EDOM - Annual Report 2018 | FinancialReports.eu

EDOM Technology Co., Ltd. and Subsidiaries

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

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2018 are the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Financial Reporting Standard 10, “Consolidated Financial Statements”. Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies as of and for the year ended December 31, 2018. Hence, we have not prepared a separate set of consolidated financial statements of affiliates.

Very truly yours,

EDOM TECHNOLOGY CO., LTD.

By:

YU-I TSENG

March 8, 2019

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and the Shareholders EDOM Technology Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of EDOM Technology Co., Ltd. (the “Company”) its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2018 and 2017, the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the 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, and we do not provide a separate opinion on these matters.

The descriptions of the key audit matters for the Group’s consolidated financial statements are as follows:

The Impairment of Accounts Receivable

Refer to Notes 5 and 13 of the accompanying consolidated financial statements for further disclosures related to accounts receivable and the impairment of accounts receivable.

As of December 31, 2018, accounts receivable were a significant component of the Group’s assets, with a gross account receivable balance of NT$4,624,844 thousand on the consolidated balance sheet, which accounted for 26.71% of the consolidated total assets. The major risk of accounts receivable lies within the valuation due to the subjectivity inherent in estimating the impact of assumptions on the recoverability of accounts receivable and customer credibility risk. Therefore we identified the impairment of accounts receivable as a key audit matter.

We evaluated management’s accounting policies of accounts receivable and reviewed the accuracy of the aging of receivables and the customers’ respective credit ratings in order to assess the reasonableness of the impairment policy of accounts receivable.

Our audit procedures in respect of this area included the following:

Sampling accounting documents to test the correctness of the year-end aging report of accounts receivable and inspecting whether any valuation of the impairment was performed on the abnormally aged receivables.
Understanding the credit management of the Group through discussions on the impairment arising from the credit rating policy; obtaining the historical write-off ratio of accounts receivable and analyzing the allowances for accounts receivable in the current period in order to evaluate the reasonableness of the allowance for bad debts applied to similar credit risks.

The Impairment of Inventories

Refer to Notes 5 and 14 of the accompanying consolidated financial statements for further disclosures related to inventories and the impairment of inventories.

As of December 31, 2018, inventories were a significant component of the Group’s assets, with a gross inventories balance of NT$9,830,322 thousand on the consolidated balance sheet, which accounted for 56.76% of the consolidated total assets. Inventories are comprised mainly of semiconductor components; therefore, due to the fast changing demand in technology which may result in inventory becoming slow moving or obsolete, inventories may not be able to be sold or sales prices may be discounted to less than the inventories respective carrying values. Management assesses the net realizable value of inventories according to the International Financial Reporting Standards on inventories which comprises an area of significant judgment. As a result, the inventories balance is significant to the consolidated financial statements, and therefore we identified the impairment of inventories as a key audit matter.

Our audit procedures in respect of this area included the following:

Testing the carrying value of inventory by comparing the carrying value to the latest sales invoices for a sample of inventory items to assess whether those items were held at the lower of cost or net realizable value.
Selecting a sample of inventory items at the year-end and confirming that they have been valued at the lower of cost or net realizable value by reference to the post year-end sales; additionally, challenging the appropriateness of the Group’s inventory provisioning policy by assessing inventory aging profiles and comparing the historical levels of write-offs against the amounts provided.
Attending year-end inventory counts, along with other relevant procedures, to assess the condition of inventory and evaluate the adequacy of inventory provisions for obsolete and slow-moving goods.

Other Matter

We have also audited the parent company only financial statements of the Company as of and for the years ended December 31, 2018 and 2017 on which we have issued an unmodified opinion.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an 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 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 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 Group’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 Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
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Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are An-Hwei Lin and Chih-Hsien Ke.

Deloitte & Touche Taipei, Taiwan Republic of China

March 8, 2019

Notice to Readers

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

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at amortized cost - current (Notes 4, 9 and 38) Debt investments with no active market - current (Notes 4, 12 and 38) Notes receivable (Notes 4, 5 and 13) Accounts receivable (Notes 4, 5 and 13) Accounts receivable from related parties (Notes 4 and 37) Current tax assets (Notes 4 and 30) Inventories (Notes 4, 5 and 14) Other current assets (Note 21) Total current assets NONCURRENT ASSETS Financial assets at fair value through profit or loss - noncurrent (Notes 4 and 7) Financial assets at fair value through other comprehensive income - noncurrent (Notes 4 and 8) Available-for-sale financial assets - noncurrent (Notes 4 and 10) Financial assets measured at cost - noncurrent (Notes 4 and 11) Debt investments with no active market - noncurrent (Notes 4, 12 and 38) Investments accounted for using the equity method (Notes 4 and 16) Property, plant and equipment (Notes 4, 17 and 38) Investment properties (Notes 4 and 18) Goodwill (Notes 4 and 19) Other intangible assets (Notes 4 and 20) Deferred tax assets (Notes 4 and 30) Other noncurrent assets (Note 21) Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 4, 22 and 38) Short-term bills payable (Notes 4 and 22) Notes and accounts payable (Notes 4 and 24) Other payables (Notes 4 and 25) Current tax liabilities (Notes 4 and 30) Provisions - current (Notes 4 and 26) Current portion of long-term borrowings (Notes 4, 22 and 38) Other current liabilities (Notes 4 and 25) Total current liabilities NONCURRENT LIABILITIES Long-term borrowings, net of current portion (Notes 4, 22 and 38) Deferred tax liabilities (Notes 4 and 30) Net defined benefit liabilities - noncurrent (Notes 4 and 27) Guarantee deposits received (Note 37) Total noncurrent liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable to owners of the Company NONCONTROLLING INTERESTS Total equity TOTAL		2018 Amount % $ 1,391,847 8 15,745 - - - 177,543 1 4,624,844 27 7,383 - 3,326 - 9,830,322 57 264,119 1 16,315,129 94 88,095 1 6,763 - - - - - - - 56,630 - 645,526 4 33,860 - 36,336 - 17,262 - 95,642 1 22,919 - 1,003,033 6 $ 17,318,162 100 $ 4,083,178 24 644,763 4 7,367,278 42 655,546 4 54,842 - - - 168,596 1 240,146 1 13,214,349 76 749,944 5 9,336 - 13,703 - 10,064 - 783,047 5 13,997,396 81 2,225,726 13 122,316 1 550,603 3 61,686 - 315,165 2 927,454 5 32,848 - 3,308,344 19 12,422 - 3,320,766 19 $ 17,318,162 100		2017
				Amount % $ 670,084 5 - - 29,455 - 172,206 1 4,545,652 31 - - 3,310 - 7,904,755 54 301,360 2 13,626,822 93 - - - - 9,859 - 149,035 1 1,023 - 59,375 1 604,991 4 34,694 - 32,646 - 11,507 - 85,644 1 30,714 - 1,019,488 7 $ 14,646,310 100 $ 3,977,088 27 429,770 3 4,940,232 34 582,067 4 72,139 - 380,555 3 6,419 - 48,345 - 10,436,615 71 898,463 6 10,893 - 15,070 - 22,228 1 946,654 7 11,383,269 78 2,225,726 15 121,162 1 514,232 4 - - 463,048 3 977,280 7 (61,686) (1) 3,262,482 22 559 - 3,263,041 22 $ 14,646,310 100

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

OPERATING REVENUE (Notes 4 and 37) Sales Service income Other operating revenue Total operating revenue OPERATING COSTS (Notes 4, 14 and 29) GROSS PROFIT OPERATING EXPENSES (Notes 4, 29 and 37) Selling and marketing expenses General and administrative expenses Expected credit loss Total operating expenses PROFIT FROM OPERATIONS NONOPERATING INCOME AND EXPENSES (Notes 4, 11, 16, 29 and 37) Other income Other gains and losses Finance costs Share of profit (loss) of associates Total nonoperating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 30) NET PROFIT FOR THE YEAR		2018 Amount % $ 80,258,182 100 1,145 - 78 - 80,259,405 100 77,716,731 97 2,542,674 3 1,179,517 1 456,806 1 14,520 - 1,650,843 2 891,831 1 51,952 - 5,199 - (616,556) (1) (18,217) - (577,622) (1) 314,209 - 70,582 - 243,627 -		2017
				Amount % $ 75,980,045 100 5,386 - - - 75,985,431 100 73,507,329 97 2,478,102 3 1,116,844 1 452,038 1 - - 1,568,882 2 909,220 1 31,476 - (19,995) - (461,275) (1) 726 - (449,068) (1) 460,152 - 96,470 - 363,682 - (Continued)

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Notes 4 and 27) Unrealized loss on investments in equity instruments at fair value through other comprehensive income (Notes 4 and 28) Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 30) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations (Notes 4 and 28) Unrealized loss on available-for-sale financial assets (Notes 4 and 28) Unrealized gain on investments in debt instruments at fair value through other comprehensive income (Notes 4 and 28) Share of other comprehensive income (loss) of associates accounted for using the equity method (Notes 4 and 28) Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 4 and 30) Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE YEAR NET PROFIT (LOSS) ATTRIBUTABLE TO: Owners of the Company Noncontrolling interests		2018 Amount % $ 481 - (3,096) - 426 - (2,189) - 88,254 - - - 8,029 - (266) - (15,152) - 80,865 - 78,676 - $ 322,303 - $ 243,428 - 199 - $ 243,627 -		2017
				Amount % $ (1,421) - - - 242 - (1,179) - (230,496) - (4,928) - - - 1,054 - 39,006 - (195,364) - (196,543) - $ 167,139 - $ 363,715 - (33) - $ 363,682 - (Continued)

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO: Owners of the Company Noncontrolling interests EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 31) Basic Diluted		2018 Amount % $ 322,126 - 177 - $ 322,303 - $ 1.09 $ 1.09		2017
				Amount % $ 167,164 - (25) - $ 167,139 - $ 1.63 $ 1.60
		$		$

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

(Concluded)

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

			Equity Attributable to Owners of the Company	Equity Attributable to Owners of the Company
Share Capital	(Note 28) Amount $ 2,225,726 - - - - - - - 2,225,726 - 2,225,726 - - - - - - - - - $ 2,225,726	Capital Surplus (Notes 4, 23 and 28)	Others $ 4,172 - - - - - (4,172 ) - - - - - - - 1,152 - - - 2 - $ 1,154	Retained Earnings (Note 28) Unappropriated Retained Legal Reserve Special Reserve Earnings $ 490,396 $ - $ 237,403 23,836 - (23,836 ) - - (111,286 ) - - 363,715 - - (1,178) - - 362,537 - - - - - (1,770) 514,232 - 463,048 - - (71,589) 514,232 - 391,459 36,371 - (36,371 ) - 61,686 (61,686 ) - - (222,572 ) - - - - - 243,428 - - 907 - - 244,335 - - - - - - $ 550,603 $ 61,686 $ 315,165	Other Equity (Notes 4and 28)
					Unrealized Exchange Gain (Loss) on Differences on Financial Unrealized Translating Assets at Fair Gain (Loss) on the Financial Value Through Available-for- Statement of Comprehensive sale Financial Foreign Income Assets Operations $ - $ 11,755 $ 121,488 - - - - - - - - - - (4,928) (190,445) - (4,928 ) (190,445 ) - - - - - 444 - 6,827 (68,513 ) 23,570 (6,827) - 23,570 - (68,513 ) - - - - - - - - - - - - - - - 4,930 - 72,861 4,930 - 72,861 - - - - - - $ 28,500 $ - $ 4,348
		Additional Additional Paid-in Capital Paid-in Capital - Bond - Options Treasury Stock Conversion Expired Transactions $ 106,980 $ - $ 10,010 - - - - - - - - - - - - - - - - 4,172 - - - - 106,980 4,172 10,010 - - - 106,980 4,172 10,010 - - - - - - - - - - - - - - - - - - - - - - - - - - - $ 106,980 $ 4,172 $ 10,010
Shares (Thousands) 222,573 - - - - - - - 222,573 - 222,573 - - - - - - - - - 222,573

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

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EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Impairment loss recognized on trade receivables Net loss on fair value changes of financial assets designated as at fair value through profit or loss Finance costs Interest income Dividend income Share of loss (profit) of associates (Gain) loss on disposal of property, plant and equipment Loss on sale of investments Impairment loss on financial assets Write-downs of inventories Loss on disposal of scrap inventories and inventory physical count Net loss (gain) on foreign currency exchange Other items Changes in operating assets and liabilities Decrease in notes receivable Decrease in accounts receivable Increase in inventories Decrease (increase) in other current assets Increase (decrease) in notes and accounts payable (Decrease) increase in other payables Decrease in provisions (Decrease) increase in other current liabilities Cash generated from operations Interest paid Income tax paid Net cash generated from (used in) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at amortized cost Purchase of financial assets at fair value through profit or loss Proceeds from financial assets at fair value through profit or loss Purchase of available-for-sale financial assets Proceeds from sale of available-for-sale financial assets Purchase of debt investments with no active market Proceeds from sale of debt investments with no active market Purchase of financial assets measured at cost	2018 $ 314,209 33,459 9,808 14,520 - 11,480 616,556 (3,795) (654) 18,217 (506) - - 67,123 215 25,322 (891) 2,509 96,686 (1,676,172) 148,294 2,172,813 (23,930) (165,553) (27,936) 1,631,774 (605,154) (115,398) 911,222 15,326 (31,898) 3,822 - - - - -	2017 $ 460,152 27,691 4,327 - 3,686 - 461,275 (3,496) (1,391) (726) 534 6 18,406 22,411 1,445 (44,851) (1,014) 574,646 266,192 (295,604) (63,972) (1,246,125) 12,931 (18,749) 34,207 211,981 (466,381) (24,777) (279,177) - - - (2,000) 1,994 (10) 4,308 (65,608) (Continued)

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EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

Acquisitions of associates Increase in prepayments for financial assets at fair value through profit or loss Net cash outflow on acquisition of subsidiaries (Note 32) Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in other assets Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Increase in prepayments for land, building and equipment Interest received Dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Proceeds from short-term bills payable Repayments of bonds payables Proceeds from long-term borrowings Repayments of long-term borrowings Refunds of guarantee deposits received Dividends paid Acquisition of additional interest in subsidiaries (Note 33) Net cash (used in) generated from financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2018 $ (14,586) (400) (54,811) (29,770) 2,766 8,311 - 367 (15,031) - 3,795 654 (111,455) 22,554 214,993 - - (7,111) (12,699) (222,572) - (4,835) (73,169) 721,763 670,084 $ 1,391,847	2017 $ (5,000) - - (146,903) 815 - (1,675) - (1,345) (7,825) 3,496 1,391 (218,362) 337,118 229,814 (111,300) 107,000 (2,118) (18,930) (111,286) (6,724) 423,574 192,195 118,230 551,854 $ 670,084

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

(Concluded)

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EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

1. GENERAL INFORMATION

EDOM Technology Co., Ltd. (the “Company”) was established in July 1996 and engaged in the distribution of electronic parts and computer hardware, software and equipment. The Company’s shares have been listed on the Taiwan Stock Exchange since October 1, 2002.

