle Annual Improvement	January 1, 2019

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None of the above guidelines and interpretations had a significant effect on the Company's financial statement based on the Company’s assessment.

IFRS 16 Leases

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 “Leases” whether an Arrangement contains a Lease”, and a number of related interpretations. This standard stipulates that the lessee should recognize the right-of-use assets and lease liabilities (except for leases with assets less than 12 months or low-value assets); the lessor’s accounting treatment remains the same, and is treated as two types: operating lease and finance lease, only increase the relevant disclosure.

The Company treats the lessee's lease contract in accordance with International Financial Reporting Standard No. 16, but does not rewrite the previous financial statements (hereinafter referred to as “corrected traceability”), which may be used separately for the Republic of China on January 1, 2019. The right assets amounted to 1,427,547 TWD (in thousands), and the lease liability was increased by 412,001 TWD (in thousands), and other non-current assets were reduced by 1,015,546 TWD (in thousands).

( 3 ) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs endorsed by the FSC are as follows:

issued by IASB but not yet endorsed by the FSC standards, interpretations and amendments issued by IASB but not yet sed by the FSC are as follows:	included in the IFRSs
	Effective Date Issued
New, Revised or Amended Standards and Interpretations	by IASB
Amended by_Definition of Material (Amendments to IAS 1_	January 1, 2020
and IAS 8)
IFRS 3 Amended by_definition of Business (Amendments to IFRS 3)_	January 1, 2020
Amended by_Sale or Contribution of Assets between an Investor and_	To be determined
its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)	by IASB
IFRS 17 Insurance Contracts	January 1, 2021

None of the above guidelines and interpretations had a significant effect on the Company's financial statement based on the Company’s assessment.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ES For the convenience of readers, the accompanying parent company only financial statements have been translated into English from the original Chinese version prepared and used in the R.O.C. 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 parent company only financial statements shall prevail.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(A) Statement of Compliance

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

(B ) Basis of Preparation

Except for financial assets and financial liabilities at fair value through profit or loss, the consolidated financial statements have been prepared under the historical cost convention.
(1) Financial assets and liabilities (including derivatives) measured at fair value through gains and losses, as measured by fair value.
(2) Financial assets/provisions for the sale of financial assets at fair value, as measured by fair value, through other consolidated gains and losses.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
The Company first applied IFRS 9 and IFRS 15 on January 1, 2018, using the formal retrospective transfer of the conversion difference to the retained surplus or other interest as at January 1, 2018. However, the financial statements and notes for 2017 have not been re-compiled. 2017 is based on IAS 39, IAS 11, IAS 18 and their related interpretation and interpretation of the announcement, the major accounting policies used and the description of important accounting items, please elaborate note 12, (IV) and (V).

(C ) Basis of consolidation/ Events after the balance sheet date

A. Basis for preparation of consolidated financial statements:
(1) All subsidiaries are included in the Company’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Company. The Company controls an entity when the Company is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Company obtains control of the subsidiaries and ceases when the Company loses control of the subsidiaries.

~18 ~

(2) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Company are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
(3) Profit and loss and other comprehensive gains and losses are attributed to the parent company's owner and non-controlling interests. The total profit and loss is also attributed to the parent company's owner and non-controlling interests, which may result in the loss of the non-controlling rights.
(4) A change in a shareholding in a subsidiary that does not result in a loss of control (transaction with an uncontrolled right) is treated as a rights transaction, which is considered a transaction with the owner. The difference between the amount of the adjustment of the non-controlling interest and the fair value of the consideration paid or received is directly recognized in the equity.
(5) A change in a shareholding in a subsidiary that does not result in a loss of control (transaction with an uncontrolled right) is treated as a rights transaction, which is considered a transaction with the owner. The difference between the amount of the adjustment of the non-controlling interest and the fair value of the consideration paid or received is directly recognized in the equity.
B. Subsidiaries included in the consolidated financial statements:

received is directly recognized in the equity. B. Subsidiaries included in the consolidated financial statements:	received is directly recognized in the equity. B. Subsidiaries included in the consolidated financial statements:	y. ancial statements:
Investment Subsidiary Percentage of equity held Company name name Business nature Dec, 31, 2018 Dec, 31, 2017 The Company Changchun Engley Auto Industrial CO., LTD Production and sales of various auto parts 96.57 100 The Company Engley Auto Industrial CO., LTD international trade 100 100 The Company Engley Holding Common Investment 80 80 (Samoa) Limited Changchun Engley Changchun Engley Production and sales 100 100 Auto Industrial CO., LTD Auto Parts Industrial CO., LTD various auto parts Changchun EngleyChengtuEngley Auto Production and sales 100 100 Auto Industrial CO., LTD PartsIndustrial CO., LTD various auto parts Changchun EngleySuzhouEngley Auto Production and sales 100 100 Auto Industrial CO., LTD PartsIndustrial CO., LTD various auto parts	Investment Subsidiary Percentage of equity held Company name name Business nature Dec, 31, 2018 Dec, 31, 2017	Percentage of equity held	Note
			Note 7 - - - - -

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Investment Subsidiary Percentage of equity held Company name name Business nature Dec, 31, 2018 Dec, 31, 2017	Note - - - Note1 Note2 - Note5 Note5 Note3 - - Note1 Note2
Changchun EngleyLiaoning Engley Production and sales 100 100 Auto Industrial CO., LTD Auto Parts Industrial CO., LTD. various auto parts Changchun EngleyChangchun Laitewei Production and sales 100 100 Auto Industrial CO., LTD Technology CO., LTD. Composite material Changchun EngleyChangsha Engley Production and sales 100 100 Auto Industrial CO., LTD Auto Parts Industrial CO., LTD. various auto parts Changchun EngleyIcheng Engley Production and sales 90 90 Auto Industrial CO., LTD Auto Parts Manufacture Industrial CO., LTD. various auto parts Changchun EngleyFoshan Engley Production and sales 98.6 98.6 Auto Industrial CO., LTD Auto Parts Industrial CO., LTD. various auto parts Changchun EngleyQingdaoEngley Production and sales 100 100 Auto Industrial CO., LTD Auto Parts Industrial CO., LTD. various auto parts Changchun EngleyLinde Engley (Tianjin) Auto Production and sales of various 54 54 Auto Industrial CO., LTD Parts Industrial CO., LTD. auto parts Changchun EngleyLinde Engley (Tianjin) Auto Production and sales of 54 54 Auto Industrial CO., LTD Parts Industrial CO., LTD. various auto parts Changchun EngleyTianjin Engley Production and sales 99.5 99.5 Auto Industrial CO., LTD Mold Manufacture CO., LTD. various auto parts Changchun Engley Auto Industrial CO., LTD NingBoMauXiang MetalCO., LTD Production and sales of various auto parts & Mold design and development 51 51 NingBoMauXiang Taizhou Maoqi Production and sales 100 100 Metal Co., Ltd. Metal Co., Ltd. various auto parts SuzhouEngley Icheng Engley Production and sales 10 10 PartsIndustrial CO., LTD Auto Parts Manufacture Industrial CO., LTD. various auto parts SuzhouEngley Auto Foshan Engley Auto Parts Industrial Production and sales of 1.4 1.4 PartsIndustrial CO., LTD. various auto parts

Investment
Subsidiary
Percentage of equity held
Company name
name
Business nature
Dec, 31, 2018 Dec, 31, 2017

Note
-
-
-
Note1
Note2
-
Note5
Note5
Note3
-
-
Note1
Note2

Changchun EngleyLiaoning Engley
Production and sales
100
100
Auto Industrial
CO., LTD
Auto Parts Industrial
CO., LTD.
various auto parts
Changchun EngleyChangchun Laitewei Production and sales
100
100
Auto Industrial
CO., LTD
Technology CO.,
LTD.
Composite material
Changchun EngleyChangsha Engley
Production and sales
100
100
Auto Industrial
CO., LTD
Auto Parts Industrial
CO., LTD.
various auto parts
Changchun EngleyIcheng Engley
Production and sales
90
90
Auto Industrial
CO., LTD
Auto Parts
Manufacture
Industrial CO., LTD.
various auto parts
Changchun EngleyFoshan Engley
Production and sales
98.6
98.6
Auto Industrial
CO., LTD
Auto Parts Industrial
CO., LTD.
various auto parts
Changchun EngleyQingdaoEngley
Production and sales
100
100
Auto Industrial
CO., LTD
Auto Parts Industrial
CO., LTD.
various auto parts
Changchun EngleyLinde Engley
(Tianjin) Auto
Production and sales
of various
54
54
Auto Industrial
CO., LTD
Parts Industrial CO.,
LTD.
auto parts
Changchun EngleyLinde Engley
(Tianjin) Auto
Production and sales
of
54
54
Auto Industrial
CO., LTD
Parts Industrial CO.,
LTD.
various auto parts
Changchun EngleyTianjin Engley
Production and sales
99.5
99.5
Auto Industrial
CO., LTD
Mold Manufacture
CO., LTD.
various auto parts
Changchun Engley
Auto Industrial
CO., LTD
NingBoMauXiang
MetalCO., LTD
Production and sales
of various auto parts
& Mold design and
development
51
51
NingBoMauXiang
Taizhou Maoqi
Production and sales
100
100
Metal Co., Ltd.
Metal Co., Ltd.
various auto parts
SuzhouEngley
Icheng Engley
Production and sales
10
10
PartsIndustrial
CO., LTD
Auto Parts
Manufacture
Industrial CO., LTD.
various auto parts
SuzhouEngley
Auto
Foshan Engley Auto
Parts Industrial
Production and sales
of
1.4
1.4
PartsIndustrial
CO., LTD.
various auto parts

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SuzhouEngley	TianjinEngley Mold	Production and sales	0.5	0.5	Note3
Auto	making	of
PartsIndustrial	CO., LTD.
Engley Holding	Engley Precision	Common Investment	60.5	60.5	Note4
(Samoa) Limited	Industry B.V.
Engley Precision	Kranendonk	Development and	75	75	Note6
		manufacture of soft
		robot software
Industry B.V.	Beheersmaatschapp	R&D and
	ij B.V.	manufacturing

Note 1: Changchun Engley Automobile Industry Co., Ltd. and Suzhou Engley Automobile Parts Co., Ltd. jointly hold 100% of the shares of Yizheng Engley Automobile Parts Manufacturing Co., Ltd.
Note 2: Changchun Engley Automobile Industry Co., Ltd. and Suzhou Engley Automobile Parts Co., Ltd. jointly hold 100% of the shares of Foshan Engley Automobile Parts Co., Ltd.
Note 3: Changchun Engley Automobile Industry Co., Ltd. and Suzhou Engley Automobile Parts Co., Ltd. jointly hold 100% of the shares of Tianjin Jinli Mold Manufacturing Co., Ltd.
Note 4: Engley Precision Indus try B. V. was established on January 20, 2017.
Note 5: The Company increased its shareholding in Linde Engley (Tianjin) Auto Parts Co., Ltd. and Linde Engley (Changchun) Auto Parts Co., Ltd. in August 2006 by 3%, and increased the comprehensive shareholding of the two merged individuals. The ratio is 54%.
Note 6: The Company obtained the control right of Kran end onk B ehe er smaa tsc hap pij B.V. in February 2017. The company will enter the consolidated financial report from the date of control. Please refer to Note 6 (32) for details.
Note 7: The Company sold 0.01% of the equity of Changchun Engley Automobile Industry Co., Ltd. in June 2018, and the cash increase of Changchun Engley Automobile Industry Co., Ltd. in December 2018. The company did not subscribe for the shareholding ratio. The shareholding ratio was changed to 9 6.57%.
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Company:

~21 ~

The total of the non-controlling interests of the Company and the Company’s non-controlling interests and the Company’s non-controlling interests in the Company and the Company’s noncontrolling interests and information about the subsidiaries are:

Non-control interests	Non-control interests	Non-control interests
	Dec. 31, 2017
	Amount 568,232	Percentage 49%
49%

Balance sheet
Non-current Assets Current Liabilities ( Non-current Liabilities ( Total net Assets	NingBoMauXiang Metal Co., Ltd. Dec. 31, 2018 Dec. 31, 2017 $ 1,641,639 $ 1,426,406 1,385,340 1,334,122 1,190,475) ( 1,155,131) 723,967) ( 445,739) $ 1,112,537 $ 1,159,658
	Dec. 31, 2018 $ 1,641,639 1,385,340 1,190,475) ( 723,967)
	$ 1,112,537

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Consolidated Income Statement

Consolidated Income Statement
Income $ Income (Loss) Before Tax ( Income Tax Benefit (expense) ( Continue the net loss of ( the business unit for the current period Loss of closed units Current loss ( Other comprehensive profit and loss (Net After Tax) Current comprehensive profit and loss ($ comprehensive profit and loss attributed to Non-control interests Payment to non-controlling equity dividends $ Cash flow statement Operation activities Net cash inflows (outflows) ($ Investment activities Net cash inflows (outflows) ( Financing activities Net cash inflows (outflows) Impact of exchange rate changes on Cash Equivalents and cash (	$	NingBoMauXiang Metal Co., Ltd. 2018 2017 1,582,735 $ 966,875 1,488) ( 53,615) 14,270) ( 9,029) 15,758) ( 62,644) - - 15,758) ( 62,644) - - 15,758) ($ 62,644) ($7,721) ($ 30,696) - $ - NingBoMauXiang Metal Co., Ltd. 2018 2017 61,520) ($ 246,597) 78,050) ( 174,513) 186,933 51,099 1,134) ( 9,124)






	$


	$

			2018 61,520) ($ 78,050) ( 186,933 1,134) (

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Current cash and cash equivalents Decrease (Increase) Cash and Cash Equivalents on January 1 Cash and Cash Equivalents on December 31	46,229 ( 9,096 $ 55,325	379,135) 388,231 $ 9,096

(4 ) Foreign Currencies Exchange

The functional currency of the Company’s subsidiaries within the Republic of China and within the Chinese People’s Republic of China is the New Taiwan Dollars and Renminbi. The original functional currency of the Company was “RMB”. As the Company complies with the financial reporting requirements of listing in Taiwan, the consolidated financial statement is presented in “NTD” as the expression currency, but the consideration of the Company’s financing management is beneficial. The company's function was changed to be responsible for the planning of the Company’s fundraising activities and the fundraising activities based on the “Taiwanese currency” in Taiwan. In response to this economic environment change, the board of directors of the company decided to convert the functional currency from November 8, 2016. “CNY” was changed to “NTD” and was processed on January 1, 2017 in accordance with IAS 21 “Impact of Exchange Rate Changes”.

Foreign currency transactions and balances
(1) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
(2) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
(3) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Nonmonetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, non-monetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
(4) All exchange differences recognized in the current profit or loss are presented in the statement of comprehensive income within ‘other gains and losses’.
Translation of foreign operations

The operating results and financial position of all the Company entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

(1) Assets and liabilities for each balance sheet presented are translated at the closing

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exchange rate at the date of that balance sheet;

(2) Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

(3) All resulting exchange differences are recognized in other comprehensive income.

(5 ) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;

(2) Assets held mainly for trading purposes;

(3) Assets that are expected to be realized within twelve months from the balance sheet date;

(4) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.

The Company classifies all liabilities that do not meet the above conditions as non-current.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:

(a) Liabilities that are expected to be settled within the normal operating cycle; (b)Liabilities arising mainly from trading activities;

(d)Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issuance of equity instruments do not affect its classification.

The Company classifies all liabilities that do not meet the above conditions as non-current.

(6 ) Cash Equivalents

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

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

A. Financial assets that are not measured at amortized cost or measured at fair value through other combined gains and losses.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C. Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial assets are subsequently remeasured and stated at fair value, and any

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changes in the fair value of these financial assets are recognized in profit or loss.

(8 ) Notes Receivable and Accounts

It refers to the contract that the account and the receipt of the right to exchange the value of the consideration for the transfer of goods or services in accordance with the.
For short-term accounts receivable and bills that are not paid, the discount is not significant, and the Company is measured by the original invoice amount.