The consolidated financial statements of the Company and its subsidiaries, collectively referred to thereafter as the “Group” are presented in the Company’s functional currency, the New Taiwan dollar.

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors and authorized for issue on March 8, 2019.

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

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

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

1) IFRS 9 “Financial Instruments” and related amendments

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

Classification, measurement and impairment of financial assets

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

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

Financial Assets Cash and cash equivalents Investments in Debt Securities with No Active Market Equity securities Mutual funds Notes receivable, and accounts receivables Notes receivable, and accounts receivables Financial Assets FVTPL Add: Reclassification from available-for-sale Required reclassification Remeasurement of financial assets at cost (IA FVTOCI Debt instruments Add: Reclassification from loans and rece Equity instruments Add: Reclassification from available-for-s Amortized cost Add: Reclassification from loans and receiva	Measurement Category	Measurement Category	FR A an $	Carrying Amount IAS 39 IFRS 9 Remark $ 670,084 $ 670,084 30,478 30,478 c) 76,917 11,683 a) 9,859 9,859 a) 72,118 59,816 b) 682,302 682,302 d) 4,035,556 4,056,299 e) S 9 Carrying mount as of uary 1, 2018 Retained Earnings Effect on January 1, 2018 Other Equity Effect on January 1, 2018 Remark a) b) 71,499 $ (75,589 ) $ - e) a) 4,066,158 4,000 16,743 c), d) 1,382,864 - - 5,520,521 $ (71,589) $ 16,743
	IAS 39 Loans and receivables Loans and receivables Available‑for‑sale Available‑for‑sale Available‑for‑sale Loans and receivables Loans and receivables IAS 39 Carrying Amount as of January 1, 2018 R $ - (IAS 39) - - S 39) - ivables (IAS 39) - ale (IAS 39) - - bles (IAS 39) - - $ -	IFRS 9 Amortized cost Amortized cost Mandatorily at FVTPL Fair value through other comprehensive income (i.e. FVTOCI) - equity instruments Mandatorily at FVTPL Amortized cost (FVTOCI - debt instruments) FVTOCI - debt instruments eclassifications Remeasurements I J $ 149,035 $ (77,536) 149,035 (77,536) 4,035,556 20,743 9,859 - 4,045,415 20,743 1,382,864 - 1,382,864 - $ 5,577,314 $ (56,793)
			$

a) The Group elected to classify all its investments in equity securities previously classified as available-for-sale under IAS 39 as at FVTPL and FVTOCI under IFRS 9, As a result, the related other equity - unrealized gain (loss) on available-for-sale financial assets of $6,827 thousand was reclassified to other equity - unrealized gain (loss) on financial assets at FVTOCI.

Investments in unlisted shares previously measured at cost under IAS 39 have been classified at FVTPL under IFRS 9 and were remeasured at fair value. Consequently, a decrease of $65,234 thousand and $63,287 thousand was recognized in both financial assets at FVTPL and retained earnings and an increase of $1,947 thousand was recognized in deferred tax assets on January 1, 2018.

The Group recognized under IAS 39 impairment loss on certain investments in equity securities previously classified as available-for-sale and the loss was accumulated in retained earnings. Since those investments were designated as at FVTOCI under IFRS 9 and no impairment assessment is required, an adjustment was made that resulted in a decrease of $4,000 thousand in other equity - unrealized gain (loss) on financial assets at FVTOCI and an increase of $4,000 thousand in retained earnings on January 1, 2018.

b) Mutual funds previously classified as available-for-sale under IAS 39 were classified mandatorily as at FVTPL under IFRS 9, because the contractual cash flows are not solely payments of principal and interest on the principal outstanding and they are not equity instruments. The retrospective adjustment resulted in a decrease of $12,302 thousand in retained earnings on January 1, 2018.
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c) Debt investments previously classified as debt investments with no active market and measured at amortized cost under IAS 39 were classified as at amortized cost with an assessment of expected credit losses under IFRS 9, because on January 1, 2018, the contractual cash flows were solely payments of principal and interest on the principal outstanding and these investments were held within a business model whose objective is to collect contractual cash flows.
d) Notes receivable, trade receivables and other receivables that were previously classified as loans and receivables under IAS 39 were classified as at amortized cost with an assessment of expected credit losses under IFRS 9.
e) Notes receivable, trade receivables and other receivables that were previously classified as loans and receivables under IAS 39 were classified as at FVTOCI with an assessment of expected credit losses under IFRS 9, because these investments were held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets. As a result of retrospective application, the related adjustments comprised an increase in other equity - unrealized gain (loss) on financial assets at FVTOCI of $20,743 thousand on January 1, 2018.
2) IFRS 15 “Revenue from Contracts with Customers” and related amendments

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

If the contract is noncancellable, the Group will recognize a receivable and a contract liability when it has an unconditional right to the consideration in accordance with IFRS 15. Prior to the application of IFRS 15, consideration was recognized as deferred revenue when received.

For product sales with discount, the Group recognizes a refund liability (recognized in other current liability) when recognizing revenue. Prior to the application of IFRS 15, return provisions and discount provisions were recognized when recognizing revenue.

The Group elected only to restate IFRS 15 for uncompleted contracts as of January 1, 2018.

Impact on assets, liabilities and equity for the current period

As Originally Stated Adjustments Arising from Initial Application December 31, 2017 Contract liability (recognized in other current liability) $ - $ 43,483 Unearned receipts (recognized in other current liability) 43,483 (43,483) Refund liability - 380,555 Provisions 380,555 (380,555) Total effect on liabilities $ 424,038 $ -	Restated $ 43,483 - 380,555 - $ 424,038

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3) IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

IAS 21 stipulated that a foreign currency transaction shall be recorded on initial recognition in the functional currency by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction. IFRIC 22 further explains that the date of the transaction is the date on which an entity recognizes a nonmonetary asset or nonmonetary liability from payment or receipt of advance consideration. If there are multiple payments or receipts in advance, the entity shall determine the date of the transaction for each payment or receipt of advance consideration.

The Group applied IFRIC 22 prospectively to all assets, expenses and income recognized on or after January 1, 2018 within the scope of the Interpretation.

b. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed by the FSC for application starting from 2019

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

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

Effective Date
Announced by IASB (Note 1)

January 1, 2019
January 1, 2019 (Note 2)
January 1, 2019
January 1, 2019 (Note 3)
January 1, 2019
January 1, 2019

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The FSC permits the election for early adoption of the amendments starting from 2018.
Note 3: The Group shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.
IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 and a number of related interpretations.

Definition of a lease

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

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The Group as lessee

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

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

Except for the leases of investment properties mentioned below, lease liabilities will be recognized on January 1, 2019 for leases currently classified as operating leases with the application of IAS 17. Lease liabilities will be measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets will be measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments. Except for the following practical expedients which are to be applied, the Group will apply IAS 36 to all right-of-use assets.

The Group expects to apply the following practical expedients:

a) The Group will apply a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
b) The Group will account for those leases for which the lease term ends on or before December 31, 2019 as short-term leases
c) The Group will exclude initial direct costs from the measurement of right-of-use assets on January 1, 2019.
d) The Group will use hindsight, such as in determining lease terms, to measure lease liabilities.

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

The Group as lessor

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

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Anticipated impact on assets, liabilities and equity

	Carrying	Carrying	Adjustments	Adjusted
	Amount as of		Arising from	Carrying
	December	31,	Initial	Amount as of
	2018		Application	January 1, 2019
Right-of-use assets	$	-	$ 61,683	$ 61,683
Total effect on assets	$	-	$ 61,683	$ 61,683
Lease liabilities - noncurrent	$	-	$ 61,683	$ 61,683
Total effect on liabilities	$	-	$ 61,683	$ 61,683

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

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

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

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

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b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value.

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

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for the asset or liability.
c. Classification of current and noncurrent assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period, even if an agreement to refinance, or to reschedule payments, on a long-term basis is completed after the reporting period and before the consolidated financial statements are authorized for issue; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Assets and liabilities that are not classified as current are classified as noncurrent.

d. Basis of consolidation
Principles for preparing consolidated financial statements

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition up to the effective date of disposal, as appropriate.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

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All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the noncontrolling interests even if this results in the noncontrolling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the noncontrolling interests are adjusted to reflect the changes in their respective interests in the subsidiaries. Any difference between the amount by which the noncontrolling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to the owners of the Company.

Refer to Note 15, Tables 7 and 8 for the detailed information of subsidiaries (including the percentages of ownership and main businesses).

e. Business combinations

Acquisitions of businesses are accounted for using the acquisition method. Acquisition-related costs are generally recognized in profit or loss as they are incurred.

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any noncontrolling interests in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.

Noncontrolling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation may be initially measured at fair value or at the noncontrolling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets. Other types of noncontrolling interests are measured at fair value.

Where the consideration that the Group transfers in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and is considered as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments made against goodwill or gains on bargain purchases. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. The measurement period does not exceed one year from the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified either as an asset or a liability is measured at fair value at the end of the subsequent reporting period, with any gains or losses recognized in profit or loss.

f. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

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

Nonmonetary items that are measured at historical cost in a foreign currency are not retranslated.

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For the purposes of presenting consolidated financial statements, the functional currencies of the Company and the group entities (including subsidiaries, associates and branches in other countries that use currency, different from the currency of the Company) are translated into the presentation currency, New Taiwan dollars as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Company and noncontrolling interests as appropriate).

g. Inventories

Inventories consist of goods and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs necessary to make the sale. Inventories are recorded at their weighted-average cost on the balance sheet date.

h. Investment in associates

An associate is an entity over which the Group has significant influence and that is not a subsidiary.

The Group uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group’s share of equity of associates.

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

The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized is deducted from the carrying amount of the investment.

i. Property, plant and equipment

Property, plant and equipment are measured at cost, less accumulated depreciation.

Freehold land is not depreciated.

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

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

j. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation. Depreciation is recognized using the straight-line method.

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

k. Goodwill

Goodwill arising from the acquisition of a business is carried at cost as established at the date of acquisition of the business less the accumulated impairment loss.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units or groups of cash-generating units (referred to as “cash-generating units”) that is expected to benefit from the synergies of the combination.

A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more frequently, when there is an indication that the unit may be impaired, by comparing its carrying amount, including the attributed goodwill, with its recoverable amount. However, if the goodwill allocated to a cash-generating unit was acquired in a business combination during the current annual period, that unit shall be tested for impairment before the end of the current annual period. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then pro rata to the other assets of the unit based on the carrying amount of each asset in the unit. Any impairment loss is recognized directly in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

l. Intangible assets

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

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

m. Impairment of tangible and intangible assets

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

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

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

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n. Financial instruments

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

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

1) Financial assets

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

a) Measurement category

2018

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in debt instruments and equity instruments at FVTOCI.

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and debt instruments that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gains or losses recognized in profit or loss incorporate any dividends or interest earned on such financial assets. Fair value is determined in the manner described in Note 36.

ii. Financial assets at amortized cost

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

i) The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
ii) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

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

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Interest income is calculated by applying the effective interest rate to the gross carrying amount of such a financial asset, except for:

i) Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such financial assets; and
ii) Financial assets that are not credit-impaired on purchase or origination but have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such financial assets.

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

iii. Investments in debt instruments at FVTOCI

Debt instruments that meet the following conditions are subsequently measured at FVTOCI:

i) The debt instrument is held within a business model whose objective is achieved by both collecting of contractual cash flows and selling of such financial assets; and
ii) The contractual terms of the debt instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Investments in debt instruments at FVTOCI are subsequently measured at fair value. Changes in the carrying amounts of these debt instruments relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and impairment losses or reversals are recognized in profit or loss. Other changes in the carrying amount of these debt instruments are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of.

iv. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, it will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

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2017

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

i. Available-for-sale financial assets

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

Available-for-sale financial assets are measured at fair value. Dividends on available-for-sale equity investments are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when the investment is disposed of or is determined to be impaired.

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

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

ii. Loans and receivables

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

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

b) Impairment of financial assets

2018

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables), investments in debt instruments that are measured at FVTOCI.

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

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

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of such a financial asset.

2017

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

Financial assets carried at amortized cost, such as trade receivables and notes receivables, are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with defaults on receivables.

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

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

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

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

For financial assets that are carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

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

c) Derecognition of financial assets

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

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

2) Equity instruments

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments issued by a group entity are recognized at the proceeds received, net of direct issue costs.

The repurchase of the Company’s own equity instruments is recognized in and deducted directly from equity. No gain or loss is recognized in profit or loss on the issue, sale, purchase, or cancellation of the Company’s own equity instruments.

3) Financial liabilities

a) Subsequent measurement

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

b) Derecognition of financial liabilities

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

27 -

4) Convertible bonds

The component parts of compound instruments (convertible bonds) issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

On initial recognition, the fair value of the liability component is estimated using the prevailing market interest rate for similar nonconvertible instruments. This amount is recorded as a liability on an amortized cost basis using the effective interest method until extinguished upon conversion or the instrument’s maturity date. Any embedded derivative liability is measured at fair value.

The conversion option classified as equity is determined by deducting the amount of the liability component from the fair value of the compound instrument as a whole. This is recognized and included in equity, net of income tax effects, and is not subsequently remeasured. In addition, the conversion option classified as equity will remain in equity until the conversion option is exercised, in which case, the balance recognized in equity will be transferred to capital surplus - share premium. When the conversion option remains unexercised at maturity, the balance recognized in equity will be transferred to capital surplus - share premium.

Transaction costs that relate to the issuance of convertible notes are allocated to the liability and equity components in proportion to the allocation of the gross proceeds. Transaction costs relating to the equity component are recognized directly in equity. Transaction costs relating to the liability component are included in the carrying amount of the liability component.

o. Provisions

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

p. Revenue recognition

2018

For contracts where the period between the date on which the Group transfers a promised good or service to a customer and the date on which the customer pays for that good or service is one year or less, the Group does not adjust the promised amount of consideration for the effects of a significant financing component.

Revenue from the sale of goods

Revenue from the sale of goods comes from semiconductor components. Sales of semiconductor components are recognized as revenue when goods are shipped because it is the time when the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivable are recognized concurrently. When the customer initially purchases the goods, the transaction price received is recognized as a contract liability (recognized in other current liability) until the goods have been delivered to the customer.

The Group recognized a refund liability (recognized in other current liability) based on the most likely amount of product rebates. The refund liability was recognized as a reduction of operating income in the period the related goods were sold.

28 -

2017

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

1) Revenue from the sale of goods

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

a) The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
b) The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
c) The amount of revenue can be measured reliably;
d) It is probable that the economic benefits associated with the transaction will flow to the Group; and
e) The transaction costs incurred or to be incurred can be measured reliably.
2) Dividend and interest income

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

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

q. Leasing

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

1) The Group as lessor

Rental income from operating leases is recognized on a straight-line basis over the terms of the leases. Contingent rentals are recognized as income in the period in which they are incurred.

2) The Group as lessee

Operating lease payments are recognized as an expense on a straight-line basis over the lease term. Contingent rentals are recognized as expenses in the period in which they are incurred.

r. Employee benefits
1) Short-term employee benefits

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

29 -

2) Retirement benefits

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

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

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

s. Taxation

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

1) Current tax

According to the Income Tax Law, an additional tax of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

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

2) Deferred tax

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

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

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

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

30 -

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

3) Current and deferred tax for the year

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

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

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

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

a. Estimated impairment of financial assets - 2018

The provision for impairment of trade receivables and investments in debt instruments is based on assumptions about risk of default and expected loss rates. The Group uses judgment in making these assumptions and in selecting the inputs to the impairment calculation, based on the Group’s historical experience, existing market conditions as well as forward looking estimates as of the end of each reporting period. For details of the key assumptions and inputs used, see Notes 9 and 13. In case where the actual future cash inflows are less than expected, a material impairment loss may arise.

b. Estimated impairment of trade receivables - 2017

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

c. Impairment of inventory

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

31 -

6. CASH AND CASH EQUIVALENTS

Cash on hand Checking accounts and demand deposits Cash equivalents Time deposits with original maturities of less than three months		December 31	December 31
		2018 $ 464 1,354,883 36,500 $ 1,391,847	2017 $ 504 633,080 36,500 $ 670,084

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

Bank balance	December 31
	2018 2017 0.01%-0.66% 0.01%-0.66%

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at FVTPL-noncurrent Financial assets mandatorily classified as at FVTPL Nonderivative financial assets Domestic unlisted ordinary shares Domestic unlisted preference shares Private funds		December	31
		2018 $ 12,310 3,945 71,840 $ 88,095	2017 $ - - - $ -

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018

	December 31,	December 31,
		2018
Noncurrent
Investments in equity instruments at FVTOCI
Listed shares
Ordinary shares - Aewin Technologies Co., Ltd.	$	6,763

These investments in equity instruments are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as they believe that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes. These investments in equity instruments at FVTOCI were classified as available-for-sale under IAS 39. Refer to Note 3 and Note 10 for information relating to their reclassification and comparative information for 2017.

32 -

9. FINANCIAL ASSETS AT AMORTIZED COST - 2018

	December 31,
	2018
Current
Domestic investments
Reverse and restricted deposits	$ 15,745

a. The deposits were classified as debt investments with no active market under IAS 39. Refer to Note 3 and Note 12 for information relating to their reclassification and comparative information for 2017.
b. Refer to Note 38 for information relating to investments in financial assets at amortized cost pledged as security.

10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

	December 31,	December 31,
		2017
Noncurrent
Domestic investments
Listed shares	$	9,859

11. FINANCIAL ASSETS MEASURED AT COST - 2017

	December 31,	December 31,
		2017
Noncurrent
Domestic unlisted ordinary shares	$	23,000
Overseas unlisted preference shares		50,898
Overseas unlisted ordinary shares		3,019
Overseas private funds		72,118
	$	149,035
Classification according to financial asset measurement categories
Available-for-sale financial assets	$	149,035

Management believed that the above unlisted equity investments held by the Group had fair values which cannot be reliably measured because the range of reasonable fair value estimates was so significant. Therefore, they were measured at cost less impairment at the end of the reporting period.

Some investees had continuing deficits; thus, investment impairment losses were recognized. The valuation losses on financial assets were NT$18,406 thousand in 2017, recognized in other income and losses.

33 -

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET - 2017

	December 31,	December 31,
		2017
Current
Reserve	$	29,455
Noncurrent
Time deposits with original maturities of more than three months	$	1,023

For information on pledged of debt investments with no active market, refer to Note 38 for related disclosures.

13. NOTES RECEIVABLE AND TRADE RECEIVABLES

Notes receivable Operating Less: Allowance for impairment loss Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss At FVTOCI		December 31	December 31
		2018 $ 177,886 (343) $ 177,543 $ 1,078,122 (198,148) 879,974 3,744,870 $ 4,624,844	2017 $ 172,206 - $ 172,206 $ 4,752,102 (206,450) 4,545,652 - $ 4,545,652

a. Notes receivable

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

Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 Add: Net remeasurement of loss allowance Foreign exchange gains and losses Balance at December 31, 2018	2018 $ - - - 313 30 $ 343

34 -

b. Trade receivables

In 2018

1) At amortized cost

The average credit period of sales of goods was 90 days. The Group adopted a policy of only dealing with entities that are rated the equivalent of investment grade or higher and obtaining sufficient collaterals, where appropriate, as a means of mitigating the risk of financial loss from defaults. Credit rating information is obtained from independent rating agencies where available or, if not available, the Group uses other publicly available financial information or its own trading records to rate its major customers. The Group’s credit exposures and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty credit limit that are reviewed and approved by the risk management committee annually.

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all trade receivables. The expected credit losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of economic conditions at the reporting date. As the Group’s historical credit loss experience does not show significant different loss patterns for different customer segments, the provision for loss allowance based on credit quality is not further distinguished according to the Group’s different customer base.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in profit or loss.

The following table details the loss allowance of trade receivables based on the Group’s provision matrix.

December 31, 2018

Normal Credit Quality Abnormal Credit Quality Expected credit loss rate 0-1% 100% Gross carrying amount $ 910,980 $ 167,142 Loss allowance (Lifetime ECL) (31,006) (167,142) Amortized cost $ 879,974 $ -	Total $ 1,078,122 (198,148) $ 879,974

35 -

The movements of the loss allowance of trade receivables at amortized cost were as follows:

		2018
Balance at January 1, 2018 per IAS 39	$	206,450
Adjustment on initial application of IFRS 9		(20,743)
Balance at January 1, 2018 per IFRS 9		185,707
Add: Net remeasurement of loss allowance		7,514
Add: Acquired in a business combination		247
Less: Net remeasurement of loss allowance		(412)
Foreign exchange gains and losses		5,092
Balance at December 31, 2018	$	198,148
The aging of receivables was as follows:
	December 31,
		2018
Up to 60 days	$	598,709
61-90 days		147,079
91-120 days		108,574
Over 120 days		223,760
	$	1,078,122

The above aging schedule was based on the number of past due days from the invoice date.

2) At FVTOCI

For trade receivables that are probably factored, the Group will decide whether to sell these trade receivables to banks without recourse based on its level of working capital. These trade receivables are classified as at FVTOCI because they are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.

The following table details the loss allowance of trade receivables based on the Group’s provision matrix.

December 31, 2018 Normal Credit Quality Abnormal Credit Quality Expected credit loss rate 0-1% 100% Gross carrying amount $ 3,744,870 $ - Loss allowance (Lifetime ECL) (28,773) - Amortized cost $ 3,716,097 $ -	Total $ 3,744,870 (28,773) $ 3,716,097

36 -

The movements of the loss allowance of trade receivables at FVTOCI were as follows:

		2018
Balance at January 1, 2018 per IAS 39	$	-
Adjustment on initial application of IFRS 9		20,743
Balance at January 1, 2018 per IFRS 9		20,743
Add: Net remeasurement of loss allowance		6,693
Foreign exchange gains and losses		1,337
Balance at December 31, 2018	$	28,773
The aging of receivables was as follows:
	December 31,
		2018
Up to 60 days	$ 1,837,425
61-90 days		827,310
91-120 days		712,113
Over 120 days		368,022
	$ 3,744,870

The above aging schedule was based on the number of past due days from the invoice date.

2017

The Group applied the same credit policy in 2018 and 2017. In determining the recoverability of an account receivable, the Group considered any change in the credit quality of the account receivable since the date the credit was initially granted to the end of the reporting period.

The credit risk was limited because the accounts receivable consisted of a large number of unrelated-party customers that are not related to each other.

The aging of receivables was as follows:

	December 31,
	2017
Up to 60 days	$ 2,275,310
61-90 days	1,112,457
91-120 days	793,676
Over 120 days	570,659
	$ 4,752,102

The above aging schedule was based on the number of past due days from the invoice date.

No accounts receivable were past due at the end of the reporting period; thus, the Group did not recognize an allowance for impairment loss.

37 -

The movements of the allowance for doubtful trade receivables were as follows:

Individually Assessed for Impairment Balance at January 1, 2017 $ 195,511 Add: Impairment losses recognized (reversed) on receivables 3,793 Less: Amounts written off during the year as uncollectible (14,518) Foreign exchange translation gains and losses (14,689) Balance at December 31, 2017 $ 170,097 INVENTORIES Merchandise inventories		Collectively Assessed for Impairment Total $ 38,705 $ 234,216 (107) 3,686 - (14,518) (2,245) (16,934) $ 36,353 $ 206,450 December 31	Collectively Assessed for Impairment Total $ 38,705 $ 234,216 (107) 3,686 - (14,518) (2,245) (16,934) $ 36,353 $ 206,450 December 31
		2018 $ 9,830,322	2017 $ 7,904,755

14. INVENTORIES

The costs of inventories recognized as cost of goods sold for the years ended December 31, 2018 and 2017 were NT$77,716,713 thousand and NT$73,507,329 thousand, respectively.

The cost of inventories recognized as cost of goods sold for 2018 included NT$67,123 thousand in inventory write-downs; a loss of NT$13 thousand on the disposal of scrap inventories; and a loss of NT$202 thousand on the inventory physical count. The cost of inventories recognized as cost of goods sold for 2017 included NT$22,411 thousand in inventory write-downs; a loss of NT$358 thousand on the disposal of scrap inventories; and a loss of NT$1,087 thousand on the inventory physical count.

15. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements were summarized as follows:

Investor
Investee
Nature of Activities
The Company
AMOD Technology Co., Ltd.
General trade
The Company
ACCU
General trade and investment in
manufacturing and service
industries
The Company
Sunjet Components Corp.
General trade of electronic
components
The Company
iPro Technology, Inc.
General trade of electronic
components
AMOD Technology Co., Ltd.
AMOD (Shenzhen)
Trade of computer peripherals
ACCU Technologies Ltd.
(ACCU)
Sunshine Global
General trade and investment in
manufacturing and service
industries
ACCU
Honest Rich
General trade and investment in
manufacturing and service
industries
ACCU
Massive Strong
General trade and investment in
manufacturing and service
industries

Proportion of Ownership (%)
December 31
2018
2017
Remark
-
99.75
a, b, d
100.00
100.00
a
99.83
99.85
a, d
92.73
-
a, c
100.00
100.00
a
100.00
100.00
a
100.00
100.00
a
100.00
100.00
a

(Continued)

38 -

Investor
Investee
Nature of Activities
Honest Rich
EDOM (Shenzhen)
Trade of computer peripherals
Massive Strong
EDOM (Shanghai)
Trade, research and development
of computer peripherals
Sunjet Components Corp.
Freeland Worldwide
General trade and investment in
manufacturing and service
industries
Freeland Worldwide
Corporation
Sunjet (HK) Components
General trade and investment in
manufacturing and service
industries
Sunjet (HK) Components
Sunjet Components Corp.
(Dongguan)
Trade of electric power equipment
and computer peripherals

Proportion of Ownership (%)
December 31
2018
2017
Remark
100.00
100.00
a
100.00
100.00
a
100.00
100.00
a
100.00
100.00
a
100.00
100.00
a

(Concluded)

Remarks:

a. All of the subsidiaries’ financial statements had been audited.
b. The Group acquired 8.13% of stock from noncontrolling interests in December 2017 and increased its interest from 91.62% to 99.75%.
c. For the purpose of intensifying market competitiveness, the Group acquired iPro Technology, Inc. in August 2018 after considering the completeness of product lines, customer similarity and back office integration.
d. To strengthen management controls, the Group announced an internal merger of its subsidiaries, Sunjet Components Corp and AMOD Technology Co., Ltd by means of share conversion, which was approved by the Group’s board of directors on November 9, 2018, and the base date of merger was on December 31, 2018. Subsequently, the Group’s ownership interest in Sunjet Components Corp had decreased from 99.85% to 99.83%.

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Associates that are not individually material KingHold Technology ILDO Korea Co., Ltd. EJET Technology Co., Ltd.		December	31
		2018 $ 28,849 25,232 2,549 $ 56,630	2017 $ 29,132 25,304 4,939 $ 59,375

Aggregate information of associates that are not individually material:

Profit (loss) from continuing operations Other comprehensive income Total comprehensive income (loss) for the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ (18,217) - $ (18,217)	2017 $ 726 - $ 726

The Group acquired associate that is not individually material, EJET Technology Co., Ltd. in 2017.

39 -

Investments accounted for by the equity method and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements that have been audited except for ILDO Korea Co., Ltd. and EJET Technology Co., Ltd. Management believes that there is no material impact on the equity method of accounting or the calculation of the share of profit or loss and other comprehensive income, from the financial statements of investees that have not been audited.

17. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2017 Additions Disposals Transfers to investment properties Reclassifications Effects of foreign currency exchange differences Balance at December 31, 2017 Accumulated depreciation Balance at January 1, 2017 Depreciation expenses Disposals Transfers to investment properties Effects of foreign currency exchange differences Balance at December 31, 2017 Carrying amounts at December 31, 2017 Cost Balance at January 1, 2018 Additions Disposals Effects of acquisition of subsidiary Reclassifications Effects of foreign currency exchange differences Balance at December 31, 2018 Accumulated depreciation Balance at January 1, 2018 Depreciation expenses Disposals Effects of acquisition of subsidiary Effects of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018	Land $ 184,514 83,735 - - 37,191 - $ 305,440 $ - - - - - $ - $ 305,440 $ 305,440 - - 25,279 - - $ 330,719 $ - - - - - $ - $ 330,719	Buildings Machinery and Equipment Transportation Equipment $ 283,160 $ 1,277 $ 37,640 42,474 - 2,534 - - (769 ) (42,550 ) - - 23,967 - - (1,783) - (149) $ 305,268 $ 1,277 $ 39,256 $ 55,902 $ 1,140 $ 25,004 7,458 108 2,955 - - (769 ) (7,022 ) - - (221) - (71) $ 56,117 $ 1,248 $ 27,119 $ 249,151 $ 29 $ 12,137 $ 305,268 $ 1,277 $ 39,256 - 352 10,258 - (1,277 ) (12,147 ) 24,232 315 2,818 - (352 ) - (3,187) - (246) $ 326,313 $ 315 $ 39,939 $ 56,117 $ 1,248 $ 27,119 9,027 36 4,211 - (1,277 ) (10,017 ) 2,924 308 1,840 (569) - (98) $ 67,499 $ 315 $ 23,055 $ 258,814 $ - $ 16,884	Office Equipment Leasehold Improvements $ 149,490 $ 33,507 17,007 1,761 (5,373 ) (24,806 ) - - 401 - (807) (969) $ 160,718 $ 9,493 $ 120,124 $ 25,736 12,373 3,963 (4,024 ) (24,806 ) - - (558) (831) $ 127,915 $ 4,062 $ 32,803 $ 5,431 $ 160,718 $ 9,493 10,745 8,415 (5,682 ) - 1,329 - 352 - (228) 209 $ 167,234 $ 18,117 $ 127,915 $ 4,062 12,855 6,496 (5,552 ) - 1,153 - (613) (74) $ 135,758 $ 10,484 $ 31,476 $ 7,633	Total $ 689,588 147,511 (30,948 ) (42,550 ) 61,559 (3,708) $ 821,452 $ 227,906 26,857 (29,599 ) (7,022 ) (1,681) $ 216,461 $ 604,991 $ 821,452 29,770 (19,106 ) 53,973 - (3,452) $ 882,637 $ 216,461 32,625 (16,846 ) 6,225 (1,354) $ 237,111 $ 645,526

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

Buildings
Main buildings	30-50 years
Building improvements	2-5 years
Machinery and equipment	5 years
Transportation equipment	5-7 years
Office equipment	2-10 years
Leasehold improvements	2-5 years

Property, plant and equipment pledged as collateral for bank borrowings were set out in Note 38.

18. INVESTMENT PROPERTIES

	Completed	Completed
	Investment
	Properties
Cost
Balance at January 1, 2017	$	-
Transferred from property, plant and equipment		42,550
Balance at December 31, 2017	$	42,550
Accumulated amortization
Balance at January 1, 2017	$	-
Transferred from property, plant and equipment		7,022
Depreciation expenses		834
Balance at December 31, 2017	$	7,856
Carrying amounts at December 31, 2017	$	34,694
Cost
Balance at January 1, 2018	$	42,550
Transferred from property, plant and equipment		-
Balance at December 31, 2018	$	42,550
Accumulated amortization
Balance at January 1, 2018	$	7,856
Depreciation expenses		834
Balance at December 31, 2018	$	8,690
Carrying amounts at December 31, 2018	$	33,860

The investment properties were depreciated using the straight-line method over their estimated useful lives as follows:

50 years

Main buildings

41 -

The fair values of investment properties were measured on a recurring basis, as follows:

Independent valuation and review by independent auditor The Group has freehold interests in all of its investment properties.		December 31	December 31
		2018 $ 166,933	2017 $ 170,405

19. GOODWILL

Cost Balance at January 1 Additional amounts recognized from business combinations occurring during the year (Note 32)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 32,646 3,690 $ 36,336	2017 $ 32,646 - $ 32,646

20. OTHER INTANGIBLE ASSETS

	Computer
	Software
Cost
Balance at January 1, 2017	$ 37,100
Additions	1,345
Deductions	(2,737)
Effects of foreign currency exchange differences	(60)
Balance at December 31, 2017	$ 35,648
Accumulated amortization
Balance at January 1, 2017	$ (22,601)
Amortization expenses	(4,327)
Deductions	2,737
Effects of foreign currency exchange differences	50
Balance at December 31, 2017	$ (24,141)
Carrying amounts at December 31, 2017	$ 11,507
	(Continued)

42 -

	Computer
	Software
Cost
Balance at January 1, 2018	$ 35,648
Additions	15,031
Deductions	(101)
Effects of foreign currency exchange differences	496
Balance at December 31, 2018	$ 51,074
Accumulated amortization
Balance at January 1, 2018	$ (24,141)
Amortization expenses	(9,808)
Deductions	101
Effects of foreign currency exchange differences	36
Balance at December 31, 2018	$ (33,812)
Carrying amounts at December 31, 2018	$ 17,262
	(Concluded)

The other intangible assets are depreciated on a straight-line basis over 3 to 5 years.

21. OTHER ASSETS

Current Excess VAT paid Prepayments Tax refund receivable Others Noncurrent Refundable deposits (Note 34) Prepayments for land, building and equipment Prepayments for investments		December 31	December 31
		2018 $ 141,776 87,983 6,098 28,262 $ 264,119 $ 22,519 - 400 $ 22,919	2017 $ 103,078 116,256 6,607 75,419 $ 301,360 $ 22,403 8,311 - $ 30,714

43 -

22. BORROWINGS

a. Short-term borrowings

Secured borrowings Bank loans (1) Unsecured borrowings Line of credit borrowings (2)		December 31	December 31
		2018 $ 1,054,529 $ 3,028,649	2017 $ 2,107,625 $ 1,869,463

1) The effective weighted average interest rates for bank loans ranged from 1.73%-4.10% and 1.44%-2.60% per annum as of December 31, 2018 and 2017, respectively.
2) The effective weighted average interest rate for credit loans was 0.96%-4.36% and 0.96%-2.77% per annum as of December 31, 2018 and 2017, respectively.
b. Short-term bills payable

Commercial paper Less: Unamortized discount on bills payable		December 31	December 31
		2018 $ 645,000 237 $ 644,763	2017 $ 430,000 230 $ 429,770

Outstanding short-term bills payable were as follows:

December 31, 2018

Promissory Institutions Commercial papers Mega International Commercial Bank China Bills Finance Corporation China Bills Finance Corporation Taiwan Finance Corporation Far Eastern International Bank International Bills Finance Corporation International Bills Finance Corporation Grand Bills Finance Corporation	Nominal Amount $ 100,000 100,000 30,000 100,000 100,000 100,000 15,000 100,000 $ 645,000	Discount Amount $ 7 32 9 127 10 33 1 18 $ 237	Carrying Value Interest Rate Collateral $ 99,993 0.84% - 99,968 0.49% - 29,991 0.49% Joint guarantors with guaranteed notes in deposit 99,873 0.75% - 99,990 0.58% - 99,967 0.70% - 14,999 0.65% Joint guarantors with guaranteed notes in deposit 99,982 0.73% - $ 644,763	The Carrying Value of Collateral $ - - - - - - - -
				$ -

44 -

December 31, 2017

Promissory Institutions Commercial papers Mega International Commercial Bank China Bills Finance Corporation China Bills Finance Corporation International Bills Finance Corporation Grand Bills Finance Corporation	Nominal Amount $ 100,000 100,000 30,000 100,000 100,000 $ 430,000	Discount Amount $ 99 49 23 25 34 $ 230	Carrying Value Interest Rate Collateral $ 99,901 0.84% - 99,951 0.46% - 29,977 0.52% Joint guarantors with guaranteed notes in deposit 99,975 0.50% - 99,966 0.73% - $ 429,770	The Carrying Value of Collateral $ - - - - -
				$ -

c. Long-term borrowings

Secured borrowings (Note 38) Loans from bank (1) (3) Unsecured borrowings Loans from bank (2) Less: Current portion Long-term borrowings		December 31	December 31
		2018 $ 118,540 800,000 918,540 168,596 $ 749,944	2017 $ 104,882 800,000 904,882 6,419 $ 898,463

To meet its working capital and capital expenditure requirements, the Company signed long-term loan agreements with banks, as follows:

1) On August 11, 2017, the Group acquired new bank borrowing facilities in the amount of NT$107,000 thousand. As of December 31, 2017, the weighted average effective interest rate of the bank borrowings secured by the Group’s freehold land and buildings (refer to Note 38) was 1.5500% per annum, and the principal and interests will be repayable monthly until August 11, 2032.
2) In October 2016, the Group signed a NT$1,600,000 thousand syndicated loan agreement, and a portion of this loan was used on October 11, 2016. The credit period is five years from October 2016. The loan is repayable in five semiannual installments from October 2019. The interest rate was 1.7970% per annum as of December 31, 2018 and 2017, respectively.

The interest rates for the Group’s floating-rate borrowings were reset quarterly.

Within the terms of the syndicated bank loans agreements, the Group should maintain certain financial ratio requirements based on the consolidated financial statements.

45 -
3) On August 6, 2013, the Group subsidiaries iPro Technology, Inc., which the Group acquired in August 2018, had acquired new bank borrowings facilities in the amount of NT$27,000 thousand. As of December 31, 2017, the weighted average effective interest rate of the bank borrowings secured by the Company’s freehold land and buildings (refer to Note 38) was 2.2200% per annum. The interests have been repaid monthly from August 6, 2013 to August 5, 2015, and the principal and interests will be repayable monthly from August 5, 2015 until August 5, 2028.

Loans of the Group are listed below:

Maturity Effective Interest Date Major Terms Rate Floating-rate borrowings Unsecured borrowings 2021.10.11 The loan is repayable in five semiannual installments starting from the end of the 36th month from the first drawdown date. 1.7970% Secured borrowings 2032.08.11 The loan is repayable starting from the first drawdown date. 1.5500% 2028.08.05 The loan has grace period and repayable principal and interest starting from the end of the 24th month from the first drawdown date. 2.2200%		December 31	December 31
		2018 $ 800,000 98,463 20,077 $ 918,540	2017 $ 800,000 104,882 - $ 904,882

23. BONDS PAYABLE

To improve its financial structure as well as repay a bank loan, the Company issued on July 11, 2014 in Taiwan unsecured convertible bonds with an aggregate amount of NT$300,000 thousand. These bonds will mature in three years from their issuance. Unless the bondholders convert their holdings in the Company’s ordinary shares under Article 10 of the terms of issuance and conversion, or the Company redeems the bonds ahead of time in accordance with Article 18 of the terms of issuance, or the Company’s shares are bought back and cancelled by the securities dealer, the Company should redeem these bonds in cash at 100.75% of the bond denomination on expiration date. Bondholders may convert the bonds into the Company’s ordinary shares at any time between August 12, 2014 and July 1, 2017. The conversion price of the bonds is NT$26.6 per share. When the Company issued share bonuses on August 23, 2016, the conversion price was adjusted to NT$17.4. The convertible bonds expired on July 11, 2017 and were redeemed in cash on July 26, 2017.

The convertible bonds contain both liability and equity components. The equity component was presented in equity under the heading of capital surplus - conversion options. The effective interest rate of the liability component was 1.8577% per annum on initial recognition. The capital surplus - conversion options was reclassified as capital surplus - additional paid-in capital - expired options when the convertible bonds expired.

Liability Component at January 1, 2017 Interest charged at an effective interest rate Redeemed convertible bonds Liability component at December 31, 2017	$ 110,243 1,057 (111,330) $ -

46 -

24. NOTES AND ACCOUNTS PAYABLE

Notes and accounts payable Operating		December 31	December 31
		2018 $ 7,367,278	2017 $ 4,940,232

The average credit period for purchases of certain goods was one month. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

25. OTHER LIABILITIES

Current Other payables Salaries and bonuses Accrued commissions Accrued freights Payables for annual leave Accrued investments Others Other liabilities Refund liability Contract liability Unearned receipts Others		December 31	December 31
		2018 $ 286,174 34,427 72,288 27,777 73,487 161,393 $ 655,546 $ 217,067 20,216 - 2,863 $ 240,146	2017 $ 308,650 29,340 50,025 21,992 18,000 154,060 $ 582,067 $ - - 43,483 4,862 $ 48,345

26. PROVISIONS

		December 31,
		2017
Current
Customer	returns and rebates	$ 380,555

The provision for customer returns and rebates was based on historical experience in 2017, management’s judgments and other known reasons to estimate the product returns and rebates that may occur in the year. The provision was recognized as a reduction of operating income in the period the related goods were sold.

47 -

27. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company and AMOD Technology Co., Ltd. Sunjet Components Corp. as well as iPro Technology, Inc. of the Group have pension plans under the Labor Pension Act (the “LPA”), which are state-managed defined contribution plans. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

ACCU, Sunshine Global, Honest Rich, Massive Strong, Freeland Worldwide Corporation and Sunjet (HK) Components are overseas holding companies with no employees; thus, there were no pension plans or pension costs recognized.

The employees of the Group’s subsidiary in China are members of a state-managed retirement benefit plan operated by the government of China. The subsidiary is required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to this retirement benefit plan is to make the specified contributions.

b. Defined benefit plans

The defined benefit plans adopted by the Company and Sunjet Components Corp. of the Group in accordance with the Labor Standards Law are operated by the government of the Republic of China (“ROC”). Pension benefits are calculated on the basis of the length of service and average monthly salaries of the 6 months before retirement. The Group contributes amounts equal to 2%-2.3% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. Before the end of each year, the Group assesses the balance in the pension fund. If the amount of the balance in the pension fund is inadequate to pay retirement benefits for employees who conform to retirement requirements in the next year, the Group is required to fund the difference in one appropriation that should be made before the end of March of the next year. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (the “Bureau”); the Group has no right to influence the investment policy and strategy.

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

Present value of funded defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December	31
		2018 $ 83,587 (69,884) $ 13,703	2017 $ 80,934 (65,864) $ 15,070

48 -

Movements in net defined benefit liabilities (assets) were as follows:

	Present Value
	of the Defined		Net Defined
	Benefit	Fair Value of	Benefit
	Obligation	the Plan Assets	Liability (Asset)
Balance at January 1, 2017	$ 78,409	$ (63,735)	$ 14,674
Service cost
Current service cost	286	-	286
Net interest expense (income)	1,078	(887)	191
Recognized in profit or loss	1,364	(887)	477
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	260	260
Actuarial loss - changes in demographic
assumptions	1,654	-	1,654
Actuarial loss - changes in financial
assumptions	1,545	-	1,545
Actuarial gain - experience adjustments	(2,038)	-	(2,038)
Recognized in other comprehensive income	1,161	260	1,421
Contributions from the employer	-	(1,502)	(1,502)
Balance at December 31, 2017	80,934	(65,864)	15,070
Service cost
Current service cost	292	-	292
Net interest expense (income)	1,112	(915)	197
Recognized in profit or loss	1,404	(915)	489
Remeasurement
Return on plan assets (excluding amounts
included in net interest)	-	(1,730)	(1,730)
Actuarial loss - changes in demographic
assumptions	1,072	-	1,072
Actuarial loss - changes in financial
assumptions	2,448	-	2,448
Actuarial gain - experience adjustments	(2,271)	-	(2,271)
Recognized in other comprehensive income	1,249	(1,730)	(481)
Contributions from the employer	-	(1,375)	(1,375)
Balance at December 31, 2018	$ 83,587	$ (69,884)	$ 13,703

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

1) Investment risk: The plan assets are invested in domestic and foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate for a 2-year time deposit with local banks.
2) Interest risk: A decrease in the government bond interest rate will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plan’s debt investments.
3) Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the present value of the defined benefit obligation.
49 -

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

Discount rate(s) Expected rate(s) of salary increase	December 31
	2018 2017 1.125% 1.375% 2.25%-5% 2.25%-5%

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

Discount rate 0.25% increase 0.25% decrease Expected rate of salary increase 0.25% increase 0.25% decrease		December	31
		2018 $ (2,464) $ 2,566 $ 2,449 $ (2,366)	2017 $ (2,507) $ 2,614 $ 2,500 $ (2,412)

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

The expected contributions to the plan for the next year The average duration of the defined benefit obligation		December	31
	2018 2017 $ 1,366 $ 1,395 11.8-12.4 years 12.5-12.8 years

28. EQUITY

a. Share capital - ordinary shares

Number of shares authorized (in thousands) Amount of shares authorized Number of shares issued and fully paid (in thousands) Amount of shares issued		December 31	December 31
		2018 250,000 $ 2,500,000 222,573 $ 2,225,726	2017 250,000 $ 2,500,000 222,573 $ 2,225,726

Fully paid ordinary shares, which have a par value of NT$10, carry one vote per share and carry a right to dividends.