(9 ) Financial Assets Loss

After the financial assets measured by the fair value of the debt instruments and the financial assets measured by the amortized cost, and all reasonable and corroborative information (including forward-looking), For those who have not significantly increased the credit risk since the original recognition, the allowance loss is measured by the 12-month expected credit loss amount. For those who have significantly increased the credit risk since the original recognition, the allowance loss is measured by the expected amount of credit loss during the period of existence; the accounts receivable or contract assets that do not contain significant financial components are measured by the amount of expected credit losses during the duration of the period.

(10 ) Derecognition of financial assets

The Company derecognizes a financial asset when the contractual rights to receive the cash flows from the financial asset expire.

(11 ) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads. It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

(12 ) INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD/ Associated corporation

A connected enterprise is an entity that has a significant impact on the Company and has no control over it. It is generally a share that directly or indirectly holds more than 20% of its voting rights. The Company handles the investment of the related companies in the equity method and obtains the cost based on the cost.
The Company’s share of profit or loss after the acquisition of the relevant enterprise is recognized as current gains and losses, and other comprehensive profit and loss shares obtained after it is recognized as other comprehensive gains and losses. If the Company is connected to any of the enterprises. The loss share equals or exceeds its interest in the affiliated enterprise (including any other unsecured receivables), and the Company does not recognize any further loss, unless the Company sends the relevant joint venture. The law establishes an obligation, presumes an obligation, or has paid for it on its behalf.
When the Company’s share of the Company’s share of the Company's share of the Company's share of the Company’s share of the Company's share of the Company's share of

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"Capital reserve."

The unrealized gains and losses generated by the Company and the Associated Enterprise Exchange have been eliminated in accordance with their share of the rights and interests of the associated enterprise; unless the evidence indicates that the transferred property has been derogated, the loss is not realized or sold. The policy of the association's accounting policies has been adjusted as necessary, in line with the policies adopted by the Company.
The increase or decrease in the net value of the equity is subject to adjustments to the “capital reserve” and “use of equity” if the Company’s shareholdings are changed or reduced. Investment in law." If the investment ratio is lowered, in addition to the above adjustment. If the interest or loss previously recognized in other comprehensive gains and losses is related to the decrease in the ownership interest, and the profit or loss is reclassified to the profit or loss when the relevant asset or liability is disposed, it is reclassified to profit or loss according to the reduction ratio.
When the loss of the Company has a significant impact on the related enterprises, the remaining investment in the former Guanlian enterprise is re-measured according to the fair value. The difference between the fair value and the book value is recognized as the current profit and loss.
When the Company disposes of the connected enterprise, if the loss has a significant impact on the related enterprise. All of the amounts that are recognized in other comprehensive profit or loss in relation to the related party, the accounting treatment is the same as the Company’s direct disposal of related assets or liabilities, that is, if it is previously recognized as other comprehensive profit or loss, Assets or liabilities will be reclassified as profit or loss. When the significant impact on the affiliated enterprise is lost, the benefit or loss is reclassified from equity to profit or loss. If there is still a significant impact on the associated company, the amount previously recognized in other comprehensive gains and losses will be transferred in the above manner only by proportionality.
When the Company disposes of the related enterprise, if the significant impact on the related enterprise is lost, the capital reserve related to the related enterprise is transferred to profit or loss; if it still has significant influence on the related enterprise, it is transferred to profit or loss according to the proportion of disposal. .

(13 ) Property, Plant and Equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a

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cost that is significant in relation to the total cost of the item must be depreciated separately.

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

uipment are as follows:
House and building	20 years
Mechanical equipment	5~10 years
Transportation Equipment	5 years
Office equipment	3~5 years
Mold equipment	5 years
Rental equipment	10 years

(14 ) Assets / Operating lease (lessee)

According to the terms of the lease agreement, when all the risks and rewards of the leasehold ownership are borne by the Company, it is classified as a financing lease.
(1) At the beginning of the lease, the fair value of the leased property and the lowest rent are paid as the present value. The lower one is recognized as the asset and the debt.
(2) Subsequent minimum lease payments are allocated to financial costs and liabilities that have not yet been paid. The financial costs are allocated on a period-by-term basis during the lease period so that the interim interest rate calculated on the balance of the negative debts is fixed.
(3) The real estate, factory premises and equipment obtained under the financing lease shall be depreciated according to the durability period of the assets. If it is not reasonable to determine that the Company will acquire ownership at the expiration of the lease term, the depreciation shall be based on the shorter of the asset's durability period and the lease term.
Deductions for operating leases are recognized as current gains and losses on a straight-line basis over the lease period, except for any incentives received from the lessor.

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(15 ) Intangible Assets

1.Other intangible assets

Computer software is stated at cost and amortized on a straight-line basis over its estimated useful life of 10 to 20 years.

2.Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

(16 ) Non-financial Assets Loss

The Company estimates the recoverable amount of assets on the balance sheet date of the assets on the balance sheet date. When the recoverable amount is lower than the book value, the loss is recognized. The recoverable amount refers to the fair value of an asset minus the cost of the disposal or the value of its use, whichever is higher. When the impairment loss of the assets recognized in previous years does not exist or decrease, the impairment loss is reversed, but the book value of the asset increased by the derogation loss is not more than the depreciation or amortization if the asset is not recognized for impairment loss. After the book amount.
Goodwill, non-determined years of intangible assets and intangible assets are not yet available, and the recoverable amount is estimated on a regular basis. When the recoverable amount is lower than the book value, the loss is recognized. Loss on goodwill impairment is not reversed in subsequent years.
If the goodwill is for the purpose of the impairment test, it will be allocated to the cash generating unit. This apportionment is based on the identification of the operating department and the distribution of goodwill to a cashgenerating unit or cash-generating unit Company that is expected to benefit from the merger of the business that generates the goodwill.

(17 ) Loans

Refers to the long-term and short-term loans borrowed from the bank and other long-term and short-term borrowings. The Company measures the fair value less the transaction cost at the time of original recognition, and any subsequent difference between the price and the redemption value after deducting the transaction cost, the interest expense method is used to recognize the interest expense during the circulation period according to the amortization procedure. In profit and loss.

(18 ) Notes and accounts payable

Notes and accounts payable are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
However, short-term accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

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(19 ) Interchangeable B o n d s P a ya b l e

The convertible corporate bonds issued by the Company are embedded with a conversion right (that is, the holder can choose to convert into the ordinary shares of the Company, but not a fixed amount of shares converted by a fixed amount), the right to sell and the right to buy, At the initial issuance, the issue price is classified into financial assets or financial liabilities according to the conditions of issuance. The treatment is as follows:

The embedded conversion rights, the resale rights and the repurchase rights are accounted for as “financial assets or liabilities measured at fair value through profit or loss” at the date of the original recognition. Based on the fair value assessment at the time, the difference is recognized as “the profit or loss of financial assets (liabilities) measured at fair value through profit or loss”.
The principal contract of the corporate bonds: the difference between the issue amount and the redemption value is recognized as the corporate bond payable at the time of the original recognition, after deducting the abovementioned “financial assets or liabilities measured at fair value through profit or loss”. The subsequent effective interest method is recognized in profit or loss during the circulation period based on the amortization procedure as an adjustment item for “financial costs”.
Any transaction costs directly attributable to the transaction, which are allocated to the components of each liability Company according to the proportion of the original book value of each of the above items.
When the holder converts, the liability component of the account (including “amount of corporate bonds payable and “financial assets or liabilities measured at fair value through profit or loss”) is treated as a subsequent measure of its classification, and Part of the book value is used as the issue cost for the exchange of common shares.

( 2 0 ) Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability specified in the contract is discharged or cancelled or expires.

(21 ) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

(22 ) Employee Benefits

A. Short-term employee benefits

Short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period and should be recognized as expense in that period when the employees render service.

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B. Pensions - defined contribution plans

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

C. Employees’ compensation and directors’ and supervisors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognized as expense and liability, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates.

- (23) Employee Share based Payment

For the equity-settled share-based payment arrangements, the employee services received are measured at the fair value of the equity instruments granted at the grant date, and are recognized as compensation cost over the vesting period, with a corresponding adjustment to equity. The fair value of the equity instruments granted shall reflect the impact of market vesting conditions and non-market vesting conditions. Compensation cost is subject to adjustment based on the service conditions that are expected to be satisfied and the estimates of the number of equity instruments that are expected to vest under the non-market vesting conditions at each balance sheet date. Ultimately, the amount of compensation cost recognized is based on the number of equity instruments that eventually vest.

(24 ) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the

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temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

(25) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. When the repurchased stock is reissued, the difference between the amount of the deductible and the value of the tax and the book value will be recognized as the adjustment of the shareholder's equity.

(26 ) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities; stock dividends are recorded as stock dividends to be distributed and are reclassified to ordinary shares on the effective date of new shares issuance.

(27 ) Revenue Recognition

Production Sale
(1) The Company operates the manufacture and sale of automobile parts and related products of molds, and the sales receipts are recognized when the control of the products is transferred to the customers. When the product is shipped to the designated location, the old outdated and lost risk has been transferred to the customer and the customer accepts the product according to the sales contract, or the customer witnesses that all the acceptance criteria have been met, the commodity delivery party occurs.
(2) Sales and sales of automobile parts are deducted from the net amount of the estimated sales discount at the contract price. The sales discount given to the customer is usually based on the estimated future sales volume of the project.

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The Company estimates the sales discount based on historical experience using the expected value method. The income recognition amount is likely to not be significantly changed in the future. Partially limited and updated estimates on each balance sheet date. Estimated sales related to the balance sheet of the asset balance shall be paid as a refund of the customer's discount. The payment terms of the sales transaction are 30 days after the date of delivery, which is consistent with the market practice. Therefore, the judgment contract does not contain a large financial component.

(3) The Company will recognize the income and receivables when opening the customer's bill every month according to the amount of the bill that has the right to open the bill.

2. Software service revenue

The Company provides the development of customized software-related services. The labor income is recognized as income during the financial reporting period provided by the service to the customer. The fixed price contract is based on the proportion of services that have been actually provided on the balance sheet date, and the completion ratio of the service is based on the fact that the actual service is provided by the whole service. The customer pays the contract price in accordance with the agreed time schedule. When the service provided by the Company exceeds the customer's payment, it is recognized as a contractual asset. If the customer pays more than the services already provided by the Company, it is recognized as a contractual debt.

(28) Government Grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received. Government grants that are receivables as compensation for expenses already incurred are deducted from incurred expenses in the period in which they become receivables. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire noncurrent assets (mainly including land use right and depreciable assets) are recognized as a deduction from the carrying amount of the related assets and recognized as a reduced depreciation or amortization charge in profit or loss over the contract period or useful lives of the related assets.

(29) Business combination

The Company adopts the acquisition method for enterprise merger. The merger price is calculated based on the transferred assets, the liabilities incurred or incurred, and the fair value of the issued equity instruments. The transferred content, such as the value of the asset, includes the fair value of any asset and liability generated by the contingent consideration. The costs associated with the acquisition are recognized as a fee at the time of the occurrence. The identifiable assets and liabilities incurred in the merger of enterprises are measured at the fair value of the acquisition date. The Company is based on individual acquisition transactions. The components of the noncontrolling interests are current ownership interests and their holders are entitled to share the company's net assets on a pro-rata basis at the time of liquidation. The measurement of the proportion of the identifiable net assets of the acquire; all other components of the noncontrolling interest are measured at the fair value of the acquisition date.
The fair value of the transferable considerations, the non-controlling interests of the acquire and the interests of the previously held acquire, if it exceeds the fair value of the identifiable assets and liabilities assumed, is recognized as goodwill on the acquisition date; The difference between the fair value of the identifiable assets and the liabilities assumed, which exceeds the transfer consideration, the non-controlling interest of the acquire and the previously held equity of the

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acquire, is recognized as Period profit and loss.

(30) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision-Maker. The Company’s Chief Operating Decision-Maker is responsible for allocating resources and assessing performance of the operating segments.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

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

(1 ) Critical judgements in applying the Company’s accounting policies

There is no significant uncertainty in the adoption of the accounting policies.

(2 ) Critical accounting estimates and assumptions

Since the stock must be valued at the lower of the cost and the net realizable value, the Company must use the judgment and estimate to determine the net realizable value of the inventory on the balance sheet date. Due to the rapid changes in technology, the Company assessed the amount of normal loss, outdated or no market sales value on the balance sheet date, and reduced the inventory cost to the net realizable value. This stock evaluation is based on the estimation of the product requirements during the specific period, and may result in major changes.

On December 31, 2018, the book value of the company's deposit was 5, 498, 4,909 NTD (in thousands).

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1 ) CASH AND CASH EQUIVALENTS

Cash on hands Demand deposits	Dec. 31, 2018 $ 1,392 3,239,861 $ 3,241,253	Dec. 31, 2017 $ 1,083 1,161,765 $ 1,162,848

The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote. The exposure amount of the largest credit risk on the balance sheet date of the asset is the amount of the cash and the cash amount of the cash.
The Company has no cash and cash equivalents pledged to others.

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

al assets at fair value through profit or loss-CURRENT
Items	December 31,	2018
Current Items
FORCE FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Convertible corporate bond redemption and sale	$	1,320
（Note6 (XIV)）

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The Company’s financial assets, which are controlled by the fair value through profit and loss, were recognized as loss of 1,369,000 yuan from January 1 to December 31, 2018.
The Company has not provided pledges for financial assets that are valued at fair value through profit or loss
Please refer to Note 12 (II) for the relevant credit risk information.
For information on December 31, 2017, please refer to Note 12 (IV) for details.

(3 ) Note and Accounts Receivable, Net

d Accounts Receivable, Net
Notes receivable Notes accounts Less: Loss allowance (	$	End of 2018 1,113,140 4,138,960 66,497) ( 4,072,463	$	End of 2017 821,814 3,839,720 72,162) 3,767,558
	$		$
	$		$

Less: Loss allowance	(	66,497) ( $ 4,072,463	72,162) $ 3,767,558
1. Aging analysis of notes and accounts receivable, net Notes receivable Not past due Accounts receivable Not past due In 90 days In 91-180 days Over 181 days		End of 2018 $ 1,113,140	End of 2017 $ 821,814
		$ 3,669,936 303,159 76,216 89,649 $ 4,138,960	$ 3,556,246 113,206 38,176 132,092 $ 3,839,720

Aging analysis is based on past due (day).

The largest credit risk of the Company’s bills receivables and accounts on December 31, 2018 and 31 December 2017, regardless of the collateral or other credit enhancements held. The amount of the insurance is the carrying amount of each type of notes receivable and accounts.
On December 31, 2018 and December 31, 2017, the company's subsidiaries provided shortterm borrowings, so they provided accounts receivable to the bank for pledge, amounting to RMB 4,47,000 and RMB 0, respectively.
On December 31, 2018 and December 31, 2017, some of the subsidiaries of the Japanese company issued bank acceptance bills, so they provided notes receivable to the bank for pledge, amounting to 6 96, 427 thousand and 24 7 respectively. , 2 37 thousand yuan.
On December 31, 2018 and December 31, 2017, the Japanese Company had a total of 84,43.8 thousand and 137,100,000, and the notes receivable were discounted to the bank. The Company does not expect the invoice to refuse payment. The notes receivable will be paid by the bank upon maturity of the notes, and the Company will deduct the discounted notes directly from the notes receivable.

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In the case of the receipt of the bill and the pledge of the accounts receivable, please refer to the attached statement in the consolidated financial report.
For related credit risk information, please refer to Note 12 (II).

(4 ) Inventories

Inventories
End of 2018 Cost Allowance for sluggishness and loss of price Finished goods $ 3,724,444 ($ 156,421) Raw material 1,188,051 ( 76,780) Work in process 840,980 ( 21,865) Total $ 5,753,475 ($ 255,066) End of 2017 Cost Allowance for sluggishness and loss ofprice Finished goods $ 2,626,751 ($ 115,296) Raw material 708,659 ( 66,113) Work in process 892,929 ( 8,387) Total $ 4,228,339 ($ 189,796) Stock-related loss recognized in the current period: 2018 Cost of salad inventories $ 17,531,834 $ Inventory sluggish and depreciation loss amount 80,676 $ 17,612,510 $			End of 2018		Carrying Amount $ 3,568,023 1,111,271 819,115 $ 5,498,409 CarryingAmount $ 2,511,455 642,546 884,542 $ 4,038,543 2017 14,925,761 20,063 14,945,824
	Cost		Allowance for sluggishness and loss of price ($ 156,421) ( 76,780) ( 21,865) ($ 255,066) End of 2017
	$ 3,724,444 1,188,051 840,980 $ 5,753,475		($ ( ( ($

	Cost Allowance for sluggishness

		2018 $ 17,531,834 80,676 $ 17,612,510
				$ $

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(5 ) Prepayments

(6 ) (7 )	Prepayments Prepayments of Other Total Other Current Assets Refundable deposits Import duty Other current assets Total Please note the nature of the deposit Investment Using Equity Methods January 1 of the year Increase investment for using equity method Share of profits for using equity method Capital surplus changes Share of earnings for using equity method ( Other equity changes ( EFFECT OF EXCHANGE RATE CHANGES ( Balance Affiliate Corporation	Prepayments Prepayments of Other Total Other Current Assets Refundable deposits Import duty Other current assets Total Please note the nature of the deposit Investment Using Equity Methods January 1 of the year Increase investment for using equity method Share of profits for using equity method Capital surplus changes Share of earnings for using equity method ( Other equity changes ( EFFECT OF EXCHANGE RATE CHANGES ( Balance Affiliate Corporation	End of 2018 End of 2117 $ 532,543 $ 735,439 57,754 - 111,557 118,261 $ 701,854 $ 853,700 End of 2018 End of 2117 $ 902,595 $ 664,712 391,285 235,179 189,356 100,027 $ 1,483,236 $ 999,918 and please refer to Note 8 in the Financial Statements. December 31, 2018 $ 1,421,718 December 31, 2017 $ 1,092,412 - 315,700 20,885 9,669 16,555 - 62,928) ( 2,580) 23,093) ( 567) 16,961) 7,084 $ 1,356,176 $ 1,421,718	End of 2018 End of 2117 $ 532,543 $ 735,439 57,754 - 111,557 118,261 $ 701,854 $ 853,700 End of 2018 End of 2117 $ 902,595 $ 664,712 391,285 235,179 189,356 100,027 $ 1,483,236 $ 999,918 and please refer to Note 8 in the Financial Statements. December 31, 2018 $ 1,421,718 December 31, 2017 $ 1,092,412 - 315,700 20,885 9,669 16,555 - 62,928) ( 2,580) 23,093) ( 567) 16,961) 7,084 $ 1,356,176 $ 1,421,718

Information of the major associates of the Company:

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Corporation Name KenLian Corporation HonLi Corporation ShanSheng Corporation	Operation Area China Taiwan China	Shareholding ratio Dec. 31, 2018 Dec. 31, 2017 Relationship 46% 46% Strategic investment 40% 40% Strategic investment 20% 20% Strategic investment	Measurem
			Methods equity method equity method equity method

In May 2018, the Company invested in Zhejiang Shansheng Plastics Technology Co., Ltd., with a total investment of 312,90 thousand yuan, mainly from the research and development, production and sales of products inside and outside the car.

Financial information of the major associates of the Company:

Balance Sheet

Balance Sheet
Current Assets Non-current assets Current Liabilities ( Non-current Liabilities ( Total net assets Share of the net assets of related companies Goodwill Associated company carrying value Current Assets Non-current assets Current Liabilities ( Non-current Liabilities ( Total net assets Share of the net assets of related companies Goodwill Associated company carrying value	Kenlien Engley (Changchun ) Auto StructureCO., LTD. End of 2018 $ 904,573 End of 2017 $ 706,843 340,429 301,206 622,387) ( 432,183) 7,827) - $ 614,788 $ 575,866 $ 282,802 $ 262,523 - - $ 282,802 $ 262,523 HungliAuto Parts Industrial CO., LTD. End of 2018 End of 2017 $ 432,260 $ 626,140 1,794,573 1,373,462 489,194) ( 38,316) 252,523) ( 252,523) $ 1,485,116 $ 1,708,763 $ 594,047 $ 683,506 - - $ 594,047 $ 683,506
	End of 2018 $ 432,260 1,794,573 489,194) ( 252,523) ( $ 1,485,116 $ 594,047 - $ 594,047
	$ 1,485,116 $ 594,047 - $ 594,047

Zhejiang Shansheng Molding Technology Co., Ltd.

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Current assets Noncurrent assets Current liabilities ( Noncurrent liabilities ( Total, net Share of the net assets of related companies Goodwill Associated company carrying value	End of 2018 $ 941,370 444,642 800,177) ( 74,383) $ 511,452 $ 102,291 238,136 $ 340,427	End of 2017 $ 850,916 337,983 696,041) - $ 492,858 $ 98,572 243,463 $ 342,035

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Comprehensive Profit
and Loss Sheet
	Kenlien	Engley (Changchun ) End of 2018			Auto StructureCO., LTD. End of 2017
Revenue	$	1,436,585			$		1,175,831
Continued operating segments’
net profit for current	$		162,987		$			127,312
Income(loss) on discontinued operations				-					-
Other comprehensive profit
and loss (net after tax)				-					-
Total	$		162,987		$			127,312
Dividends received from	$			-	$				-
affiliated companies
	Hungli Auto Parts Industrial CO.,LTD.
		2018				2017
Revenue	$		12,460		$			1,425
Continued operating segments’
net profit for current	(		202,573) (					173,342)
Income(loss) on discontinued operations				-					-
Other comprehensive profit	(		57,732) (					1,445)
and loss (net after tax)
Total	($		260,305)($					174,787)
Dividends received from	$			-	$				-
affiliated companies
	Zhejiang Shansheng			Molding Technology			Co., Ltd.
		End of	2018			End of		2017
Revenue	$		955,473		$			959,189
Continued operating segments’
net profit for current			21,204					122,414
Income(loss) on discontinued operations				-					-
Other comprehensive profit
and loss (net after tax)				-					-
Total	$		21,204		$			122,414
Dividends received from	$			-	$				-
affiliated companies

~41

The sum of the book value of the Company’s individual non-significant related companies and the results of their operations are summarized as follows:
On the end of 2018 and on the end of 2017, the total amount of the accounts of the Company’s non-significant related corporations was 138,90 NTD (in thousands) and 133,654 NTD (in thousands), respectively.

133,654 NTD (in thousands), respectively.
End of 2018 Continued operating segments’ net profit for current $ 15,453 Income(loss) on discontinued operations - Other comprehensive profit and loss (net after tax) - Total $ 15,453 Dividends received from affiliated companies $ -	End of 2017 $ 7,963 - - $ 7,963

	$

~42

(8) Real estates, plants and equipment

(8) Real estates, plants and equipment
Balance, beginning of the year Cost of house and Buildings $ 2,850,168 Machinery Equipment 4,394,555 Transport Equipment 80,670 Office equipment 348,526 Mold Equipment 664,388 Rental Equipment 866,490 Unfinished works and equipment to be inspected 2,150,642 Cost Subtotal Accumulated depreciation $ 11,355,439 House and building ($ 572,946) ($ ( 1,598,896) ( Transport Equipment Office equipment ( 46,761) ( ( 181,861) ( Mold equipment ( 221,283) ( Rental equipment ( 153,591) ( Cost Subtotal Accumulated Depreciation ($ 2,775,338) ($ House and building $ - Machinery equipment - Transport Equipment - Office equipment - Unfinished works and equipment to be inspected (Note) ( 68,803) Cost Subtotal ($ 68,803) ($ Total $ ~~8,511,298~~			January 1, 2018 to December 32, 2018
		Added amount


	( ( (

Note: The unfinished works have been put into use this year and were transferred to houses and buildings during the period.

~34

January 1, 2017 to December 32, 2017 Balance, beginning Added Amount of Trading of Effect of exchange of the year amount disposition the year rate changes Cost of house and Buildings $ 2,583,095 $ - $ 34,668 $ - $ 256,905 ($ 24,500) Machinery Equipment 3,517,011 - 359,676 ( 23,704) 567,296 ( 25,724) Transport Equipment 65,817 9,540 7,801 ( 6,745) 4,407 ( 150) Office equipment 282,619 24,932 68,817 ( 8,767) ( 17,751) ( 1,324) Mold equipment 446,470 - 126,019 ( 6,385) 100,191 ( 1,907) Rental equipment 773,805 - - - 99,732 ( 7,047) Unfinished works and equipment to be inspected 1,310,030 - 1,809,600 -( 981,700) 12,712 Cost Subtotal $ 8,978,847 $ 34,472 $ 2,406,581 ($ 45,601) $ 29,080 ($ 47,940) House and Buildings ($ 434,629) $ - ($ 131,347) $ - ($ 10,053) $ 3,083 Machinery Equipment ( 1,237,056) - ( 369,908) 17,100 ( 17,494) 8,462 Transport Equipment ( 33,785) ( 4,730) ( 12,198) 3,954 - ( 2) Office equipment ( 135,348) ( 10,492) ( 57,264) 6,900 13,812 531 Mold equipment ( 131,271) - ( 91,695) 1,571 ( 109) 221 Rental equipment ( 123,313) -( 69,839) - 38,642 919 Cost Subtotal ($ 2,095,402) ($ 15,222) ($ 732,251) $ 29,525 $ 24,798 $ 13,214 Cost Subtotal Unfinished works and equipment to be inspected - $ - ($ 67,899) $ - $ - ($ 904) Total $ 6,883,445					January 1, 2017 to December 32, 2017	January 1, 2017 to December 32, 2017
	Balance, beginning					Effect of exchange

The impairment loss recognized by the Company in 2017 is 67,899 NTD (in thousands). For details, please refer to Note 6 (XI)

~35 ~

Real estate, plants and equipment loading costs and capital ratios and interest rates:

Year of 2018 Capitalized amount $ 60,182 Capitalized interest rate interval 1.3%~6.51%	Year of 2017 $ 23,754 4.35%~4.75%

For information on immovable property, plants premises and equipment, please refer note 8. (9 ) INTANGIBLE ASSETS

						Year of 2018	Year of 2018				Balance, Dec. 31, 2018 $ 443,959 649,892 645,199 $ 1,739,050	Balance, Dec. 31, 2018 $ 443,959 649,892 645,199 $ 1,739,050
Balance, Jan. 1, 2018 $ 397,600 664,434 653,304 $ 1,715,338 ($ 67,482) ( 107,820) ($ 175,302) $ 1,540,036		Business combination $ - ~~$~~ ~~$~~ $					New added $ 66,399 - -( $ 66,399 ~~$~~ ~~41,439~~) 72,040)	Effect of Exchange rate
					- - - - - -
			$					($ (
								($
			~~$~~

											($ 93,584) ( 176,076) ($ 269,660) $ 1,469,390
			~~$~~			~~(~~ ( (				~~$~~
	$ 175,302) $ 1,540,036		$				$113,479) Year			$
								of
Balance, Jan.
			Business combination $ 219,584 - 458,200 $ 677,784 $ - - $ -	Business						Effect of		Balance, Dec. 31, 2018 $ 397,600 664,434 653,304 $ 1,715,338 67,482) 107,820) 175,302) $1,540,036
	1, 2018 $ 84,997 671,704 152,387 $ 909,088						$ $		(	Exchange rate

($ 17,812) ( 34,700) ($ 52,512)
						( ( (	$
	$ 856,576

The above amortization expenses are recognized under the manufacturing expenses and operating expenses in the consolidated income statement.

~36

2. The goodwill is distributed to the cash generating segments of the Company:

		End of 2018	Balance, at the end of the year
	Fist gain from combination 458,200 38,992 ( 121,991 ( 619,183	Effect of Exchange rate $ 39,561 1,272) 12,273) $ 26,016 End of 2017
$
			$ 497,761 37,720 109,718 $ 645,199
$


	Firstgain from	Effect of	Balance,at
	combination	Exchange rate $ 44,367 428) 9,818) $ 34,121	the end of theyear
$	458,200 38,992 ( 121,991 ( 619,183		$ 502,567 38,564 112,173 $ 653,304
$

Corporation mergers and acquisitions are based on the purchase price and the direct cost of the relevant purchases or due to the control gaining to complete the Corporation merger, the acquired company's rights and interests are calculated on the date of acquisition, and the fair value is evaluated by the evaluation method. The difference between the deducted fair values of the identifiable net assets is recognized as goodwill.

As of December 31, 2018, the Company’s reputation for mergers and acquisitions was 645,199 yuan. It is mainly expected to be benefited by the mergers and acquisitions of the M&A companies and the potential customer relationships. According to IAS 36, the reputation of the enterprise is combined and at least the depreciation test should be carried out every year. The depreciation test of goodwill distributes the goodwill to the cashgenerating unit that is expected to benefit from the consolidation of the synergy. Each company is a cash-generating unit that produces a unique cash flow. Therefore, the impairment of goodwill is based on the calculation of the company's use value and the net asset value of the valuation to assess whether the loss is required.

The Company's recoverable amount is based on the value of the use exceeds the amount of the book, so the goodwill is not degraded. The calculation of the use value mainly considers the operating net profit rate, growth rate and discount rate. The management level determines the operating net profit rate based on the previous performance and its expected progress on the market development. The average rate of weighting used is consistent with the forecast of the industry report, and the discount rate used is the pre-tax ratio and reflects the specific risks associated with the operations sector.

~37 ~

(10 ) Other Current Assets

Other Current Assets
Use of land (Long- term Repayable) Repayable to equipment Refundable deposits Other non-current assets	$	End of 2018 1,015,546 1,515,244 263,241 121,568 2,915,599	$	End of 2017 1,065,325 741,130 741,130 98,547 2,080,521
	$		$

The long-term prepaid rent is the use-right of land contract obtained by the Company from December 2006 to July 2006. The lease term is 50 years and has been paid in full at the time of signing the lease. From January 1 to December 31, 2018. The rental expenses recognized for the day and from January 1 to December 31, 2017 were 27,000 TWD and 27,297 TWD (in thousands).
Please note the nature of the deposit and please refer to Note 8 of the financial report.

(11 ) Non-financial Impairment Loss

The current profit and loss recognized by the Company in 2018 and 2017 are calculated as 8,540 and 67,899 TWD (in thousands), respectively. The details are as follows:

Year of 2018 Recognized as the current profit and loss Impairment loss–machinery $ 8,512 Impairment loss–Transport Equipment 5 Impairment loss–Office equipment 23 Impairment loss–Unfinished works and equipment to be inspected - $ 8,540		Year of 2017 Recognized as the

The above description of the loss is disclosed by the department as
follows: ：

lows:：
Subsidiary– Liaoning Engley	Year of 2018 Recognized as the current profit and loss $ 8,540	Year of 2017 Recognized as the
		current profit and loss $ 67,899

~38

The Company’s property and plant, equipment and equipment were depreciated as a result of the unfinished engineering evaluation of the building and construction, machinery, transportation and office equipment of the company's Liaoning Engley in 2018 and 2006. The Company has reduced its carrying amount to the recoverable amount. Adjustments and recognition of impairment losses were 8,540 TWD and 67,899 TWD (in thousands) respectively. The recoverable amount is the fair value of the asset, which is based on the reset method. The fair value is the third grade.

(1 2 ) Short-term Loads

ort-term Loads
Credit loan Secured loan Interest rate range	$ $	Dec. 31, 2018 2,113,860 223,500 2,337,360 1.05%~5.48%	$ $	Dec. 31, 2017 1,576,776 91,400 1,668,176 1.05%~5.22%

Please refer to the detailed financial statement Note 8 for the warranty of the loan.