50 -

b. Capital surplus

May be used to offset a deficit, distributed as cash dividends, or transferred to share capital (1) Arising from conversion of bonds Arising from treasury share transactions May be used to offset a deficit only Capital surplus - expired options (2) Share of in capital surplus of associates (3) Changes in percentage of ownership interest in subsidiaries (4)		December 31	December 31
		2018 $ 106,980 10,010 4,172 1,152 2 $ 122,316	2017 $ 106,980 10,010 4,172 - - $ 121,162

1) Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year).
2) Such capital surplus arises from reclassified capital surplus - options when the convertible bonds expired.
3) Such capital surplus arises from the effect of changes in ownership interests in associates resulting from equity transactions other than actual disposals or acquisitions, or from changes in capital surplus of associates accounted for using the equity method.
4) Such capital surplus arises from the effect of changes in ownership interests in subsidiaries resulting from equity transactions other than actual disposals or acquisitions, or from changes in capital surplus of subsidiaries accounted for using the equity method.

c. Retained earnings and dividend policy

Under the dividend policy as set forth in the amended Articles, where the Company made profit in a fiscal year, the profit shall be first utilized for paying taxes, offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. For the policies on the distribution of employees’ compensation and remuneration of directors and supervisors before and after amendment, refer to “Employees’ compensation and remuneration of directors and supervisors” in Note 29 (g).

A legal reserve should be appropriated from earnings until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset any deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

51 -

The appropriations of earnings for 2018 and 2017 were approved in the shareholders’ meetings on June 15, 2018 and June 22, 2017, respectively. The appropriations, including dividends per share, were as follows:

Legal reserve Special reserve Cash dividends	Appropriation of Earnings For the Year Ended December 31 2017 2016 $ 36,371 $ 22,836 61,686 - 222,572 111,286	Dividends Per Share (NT$)
		For the Year Ended December 31
		2017 2016 $1.0 $0.5

The appropriation of earnings for 2018 was proposed by the Company’s board of directors on March 8, 2019. The appropriations and dividends per share were as follows:

	Appropriation	Appropriation	Dividends Per
	of	Earnings	Share (NT$)
Legal reserve	$	24,343
Special reserve		(61,686)
Cash dividends		155,801	$0.7

The appropriations of earnings for 2018 are subject to resolution in the stockholders’ meeting on June 5, 2019.

d. Other equity items

1) Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Effect of changes in tax rate Recognized for the year Exchange differences arising on translating the foreign operations Share of associates’ exchange difference Income tax related to gains arising on translating the financial statements of foreign operations. Income tax related to loss on share of associates’ exchange difference Other comprehensive income recognized for the year Exchange differences arising on the acquisition of noncontrolling interest attributed to the parent company Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2018 $ (68,513) 2,446 88,279 (266) (17,651) 53 72,861 - $ 4,348	2017 $ 121,488 - (230,505) 1,054 39,185 (179) (190,445) 444 $ (68,513)

52 -
2) Unrealized gain (loss) on available-for-sale financial assets

Balance at January 1, 2017 Recognized for the year Unrealized gain on revaluation of available-for-sale financial assets Disposal of available-for-sale financial assets Other comprehensive income recognized for the year Balance at December 31, 2017 Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9	$ 11,755 (4,934) 6 (4,928) $ 6,827 $ 6,827 (6,827) $ -

3) Unrealized gain (loss) on financial assets at FVTOCI

	For the Year	For the Year
		Ended
	December 31,
		2018
Balance at January 1 per IAS 39	$	-
Adjustment on initial application of IFRS 9		23,570
Balance at January 1 per IFRS 9		23,570
Recognized for the year
Unrealized loss - equity instruments		(3,096)
Disposal of investments in debt instruments		8,026
Other comprehensive income recognized for the year		4,930
Balance at December 31	$	28,500

e. Noncontrolling interests

Balance at January 1 Share of loss for the year Other comprehensive income recognized for the year Exchange differences arising on translation of foreign entities Remeasurement on defined benefit plans Unrealized gain or loss on FVTOCI financial assets Noncontrolling interest arising from acquisition of subsidiaries (Note 32) Acquisition of noncontrolling interests in subsidiaries (Note 33) Balance at December 31	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 559 199 (25) - 3 11,688 (2) $ 12,422	2017 $ 5,982 (33) 9 (1) - - (5,398) $ 559

53 -

29. NET PROFIT

Net Profit

a. Other income

Rental income Interest income Dividends Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 17,615 3,795 654 29,888 $ 51,952	2017 $ 12,431 3,496 1,391 14,158 $ 31,476

b. Other gains and losses

Gain (loss) on disposal of financial assets Financial assets at FVTPL Impairment loss from financial assets carried at cost Gain (loss) on disposal of property, plant and equipment Net foreign exchange gains (losses) Loss from available-for-sale financial assets Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ (11,480) - 506 16,213 - (40) $ 5,199	2017 $ - (18,406) (534) (981) (6) (68) $ (19,995)

c. Finance costs

Interest on bank loans Interest on convertible bonds	For the Year Ended	For the Year Ended	December 31
		2018 $ 616,556 - $ 616,556	2017 $ 460,027 1,248 $ 461,275

d. Impairment losses recognized

Trade receivable Inventories (included in operating costs) Impairment loss from financial assets carried at cost	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 14,520 $ 67,123 $ -	2017 $ 3,686 $ 22,411 $ 18,406

54 -

e. Depreciation and amortization

Property, plant and equipment Investment properties Intangible assets An analysis of depreciation by function Operating expenses Nonoperating expenses An analysis of amortization by function Operating expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 32,625 834 9,808 $ 43,267 $ 32,625 834 $ 33,459 $ 9,808	2017 $ 26,857 834 4,327 $ 32,018 $ 26,857 834 $ 27,691 $ 4,327

f. Employee benefits expense

Employees’ compensation and remuneration of directors and supervisors for 2018 and 2017

Post-employment benefits (refer to Note 27) Defined contribution plans Defined benefit plans Other employee benefits Total employee benefits expense An analysis of employee benefits expense by function Operating expenses	For the Year Ended	For the Year Ended	December 31
		2018 $ 48,764 489 49,253 835,471 $ 884,724 $ 884,724	2017 $ 47,325 477 47,802 851,303 $ 899,105 $ 899,105

g. Employees’ compensation and remuneration of directors and supervisors

The Company accrued employees’ compensation and remuneration of directors and supervisors at the rates of no less than 3% and no higher than 3%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors and supervisors. The employees’ compensation and remuneration of directors and supervisors for the years ended December 31, 2018 and 2017 which have been approved by the Company’s board of directors on March 8, 2019 and March 16, 2018, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors	For the Year Ended December 31
	2018 2017 5.0% 5.0% 2.5% 2.5%

55 -

Amount

Employees’ compensation Remuneration of directors	For the Year Ended December 31	For the Year Ended December 31
	2018 Cash $ 15,906 7,953	2017
		Cash $ 24,217 12,109

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

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

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

30. INCOME TAXES

a. Income tax recognized in profit or loss

The major components of tax expense were as follows:

Current tax Current year Income tax expense for unappropriated earnings Prior periods Deferred tax Current year Adjustments to deferred tax attributable to changes in tax rates and laws Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 90,366 4,014 297 94,677 (14,076) (10,019) (24,095) $ 70,582	2017 $ 86,256 10,161 (366) 96,051 419 - 419 $ 96,470

A reconciliation of accounting profit and income tax expenses is as follows:

Profit before tax Income tax expense calculated at the statutory rate (20% in 2018 and 17% in 2017) Nondeductible expenses in determining taxable income Deferred tax on undistributed earnings from subsidiary	For the Year Ended	For the Year Ended	December 31
		2018 $ 314,209 $ 62,842 4,225 (2,705)	2017 $ 460,152 $ 78,226 4,215 (738) (Continued)

56 -

Tax-exempt income Additional income tax on unappropriated earnings Unrecognized loss carryforwards/deductible temporary differences Effect of different tax rates used by some Group entities operating in other jurisdictions Effect of tax rate changes Adjustments for prior years’ tax Others Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2018 $ 4,118 4,014 6,102 1,048 (10,019) 297 660 $ 70,582	2017 $ 134 10,161 2,008 1,726 - (366) 1,104 $ 96,470 (Concluded)

In 2017, the applicable corporate income tax rate used by the group entities in the ROC was 17%. However, the Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%, effective in 2018. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%. The applicable tax rate used by subsidiaries in China is 25%. Tax rates used by other group entities operating in other jurisdictions are based on the tax laws in those jurisdictions.

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

b. Income tax recognized in other comprehensive income

Deferred tax Effect of change in tax rate Current year: Exchange differences arising on translating the foreign operations Share of other comprehensive income of subsidiaries and associates Actuarial gains and losses on defined benefit plan	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 2,968 (17,651) 53 (96) $ 14,726	2017 $ - 39,185 (179) 242 $ 39,248

c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December	31
		2018 $ 3,326 $ 54,842	2017 $ 3,310 $ 72,139

57 -
d. Deferred tax assets and liabilities

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

For the year ended December 31, 2018

Deferred tax assets
Temporary differences
Refund liabilities (provision)

Defined benefit obligation
Payable for annual leave
Allowance for impairment loss
(allowance for impairment loss on
trade receivables)
Allowance for write-down of
inventories
Foreign exchange
Accrued loss from subsidiaries
Convertible bonds
Unrealized employee expenses
Exchange differences on translating
foreign operations
Tax losses
Others

Deferred tax liabilities
Temporary differences
Associates

Foreign exchange
Exchange differences on translating
foreign operations
Share of other comprehensive income
of associates

Opening
Balance
IFRS
Retroactive
Adjustment
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Effect of
Acquisition of
Subsidiary
Closing Balance
$ 3,352
$ -
$ 16,281
$ -
$ -
$ 19,633
4,165
-
57
426
-
4,648
3,123
-
1,161
-
-
4,284
402
-
56
-
4
462
15,154
-
2,853
-
251
18,258
888
-
(80 )
-
-
808
33,121
1,947
2,825
-
-
37,893
32
-
(32 )
-
-
-
5,390
-
(1,283 )
-
-
4,107
16,066
-
-
(12,929 )
-
3,137
3,901
-
(1,545 )
-
-
2,356

50

-

6

-

-

56
$ 85,644
$ 1,947
$ 20,299
$ (12,503)
$ 255
$ 95,642
$ 2,664
$ -
$ 509
$ -
$ -
$ 3,173
6,026
-
(4,305 )
-
16
1,737
2,079
-
-
2,254
-
4,333

124

-

-

(31)

-

93
$ 10,893
$ -
$ (3,796)
$ 2,223
$ 16
$ 9,336

For the year ended December 31, 2017

Deferred tax assets
Temporary differences
Provision

Defined benefit obligation
Payable for annual leave
Allowance for impairment loss on trade
receivables
Allowance for write-down of
inventories
Foreign exchange
Accrued loss from of subsidiaries
Convertible bonds
Unrealized employee expenses
Exchange differences on translating
foreign operations
Share of other comprehensive income
of associates
Tax losses
Others

Opening
Balance
IFRS
Retroactive
Adjustment
Recognized in
Profit or Loss
Recognized in
Other
Comprehensive
Income
Effect of
Acquisition of
Subsidiary
Closing Balance
$ 6,440
$ -
$ (3,088 )
$ -
$ -
$ 3,352
3,873
-
50
242
-
4,165
2,623
-
500
-
-
3,123
646
-
(244 )
-
-
402
16,689
-
(1,535 )
-
-
15,154
-
-
888
-
-
888
32,383
-
738
-
-
33,121
104
-
(72 )
-
-
32
4,224
-
1,166
-
-
5,390
1,514
-
-
14,552
-
16,066
55
-
-
(55 )
-
-
1,804
-
2,097
-
-
3,901

74

-

(24)

-

-

50
$ 70,429
$ -
$ 476
$ 14,739
$ -
$ 85,644
(Continued)

58 -

Deferred tax liabilities Temporary differences Associates Foreign exchange Exchange differences on translating foreign operations Share of other comprehensive income of associates	Opening Balance IFRS Retroactive Adjustment Recognized in Profit or Loss Recognized in Other Comprehensive Income Effect of Acquisition of Subsidiary Closing Balance $ 2,564 $ - $ 100 $ - $ - $ 2,664 5,231 - 795 - - 6,026 26,712 - - (24,633 ) - 2,079 - - - 124 - 124 $ 34,507 $ - $ 895 $ (24,509) $ - $ 10,893

(Concluded)

e. Deductible temporary differences and unused loss carryforwards for which no deferred tax assets have been recognized in the consolidated balance sheets

Loss carryforwards Expiry in 2019 Expiry in 2023 Expiry in 2025 Expiry in 2026 Expiry in 2027 Deductible temporary differences Financial assets measured at FVTPL Financial assets measured at cost Accrued loss from subsidiaries Allowance for impairment loss Others		December 31	December 31
		2018 $ - - 15,798 12,274 14,661 $ 42,733 $ 197,452 - 77,296 10,365 1,593 $ 286,706	2017 $ 19,813 7,622 21,003 12,274 14,661 $ 75,373 $ - 126,809 64,005 - - $ 190,814

f. Income tax assessments

The tax returns of the Company through 2015 have been assessed and cleared by the tax authorities.

The tax returns of the Company’s subsidiaries, AMOD Technology Co., Ltd. and Sunjet Components Corp. and iPro Technology Inc. through 2016 have been assessed and cleared by the tax authorities.