(13 ) Other payables

Payable equipment Acquisition of subsidiary agreement liabilities Payroll payable Interbank/shareholder loan Coping with social security and provident fund Coping with contingent consideration Accrued profit sharing bonus to employees Compensation to directors Other payables Total	End of 2018 $ 552,218 457,600 287,734 56,068 107,649 - 15,379 17,564 421,888 $ 1,916,100	End of 2017 $ 490,012 - 271,750 153,696 103,087 53,355 10,813 12,000 374,823 $ 1,469,536

The social security expenses and housing provident fund of the Company’s mainland China subsidiaries are paid according to the “Social Insurance Law of the People's Republic of China” according to the monthly salary of the employees; the social security expenses and housing accumulation fund that should be included in the actual salary of the employees Estimated in the annual financial statements.
The interest rate of interbank borrowings on December 31, 2018 and December 31, 2006 was 4.35 %.
The Company agreed in the acquisition of Kranendonk Beheersm a atsc happij BV (K company) contract: If K Company reached the agreed profit conditions before 2017, it is expected that the Company will have to pay an additional 52,800. Purchase price of EUR 1,500 (in thousands). However, after the actual results of the operation did not meet the agreed profit conditions, the price reduction was 15,98 1 (EUR 4 54 ), which was paid in the

~39 ~

current period.

The acquisition of the subsidiary's agreement liability was due to the Company’s transfer of a 0.5% stake in Engle y Precision Industry BV 6 and the acquisition of Kr a nend onk B ehe ers ma atsc hap pij BV (K company) ), obtained its 75% stake. The Company’s comprehensive shareholding ratio for K is 36.3%. In the equity investment agreement, it is given to the shareholders of the non-controlling rights. The two parties agree that the non-controlling rights shareholder will transfer the 37% of the shares held to the Company during the scheduled period. Therefore, the obligation to purchase the rights and interests of the cash in cash should be recognized as financial liabilities by the present value of the redemption amount, and the related rights and interests should be adjusted to reduce the capital reserve - the premium of RMB 457,600.00. As of December 31, 2018, the Company recognized the redemption debt of 457,600 yuan for the above-mentioned option to grant non-control rights.

(14 ) B o n d s p a ya b l e

n d s p a ya b l e
First-time unsecured convertible corporate debt in China Second unsecured convertible corporate debt in China Less: discount on corporate debt ( Subtotal Less: Due part within one year ( Total	End of 2018 $ 1,100,000 400,000 28,140) ( 1,471,860 1,083,642) $ 388,218	End of 2017
		$ 1,100,000 - 32,814)
		1,067,186 - $ 1,067,186

On the 8th of November 2016, the Company in the Republic of China, the company's board of directors for the first time issued a non-guaranteed convertible corporate bond, as follows:
(1) The conditions for the first time releasing company's domestic non-guaranteed conversion of corporate bonds are as follows:
- A. The company will be approved by the authorities to issue the first non-guaranteed transfer of corporate bonds in nation, with a total amount of 1,100,000 NTD (in thousands), and a coupon rate of 0%, three years after the issuance. The flow period is from January 10, 2017 to January 10, 2020. When the convertible corporate bond expired, it will be repaid in cash at the face value of the bond. This convertible corporate bond was listed on the China Securities and Exchanges Counters on January 10, 2017.
- B. The holder of this conversion company bond shall, from the day after the expiration of three months after the date of issuance of the bond, to the expiration date, at any time, except for the suspension of the transfer period as required by the method or the decree, may request the Company to convert to the ordinary Shares, the rights and obligations of the converted ordinary shares are the same as the original issued ordinary shares.
- C. The price of the company's conversion bonds at the time of issuance is set at 181 NTD per share. The conversion price of the conversion of the company's bonds is determined by the pricing model stipulated in the

~40 ~

conversion method. After the continuation of the conversion price adjustment method in accordance with the conversion method, the pricing model specified in the conversion method will be adjusted. As of December 31, 2018, the conversion of the conversion of the company's debt has been adjusted to 170.3 NTD per share.

  - D. The holder of the bond may request the company to buy back the converted corporate bonds at a rate of 100% of the bonds within 40 days before the transfer of the company's debts.

  - E. From the date of the three-month issue of the conversion of the company's bonds to the 40th day before the expiration of the issue period, if the company's common stock closing price exceeds 30% of the current conversion price for 30 consecutive business days, the company will Within 30 business days thereafter, the creditors are notified and the bonds outstanding in cash are recovered in cash in denominations on the base date of the recovery. When the conversion of the company's bond issuance expires on the 30th day after the expiration of the issue period and the 40th day before the expiration of the issue period, if the outstanding balance of the converted corporate bond is less than 10% of the original issue, the company may press the bond at any time thereafter. Denominations recover all of their bonds in cash.

  - F. According to the conversion method, all the Company's recovered (including those bought by the securities firm's business office), repaid, or converted, the converted corporate bonds will be cancelled, not sold or issued, and the conversion rights attached to them will be eliminated.

(2) In the issuance of convertible corporate bonds, the Company separates the equity-type conversion rights from the components of each liability in accordance with IAS 32 “Financial Instruments: Presentation” , and accounts for “Capital Reserves – Options” 44,895 NTD (in thousands). Another embedded buyback right and sellback right. In accordance with the provisions of IAS 39 “Financial Instruments: Recognition and Measurement” , it is not closely related to the economic characteristics and risks of the main contract debt commodity and is therefore treated separately and is stated in terms of fair value through profit or loss. Financial assets or negative Debt. "The effective rate of the principal contractual debt after separation is 1.53%.
The second unsecured convertible corporate bonds in the Republic of China, issued by the Board of Directors of the Company on April 11, 107, the Republic of China, are as follows:
(1) The second time company's in-domestic non-guarantee conversion of the company's debt is as follows:
- A. The company has been approved to issue and fundraise the second non-guarantee conversion of the company's bonds by the authorities, with a total amount of 400,000 NTD (in thousands), a coupon rate of 0%, and three years issuance. The period of circulation is from June 22, 2018 to June 22, 2021. When the conversion of the company's bonds is overdue, the principal amount of the bonds shall be repaid in cash at once. The conversion of the company's debts on June 22, 2018 was signed and sold on the China Securities and Exchanges Counter.

~41 ~

B. The bondholders of this conversion company shall, from the day following the date of the issuance of this bond after the expiration of three months, until the expiry date, except as required by the scheme or the ordinance to suspend the transfer period , May also at any time request to the Company to convert to the company's common stock. The rights and obligations of common shares after conversion are the same as those originally issued.
C. This conversion company debt at the time of issue conversion price is set at 177 NTD per share, the conversion price of this conversion company debt is determined according to the pricing model stipulated in the conversion method , After the continuation of the conversion price adjustment in line with the conversion method, will be adjusted according to the pricing model stipulated in the conversion method. As at December 31, 2018, the conversion price of this conversion company debt has been adjusted to 17 1.4 NTD per share.
D. Bondholders are required to expire during the issuance of this conversion company's debt, requiring the company to buy back the convertible corporate debt held by the bond at 10 0% of its denomination.
E. The closing price of the company's common stock closed for 30 consecutive business days more than 3 0% of the time of the conversion 40 days after the expiry of the three-month period from the day following the expiration of the company's debt to the date of issue , The company will notify the creditors within 30 business days thereafter and recover the negotiable bonds in cash at the denomination of the bonds on the basis of the base date. When this conversion company's debt is issued from the day following the expiration of three months until 40 days before the expiry of the issuance period, the external balance of the conversion company's debt is less than 10% of the total amount of the original issue , The company is required to recover all its bonds in cash at any time thereafter at the denomination of the bonds.
F. According to the conversion method, all of the company's recovery (including by the Securities Merchants Business premises), repayment, or converted this conversion company debt will be written off, not sold or issued, its attached conversion rights and the same elimination.
(2) In issuing convertible corporate bonds, the Company is based on IAS 32 "Financial instrument: Presentation" stipulates that the right of conversion of the nature of equity and the constituent elements of each liability shall be separated, and the accounts of "capital reserve-equity" shall be counted as 13,352 NTD (in thousands). Another embedded purchase right and the right to sell back, according to the IAS 39 "Financial instruments: recognition and measurement" provisions. Because it is not closely related to the economic characteristics and risks of the debts of the principal contractual debts, it is treated as a separate transaction and is accounted for as “FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS”. The effective rate of the principal contractual debt after separation is 1.25 %.

~42 ~

(15)Long-term Load Load Type Duration and return Rate Warranty Dec. 31, 2018 Long-term Load Credit load From May 24, 2016 to October 26, 2020, monthly interest 4.75% - payments Credit load From June 2, 2017 to $1,564,500 June 1, 2020. Monthly 1.3%~5.11% - 252,926 and quarterly interest payments Credit load From Feb. 13, 2017 to Dec. 15, 2022 Monthly interest payments and quarterly interest payments 3.19%~5.70% - 326,877 Credit load From Sep. 20, 2017 to Oct. 21, 2021 , every two months and quarterly interest payments 1.30%~3.75% - 549,941 Credit load From Sep. 25, 2017 to Apr. 9, 2021 , quarterly interest payments 3.87%~3.88% - 337,798 Credit load From Nov. 23, 2017 to Nov. 23, 2020 , quarterly interest payments 3.56% - 88,393 Credit load From Nov. 30, 2018 to Nov. 30, 2021 , monthly interest payments 4.60% - 85,486 Leasing Loans From Jul. 11, 2018 to May 11, 2022 , quarterly interest payments 7.80% machinery equipment 563,889 Leasing Loans From Sep. 5, 2016 to Mar. 8, 2022 , monthly interest payments and quarterly interest payments 5.07%~7.11% machinery 219,220 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 , quarterly interest payments 6.51% machinery 74,172 Leasing Loans From Dec. 20, 2017 to Sep. 20, 2021 , quarterly interest payments 6.69% machinery 191,154 Leasing Loans From Apr. 12, 2018 to Jan. 12, 2022 , quarterly interest payments 5.62% machinery 37,569 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 , quarterly interest payments 6.51% machinery 77,551 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 ,quarterly interest payments 6.51% machinery 119,588 $ 4,489,064 Less: Long-term borrowing due within one year ( 1,586,201) $ 2,902,863	(15)Long-term Load Load Type Duration and return Rate Warranty Dec. 31, 2018 Long-term Load Credit load From May 24, 2016 to October 26, 2020, monthly interest 4.75% - payments Credit load From June 2, 2017 to $1,564,500 June 1, 2020. Monthly 1.3%~5.11% - 252,926 and quarterly interest payments Credit load From Feb. 13, 2017 to Dec. 15, 2022 Monthly interest payments and quarterly interest payments 3.19%~5.70% - 326,877 Credit load From Sep. 20, 2017 to Oct. 21, 2021 , every two months and quarterly interest payments 1.30%~3.75% - 549,941 Credit load From Sep. 25, 2017 to Apr. 9, 2021 , quarterly interest payments 3.87%~3.88% - 337,798 Credit load From Nov. 23, 2017 to Nov. 23, 2020 , quarterly interest payments 3.56% - 88,393 Credit load From Nov. 30, 2018 to Nov. 30, 2021 , monthly interest payments 4.60% - 85,486 Leasing Loans From Jul. 11, 2018 to May 11, 2022 , quarterly interest payments 7.80% machinery equipment 563,889 Leasing Loans From Sep. 5, 2016 to Mar. 8, 2022 , monthly interest payments and quarterly interest payments 5.07%~7.11% machinery 219,220 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 , quarterly interest payments 6.51% machinery 74,172 Leasing Loans From Dec. 20, 2017 to Sep. 20, 2021 , quarterly interest payments 6.69% machinery 191,154 Leasing Loans From Apr. 12, 2018 to Jan. 12, 2022 , quarterly interest payments 5.62% machinery 37,569 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 , quarterly interest payments 6.51% machinery 77,551 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 ,quarterly interest payments 6.51% machinery 119,588 $ 4,489,064 Less: Long-term borrowing due within one year ( 1,586,201) $ 2,902,863	(15)Long-term Load Load Type Duration and return Rate Warranty Dec. 31, 2018 Long-term Load Credit load From May 24, 2016 to October 26, 2020, monthly interest 4.75% - payments Credit load From June 2, 2017 to $1,564,500 June 1, 2020. Monthly 1.3%~5.11% - 252,926 and quarterly interest payments Credit load From Feb. 13, 2017 to Dec. 15, 2022 Monthly interest payments and quarterly interest payments 3.19%~5.70% - 326,877 Credit load From Sep. 20, 2017 to Oct. 21, 2021 , every two months and quarterly interest payments 1.30%~3.75% - 549,941 Credit load From Sep. 25, 2017 to Apr. 9, 2021 , quarterly interest payments 3.87%~3.88% - 337,798 Credit load From Nov. 23, 2017 to Nov. 23, 2020 , quarterly interest payments 3.56% - 88,393 Credit load From Nov. 30, 2018 to Nov. 30, 2021 , monthly interest payments 4.60% - 85,486 Leasing Loans From Jul. 11, 2018 to May 11, 2022 , quarterly interest payments 7.80% machinery equipment 563,889 Leasing Loans From Sep. 5, 2016 to Mar. 8, 2022 , monthly interest payments and quarterly interest payments 5.07%~7.11% machinery 219,220 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 , quarterly interest payments 6.51% machinery 74,172 Leasing Loans From Dec. 20, 2017 to Sep. 20, 2021 , quarterly interest payments 6.69% machinery 191,154 Leasing Loans From Apr. 12, 2018 to Jan. 12, 2022 , quarterly interest payments 5.62% machinery 37,569 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 , quarterly interest payments 6.51% machinery 77,551 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 ,quarterly interest payments 6.51% machinery 119,588 $ 4,489,064 Less: Long-term borrowing due within one year ( 1,586,201) $ 2,902,863	(15)Long-term Load Load Type Duration and return Rate Warranty Dec. 31, 2018 Long-term Load Credit load From May 24, 2016 to October 26, 2020, monthly interest 4.75% - payments Credit load From June 2, 2017 to $1,564,500 June 1, 2020. Monthly 1.3%~5.11% - 252,926 and quarterly interest payments Credit load From Feb. 13, 2017 to Dec. 15, 2022 Monthly interest payments and quarterly interest payments 3.19%~5.70% - 326,877 Credit load From Sep. 20, 2017 to Oct. 21, 2021 , every two months and quarterly interest payments 1.30%~3.75% - 549,941 Credit load From Sep. 25, 2017 to Apr. 9, 2021 , quarterly interest payments 3.87%~3.88% - 337,798 Credit load From Nov. 23, 2017 to Nov. 23, 2020 , quarterly interest payments 3.56% - 88,393 Credit load From Nov. 30, 2018 to Nov. 30, 2021 , monthly interest payments 4.60% - 85,486 Leasing Loans From Jul. 11, 2018 to May 11, 2022 , quarterly interest payments 7.80% machinery equipment 563,889 Leasing Loans From Sep. 5, 2016 to Mar. 8, 2022 , monthly interest payments and quarterly interest payments 5.07%~7.11% machinery 219,220 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 , quarterly interest payments 6.51% machinery 74,172 Leasing Loans From Dec. 20, 2017 to Sep. 20, 2021 , quarterly interest payments 6.69% machinery 191,154 Leasing Loans From Apr. 12, 2018 to Jan. 12, 2022 , quarterly interest payments 5.62% machinery 37,569 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 , quarterly interest payments 6.51% machinery 77,551 Leasing Loans From Jun. 8, 2018 to Mar. 8, 2022 ,quarterly interest payments 6.51% machinery 119,588 $ 4,489,064 Less: Long-term borrowing due within one year ( 1,586,201) $ 2,902,863
		(	$ 4,489,064 1,586,201) $ 2,902,863

~43

Load Type Duration and return Rate Warranty Long-term Load Credit load From May 23, 2016 to Oct. 26, 2020 , monthly interest payments 4.75% - Credit load From Jun. 2, 2017 to Jun. 1, 2020 , monthly interest payments 1.7%~4.94% - Credit load From Feb. 13, 2017 to Dec. 15, 2022 , monthly interest payments 4.75% - Credit load From Feb. 18, 2016 to Sep. 30, 202 , monthly interest payments 2.83%~5.24% - Credit load From Nov. 23, 2017 to Nov. 22, 2020 , monthly interest payments 2.71% - Credit load From Sep. 25, 2017 to Sep. 24, 2020 , monthly interest payments 2.83% - Less: Long-term borrowing due within one year (16)Other current liabilities and other non-current liabilities CURRENT ： Items End of 2018 Due lease payments $ 42,776 Payments received in advance - Long-term load due within one year 1,586,201 Corporate debt due within one year 1,083,642 Total $ 2,712,619 NON- CURRENT Items End of 2018 Due lease payments $ - Deferred government subsidy income 231,620 Deferred after-sale lease return Benefits - Other Non-current Liabilities-other 576 Total $ 232,196		Dec. 31, 2017 $ 1,599,500 123,524 286,680 353,648 90,371 121,510 2,575,233 ( 105,631) $ 2,469,602 End of 2017 229,491 574,459 105,631 - 909,581 End of 2017 251,057 229,581 104,869 - 585,507
	$
	$

	$
	$

~44

The Company's subsidiary Liaoning Engley Auto Parts Co., Ltd., Foshan Engley Auto Parts Co., Ltd., Tianjin Engley Mold Manufacturing Co., Ltd., Changsha Engley Auto Parts Co., Ltd. Changchun Engley Automobile Industry Co., Ltd. and the local Economic Development Region Management Committee signed a development incentive agreement, access to land use rights subsidy total 256, 750 NTD (in thousands), and respectively according to the right to use the land 50 years to recognize the income by year. The Company recognized other income at 6,247 NTD (in thousands) and 4,313 NTD (in thousands) from January 1, 2018 to December 31 and from January 1, 2017 to December 3 1st, respectively.
The Company has leased machinery and equipment by financial lease for a period of 3-5 years. The Company’s total future minimum lease payments for December 31, 2018 and December 31, 2017 and their present values are as follows:

CURRENT Within 1 year NON-CURRENT 1 – years CURRENT Within 1 year NON-CURRENT 1 – years	271,401 $ 524,951 Total financial Lease Liabilities $ 45,830 - $ 45,830 Total financial Lease Liabilities $ 253,550		End of 2018
		Total financial Lease Liabilities $ 45,830 - $ 45,830	Future financial costs ($ 3,054) - ($ 3,054) End of 2017

~45

The financial leasing contracts responsibility and guarantee of the above are held by the chairman of Changchun Hongyun Hardware Products Co., Ltd., Lin Qibin and sub-company general manager Lin Shangwei.

(17 ) Pension

In accordance with the pension insurance system established by the Government of the People's Republic of China, the Company allocates pension benefits on a monthly basis according to a certain ratio of the total salary of local employees, with a rate of 20 percepts. The pension of each employee is coordinated by the government, and the Company has no further obligation other than to make monthly transfers. From January 1, 2018 to December 31 and 2017 from January 1 to December 31, the ex-retirement scheme was 137,473 yuan and 10 1,387 yuan respectively. (in thousands)

(1 8 ) Share Base Payment

By January 1, 2018 to December 31, the Company’s share base payment agreement is as follows:

Type	Day	Amount	Duration	Condition
Cash replenishment	2018.8.10	188k shares	NA	Immediately own
retains employee subscription.

The above share base payment agreement is the delivery of equity.

(1 9 ) Equity

By 2018. December 31, the company's rated capital amount of 3,000,000 NTS (in thousands), divided into 300,000 shares, the amount of capital received is 1,190,000 NTS (in thousands), each dollar denomination 10 NTD.
The company's common stock period and the end of the circulation of the number of external shares adjusted as follows:

external shares adjusted as follows:
Jan. 1 Cash replenishment Reclaim shares Dec. 31	2018 Share(in thousands) 110,000 9,000 ( 683) 118,317		2017 Share(in thousands) 110,000 - - 110,000
		(

In June 2018 the board of directors of the Company passed a resolution of through the processing of cash replenishment issued new shares 9,000 shares. The issue price is 147 NTD per share, the total amount of funds is 1,323,000 NTD. The capital increase base date is August 7, 2018, when the replenishment plan will be completed.

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4. Treasury Share

(1) The reason for the recovery of shares and its quantity:

Name of the company holding the shares Reason for recovery The Company Safeguarding the company's credit and shareholders ' equity		End of	2018
		Share (k) 683	accounting amount $ 80,438

(2) The Securities Trading law stipulates that the proportion of a company to buy back a foreign share shall not exceed 10% of the total number of shares issued by the company; The total amount of the bought shares Shall not exceed the retained surplus plus the premium for the issuance of shares and the amount of Capital Provident Fund realized.
(3) The Treasury shares held by the company shall not be pledged under the provisions of the Securities Exchange law and shall not enjoy the rights of shareholders until they have been transferred.
(4) In accordance with the provisions of the Securities Exchange Act, the shares purchased by the employee for the transfer of shares shall be transferred within three years from the date of purchase, and those who are overdue are deemed not to have issued shares of the company And shall handle the change registration and sale of the shares. And in order to maintain the company's credit and shareholders ' rights and interests to buy back shares, should be bought back within six months from the date of change registration and sales of shares.
In January 2019, the Company bought back shares in 310 equity companies (Treasury shares). By February 20, 2019, the Company by the Board of directors through the first time to buy backs the shares of the company (Treasury shares). It is proposed to handle the case of 9,930 NTD (in thousands) (993,000 shares) of written-off shares, with a base date of March 4, 2019.

(20 ) Capital Reserve

In accordance with the provisions of the company law, the excess of the proceeds from the issuance of shares in the coupon amount and the capital reserve of the received gift. In addition to being used to make up for losses, when the company does not accumulate losses, in proportion to the original shares of shareholders issued to new shares or cash. Also in accordance with the relevant provisions of the Securities Exchange law. When the above capital reserve capital is allocated, the aggregate amount shall not exceed 10% of the total capital collected each year. If the company is not in surplus reserve to fill the capital loss is still insufficient, it should not be supplemented by capital reserve.

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Year of 2018	Year of 2018	Year of 2018
Other $ 61,842 - 110,668 16,555 13,352 - $ 202,417 ( Year of 2017
			$
			$ $

	$ $	Other 16,728 219 44,895 61,842

Note: For information on additional equity agreements for the acquisition of subsidiaries, please refer to Notes 6 and (XIII).

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(21 ) Retained Surplus

The company is in the growth stage. Based on capital expenditure, business expansion and sound financial planning for sustainable development, the company's dividend policy will be based on the company's future capital expenditure budget and capital demand, with cash dividends and / or stock dividends. The method is allotted to the shareholders of the company.
According to the current company's stipulations, if the company has a surplus after each year's final settlement, it will be assigned according to the following order:
(1) Pay taxes in accordance with the law.
(2) To compensate for the accumulated losses in the previous year.
(3) A 10% statutory surplus reserve is proposed, but the statutory surplus has reached the actual amount of the company's receipt, and is not limited to this.
(4) A special surplus reserve that must be deposited in accordance with regulations.
(5) Deducting the amount of the previous year's surplus after items (1) to (4) above, then Accumulate undistributed surplus in the previous period is available for distribution of surplus. Profit available for distribution of dividends case I get points by the Board of Directors proposal, please send shareholders will often depend on the market, according to Cabinet Resolution Act through a dispatch after. Dividend distribution can be issued in cash dividends and/or stock dividends. Under the laws of the British Cayman Islands, the minimum dividend amount should be at least 10% (10%) of the current year's surplus, and cash. dividend ratio of not less than ten percent (10%) of the total shareholders' dividends, and to one hundred percent (100%) for the upper limit.
The statutory surplus reserve shall not be used except for the loss of the company and the issuance of new shares or cash in proportion to the original share of the shareholders. However, if it is issued to new shares or cash, the reserve shall exceed 20% of the paid-up capital. The five parts are limited.
The statutory surplus reserve shall not use except for the loss of the company and the issuance of new shares or cash in proportion to the original share of the shareholders. However, if it is issued to new shares or cash, the reserve shall exceed 20 % of the paid-up capital. The five parts are limited.
The company distributes the resolutions through the 2017 and 2016 earnings by the shareholders' meeting on May 29, 2018 and June 14, 2017, respectively.

Statutory surplus reserve Special surplus reserve Cash dividend	2017 amount per share (NTD) $ 133,987 91,000 429,000 $ 3.90	2016	2016
	amount $ 133,987 91,000 429,000	amount $ 125,474 691,392 495,000	per share(NTD)
			$ 4.50

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The company's resolution on the 2018 surplus of the Board of Directors' decision is made on March 25, 2019 as follows:

arch 25, 2019 as follows:
Statutory surplus reserve Special surplus reserve Cash dividend		2018 amount per share(NTD) $ 112,340 281,227 531,032 $ 4.50
		amount $ 112,340 281,227 531,032

In allocating the surplus for 2017 and 2016, as stipulated in letter number 1,010,012,865 of April 6, 2012, the net amount of other shareholders ' equity in the account of the annual occurrence of the deposit , A special surplus reserve of the same amount from the current profit and loss and the previous undistributed surplus shall not be allocated; However, the company has proposed a special surplus reserve at the time of the first application of IFRS , A special surplus reserve should be added to the difference between the amount and the net of other equity deductions.
The Board of Directors of the Company shall, through the proposed and shareholders ' meeting resolution surplus allocation, refer to the "Public observation information Station" of the Taiwan Stock exchange for enquiries.
For information on staff remuneration and directors' remuneration, please refer Note 6
(XXVIII). 。

(22 ) Non-controlling Equity

XVIII).。 ontrolling Equity
Balance, beginning of the year Share attributable to non- controlling interests net profit Cash dividend ( Exchange difference for conversion of financial statements of foreign operating institutions ( Increase Non-control interests 〈Note1&2〉 Decrease Non-control interests 〈Note 3〉 Balance, end of the year	$	Year of 2018 1,813,574 327,927 144,370) 27,260) ( 442,857 -( 2,412,728	$	Year of 2017 1,291,267 281,994 - 25,936) 325,292 59,043) 1,813,574
	$		$

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〈 Note1 〉 From January 1 to December 31, 2017, the non-controlling rights increase mainly depends on Kran end onk B ehe er smaa tsc hap pij B.V. The stock rights are generated according to the accounting plan of the enterprise merger.
〈 Note 2 〉 From January 1 to December 31, 2018, the increase in non-control rights was mainly due to the increase in capital of Changchun Engley Automobile Industry Co., Ltd. on December 27, 2007, and the partial share rights were subscribed by external shareholders
〈 Note 3 〉 From January 1 to December 31, 2018, the increase in non-control rights was mainly due to the increase in capital of Changchun Engley Automobile Industry Co., Ltd. on December 27, 2007, and the partial share rights were subscribed by external shareholders.

(23 ) Operation Revenue

Customer contract revenue

Details of Customer contract revenue

$	2018 21,855,386

The income of the Company is derived from the provision of goods and services that are transferred step by step and transferred at a certain point in time. The revenue can be subdivided into the following geographical areas:

	Year of 2018
China	Other Region $ 526,499 11,353)	Total
$ 27,000,079 5,659,839)		$ 27,526,578 5,671,192 $ 21,855,386
$ 21,340,240	$ 515,146
$ 21,311,629 - $ 21,311,629	$ 58,351 485,406 $ 543,757	$ 21,369,980 485,406 $21,855,386

The reporting department of the Comapny providing the main operational decision-makers is a large land area.

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Contractual debt
(1)The Company recognizes the contractual debts associated with the client's contractual income as follows:

End of 2018 Debt: Debt-Advance payment 522,570

(2)Initial contractual debts, recognition of income in the current period

End of 2018

Debt: Debt-Advance payment 137,356

Please refer Note 12 (V) for the relevant disclosure of the 2017 business income.

(24 ) Other Benefits and Losses

Benefits and Losses
		2018 2017
Disposal of loss of property, plant and	($	8,175) ($	5,794)
equipment
Net foreign currency	(	83,497) (	81,216)
exchange loss
FINANCIAL ASSETS AT
FAIR VALUE THROUGH
OR LOSS, net		12,741	1,654
Disposal of loss of
property, plant and
equipm	(	8,540) (	67,899)
Other expenses	(	1,547) (	29,323)
Total	($	89,018) ($	182,578)

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(25 ) Other Revenue

(25 )Other Revenue
Income Bank deposit interest Government Grants Other income (26 ) Financial Costs Interest expense: Interest of load Financial leasing Convertible corporate bond Less: the capitalization amount of the eligible item ( (27)Additional information on Expense		2018		2017
		$ 16,030 41,491 58,816 $ 116,337 2018		$ 21,079 37,826 50,769 $ 109,674 2017
	$	294,458 6,139 19,284 319,881 60,182) ( 259,699	$	198,943 28,894 16,205 244,042 23,754) 220,288

	$		$

(28 )	Employee benefit Depreciation of property, plant and equipment Intangible Assets amortization fee Employee Welfare Salary Labor insurance Pension Other		2018	2017
			$ 2,166,960 888,347 113,479 $ 3,168,786	$ 1,641,948 732,251 105,574 $ 2,479,773
			2018 $ 1,751,499 69,573 137,473 208,415 $ 2,166,960	2017 $ 1,335,135 50,042 101,387 155,384 $ 1,641,948

According to the company's articles of association, if the company makes a profit in the year, the company should provide a minimum of 0.5% of the employee's remuneration before the tax, up to 8%, and the director's remuneration is 0.5%, up to 3%.
T h e company's s t a f f r e m u n e r a t i o n a n d d i r e c t o r s ' c o m p e n s a t i o n :

Employee compensation Directors compensation	2018 $ 15,379 17,564	2017 $ 10,813 12,000

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32,943

22,813

The above-mentioned accounts for the salary account of the gold account, from January 1 to December 31, 2018, and January 1 to December 31, 2017, are based on the profitability of the current period and are based on the company's charter.

The employee compensation and the supervisory compensation for the period from January 1 to December 31, 2018 and January 1 to December 31, 2017 will be released in cash. From January 1 to December 31, 2017, the actual remuneration of employees and the amount of the actual remuneration of the directors' compensation will be the same as the amount recognized in the financial report.

The employee's remuneration and director's remuneration related information passed by the company's board of directors may be referred to the public information station for enquiry.