31. EARNINGS PER SHARE

EARNINGS PER SHARE
Basic earnings per share Diluted earnings per share	For	Unit: NT$ Per Share the Year Ended December 31
		2018 $ 1.09 $ 1.09	2017 $ 1.63 $ 1.60

59 -

The earnings and weighted average number of ordinary shares outstanding used in the computation of earnings per share were as follows:

Net Profit for the Year

Profit for the period attributable to owners of the Company Effect of potentially dilutive ordinary shares: Interest on convertible bonds Earnings used in the computation of diluted earnings per share from continuing operations	For the Year Ended	For the Year Ended	December 31
		2018 $ 243,428 - $ 243,428	2017 $ 363,715 877 $ 364,592

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

Weighted average number of ordinary shares used in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Convertible bonds Bonus issued to employees Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 222,573 - 1,459 224,032	2017 222,573 3,365 1,521 227,459

If the Group offered to settle compensation or bonuses paid to employees in cash or shares, the Group assumed the entire amount of the compensation or bonus would be settled in shares, and if the resulting potential shares have a dilutive effect, these shares are included in the weighted average number of shares outstanding used in the computation of diluted earnings per share. The dilutive effect of the potential shares is included in the computation of diluted earnings per share until the shareholders resolve the number of shares to be distributed to employees at their meeting in the following year.

32. BUSINESS COMBINATIONS

a. Subsidiaries acquired

			Proportion of
			Voting Equity
		Date of	Interests	Consideration
	Principal Activity	Acquisition	Acquired (%)	Transferred
iPro Technology	Trade of electronic	August 31, 2018	92.73	$ 152,769
Inc.	components

For the purpose of intensifying market competitiveness, the Group acquired iPro Technology Inc. and its subsidiaries in 2018 after considering the completeness of product lines, customer similarity and back office integration.

60 -

b. Considerations transferred

Cash Accrued investments

	iPro
Technology Inc.
$	79,282
	73,487
$	152,769

c. Assets acquired and liabilities assumed at the date of acquisition

		iPro
	Technology Inc.
Current assets
Cash and cash equivalents	$	24,471
Amortized cost financial assets		593
Note receivables		6,947
Accounts receivable		70,862
Inventories		46,978
Other current assets		108,614
Noncurrent assets
Property, plant and equipment		47,748
Deferred tax assets		255
Current liabilities
Short-term borrowings		(61,175)
Notes and accounts payable		(52,145)
Other payables		(7,008)
Current tax liabilities		(3,890)
Current portion of loan-teams borrowings		(2,077)
Other current liabilities		(698)
Noncurrent liabilities
Long-term borrowings		(18,692)
Deferred tax liabilities		(16)
	$	160,767
Goodwill recognized on acquisition
		iPro
	Technology Inc.
Consideration transferred	$	152,769
Plus: Noncontrolling interests (7.27% in iPro Technology Inc.)		11,688
Less: Fair value of identifiable net assets acquired		(160,767)
Goodwill recognized on acquisition	$	3,690

d. Goodwill recognized on acquisition

The fair value of identifiable net assets acquired from iPro Technology Inc. is based on the temporary value on the acquisition date. After considering the facts and information, the Group increased NT$15,580 thousand of the fair value of identifiable net assets on December 31, 2018 and deducted the goodwill recognized accordingly.

61 -
e. Net cash outflow on acquisition of subsidiaries

	iPro
	Technology Inc.
Consideration paid in cash	$ 79,282
Less: Cash and cash equivalent balances acquired	(24,471)
	$ 54,811

f. Impact of acquisitions on the results of the Group

The results of the acquirees since the acquisition date included in the consolidated statements of comprehensive income were as follows:

		iPro
	Technology Inc.
Revenue	$	315,309
Profit	$	4,368

Had these business combinations been in effect at the beginning of the annual reporting period, the Group’s revenue from continuing operations would have been NT$80,532,354 thousand, and the profit from continuing operations would have been NT$258,076 thousand for the year ended December 31, 2018. This pro-forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed on January 1, 2018 nor is it intended to be a projection of future results.

33. EQUITY TRANSACTIONS WITH NONCONTROLLING INTERESTS

a. In December 2018, the subsidiaries Sunjet Components Corp was merged with Amod Technology Co., Ltd by means of share conversion, and the Group’s interest in Sunjet Components Corp had decreased from 99.85% to 99.83%.

		Sunjet
	Components
		Corp.
Cash consideration paid	$		-
The proportionate share of the carrying amount of the net assets of the subsidiary
transferred from noncontrolling interests			2
Differences recognized from equity transactions	$		2
Line items adjusted for equity transactions
Capital surplus - changes in percentage of ownership interests in subsidiaries	$		2

62 -
b. In December 2017, the Group acquired additional 8.13% interest in Amod Technology Co., Ltd., which increased its controlling interest from 91.62% to 99.75%.

	Amod
	Technology Co.,
	Ltd.
Cash consideration paid	$ (6,724)
The proportionate share of the carrying amount of the net assets of the subsidiary
transferred from noncontrolling interests	5,398
Reattribution of other equity from noncontrolling interests
Exchange differences on translating foreign operations	(444)
Differences recognized to equity transactions	$ (1,770)
Line items adjusted for equity transactions
Retained earnings	$ (1,770)

The above transaction was accounted for as an equity transaction since the Group did not cease to have control over the subsidiary.

34. OPERATING LEASE ARRANGEMENTS

a. The Group as lessee

Operating leases relate to leases of building and transportation equipment with lease terms between one to three years. The Group does not have a bargain purchase option to acquire the leased building and transportation equipment at the expiration of the lease periods.

As of December 31, 2018 and 2017, the refundable deposits for the operating lease arrangements were NT$10,783 thousand and NT$10,570 thousand, respectively.

The commitments on future minimum lease payments under noncancellable operating leases were as follows:

Not later than 1 year Later than 1 year and not later than 5 years		December 31	December 31
		2018 $ 45,106 29,199 $ 74,305	2017 $ 45,433 64,558 $ 109,991

b. The Group as lessor

Operating leases relate to the property, plant and equipment owned by the Group have lease terms between one to ten years. The lessee does not have a bargain purchase option to acquire the property at the expiry of the lease period.

As of December 31, 2018 and 2017, the deposits received on the operating lease arrangements were NT$2,096 thousand and NT$2,023 thousand, respectively.

63 -

35. CAPITAL MANAGEMENT

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

The capital structure of the Group consists of net debt (borrowings offset by cash and cash equivalents) and equity attributable to owners of the Company (comprising issued capital, reserves, retained earnings and other equity.)

The Group is subject to capital requirements imposed by bank loan agreements.

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

36. FINANCIAL INSTRUMENTS

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

Management believes the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair values when their fair values cannot be reliably measured.

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

December 31, 2018

Financial assets at FVTPL Investments in equity Domestic unlisted shares Overseas unlisted shares Other instruments Overseas private funds Financial assets at FVTOCI Investments in equity Domestic listed shares Investments in debt Accounts receivables	Level 1 $ - - - $ - $ 6,763 - $ 6,763	Level 2 $ - - - $ - $ - - $ -	Level 3 $ 12,310 3,945 71,840 $ 88,095 $ - 3,744,870 $ 3,744,870	Total $ 12,310 3,945 71,840
				$ 88,095
				$ 6,763 3,744,870
				$ 3,751,633

64 -

December 31, 2017

Available-for-sale assets Investments in equity Domestic listed shares	Level 1 $ 9,859	Level 2 $ -	Level 3 $ -	Total $ 9,859

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

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the year ended December 31, 2018

Financial Assets Balance at January 1, 2018 per IAS 39 Adjustment on initial application of IFRS 9 Balance at January 1, 2018 per IFRS 9 Recognized in profit or loss (other gains and losses) Recognized in profit or loss (expected credit losses) Recognized in other comprehensive income (unrealized gain (loss) on financial assets at FVTOCI) Purchases Sales/settlements Net change in account receivable (included exchange differences on foreign currency) Balance at December 31, 2018 Recognized in other gains and losses - unrealized		Financial Assets at FVTPL Equity Instruments Other Instruments $ - $ - 11,683 59,816 11,683 59,816 (4,560) (6,920) - - - - 9,960 21,938 (828) (2,994) - - $ 16,255 $ 71,840 $ (4,280) $ (6,914)		Financial Assets at FVTOCI Debt Instruments $ - 4,056,299 4,056,299 - (6,693) 8,029 - - (312,765) $ 3,744,870 $ (6,693)	Total $ - 4,127,798 4,127,798 (11,480) (6,693) 8,029 31,898 (3,822) (312,765) $ 3,832,965 $ (17,887)
		Equity Instruments $ - 11,683 11,683 (4,560) - - 9,960 (828) - $ 16,255 $ (4,280)

3) Valuation techniques and inputs applied for the purpose of measuring Level 3 fair value measurement
a) The fair value of unlisted shares and private funds were determined by using the asset-based approach. The asset-based approach used the value of net assets to calculate a business entity valuation.
b) The fair value of accounts receivable of FVTOCI was determined using the discounted cash flow method. Future cash flows are estimated based on the accounts receivable at the end of the reporting period, discounted at a rate that reflects the trading credit risk.
65 -
c. Categories of financial instruments

Financial assets Financial assets at FVTPL Mandatorily classified as at FVTPL Loans and receivables (1) Available-for-sale financial assets (2) Financial assets at amortized cost (3) Financial assets at FVTOCI Equity instruments Debt instruments Financial liabilities Financial liabilities at FVTOCI Financial liabilities at amortized cost (4) Contingent consideration for business combinations (5)	December 31
	2018 2017 $ 88,095 $ - - 5,418,420 - 158,894 2,472,492 - 6,763 - 3,744,870 - 13,355,354 10,485,397 - 18,000

1) The balances include loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments with no active market, notes and accounts receivable and accounts receivable from related parties.
2) The balances include the carrying amount of available-for-sale financial assets measured at cost.
3) The balances include loans and receivables measured at amortized cost, which comprise cash and cash equivalents, debt investments, and trade and other receivables. Those reclassified to held-for-sale disposal groups are also included.
4) The balances include financial liabilities measured at amortized cost, which comprise short-term and long-term loans, short-term bills payable, notes and accounts payable and other payables.
5) Contingent consideration from the subsidiary.
d. Financial risk management objectives and policies

The Group’s major financial instruments include equity and debt investments, trade receivables, trade payables, bonds payable, borrowings and bills payable. The Group’s corporate treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Group, and uses internal risk reports to analyze exposures by degree and magnitude of risks. These risks are market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The corporate treasury function reports quarterly to the Group regarding the risks and policies implemented to mitigate risk exposures.

1) Market risk

The Group’s activities exposed it primarily to the financial risks of changes in foreign currency exchange rates and interest rates.

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

66 -

a) Foreign currency risk

The carrying amounts of the Group’s foreign currency-denominated monetary assets and monetary liabilities (including those eliminated on consolidation) that had been exposed to foreign currency risk as of the end of the reporting period are set out in Note 40.

Sensitivity analysis

The Group was mainly exposed to the U.S. dollar (USD).

The following table shows the Group’s sensitivity to a 5% increase and decrease in New Taiwan dollars (the functional currency) against the relevant foreign currencies. The 5% sensitivity rate is used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis included only outstanding foreign currency-denominated monetary items and foreign currency forward contracts designated as cash flow hedges, and their translation is adjusted at the end of the reporting period for a 5% change in foreign currency rates. A positive number below indicates an increase in pretax profit and other equity associated with the 5% strengthening of the New Taiwan dollar against the relevant currency. For a 5% weakening of New Taiwan dollar against the relevant currency, there would be an equal and opposite impact on pre-tax profit and other equity and the balances below would be negative.

Profit	USD Impact
	For the Year Ended December 31
	2018 2017 $ 16,669 $ 121,819*

The above sensitivity analysis mainly referred to the outstanding USD receivables, payables and borrowings which were not hedged at the end of the reporting period.

The Group’s sensitivity to foreign currency decreased during the current year mainly due to the decrease of loan balance in the USD.

In management’s opinion, the sensitivity analysis did not reflect the inherent exchange rate risk because the exposure at the end of the year did not reflect the exposure during the period.

b) Interest rate risk

The Group was exposed to interest rate risk because entities in the Group borrowed funds at both fixed and floating interest rates.

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

Fair value interest rate risk Financial assets Cash flow interest rate risk Financial assets Financial liabilities*	December 31
	2018 2017 $ 36,500 $ 37,523 1,364,483 659,238 26,867,064 25,026,259

67 -
The balance included short-term borrowings, short-term bills payable, long-term borrowings (including current portion) and advances on the receivables.

The Group was exposed to cash flow interest rate risk in relation to floating-rate bank borrowings. The Group’s policy is to keep its borrowings at floating interest rates to minimize the fair value interest rate risk. The Group’s cash flow interest rate risk was mainly concentrated in the fluctuations of benchmark interest rate and Taipei Interbank Offered Rate (TAIBOR) and London Interbank Offered Rate (LIBOR) arising from the Group’s New Taiwan dollar and USD-denominated borrowings.

Sensitivity analysis

The sensitivity analysis below was based on the Group’s exposure to interest rates for both derivatives and nonderivative instruments at the end of the reporting period. For floating-rate liabilities, the analysis was prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 100 basis point increase or decrease was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

Had interest rates been 100 basis points higher/lower and had all other variables been held constant, the Group’s pretax profits for the years ended December 31, 2018 and 2017 would have decreased/increased by NT$255,026 thousand and NT$243,670 thousand, respectively, mainly because of the Group’s exposure to interest rates on its floating-rate bank borrowings.

The increase in the Group’s sensitivity to interest rates during the current period was mainly due to the use of more floating-rate debt instruments.

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk, which will cause a financial loss to the Group due to failure of counterparties to discharge an obligation as well as the financial guarantees provided by the Group, could consist of the carrying amounts of the recognized financial assets as stated in the balance sheets.

The Group has a policy of only dealing with creditworthy counterparties and obtaining sufficient collaterals, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group transacts only with entities that have the equivalent of an investment grade rating or above. This information is supplied by independent credit rating agencies where available and, if not available, the Group uses other publicly available financial information and its own trading records to rate its major customers. The Group’s credit exposures and the credit ratings of its counterparties are continually monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty credit limit that are reviewed and approved by finance and accounting department annually.

The Group’s transactions are with a large number of customers in different industries and locations. Ongoing credit evaluation is performed on the status of trade receivables and, where appropriate, credit guarantee insurance cover is purchased.

The Group did not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics (not exceeding 5% of total monetary assets). The Group defines counterparties as having similar characteristics if they are related entities.

68 -

3) Liquidity risk

The Group manages liquidity risk by maintaining and monitoring a level of cash and cash equivalents deemed adequate to finance the Group’s operations and mitigate the effects of cash flow fluctuations. In addition, management monitors the use of bank borrowings and ensures compliance with loan covenants.