(29 ) Income tax

1. Income tax

Details :

Details :
Income tax: Current income tax Previous annual income tax (high) underestimation ( Total current income tax Deferred income tax: Original generation of temporary differences ( Total	$	2018 388,127 7,224) 380,903 91,325) 289,578	$	2017 313,605 7,745 321,350 48,716 370,066

	$		$

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Income tax and Accounting profit

2. Income tax and Accounting profit
		2018					2017
Income tax at pre-tax		$		441,451	$				423,467
net profit at statutory rate
Fees that should be excluded				54,225						33,627
according to the tax law
Income tax impacts as amended				9,664						-
Tax-free income under the tax law	(			212,734) (					128,838)
Tax deductions are not recognized
d f d Taxable assets				4,196						34,065
Previous annual income tax (high)	(			7,224)						7,745
d i i Income tax expense		$		289,578	$				370,066
3. The amount of deferred taxable assets		or liabilities arising from temporary differences, tax
losses and investment write-downs are as follows:
			Year of 2018
	Beginning		Recognized			Business			End
			in	profit and	Combination
			loss
-Deferred tax assets:
Allowance for bad debts	$	16,516	($	6,901)	$		-		$	9,615
Unrealized land grant income		33,647	(	8,816)			-			24,831
Sluggish inventory and price		42,278	(	9,174)			-			33,104
l Coping with social security fees		11,281		10,227			-			21,508
d id f d Tax loss		-		90,347			-			90,347
other		37,450		15,449			-			52,899
Subtotal	$	141,172	$	91,132	$		-		$	232,304
- Deferred income
tax liabilities: ($		300,524)	$	-	$		-	($		300,524)
Foreign long-term investment income
Land use rights tax		40,276)		-			2,034	(		38,242)
difference (		91,451)		-			14,901	(		76,550)
Intangible Assets Tax difference (		16,028)		-			1,322	(		14,706)
Tax difference between
property, plant and
equipment (
Other (		24,330)		193			-	(		24,137)
Subtotal ($		472,609)	$	193	$		18,257	($		454,159)
Total			$	91,325	$		18,257

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			2017
Beginning		( ( ( ( (	Recognized in profit and $ 4,985 5,935) 3,846 6,743) 19,151) 3,556) $ 26,554) $ - - - - 22,162) 22,162) $ 48,716)	Business
				Combination
$ 473,538)
	(

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The effective period of the tax loss that has not been used by the Company and the amount of unrecognized deferred taxable assets are as follows:

		End of 2018		Deduction year
Year of occurrence 2004 2005 2006 2007 2008	Numbers of declarations $ 11,715 31,755 143,103 137,704 337,731 $ 662,008	undedicated $ 11,715 31,755 70,310 137,704 337,731 $ 589,215 End of 2017	Unrecognized Deferred income
			Tax assets $ 10,677 26,332 38,496 71,634 25,144 $ 172,283	2009 2010 2011 2022 2023

Year of occurrenc e 2004 2005 2006 2007	Numbers of declarations $ 1,426 9,787 31,407 143,103 137,704 $ 323,427	Unrecognized Undedicated $ 1,426 Deferred income Tax assets $ 1,426 9,787 9,787 31,407 31,407 68,322 68,322 137,704 137,704 $ 248,646 $ 248,646	Unrecognized Deferred income	Deduction year 2018 2019 2020 2021 2022

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Tax rate of Subsidiaries in China :

	Investment Corporation		Investment Corporation
	Changchun Engley CO., LTD		applicable tax rate: 15%; Applying a preferential tax rate high-tech project since 2018
	Tianjin Engley Mold Manufacture CO., LTD		applicable tax rate: 15%; Applying a preferential tax rate high-tech project from 2018
	Chengto Engley Auto Parts Industrial CO., LTD		applicable tax rate: 15%; Western Development Offer for 8 consecutive years from 2013
	Linde Engley (Tianjin) Auto Parts Industrial CO.,LTD		applicable tax rate: 15%; Applicable tax rate high-techproject since 2016
	Suzhou Engley Auto Parts Industrial CO., LTD		applicable tax rate: 15%; Applicable tax rate high-techproject since 2016
	The other subsidiaries in China and Netherlands		applicable tax rate: 25%

The Company has not recognized the deferred income tax liabilities for the taxable temporary differences related to certain subsidiaries' investments, and the temporary differences in deferred income tax liabilities that were not recognized as at December 31, 2018 and December 31, 2017 They were 2,538,757 and 1,284,699 (in thousands).

~58 ~

(3 0 ) Earnings per share

gsper share
Basic surplus per share Net profit for current attributable to the common shareholders of the parent company Diluted surplus per share Net profit for current attributable to the common shareholders of the parent company Effects of potential common shares with dilution effect Convertible Corporate Debt Employee dividend Impact of net profit plus potential common stock attributable to the common shareholders of the parent company	2018
	After-tax amount $ 1,123,400 1,123,400 19,284 - $ 1,142,684	Weighted average number of shares in circulation (k) 113,559 113,559 7,690 122 121,371		Earnings per share (NTD) $ 9.89 $ 9.41

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Basic surplus per share Net profit for current attributable to the common shareholders of the parent company Diluted surplus per share Net profit for current attributable to the common shareholders of the parent company Effects of potential common shares with dilution effect Convertible Corporate Debt Employee dividend Impact of net profit plus potential common stock attributable to the common shareholders of the parent company	Year	of 2017
	After-tax amount $ 1,072,177 1,072,177 16,025 - $ 1,088,202	Weighted average number of shares in circulation (k) 110,000 110,000 6,254 90 116,344	Earnings per share (NTD) $ 9.75 $ 9.35

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(31) Trade with non-controlling equity

1.On August 31, 2017, the Company purchased 3% shares of Linde Engley (Tianjin) Auto Parts Co., Ltd. and Linde Engley (Changchun) Auto Parts Co., Ltd. in cash of $189,483. Linde Engley (Tianjin) Auto Parts Co., Ltd. and Linde Engley (Changchun) Auto Parts Co., Ltd. the non-controlling interest in the purchase date of the book amount of 909,399 yuan, the transaction reduced non-control Interest of 59,043 yuan, attributed to the owner of the parent company's rights and interests increased by 59,043 yuan. Linde (Tianjin) Auto Parts Co., Ltd. and Linde Engley (Changchun) Auto Parts Co., Ltd. the impact of the change of equity on the rights and interests of the owners of the parent company is as follows: (in thousands)

Buy-in Non-control interests The consideration of payment to a non- controlling interest Actual acquisition of the difference between the equity price and the account of the non-controlling interests of The reduction in retained surpluses is attributable to: Parent company owner's Equity	2018 $ - - $ - $ -	2017 $ 59,043 ( 189,483) ($ 130,440)
		($ 130,440)

2.Subsidiary cash Capital Increase, the Company does not subscribe according to the shareholding ratio Changchun Engley Auto Industry Co., Ltd., a subsidiary of the Company, issued new shares in December 2018 with a cash increase in the Republic of China, and the Company did not subscribe for a 3.42% per cent stake as a result of its shareholding. The transaction increased the non-controlling interest of 442, 857 yuan, belonging to the owner of the parent company's equity increased by 110, 668 Yuan. 2018 Changchun Engley Automobile Industry Co., Ltd. the influence of the change of equity on the rights and interests of the owners of the parent company is as follows: (in thousands)

s follows: (in thousands)
Cash Capital Increase Investment Non-controlling interest carrying amount increase capital reserve- recognition of all equity changes to subsidiaries	$ (	2018 553,525 442,857) 110,668	$	2017 - - -
	$		$

(32) Corporate mergers

1.Kr ane ndo nk Beh e ersm aat sch app ij B .V.
(1) On February 20, 2017, the Company transferred a 0.5% stake in Engley Precision Industry B.V. 6 through Engley Holding (Samoa) Limited, an 80%-owned subsidiary of the Company, for 7,991 EUR. Then invest in Kran end onk Beh eer smaa tsc hap pij BV . (hereinafter referred to as K company) and obtain 75% of its equity. The Company’s comprehensive shareholding ratio for K companies is 36.3 %. And take control of the company. The

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company operates in the Netherlands for the welding, cutting and assembly of flexible robots. The Company expects to strengthen its position in these markets after the acquisition, and expects to reduce costs through economic scale.

(2) The acquisition of the consideration paid by the company, the acquired assets and the liabilities of the liabilities at the date of acquisition and the fair value of the non-controlling interest at the date of acquisition is as follows:

Acquisition consideration Cash(Note) Coping with contingent consideration Non-controlling interests as a share of the The fair value of obtaining identifiable assets and Cash and cash equivalents NET note accounts receivable Inventory Property, plant and equipment Intangible Assets Accounts payable ( Other payables ( Total identifiable net assets Goodwill	Feb. 28, 2017 $ 536,637 48,645 42,361 627,643 5,778 21,243 34,564 18,756 219,584 123,639) 6,843) 169,443 $ 458,200

Note: Cash acquisition of the price of 536,637 yuan, including the company invested 259,162 Yuan to obtain the equity of K company and other investors investment money of 277,475 yuan (in thousands).

(3) Since February 28, 2017, the Company has been merged with K company, and the operating income and pre-tax benefits contributed by K Company are 352, 423 yuan and 86,8 03 yuan respectively. If it is assumed that the company has been incorporated into the merger since January 1, 2017, the Company’s operating income and pre-tax net profit will be:

Operation Income Before Tax	$	2017 18,910,525 1,715,130
	$

2. NingBoMauXiang

(1) On December 1, 2016, the Company purchased a 51% stake in Ningbo Maoxiang Metals Co., Ltd. (as Ningbo Maoxiang) for 135,3 06 RMB, and obtained control over Ningbo Maoxiang Company. The company manufactures and processes fine die, precision cavity molds, mold standard parts, automobile, motorcycle model and automobile parts in China. The Company expects to strengthen its position in these markets after the acquisition, and expects to reduce costs through economic scale.
(2) The purchase price of the consideration paid by Ningbo Maoxiang Co., Ltd., the acquired assets and the bearer's liabilities at the date of acquisition, and the fair value of the noncontrolling interest at the date of acquisition are as follows:

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			Dec. 1, 2016
Acquisition consideration Cash		$	625,114
Non-control interests accountable identifiable net			563,143
assets share
			1,188,257
Obtaining the fair value of identifiable assets and
liabilities
Cash			28,981
FINANCIAL ASSETS AT FAIR VALUE			30,885
THROUGH PROFIT OR LOSS -CURRENT
Note receivable			30,030
Note Accounts			361,472
Prepayments			644,471
Other receivables			14,650
stock			580,590
Land use rights			245,630
Other current Assets			142
Real estate, plant and equipment			746,781
Intangible Assets			143,528
Other non-current assets			25,362
short-term loan	(		443,943)
Accounts payable	(		236,612)
Other payables	(		450,259)
Advance payment	(		406,458)
Other current liabilities	(		9,098)
Long-term load Goodwill	(	$	~~84,298~~) 38,992
遞延所得稅負債	(		72,589)
可辨認淨資產總額 The Company has revised the preliminary estimate of	1,149,265 the price apportionment period
based on the fair value of the acquisition date and reviewed the consolidated financial
statements of December 31, 2017 in accordance with IFRS		3 and applied adjustments.

Linde Tianjin Linde Changchun

Linde Engley (Tianjin) Auto Parts Co., Ltd. (as Linde Tianjin) and Linde Engley (Changchun) Auto Parts Co., Ltd. (as Linde Changchun) changed the board of directors by the resolution of the board of directors in 2016, and changed the subsidiary company Changchun Engley Automobile Industry Co., Ltd. has obtained more than half of the seats and obtained the control of the two companies. The fair value of the assets and liabilities assumed at the acquisition date and the non-controlling interests on the acquisition date. The information on the value is as follows:

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Non-control interests account for the identifiable net assets share of the acquire Obtaining the fair value of identifiable assets and liabilities cash Accounts receivable Prepayments Other receivables stock Land use rights Other Current Assets Real estate, plant and equipment Other non-Current Assets ( short-term loan ( Accounts payable ( Other payables ( Other current liabilities ( Other non-current liabilities ( Deferred income tax liabilities Identifiable net assets Acquisition consideration	$	617,485 1,382,164 489,376) 706,599) 199,858) 83,096) 169,798) 105,697) 1,260,173 121,991 2016 764,679


	$

The Company has held 51% equity interests in Linde Tianjin and Linde Changchun prior to the merger. The benefits recognized in 2016 based on fair value re-measure are as follows:

Measuring the fair value on the acquisition date Amount of equity before control Dispose of investment interests	$ 764,679 337,223 $ 427,456

As of the end of the period, the price-sharing period of the merger case was completed. The Company revised the initial estimate of the price based on the fair value of the purchase date and adjusted the consolidated financial statement according to IFRS 3 on December 31, 2016.

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(33 ) Operational Rent

The subsidiaries of the Company sign a lease agreement for the business premises and machinery equipment, and estimate the total amount of the rent payable in the future according to the lease:

Within 1 year 1 – 5 years More than 5 years (34)Non-cash trade Purchase of real estate, plant and equipment Plus: at the beginning of the period Less: end of period payable equipment Less: initial prepayment equipment Plus: Prepaid equipment at the end of the period Less: Prepaid equipment reclassification Cash payment in the current period		End of 2018 $ 120,131 235,016 236,425 $ 591,572	End of 2017 $ 78,668 148,862 43,885 $ 271,415
		Year of 2018	Year of 2017
	( ( (	$ 1,962,012 490,012 552,218) ( 741,130) ( 1,515,244 354,423) $ 2,319,497	$ 2,406,581 376,846 490,012) 715,636) 741,130 - $ 2,318,909

(35 ) Changes in the debt from the fundraising activities

Total liabilities from financing activities $ 5,464,291 2,637,662 89,976) 4,674 337,701 $ 8,354,352	Total liabilities	Total liabilities
	from financing
		activities 5,464,291 2,637,662 89,976) 4,674 337,701 8,354,352

$

7. Trade with related associates

(1)Ultimate Controller

The ultimate controller of the Company is Lin Qibin.

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(2 ) Company Names and Relationship

Company Names Relationship Jilin Leigh Auto Parts Industrial CO., LTD Associates Chengtuyuli Auto Parts Industrial CO., LTD Associates Hungli Auto Parts Industrial CO., LTD Associates Kenlien Engley (Changchun ) Auto Structure CO., LTD. Associates LINDE WIEMANN GmbH KG Other relationship Changchunchiehke Auto Parts Industrial CO., LTD Associates Chungchingchunglikaijui Auto Parts Industrial CO., LTD Associates Tianjin Chinli Auto Parts Industrial CO., LTD Associates Qingdaoyuli Auto Parts Industrial CO., LTD Associates

Note: Far East International Leasing Co., Ltd. is not a contact relationship since it was appointed to release the director of the Company on August 1, 2017.

(3 ) Matters relating to the relationship between the world's major transactions

1. Sal e s Production: －Associates	2018 $ 3,099	$	2017
			5,147

There is no significant difference between the transaction price and the collection condition of the commodity sales and the non-related person.

P u r c h a s e

2.P u r c h a s e
Production: －Associates －other related	2018 $ 1,176,320 285,199 $ 1,461,519	$	2017
			1,009,139 - 1,009,139
		$

The commodity is purchased from the affiliated enterprise on general commercial terms and conditions. There is no significant difference between the transaction price and the payment terms and the general supplier, and the general manufacturer pays within 3 0~9 0 days of the monthly pay.

Accounts receivable

nthly pay. Accounts receivable
Accounts receivable: －Associates	2018 $ 2,655	$	2017
			5,611

Reverse the receipt and payment of the sale of the related person and the way in which the goods receivable and payable are offset by payment.

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4. Other receivables

4.Other receivables
Receivables: －Associates －Other related	End of 2018 $ 2,691 116 $ 2,807	End of 2017
		$ 1,657 1,990 $ 3,647

The other receivables of the Shangkai-Linked Enterprise are due to the receivables generated by the Company and the stakeholders for renting the factory premises.

5. Notes payable

5.Notes payable
Notes payable: －Associates 6.Notes account Notes account: －Associates －Other related 7. Others Others: －Associates 8.Prepaid Payments －Associates		End of 2018 114,506 End of 2018 571,976 24,081 596,057		End of 2017 114,014 End of 2017 444,182 26,186 470,368 End of 2017
	$		$

	$		$
	$		$
		End of 2018
				302 End of 2017 18,280
	$	3,921 End of 2018	$

	$	7,241	$

9. Equity Trading

Information on the equity Transactions of the Republic of China 10 6 and other related persons please refer to note 6 (XXXI) for details.

10. Operating expenses/other payables

End of 2018 End of 2017

Associates －Associates －Others	Other For operation $ 964 67,550 $ 68,514	payables $ 732 1,754 $ 2,486	Other For operation $ - 57,016 $ 57,016	payables
				$ - 53,727 $ 53,727

Operating expenses are mainly related to the payment of relevant technical services and production m a n a g e m e n t instructors of the salary costs.

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11. Rental Costs

al Costs
	Year of 2018
Lessor Objects Expenditure Associates Plants & buildings $ 13,362 Year of 2017		Expenditure	Other $ 1,318	Payment
				monthly
Lessor Objects Associates Plants & buildings		Expenditure	Other $ 4,031	Payment
		$15,330		monthly

For information on the above lease contract, please refer to note 6 (XXXIII) for the rental calculation of the subject matter of the lease, which is determined by reference to the rental price of the adjacent area and the area leased at the time of rental.