The Group relies on bank borrowings as a significant source of liquidity. As of December 31, 2018 and 2017, the Group’s unused short-term bank loan facilities set out in (b) below.

a) Liquidity and interest risk rate tables for nonderivative financial liabilities

The following table shows the Group’s remaining contractual maturity for its nonderivative financial liabilities with agreed repayment periods. The tables had been drawn up on the basis of the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The tables included both interest and principal cash flows. Specifically, bank loans with a repayment on demand clause were included in the second column below regardless of the probability of the banks choosing to exercise their rights to being repaid. The maturity dates for other nonderivative financial liabilities were based on the agreed repayment dates.

To the extent that interest flows are floating, the undiscounted amount was derived from the interest rate curve at the end of the reporting period.

December 31, 2018

On Demand or Less than 1 Month Nonderivative financial liabilities Noninterest bearing $ 6,971,832 Floating interest rate liabilities 915,457 $ 7,887,289 December 31, 2017 On Demand or Less than 1 Month Nonderivative financial liabilities Noninterest bearing $ 4,766,183 Floating interest rate liabilities 1,357,654 $ 6,123,837	1-3 Months $ 679,782 2,962,130 $ 3,641,912 1-3 Months $ 532,539 3,048,305 $ 3,580,844	3 Months to 1 Year $ 368,752 985,914 $ 1,354,666 3 Months to 1 Year $ 194,411 42,087 $ 236,498	1-5 Years Over 5 Years $ 2,458 $ - 694,338 79,521 $ 696,796 $ 79,521 1-5 Years Over 5 Years $ 29,166 $ - 858,353 77,326 $ 887,519 $ 77,326

69 -

Bank loans with a repayment on demand clause were included in the “on demand or less than 1 month” column in the above maturity analysis. As of December 31, 2018 and 2017, the aggregate undiscounted principal amounts of these bank loans were NT$910,451 thousand and NT$1,351,788 thousand, respectively. Taking into account the Group’s financial position, management does not believe that it is probable that the banks will exercise their discretionary rights to demand immediate repayment. Management believes that such bank loans will be repaid after the reporting date in accordance with the scheduled repayment dates set out in the loan agreements. At that time, the aggregate principal and interest cash outflows will amount to NT$5,637,360 thousand.

The amounts included above for floating interest rate instruments for both nonderivative financial assets and liabilities are subject to change if changes in floating interest rates differ from those estimates of interest rates determined at the end of the reporting period.

b) Financing facilities

Unsecured bank overdraft facility, reviewed annually and payable at call: Amount used Amount unused Secured bank overdraft facility: Amount used Amount unused Unsecured bank loan facilities which may be extended by mutual agreement: Amount used Amount unused Secured bank loan facilities which may be extended by mutual agreement; Amount used Amount unused		December 31	December 31
		2018 $ 24,849,232 12,398,583 $ 37,247,815 $ 1,099,529 3,565,681 $ 4,665,210 $ 800,000 - $ 800,000 $ 118,540 - $ 118,540	2017 $ 21,983,982 14,145,483 $ 36,129,465 $ 2,137,625 2,165,846 $ 4,303,471 $ 800,000 - $ 800,000 $ 104,882 - $ 104,882

70 -

c) Transfers of financial assets

Factored trade receivables in 2018 and 2017 were as follows:

Counter-parties 2018 Mega International Commercial Bank Taishin International Bank Chang Hwa Bank Taipei Fubon Bank CitiBank DBS Bank KGI Bank Bank SinoPac 2017 Mega International Commercial Bank Taishin International Bank Chang Hwa Bank Taipei Fubon Bank CitiBank DBS Bank KGI Bank Bank SinoPac	Receivable Sold $ 32,112,306 2,893,394 4,386,842 1,537,267 3,716,170 23,168,235 3,951,061 559,530 $ 72,324,805 $ 30,296,847 1,336,592 3,170,674 1,853,092 5,992,378 17,799,312 2,591,092 1,043,144 $ 64,083,131	Amounts Collected $ 24,136,046 1,973,106 2,408,931 1,001,897 2,366,476 12,530,540 2,646,926 284,786 $ 47,348,708 $ 22,281,465 846,980 2,396,790 1,232,470 3,678,534 8,948,710 1,541,050 466,321 $ 41,392,320	Advances Received at Year-end Interest Rates on Advances Received (%) $ 6,262,820 3.43-4.02 718,648 1.51-1.53 1,852,194 3.70-3.81 479,625 3.32-3.97 922,967 3.60-4.12 9,946,418 3.96 910,576 3.13-6.61 127,335 3.30-3.39 $ 21,220,583 $ 6,923,442 2.28-3.35 364,507 2.60-3.01 531,247 2.25-2.68 555,201 2.25-2.89 1,505,456 2.42-2.89 8,710,363 2.63 807,868 2.13-2.49 316,435 2.22-2.54 $ 19,714,519	Credit Lines $ 9,552,365 1,500,000 1,996,475 767,875 1,365,671 12,132,425 3,378,650 1,658,610
				$ 32,352,071
				$ 8,511,360 1,200,000 1,934,400 744,000 2,385,038 11,755,200 1,785,600 1,488,000
				$ 29,803,598

The above credit lines may be used on a revolving basis.

The Group signed accounts receivable factoring contracts with several banks. That is, the Group sold accounts receivable on nonletter of credit transactions to banks without recourse. In these transactions, the credit risk on accounts receivable was transferred to the banks, and the Group paid the banks a specific percentage of accounts receivable as a handling charge. The Group asked for 90% to 100% of the accounts receivable in advance by paying interest. Because the accounts receivable factoring was without recourse, the Group was free from credit risk, and the banks assumed the risk of losses on the receivables.

The Group’s exposure to credit risk from defaults amounted to US$575 thousand in December 31, 2018 and 2017. Management had set up an allowance to cover possible losses. As of December 31, 2018 and 2017, the Group had NT$21,220,583 thousand and NT$19,714,519 thousand, respectively, as advances on the receivables.

71 -

37. TRANSACTIONS WITH RELATED PARTIES

Balances and transactions between the Company and its subsidiaries have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

a. Related party name and category

Related Party Category	Related Party Category	Related Party Category
2018 2017 $ 7,043 $ - For the Year Ended December 31
2018 2017 $ 7,383 $ - For the Year Ended December 31
	2018 $ 101 $ 661 $ 104	2017 $ - $ - $ -

b. Operating revenue
c. Receivables from related parties
d. Other

All the terms of the above rental contracts conformed to normal business parties.

e. Compensation of key management personnel

Short-term employee benefits Post-employment benefits	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 76,033 2,046 $ 78,079	2017 $ 79,886 2,110 $ 81,996

The remuneration of directors and key executives was determined by the remuneration committee on the basis of individual performances and market trends.

72 -

38. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The Company’s assets mortgaged or pledged as collaterals for certain letters of credit were as follows:

Properties, plant and equipment, net Financial assets measured at cost Debt investments with no active market		December 31	December 31
		2018 $ 409,887 14,976 - $ 424,863	2017 $ 413,167 - 30,478 $ 443,645

39. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

The significant commitments of the Group as of December 31, 2018 and 2017 were as follows:

a. Unused letters of credit amounting to approximately NT$580,073 thousand and NT$675,574 thousand, respectively.
b. Checks that had been issued as guarantees for the Company’s loans amounted to NT$51,320,515 thousand and NT$40,122,933 thousand, respectively.
c. The ceiling amounts of guarantees were NT$767,875 thousand and NT$744,000 thousand, respectively. Guarantees amounting to NT$226,325 thousand and NT$229,429 thousand, respectively, and were provided for the loans obtained by Sunjet Components Corp. Sunjet Components Corp did not recognize any loss nor offer any cash or assets for the guarantees.
d. The ceiling amounts of guarantees were NT$684,480 thousand in December 31, 2017. Guarantees amounting to NT$5,656 thousand in 2017, and were provided for the loans obtained by AMOD Technology Co., Ltd. The Company did not recognize any loss nor offer any cash or assets for the guarantees.
e. The ceiling amounts of guarantees were NT$215,005 thousand in December 31, 2018, and were provided for the loans obtained by iPor Technology Inc. The Company did not recognize any loss nor offer any cash or assets for the guarantees.
f. The ceiling amounts of guarantees were NT$30,715 thousand and NT$29,760 thousand, respectively. Guarantees amounting to NT$14,631 thousand and NT$8,928 thousand, respectively, and were provided for the loans obtained by Sunjet Components Corp. (Dongguan). Sunjet Components Corp. did not recognize any loss nor offer any cash or assets for the guarantees.
73 -

40. EXCHANGE RATE OF FINANCIAL ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The significant financial assets and liabilities denominated in foreign currencies were as follows:

December 31, 2018

		Foreign
	Currencies			Carrying
	(In	Thousands)	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	79,428	30.7150	$ 2,439,634
USD		1,911	6.8632 (USD:RMB)	58,707
Nonmonetary items
Investments accounted for using the equity
method
KRW		907,636	0.0278	25,232
RMB		54,166	4.4720	242,229
Financial liabilities
Monetary items
USD		83,208	30.7150	2,555,726
USD		8,986	6.8632 (USD:RMB)	276,003
December 31, 2017
		Foreign
	Currencies			Carrying
	(In	Thousands)	Exchange Rate	Amount
Financial assets
Monetary items
USD	$	68,553	29.7600	$ 2,040,123
USD		2,938	6.5342 (USD:RMB)	87,437
Nonmonetary items
Investments accounted for using the equity
method
KRW		900,486	0.0281	25,304
RMB		47,285	4.5650	215,854
Financial liabilities
Monetary items
USD		145,280	29.7600	4,323,541
USD		8,078	6.5342 (USD:RMB)	240,393

74 -

The Group is mainly exposed to the fluctuations in the USD. The following information was aggregated by the functional currencies of the group entities, and the exchange rates between respective functional currencies and the presentation currency were disclosed. The significant realized and unrealized/unrealized foreign exchange gains (losses) were as follows:

Foreign Currencies NTD USD RMB	For the Year Ended December 31	For the Year Ended December 31
	2018 Exchange Rate Net Foreign Exchange Gain (Loss) 1 (NTD:NTD) $ 21,648 30.1492 (USD:NTD) 8,647 4.5601 (RMB:NTD) (14,082) $ 16,213	2017
		Exchange Rate Net Foreign Exchange Gain (Loss) 1 (NTD:NTD) $ (10,073) 30.4315 (USD:NTD) (2,274) 4.5068 (RMB:NTD) 11,366 $ (981)

41. SEPARATELY DISCLOSED ITEMS

a. Information on significant transactions and information on investees:
1) Financing provided to others: Table 1
2) Endorsements/guarantees provided: Table 2
3) Marketable securities held (excluding investments in subsidiaries and associates): Table 3
4) Marketable securities acquired and disposed of at costs or prices at least NT$300 million or 20% of the paid-in capital: None
5) Acquisition of individual real estate at costs of at least NT$300 million or 20% of the paid-in capital: None
6) Disposal of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 4
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: Table 5
9) Trading in derivative instruments: None
10) Intercompany relationships and significant intercompany transactions: Table 6
11) Information on investees: Table 7
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: Table 8
75 -
2) Any of the following significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: None
a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period: Table 4
b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period: Table 4
c) The amount of property transactions and the amount of the resultant gains or losses: None
d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes: Table 2
e) The highest balance, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds: None
f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receiving of services: Table 6

42. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on financial information of industries. The group entities have similar economic attributes and sell the same types of products in a uniform management approach; thus, the Group is a single reportable segment. The measurement basis of the information provided to the chief operating decision maker is the same as the information and amounts shown in the financial statements, so the consolidated financial statements for 2018 and 2017 can be compared with reportable segment revenue and operating outcome for these years. In addition, the information on operating segment assets was not regularly reported to the Group’s chief operating decision maker, so the reportable amount is zero.

a. Revenue from major products and services

The following is an analysis of the Group’s revenue from its major products and services.

Integrated circuit (IC) Random access memory (RAM) Electronic component CPU Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 63,454,522 6,742,017 7,431,080 1,315,005 1,316,781 $ 80,259,405	2017 $ 62,074,698 5,112,271 4,634,928 2,009,791 2,153,743 $ 75,985,431

76 -
b. Geographical information

The Group operates in three principal geographical areas - Taiwan, China and Hong Kong.

The Group’s revenues from external customers by location of operations and information on its noncurrent assets by location of assets are detailed below.

Revenue from External Customers For the Year Ended December 31 2018 2017 $ 24,264,921 $ 18,328,655 45,660,760 48,496,927 5,740,827 5,302,845 4,592,897 3,857,004 $ 80,259,405 $ 75,985,431	Noncurrent Assets	Noncurrent Assets

	December 31
2018 $ 24,264,921 45,660,760 5,740,827 4,592,897 $ 80,259,405	2018 $ 498,880 179,099 29,754 - $ 707,733	2017 $ 461,391 183,984 14,128 - $ 659,503

Noncurrent assets exclude noncurrent assets classified as financial instruments and deferred tax assets.

c. Information about major customers

The customer that contributed 10% or more to the Group’s revenue was as follows:

Customer A	For the Year Ended December 31	For the Year Ended December 31
	2018 Amount % $ 17,504,052 21.81	2017
		Amount % $ 11,188,108 14.72

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TABLE 1

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

No. (Note 1)	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period (Note 3)	Ending Balance (Note 3)	Actual Borrowing Amount	Interest Rate	Nature of Financing	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Note 1)	Aggregate Financing Limits (Note 2)	Note
													Item	Value
0	EDOM Technology Co., Ltd.	Sunjet Components Corp. AMOD Technology Co., Ltd. iPro Technology, Inc.	Other receivables Other receivables Other receivables	Yes Yes Yes	$ 245,720 (US$ 8,000 thousand) 245,720 (US$ 8,000 thousand) 61,430 (US$ 2,000 thousand)	$ 245,720 (US$ 8,000 thousand) - 61,430 (US$ 2,000 thousand)	$ - - -	- - -	For business operation For business operation For business operation	$ - - -	For business operation For business operation For business operation	$ - - -	- - -	- - -	$ 330,834 - 330,834	$ 661,669 - 661,669	- Note 4 -

Notes: 1. The maximum amount of financing to an individual borrower is 10% of the Company’s net asset value.
The maximum financing amount is 20% of the Company’s net asset value.
The amounts are based on the exchange rate at the end of the year.
AMOD Technology Co., Ltd. and Sunjet Components Corp. merged in December 31, 2018. AMOD Technology Co., Ltd. is the dissolved company, and Sunjet Components Corp. is the surviving company.
78 -