12. Leasing Transactions

ng Transactions
	End of 2018
Lessor Other related	Objects Subject Machinery For rent End of 2017		Amount $ 7,728	Payment
				Monthly
Lessor Other related	Objects Machinery	Subject For rent	Amount $ 16,739	Payment
				Monthly

The Company provides the relevant persons with financial leases for the rental of machinery and equipment, please refer point 2 under note 6 (16).

(4 ) Key Management compensation Information

Salary and short-term employee benefits	$	2018 59,986	$	2017 45,242

8. Pledged Assets

The company's assets provide the following details:

		Accounting Value	Accounting Value	Accounting Value
Assets	End of	2018		End of 2017	Guaranteed purpose
Refundable deposits	$	902,595	$	664,712	Established factory deposit,
(List other Current					purchase subsidiary agreement
Assets)					deposit and acceptance bill
					deposit
Refundable deposits (List other non-current		263,241		175,519	Lease loan
Assets) land use right (List other non-Current		-		87,663	Lease loan
Assets)
Real estate, plant and equipment		1,152,514		153,314	Short-term load, lease loan
Note receivable		696,427		247,237	Acceptance bill deposit
Note account		447,000		-	short-term load
	$	3,461,777	$	1,328,445

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9. Significant o r c o n t i n g e n t d e b t s a n d u n r e c o g n i z e d c o n t ra c t u a l c o m m i t m e n t s

Capital expenditures that have been signed but have not yet occurred:

Real estate, plant and equipment	December 31, 2018 $ 2,077,394	December 31, 2017
		$ 2,173,028

Please refer to Note 6 (XXXIII) for the Business Lease Agreement and the Note 6 (XVI) for the Capital Lease Agreement.

10. Major disaster damage

None.

1 1 . After the major period

On February 20, 2019, the company passed the Board of Directors of the Board of Directors - Changchun Engley Automobile Industry Co., Ltd. for the first time to open a common currency (stock A ) and apply for listing on the Shanghai Stock Exchange.

1 2 . Others

(1 ) Capital Management

The Company’s capital management objectives are to ensure that the Company can continue to operate, maintain the best capital structure to reduce the cost of capital, and provide remuneration for shareholders. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to the shareholders, return the capital to the shareholders, issue new shares or sell assets to reduce debt. The Company uses the debt-to-debt ratio to monitor its capital, which is calculated by dividing the net debt by the total amount of capital.

The net debt is calculated as the total borrowings (including “flowing and non-current borrowings” as reported in the consolidated balance sheet) deducting cash and cash. The total amount of capital is calculated as the “beneficiary” reported in the consolidated balance sheet plus the net debt.

balance sheet plus the net debt.
Total load Less: cash and cash Equivalents ( Net debt Total equity Total capital Debt to capital ratio	End of 2018 $ 8,397,128 3,241,253)	End of 2017
		$ 5,944,839 1,162,848) 4,781,991 11,461,609 16,243,600 29.44%
	5,155,875 13,399,473 18,555,348 27.79%

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(2 ) Financial Tool

Financial Tool
1.Types of financial tools Financial ToolFINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS FORCE THROUGH FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Financial assets measured by amortized cost Cash and cash bill receivable Accounts receivable (including related parties) Other receivables (including related parties) Refundable deposits Financial liabilityFinancial liabilities measured by amortized cost Short-term load Bills payable (including related parties) Accounts payable (including related parties) Other accounts payable (including related parties) Corporate debt payable (including the portion due within one year) Lease payable (including part due within one year) Long-term borrowing (including the portion due within one year)	2018 $ 1,320 3,241,253 1,113,140 4,075,118 121,925 1,165,836 $ 9,718,592 $ 2,337,360 1,701,443 4,322,926 1,923,825 1,471,860 42,776 4,489,064 $ 16,289,254	2017 $ 2,530 1,162,848 821,814 3,773,169 39,608 840,231 $ 6,640,200
		$ 1,668,176 1,360,546 3,746,573 1,527,595 1,067,186 480,548 2,575,233 $12,425,857

2. Risk management policy

The Company's daily operations are affected by a number of financial risks, including market risk (including exchange rate risk and interest rate risk), credit risk and liquidity risk. The Company’s overall risk management policy focuses on unpredictable events in the financial market and seeks to reduce the potential adverse effects on the Company’s financial position and financial performance.

The nature and extent of heavy financial risks
(1) M a r k e t R i s k

Currency Risk

A. This Company is a cross-country operation. Therefore, it is subject to the exchange rate risk arising from the transaction of the company and its subsidiaries. It is mainly in Renminbi, US Dollar and Euro. The relevant exchange rate risk comes from the future business transactions and the recognized assets and liabilities.

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B. The business of the Company involves certain non-functional currencies (the functional currency of the Company and some subsidiaries is New Taiwan Dollar, and the functional currency of some subsidiaries is Euro and Renminbi), so it is affected by exchange rate fluctuations. Exchange rate fluctuations affect foreign currency assets and liabilities as follows:

			End of 2018
	ForeignCurrency
(Foreign currency:	(in	thousands )	exchange	rate	amount (TWD)
Functional currency)
Financial assets
Currency
CNY：TWD	$	20,444	4.47	$	91,385
USD：TWD		1,247	30.72		38,308
USD：CNY		13,947	6.87		95,816
Financial liabilities
Currency
USD：CNY	$	29,093	6.87	$	893,737
EUR：TWD		15,985	35.20		562,672
EUR：CNY		17,927	7.87 End of 2016		631,030
	ForeignCurrency
(Foreign currency: Functional currency)	(in	thousands )	exchange	rate	amount (TWD)
Financial assets
Currency
USD：TWD	$	1,676	29.76	$	49,878
Non-Currency EUR：CNY	$	920	7.80	$	32,724
Financial liabilities
Currency
USD：CNY	$	18,020	6.51	$	536,275
EUR：TWD		16,512	35.57		587,332
EUR：CNY		8,806	7.80		313,229

C. All Exchange benefits and losses recognized by the Company’s monetary projects from January 1, 2018 to December 31 and from January 1, 2017 to December 31 due to exchange rate fluctuations (including realized and Unrealized) The total amount of loss is 70,708 TWD and loss 81,216 TWD (in thousands).
D. The Company’s foreign currency market risk analysis due to major exchange rate fluctuations is as follows:

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2018 Sensitivityanalysis	2018 Sensitivityanalysis	2018 Sensitivityanalysis
amplitude 1 1 1 % 1 1 1	effect $ 914 383 958 $ 8,937 5,627 6,310	affect others
		- - - - - -
~~%~~ 2017Sensitivityanalysis
amplitude 1 1	effect $ 499 $ 327	affect others
		- -

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USD：TWD	1	5,363	-
EUR：TWD	1	5,873	-
EUR：CNY	1	3,132
	%

Cash flow and fair value interest rate risk

A. The Company’s interest rate risk comes mainly from short-term borrowing and longterm borrowing at floating rates, exposing the Company to the risk of cash flow rates. The Company’s borrowers are fixed and floating rates from January 1, 2018 to December 31 and from January 1, 2017 to December 31, and the Company’s loans at floating rates are in USD and EUR Denominated
B. NET (loss) profits after the period from January 1, 2018 to December 31 and from January 1, 2017 to December 31 will be respectively when borrowing rates rise or fall by 1%, while all other factors remain unchanged Reduction or increase of 54, 6 11 NTD and 33, 947 NTD (in thousands), mainly due to floating interest rate borrowing caused by the change in interest costs.

(2) Credit risk

A. The credit risk of the Company is the risk of financial loss to the Company due to the inability of the counterparty of the client or financial instrument to meet its contractual obligations, mainly arising from the inability of the counterparty to liquidate Accounts receivable paid on the basis of the terms of collection and the cash flow of the contract classified as an investment in a debt instrument measured at fair value through gains and losses.
B. The Company shall, in accordance with its internal established credit policy, manage and credit risk to each of its new customers before making payment and proposing terms and conditions for delivery. Analysis The internal risk Control department assesses the credit quality of its customers by taking into account their financial position, past experience and other factors. Individual risk limits are set by the Board of directors in accordance with internal or external reviews, and regular monitoring of the use of credit lines. The main credit risk comes from cash and deposits deposited in banks and financial institutions, as well as from the customer’s credit risk, and include accounts receivable that have not yet been collected. For banks and financial institutions, only good institutions, such as credit evaluation, will be accepted as the subject of the transaction.
C. The Company uses I FRS 9 to provide the following assumptions as a basis for judging whether there has been a significant increase in the credit risk of financial instruments since the original recognition:

When the contract amount is more than 30 days overdue according to the agreed terms of payment, it is considered that the credit risk has increased significantly since the original recognition of the financial assets.

D. When setting a two series of investment targets for independent rating, the Company determines that the subject matter of the investment is a significant increase in credit risk.
E. The Company uses I FRS 9 to provide the premise that a breach is deemed to have occurred when the contract amount is more than one year overdue under the agreed terms of payment. F. The Company will use a simplified approach to customer accounts receivable to estimate expected credit losses on the basis of the loss rate method.

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G. The Company incorporates a loss rate based on the historical and current information of a given period to estimate future forward-looking considerations to assess the loss of allowance for accounts receivable , The loss rate method of December 31, 2018 is as follows:

End of 2018 Expect loss Account value Allowanc e losses	Not overdue Within 90 days 0% 5% $ 3,669,936 $ 303,159 $ - ($ 15,158) ($	Not overdue Within 90 days 0% 5% $ 3,669,936 $ 303,159 $ - ($ 15,158) ($	Not overdue Within 90 days 0% 5% $ 3,669,936 $ 303,159 $ - ($ 15,158) ($	91-180 days	($	over 181 days	over 181 days	Total $ 4,138,960 66,497)
				10% $ 76,216 7,622)		49% $ 89,649 43,718) ($
						43,718)

H. The Company’s statement of changes in the allowance for receivables from the adoption of simplified practices is as follows:

adoption of simplified practices is as follows:
Jan.1_IAS39 applied Jan. 1_IFRS9 Impairment loss Turnaround Effect of exchange rate Dec. 31	2018
	Note Receivables
	$ 72,162 - 72,162 (4,168) (1,497) $ 66,497

I. Republic of China 10 6 years January 1 to December 31 Credit risk information please refer note 12 and (XII).

(3) Liquidity Risk

A. Cash flow forecasting is carried out by each of the Company’s operating entities and is funded by the Company’s financial department. The Company Finance Department monitors the Company’s liquidity requirements forecast to ensure that it has sufficient funds to support its operational needs and maintains sufficient unencumbered loan commitments at all times so that the Company does not violate the relevant borrowing limits or terms. The forecast considers the company's debt financing plan, debt terms, compliance with the internal balance sheet's financial ratio target, and external regulatory requirements.
B. The Company Finance Department invests the remaining funds in the current deposits and currency market deposits of the interest-bearing deposits. The selected tools have the appropriate date of arrival or sufficient liquidity to meet the above forecast and provide sufficient water level.
C. The Company will be closed until December 31, 2018 and December 31, 2017.The amount of load is 4,6,51,829, and 2,9,42,122, respectively (in thousands).

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D. The following table is the non-derivative financial liabilities of the Company, which are Company according to the relevant due date. The non-derivative financial liabilities are analyzed according to the balance period from the date of the assets to the date of the contract. The amount of the cash flow of the contract disclosed in the table below is the amount of the undiscounted amount.

Non-derivative

Non-derivative financial liabilities - - - - - - - - - - - - Lease payable Corporate debt payable 253,550 - 121,588 - (including the portion due within one year) financial liabilities: End of 2018 1 year or less 1 to 2 years 2-3years Short-term load $ 2,359,009 $ - $ - Note payables 1,586,937 - - Note payables-related 114,506 - - Accounts Payable 3,726,869 - - Accounts Payable- related 596,057 - - Others 1,916,100 - - Others-related 7,725 - - Lease payable 45,830 - - Corporate debt payable Corporate debt payable 1,100,000 400,000 - Long-term borrowing (including the portion Long-term borrowing 222,675 1,137,290 1,358,321 (including the portion due within one year)	3-5years $ - - - - - - - - - 111,453	5years or more total $ - $ 2,359,009 - 1,586,937 - 114,506 - 3,726,869 - 596,057 - 1,916,100 - 7,725 - 45,830 - 1,500,000 - 2,829,739

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(3 ) Fair value information

The various levels of valuation techniques used to measure the fair value of financial and non-finished tools are as follows:
The first level: the price of the same assets or liabilities that the enterprise can obtain in the active market (without adjustment). The active market refers to a market with sufficient frequency and quantity of assets or liabilities to provide fixed-price information on a continuous basis.
Level 2: Observable inputs that are directly or indirectly connected to assets or liabilities, except those included in the first level.

Third level: Unobservable input value of assets or liabilities.

Financial tools that are not measured at fair value
(1) Except as listed in the table below, the Company’s financial instruments that are not measured at fair value (including cash and cash equivalents, bills receivable, accounts receivable, accounts receivable - related parties, other receivables, short-term loans, The carrying amount of notes payable, accounts payable, accounts payable - related parties, other payables, other payables - related parties and long-term borrowings (including the portion due within one year) is a reasonable approximation of fair value.

Financial liabilities:

value. inancial liabilities:
Corporate debt payable (including within one year due)	2018 Fair value Account amount 3rdlevel $ 1,471,860 $ 1,466,962	2018
			Fair value 3rdlevel $ 1,466,962

(2) The method used by the Company to measure the fair value and the assumptions are as follows:

Convertible bonds: The convertible bonds issued by the Company, whose coupon rate and market interest rate are approximated, so the fair value of their expected cash flow is estimated to be about its book value.

The financial and non-financial tools are measured at fair value. The Company is classified according to the nature, characteristics, risks and fair value of the assets and liabilities. Relevant information is as follows:

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End of 2018 Assets Repetitive fair value 1stlevel FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - Corporate bond redemption End of 2017 Assets $ - Repetitive fair value 1stlevel FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - Corporate bond redemption $ -	2ndlevel $ - 2ndlevel $ -	3rdlever $ 1,320 3rdlever $ 2,530	Total
			$ 1,320 Total
			$ 2,530

There was no any transferring between 1st and 2nd level in January 1 to December 31, 2018 and January 1 to December 31, 2017.
The following table shows the changes in the third level from January 1 to December 31, 2018 and January 1 to December 31, 2017:

Balance, at beginning New added Recognized in the current profit and loss (loss) Profit(Note) Balance, in the end	Jan. 1 to Dec. 31, 2018 $ 2,530 159 ( 1,369) $ 1,320	Jan. 1 to Dec. 31, 2017 $ - 876 1,654 $ 2,530

Note: The operating profit and loss are accounted for.

W i t h i n ye a r o f 2 0 1 8 a n d ye a r o f 2 0 1 7 , n o t r a n s f e r r i n g f r o m t h e t h i r d g r a d e .
Process evaluation system for the fair value of the Company are classified in the third stage of the finance department is responsible for independent verification fair value of financial instruments, by independent sources close to the market status of the evaluation results, and regular review to ensure that the evaluation results The system is reasonable.
For the case of the third grade fair value balance the amount of items

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as the heavy models only evaluated Great be observed output amount of funding information into value and the lower major not be observed input value becomes move the sensitivity of the analysis Description such as:

Corporate bond redemption Corporate bond redemption		End of 2018 To major unobservable range fair value skill input (weighted )	Relationship between input and fair value
		$ 1,320 Binary tree evaluation mode volatility 28.91% End of 2017 To major unobservable range fair value skill input (weighted) $ 2,530 Binary tree evaluation mode volatility 27.14%	higher volatility, higher fair value Relationship between input and fair value higher volatility, higher fair value

The Company has carefully assessed the selection of evaluation models and evaluation parameters, but the use of different evaluation models or evaluation parameters may lead to different results of evaluation. For financial assets and financial liabilities classified as the third tier, if the evaluation parameters change, the impact on the profits and losses of the current period or other consolidated gains and losses is as follows:

End of 2018

	End of	2018
Input Financial Assets Corporate Debt Redemption Volatility Input Financial Assets Corporate Debt Redemption Volatility	Recognized as profit and loss Change Favorable Unfavorable ±1% $ 40 ($ 50) End of Recognized as profit and loss Change Favorable Unfavorable ±1% $ 10 ($ 10)	Recognized in other comprehensive gains Favorable Unfavorable $ - $ - 2017 Recognized in other comprehensive gains Favorable Unfavorable $ - $ -
		Favorable $ -

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(4 ) The impact of the first application of the IFRS 9

The major accounting policies adopted from January 1 to December 31, 2017 are as follows:
(1) Financial assets that are measured at fair value through profit or loss
- A. Financial assets measured at fair value through profit or losses are financial assets held for trading. If the financial assets are acquired in the short-term, they are classified as holding financial assets for trading. Derivatives except for hedging accounting are designated as hedging items, The average is classified as a financial asset with trading.
- B. The Company adopts the trading day for the financial assets that are measured at fair value through the trade-offs that are in compliance with the trading practices.
- C. When the original recognition is based on the fair value, the relevant transaction costs are recognized as current gains and losses. Subsequent to the fair value, the change in fair value is recognized in the current profit and loss.
(2) Provision of gold for sale
- A. The provision of a financial asset is a non-derivative financial asset that is designated for sale or not classified as any other category.
- B. The Company uses the trading day for the financial statements of the financial institutions that are in compliance with the trading practices.
- C. At the original recognition, the transaction cost is added according to its fair value, and the subsequent measurement is based on the fair value. The change of the fair value is recognized in other comprehensive gains and losses.
(3) Receivables
- It is the original receivable that is generated by the customer in the normal course of business for the sale of goods or services. At the time of initial recognition, the fair value is measured, and the effective interest method is used to deduct the amount of gold after deducting from the cost of amortization. However, the short-term accounts receivable are unpaid, and the discount is not significant, and the subsequent payment is based on the amount of the original invoice.
(4) Financial assets impairment
- A. On each balance sheet date, the Company
  - assesses whether there is any objective evidence of impairment, which indicates that one or more items (ie “losses”) occurred after the original recognition of a certain Company or Company of financial assets, and The loss event has a reliable estimate of the estimated future cash flows of a financial asset or Company of financial assets.
- B. The policy used by the Company to determine whether there is a witness evidence to reduce the loss:
  - (A) The financial affairs of the issuer or the debtor are difficult;
  - (B) a breach of contract, such as a delay or non-payment of interest or principal payments;
  - (C) the concession that the debtor may not be able to consider due to the

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economic or legal reasons related to the financial difficulties of the debtor;

(D) The possibility of the debtor entering the bankruptcy or other financial restructuring is greatly increased;
(E) The active market of the financial assets was lost due to financial difficulties;
(F) Observable information shows that the estimated future cash flows of a Company of financial assets are measurably reduced after the original recognition of the assets, although the reduction is not yet recognized as belonging to a particular financial asset in the Company. Such information includes unfavorable changes in the debtor's repayment status of the Company’s financial assets, or national or regional economic conditions related to asset defaults in the Company’s financial assets;
(G) the information in the technical, market, economic or legal environment in which the issuer is operating, which has been adversely affected, and which may show that it may not be able to recover the investment cost of the equity investment; or
(H) The fair value of the equity investment in the investment fell to a lower value than the long-term or long-term.
C. The Company has been evaluated as having the evidence of the impairment loss and the loss has been lost, according to the following categories:
(A) The financial assets measured at amortized cost are recognized as the impairment loss at the current profit and loss by the difference between the current account amount and the estimated present value of the current cash flow discounted at the original effective rate of the financial asset. When the amount of the impairment loss decreases in the subsequent period, and the decrease can be objectively linked to the event occurring after the recognition of the impairment loss, the previously recognized impairment loss is amortized cost at the reversal date in the absence of the impairment loss. Within the limit, the profit and loss will be reversed. The amount of the recognition and return loss loss is adjusted by the allowance account to adjust the amount of the account.
(B) Provision of gold for sale
- Based on the difference between the acquisition cost of the asset (net of any repaid principal and amortization) and the current fair value, the impairment loss previously recognized in profit or loss of the financial asset is reclassified from other comprehensive Current profit and loss. Belonging to debts

The impairment loss is lost to the current profit and loss when the public value increases in the subsequent period and the increase can be objectively connected to the impairment loss recognition. Investors who are entitled to profit and loss must not be allowed to pass the loss or loss of profit or loss.

The current profit and loss will be reversed. The amount of the recognition and return loss is adjusted directly from the book value of the self-investment.

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The book value of financial assets has been converted from I AS 3 9 on December 31, 2017 to 1 January 2018. The preparation according to IFRS 9 has no impact on the Company.
Important items for December 31, 2017:
(1) Financial assets that are measured at fair value through profit or loss

Dec. 31, 2017 Current items: Holding financial assets for trading Convert corporate bond redemption rights $ 2,530

The net profit and loss recognized by the Company for the redemption and resale rights of the convertible corporate bonds as of December 31, 2017 is 0.

The c r e d i t r i s k i n f o r m a t i o n f r o m J a n u a r y 1 t o D e c e m b e r 3 1 , 2 0 1 7 i s a s f o l l o w s :
(1) Credit risk is the risk of financial loss caused by the inability of the trading partner of the customer or financial instrument to fulfill the contractual obligations. The Company shall conduct management and credit risk analysis for each of its new customers before it is determined by the internal credit policy of each of the Company’s operations and the conditions and conditions for the delivery of the goods. The internal risk control system evaluates the customer's credit quality by considering its financial status, past experience and other factors. The limits of individual risks are determined by the internal control of the credit control, based on the internal or external evaluation, and the use of credits is monitored on a regular basis. The main credit risk comes from cash and cash and deposited deposits with banks and financial institutions. It also comes from the credit risk of customers, including receivables that have not yet been received. For banks and financial institutions, only good institutions such as credit ratings will be accepted as transaction objects.
(2) From January 1st to December 31st, 2017, there is no limit on the credit limit, and the management level is not expected to be subject to any major loss due to the failure of the trader to perform.
(3) The Company's receivables and accounts are unsatisfactory and unconfirmed. The credit quality according to the Company’s credit standard is as follows:

Credit rating A Credit rating is other than A Credit rating A Credit rating is other than A	Dec. 31, 2017 $ 789,627 32,187 $ 821,814 $ 3,522,359 33,887 $ 3,556,246

Note: The Company’s sales management system divides customers into the following three ~81

categories:

Rating A: The relationship with the company has been good for the past 2 years, and there are no bad records.

Rating B: Customers who do not meet the A and C levels.

RatingC: In the past 2 years, the company has had arrears, defaults or other bad records with the company.

(4) Analysis of the age of financial assets that have been overdue but not derogated: ：

Within 90 days 91-180 days Over 181 days	Dec. 31, 2017
	$ 113,206 38,176 130,326 $ 281,708

(5) Changes in the impairment of financial assets:
A. The Company’s deductible amount of accounts receivable was 1,766 NTD (in thousands) by December 31, 2017.
B. The allowance for the bad account is as follows:

Evaluation At beginning List impairment loss Effect of exchange rate In the end	Year of 2017	Year of 2017
	Individual Loss $ - 1,743 23 $ 1,766	Company $	Loss 45,072 25,812 488) ( 70,396	Total $ 45,072 27,555 465)
		$		$ 72,162

(5 ) Impact of the first application of the IFRSt 15

From January 1 to December 31, 2017, the revenue recognition policy used in the m a j o r accounting policies is as follows:

Sales revenue

The Company manufactures and sells related products such as automobile parts, stamping products, hot-pressed products, and mold design. Revenue is the fair value of the consideration received or receivable for the v's external sales and sales, which is deducted from the value added tax, the sales return, the quantity discount and the net amount of the discount. When the goods are sold to the seller and the sales amount can be measured and the future economic benefits are likely to flow into the enterprise, the revenue is recognized. When the significant risks and rewards related to ownership have been transferred to the customer, the Company does not continue to participate in the management and maintains effective control of the goods and the customer accepts the goods according to the sales contract, or there is objective evidence that all acceptance terms have been met. The delivery of the goods occurs.

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The Company’s income from the January 1 to December 31, 2017 application of the accounting policy is as follows:

Sales revenue

Year of 2017 $ 18,879,842

If the v continues to apply the above accounting policy from January 1 to December 31, 2018, the number and description of the current asset balance sheet and the comprehensive profit and loss statement line item are as follows:

Balance sheet items Statement Contract liabilities- payment in advance (1) Other current liabilities	End of 2018
	Balance recognized by IFRS 15 Balance recognized by the original accounting policy Effect of policies $ 522,570 $ - $ 522,570 - 522,570 (522,570)

Note: There is no impact on the consolidated income statement for the current period.

During the past reporting period, the payment in advance in connection with the client's contract was recognized as a contractual liability under IFR S 15.

1 3 . Notes Disclosure Matters
(A) Information on major transaction matters
1. For money loan to others: please refer schedule 1.
2. Endorsement of others Guarantee: Please refer schedule 2.
3. The conditions of holding securities at the end of the period (excluding investment subsidiaries, affiliates and joint venture control components): None.
4. The amount of accumulated purchase or sale of the same securities amounts to NT 300 million NTD or more than 20% of the amount of capital received: please refer on schedule 3.
5. The amount of real estate obtained amounts to NT $300 million or the amount of capital received is more than 20%: please refer schedule 4.
6. The amount of the disposition of immovable property amounted to 300 million NTD or the amount of capital paid more than 20%: none.
7. The amount of the person entering or sold with the relationship up to 100 million NTD or the capital received is more than 20%: Please refer schedule 5
8. The amount of the receivable is up to 100 million NTD or the amount of capital received is more than 20%: Please elaborate on schedule 6.
9. Engaging in derivatives trading: None.
10. Business relations and important transaction transactions and amounts between the parent company and its subsidiaries and subsidiaries: Please refer schedule 7.

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(B ) Information related to the transfer of investment business

The name of the invested company, the region and other relevant information (excluding mainland invested companies): Please refer schedule 8.

(C ) Investment in China

  1. Basic information: Please refer schedule 9 .

  2. Major transactions arising directly or indirectly from the investment companies of the mainland through the cause and transfer of the third region: Please refer schedule 9.

1 4 . O p e r a t i n g S e gm e n t s In f o r m a t i o n
(I) General information

The management of the Company has identified the reporting departments on the basis of the reporting information applicable to the formulation of decisions by the main operating decision makers, and has divided the business organizations into Changchun Ying according to the nature of the company Lee automobile Industry, Changchun Engley parts, Chengdu Engley, Linde Tianjin and Suzhou Engley, while the Company’s revenue mainly produces and sells auto parts, stamping products, hot pressing molding products and so on.

(II) Measurement of departmental information

The profits and losses of the Company’s operating departments are measured by pre-tax gains and losses and are used as a basis for performance evaluation.

And the accountings policies of the operating departments are summarized in the same way as the significant accounting policies described in note iv.

(III) Information on departmental gains and losses and assets

Provided to key operational decision makers from January 1, 2018 to December 31 and 2017 1 From 1st to December 31, the department's information should be reported as follows:

follows:
Total Income Revenue from customers outside the enterprise Income from other sectors within the enterprise Segment revenue				2018
	Changchun Engley Industrial	$ 1,083,584 2,077,121 $3,160,705 Changchun Engley Parts $ 203,803	$ 3,715,418 414,203 $4,129,621 Chengtu Engley $ 763,147	$ 4,213,592 - $4,213,592 Linde Tianjin $ 807,281	$ 2,672,838 40,202 $2,713,040 Suzhou Engley $ 49,798	$ 16,840,922 3,183,998 $20,024,920 Total $ 3,065,902
	$ 5,155,490 652,472 $5,807,962 $ 1,241,873

~84

	2017	2017	2017
Changchun Engley Industrial
		20,024,920 7,501,658 27,526,578 5,671,192) 21,855,386	(

	$

				revenue before tax: 2017 $ 2,792,917 141,490 2,934,407 1,210,170) $ 1,724,237
					2,792,917 141,490 2,934,407 1,210,170) 1,724,237
				$

~85

(V ) Production and Labor Information

External customer revenue mainly comes from the production of automotive parts, stamping products, hot pressing molding products, mold design, manufacturing and related technical advisory services and other business.

Income information:

advisory services and other business. Income information:
Production Molding & others Total	2018		2017 $ 17,870,927 1,008,915 $ 18,879,842
	$ 19,977,257 1,878,129 $ 21,855,386

(VI ) Geography Information

The geography information of the Company in 2018 and 2017 listed below:

China Others		2018	2018	2017	2017
		Income $ 21,369,980 485,406 $ 21,855,386	non-Current Assets $ 12,009,950 799,004 $ 12,808,954	Income $ 18,527,419 352,423 $ 18,879,842	non-Current Assets $ 11,071,918 785,871 $ 11,857,789

The Company categorized the geography net revenue based on the countries where our products sale. Non-current assets refer to real estate, plant and equipment, intangible assets and land use rights (accounting for other non-current assets), but do not include financial instruments and deferred tax assets.

(VII ) Major customers’ Information

Major customers’ information of the Company in 2018 and 2017 listed below:

Company A Company B (Following blank )	2018 Amount % $ 11,558,049 53% 3,348,776 15%	2017	% 50% 22%
		Amount $ 9,444,800 4,180,192

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Cayman Engley — Audit Report / Information 2018

51989_rns_2018-11-13_9a3a444a-9eeb-4ca3-8ebb-0d45ae440aff.pdf

Cayman Engley Industrial CO., LTD and its Subsidiaries 2017 & 2018 Consolidated Financial Statement and Audit Report of Independent Accountants Table of Contents

Cayman Engley Industrial CO., LTD. and its Subsidiaries

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Description

How our audit addressed the matter

Cayman Engley Industrial CO., LTD. and its Subsidiaries

EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT

Cayman Engley Industrial CO., LTD. and its Subsidiaries Consolidated Cash Flow

2018 & 2017

Cayman Engley Industrial CO., LTD Consolidated Financial Statements Notes December 31, 2017 to December 31, 2018

1. Company History

2. THE AUTHORIZATION OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

IFRS 16 Leases

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) Statement of Compliance

(B ) Basis of Preparation

Consolidated Income Statement

(4 ) Foreign Currencies Exchange

(5 ) Classification of current and non-current items

(6 ) Cash Equivalents

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

(9 ) Financial Assets Loss

(10 ) Derecognition of financial assets

(11 ) Inventories

(15 ) Intangible Assets

(17 ) Loans

(19 ) Interchangeable B o n d s P a ya b l e

( 2 0 ) Derecognition of financial liabilities

(21 ) Offsetting financial instruments

(22 ) Employee Benefits

- (23) Employee Share based Payment

(24 ) Income tax

(25) Share capital

(26 ) Dividends

(27 ) Revenue Recognition

2. Software service revenue

(28) Government Grants

(29) Business combination

(30) Operating segments

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

(1 ) Critical judgements in applying the Company’s accounting policies

(2 ) Critical accounting estimates and assumptions

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1 ) CASH AND CASH EQUIVALENTS

Aging analysis is based on past due (day).

(4 ) Inventories

(5 ) Prepayments

Balance Sheet

(8) Real estates, plants and equipment

2. The goodwill is distributed to the cash generating segments of the Company:

(10 ) Other Current Assets

(14 ) B o n d s p a ya b l e

(17 ) Pension

(1 8 ) Share Base Payment

(1 9 ) Equity

4. Treasury Share

(20 ) Capital Reserve

(21 ) Retained Surplus

Customer contract revenue

(25 ) Other Revenue

(29 ) Income tax

1. Income tax

(3 0 ) Earnings per share

(31) Trade with non-controlling equity

(32) Corporate mergers

2. NingBoMauXiang

(33 ) Operational Rent

7. Trade with related associates

(1)Ultimate Controller

(2 ) Company Names and Relationship

(3 ) Matters relating to the relationship between the world's major transactions

4. Other receivables

Cayman Engley Audit Report / Information 2018