TABLE 2

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 1)	Maximum Amount Endorsed/ Guaranteed During the Period (Note 3)	Outstanding Endorsement/ Guarantee at the End of the Period (Note 3)	Actual Borrowing Amount	Amount Endorsed/ Guaranteed by Collaterals	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%)	Aggregate Endorsement/ Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	EDOM Technology Co., Ltd.	Sunjet Components Corp. AMOD Technology Co., Ltd. (Note 4) iPro Technology, Inc.	Subsidiary Subsidiary Subsidiary	$ 1,323,338 1,323,338 1,323,338	$ 767,875 (US$ 25,000 thousand) 706,445 (US$ 23,000 thousand) 215,005 (US$ 7,000 thousand)	$ 767,875 (US$ 25,000 thousand) - 215,005 (US$ 7,000 thousand)	$ 226,325 (US$ 7,369 thousand) - -	$ - - -	23.21 - 6.50	$ 2,646,675 - 2,646,675	Y Y Y	N N N	N N N
1	Sunjet Components Corp.	Sunjet Components Corp. (Dongguan)	Subsidiary	146,232	30,715 (US$ 1,000 thousand)	30,715 (US$ 1,000 thousand)	14,631 (US$ 476 thousand)	-	8.40	292,464	N	N	Y

Note: 1. 40% of the Company’s net asset value.
80% of the Company’s net asset value.
The amounts are based on the exchange rate at the end of the year.
AMOD Technology Co., Ltd. and Sunjet Components Corp. merged in December 31, 2018. AMOD Technology Co., Ltd. is the dissolved company, and Sunjet Components Corp. is the surviving company.
79 -

TABLE 3

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

MARKETABLE SECURITIES HELD FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Holding Company Name	Type and Issuer of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2018	December 31, 2018		Note
				Shares	Carrying Value	Percentage of Ownership (%)	Market Value or Net Asset Value
EDOM Technology Co., Ltd. Accu Technologies Ltd.	Ordinary shares AEWIN Technologies Co., Ltd. Tronc-E Co., Ltd. VitalSigns Technology Preference shares Keyssa Inc. Genxcomm Inc. Private funds BRV Lotus Growth Fund Preference shares Largan Health Technology, Inc.	- - - - - - -	Financial assets at fair value through other comprehensive income - noncurrent Financial assets at fair value through profit or loss - noncurrent Financial assets at fair value through profit or loss - noncurrent Financial assets at fair value through profit or loss - noncurrent Financial assets at fair value through profit or loss - noncurrent Financial assets at fair value through profit or loss - noncurrent Financial assets at fair value through profit or loss - noncurrent	355,923 2,000,000 830,000 91,310 87,719 - 205,140	$ 6,763 2,350 9,960 502 258 71,840 3,185	1.58 17.70 4.93 0.14 0.27 - 1.67	$ 6,763 2,350 9,960 502 258 71,840 3,185	Note 1 Note 2 Note 2 Note 2 Note 2 Note 2 Note 2

Note 1: The amounts are based on the closing price at the end of 2018.

Note 2: The fair values of financial assets measured at cost were not disclosed because they could not be reliably measured.

Note 3: Refer to Tables 7 and 8 for information on investments in subsidiaries and associates.

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TABLE 4

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Buyer	Related Party	Relationship		Transaction Details (Note)	Transaction Details (Note)	Transaction Details (Note)	Abnormal Transaction	Abnormal Transaction	Notes/Accounts Payable or Receivable	Notes/Accounts Payable or Receivable	Note
			Purchase/ Sale	Amount	% to Total	Payment Terms	Unit Price	Payment Terms	Ending Balance	% to Total
EDOM Technology Co., Ltd. Sunjet Components Corp. iPro Technology, Inc. EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shanghai) Ltd. AMOD Technology Co., Ltd. (Note 1) Sunjet (HK) Components Ltd.	iPro Technology, Inc. EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shanghai) Ltd. AMOD Technology Co., Ltd. (Note 1) Sunjet (HK) Components Ltd. EDOM Technology Co., Ltd. EDOM Technology Co., Ltd. EDOM Technology Co., Ltd. EDOM Technology Co., Ltd. Sunjet Components Corp.	Subsidiary Investee of indirect subsidiary of company Investee of indirect subsidiary of company Subsidiary Investee of indirect subsidiary of company Parent company Ultimate parent company Ultimate parent company Parent company Parent company	Purchase Sale Sale Purchase Sale Sale Purchase Purchase Sale Purchase	$ 190,162 (213,982) (315,694) 200,470 (502,384) (190,162) 213,982 315,694 (200,470) 502,384	3.17 (0.27) (0.41) 3.34 (26.14) (32.24) 66.58 93.15 (16.90) 99.96	Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation	Conducted as agree terms Conducted as agree terms Conducted as agree terms Conducted as agree terms Conducted as agree terms Conducted as agree terms Conducted as agree terms Conducted as agree terms Conducted as agree terms Conducted as agree terms	Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation Depending on capital situation	$ (189,539) 89,212 152,964 (115,459) 191,215 189,539 (89,212) (152,964) 115,459 (191,215)	2.63 2.18 3.73 (1.60) 32.17 70.75 (84.42) (98.94) 14.98 (100)	- - - - - - - - - -

Note: AMOD Technology Co., Ltd. and Sunjet Components Corp. merged in December 31, 2018. AMOD Technology Co., Ltd. is the dissolved company, and Sunjet Components Corp. is the surviving company, all of AMOD Technology Co., Ltd. transaction account balances have been merged to Sunjet Components Corp.

81 -

TABLE 5

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Company Name	Related Party	Relationship	Ending Balance (Note 1)	Turnover Rate		Overdue	Amounts Received in Subsequent Period	Allowance for Impairment Loss
					Amount	Actions Taken
EDOM Technology Co., Ltd. Sunjet Components Corp. (Note 1) Sunjet Components Corp. iPro Technology, Inc.	EDOM Trading (Shanghai) Ltd. EDOM Technology Co., Ltd. Sunjet (HK) Components Ltd. EDOM Technology Co., Ltd.	Investee of indirect subsidiary of company Parent company Investee of indirect subsidiary of company Parent company	$ 152,964 115,459 191,215 189,539	3.0 3.4 4.7 2.0	$ 74,706 - - -	Continuous collection - - -	$ 27,961 115,459 58,510 189,539	$ - - - -

Note 1: AMOD Technology Co., Ltd. and Sunjet Components Corp. merged in December 31, 2018. AMOD Technology Co., Ltd. is the dissolved company, and Sunjet Components Corp. is the surviving company, all of AMOD Technology Co., Ltd. transaction account balances have been merged to Sunjet Components Corp.

82 -

TABLE 6

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2018 (Amounts in Thousands of New Taiwan Dollars)

No. (Note 1)	Investee Company	Counterparty	Flow of Transactions (Note 2)			Transaction Details
				Financial Statement Account	Amount (Note 4)	Payment Terms	% to Total Sales or Assets (Note 3)
0	EDOM Technology Co., Ltd.	AMOD Technology Co., Ltd. (Note 5) AMOD Technology Co., Ltd. (Note 5) AMOD Technology Co., Ltd. (Note 5) AMOD Technology Co., Ltd. (Note 5) EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shanghai) Ltd. EDOM Trading (Shanghai) Ltd. EDOM Trading (Shanghai) Ltd. EDOM Trading (Shanghai) Ltd. EDOM Trading (Shanghai) Ltd. AMOD Technology (Shenzhen) Ltd. AMOD Technology (Shenzhen) Ltd. Sunjet Components Corp. (Note 5) Sunjet Components Corp. (Note 5) Sunjet Components Corp. (Note 5) Sunjet Components Corp. (Note 5) Sunjet Components Corp. (Note 5) Sunjet Components Corp. (Note 5) Sunjet Components Corp. (Note 5) iPro Technology, Inc. iPro Technology, Inc. iPro Technology, Inc.	a a a a a a a a a a a a a a a a a a a a a a a a a a a	Sale Purchase Rental income Other income Sale Purchase Trade receivables from related parties Trade payable to related parties Other payables Operating expense - service charge Sale Purchase Trade receivables from related parties Other payables Operating expense - service charge Sale Trade receivables from related parties Sale Purchase Trade receivables from related parties Trade payable to related parties Other receivables Other income Rental income Purchase Rental income Trade payable to related parties	$ 10,628 200,470 432 1,487 213,982 22 89,212 41 15,173 201,815 315,694 863 152,964 17,170 211,194 249 249 5,591 1,799 1,587 115,459 1,240 4,538 3,000 190,162 42 189,539	Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are determined by financial condition Transaction terms are determined by financial condition Transaction terms are determined by financial condition Transaction terms are based on mutual accordance with mutual agreements Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are determined by financial condition Transaction terms are determined by financial condition Transaction terms are based on mutual accordance with mutual agreements Transaction terms are not significantly different from those for third parties Transaction terms are determined by financial condition Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are determined by financial condition Transaction terms are determined by financial condition Transaction terms are determined by financial condition Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are determined by financial condition	- - - - - - - - - - - - 1 - - - - - - - 1 - - - - - 1
1	EDOM Trading (Shanghai) Ltd.	EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shenzhen) Ltd. EDOM Trading (Shenzhen) Ltd.	b b b	Sale Purchase Trade receivables from related parties	375 111 51	Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are determined by financial condition	- - -
2	EDOM Trading (Shenzhen) Ltd.	AMOD Technology (Shenzhen) Ltd. AMOD Technology (Shenzhen) Ltd.	b b	Purchase Rental income	29 59	Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties	- -
							(Continued)

83 -

No. (Note 1)	Investee Company	Counterparty	Flow of Transactions (Note 2)			Transaction Details
				Financial Statement Account	Amount (Note 4)	Payment Terms	% to Total Sales or Assets (Note 3)
3	AMOD Technology Co., Ltd. (Note 5)	AMOD Technology (Shenzhen) Ltd. Sunjet Components Corp. Sunjet Components Corp.	b b b	Sale Sale Purchase	$ 7,228 1,878 292	Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties	- - -
4	Sunjet Components Corp. (Note 5)	Sunjet (HK) Components Ltd. Sunjet (HK) Components Ltd. Sunjet (HK) Components Ltd. Sunjet Components Corp. (Dongguan) Sunjet Components Corp. (Dongguan) Sunjet Components Corp. (Dongguan) AMOD Technology (Shenzhen) Ltd.	b b b b b b b	Sale Trade receivables from related parties Purchase Sale Purchase Trade receivables from related parties Trade receivables from related parties	502,384 191,215 497 45,347 21 40,153 1,263	Transaction terms are not significantly different from those for third parties Transaction terms are determined by financial condition Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are not significantly different from those for third parties Transaction terms are determined by financial condition Transaction terms are determined by financial condition	1 1 - - - - -

Note 1: The parent company and its subsidiaries are numbered as follows:

a. “0” for the parent company.
b. Subsidiaries are numbered from “1”.

Note 2: The flow of intercompany transactions is as follows:

a. From the parent company to a subsidiary.

b. Between subsidiaries

Note 3: Balance sheet items are shown as a percentage to consolidated total assets as of December 31, 2018, while income statement items are shown as a percentage to consolidated total operating revenue for 2018.

Note 4: The above transaction amounts were eliminated upon consolidation.

Note 5: AMOD Technology Co., Ltd. and Sunjet Components Corp. merged in December 31, 2018. AMOD Technology Co., Ltd. is the dissolved company, and Sunjet Components Corp. is the surviving company, all of AMOD Technology Co., Ltd. transaction account balances have been merged to Sunjet Components Corp.

(Concluded)

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TABLE 7

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Main Businesses and Products	Investment Amount	Investment Amount	As of December 31, 2018	As of December 31, 2018	As of December 31, 2018	Net Income (Loss) of the Investee (Note 2)	Share of Profit (Loss)	Note
				December 31, 2018 (Notes 1)	December 31, 2017 (Notes 1)	Shares	Percentage of Ownership	Carrying Amount
EDOM Technology Co., Ltd. (the “Company”) ACCU Technologies Ltd. (ACCU) Sunjet Components Corp. Freeland Worldwide Corporation	ACCU Technologies Ltd. AMOD Technology Co., Ltd. ILDO Korea Co., Ltd. Sunjet Components Corp. KingHold Technology EJET Technology Co., Ltd. iPro Technology, Inc. Sunshine Global International Ltd. Honest Rich Trading Ltd. Massive Strong Investment Ltd. Freeland Worldwide Corporation Sunjet (HK) Components Ltd.	B.V.I Taipei, Taiwan Korea Taipei, Taiwan New Taipei, Taiwan Taipei, Taiwan Hsinchu City Western Samoa Western Samoa Western Samoa B.V.I Hong Kong	General trade and investment in manufacturing and service industries General trade Trade of computer peripherals General trade of electronic components General trade of electronic components General trade of electronic components General trade of electronic components General trade and investment in manufacturing and service industries General trade and investment in manufacturing and service industries General trade and investment in manufacturing and service industries General trade and investment in manufacturing and service industries General trade and investment in manufacturing and service industries	$ 452,985 (US$ 14,748 thousand) - 17,209 (₩619,012 thousand) 298,489 43,771 5,000 152,769 60,662 (US$ 1,975 thousand) 168,963 (US$ 5,501 thousand) 276,435 (US$ 9,000 thousand) 84,313 (US$ 2,745 thousand) 83,110 (HK$ 1,196 thousand)	$ 452,985 (US$ 14,748 thousand) 67,173 17,209 (₩619,012 thousand) 231,316 29,185 5,000 - 60,662 (US$ 1,975 thousand) 168,963 (US$ 5,501 thousand) 276,435 (US$ 9,000 thousand) 53,598 (US$ 1,745 thousand) 52,451 (HK$ 13,377 thousand)	14,748,179 - 74,083 34,709,305 2,716,000 500,000 6,491,334 1,975,000 5,501,000 9,000,000 27,446 21,195,545	100.00 - 25.00 99.83 33.95 45.45 92.73 100.00 100.00 100.00 100.00 100.00	` $ 274,277 - 25,232 (₩907,635 thousand) 397,604 28,849 2,549 154,206 40,522 56,187 179,145 8,771 8,769	$ 13,721 14,437 777 (₩ 28,598 thousand) 33,994 (45,385) (5,257) 4,368 2,679 5,030 8,616 (9,994) (9,994)	$ 13,721 14,401 194 (₩ 7,149 thousand) 33,866 (16,021) (2,390) 1,437 2,679 5,030 8,616 (9,994) (9,994)	Subsidiary (Note 3) Subsidiary (Notes 3 and 6) Note 4 Subsidiary (Notes 3 and 6) Note 3 Note 4 Note 3 Investee of indirect subsidiary of Company (Note 3) Investee of indirect subsidiary of Company (Note 3) Investee of indirect subsidiary of Company (Note 3) Investee of indirect subsidiary of Company (Note 3) Investee of indirect subsidiary of Company (Note 3)

Note 1: The amounts are based on the exchange rate at the end of the year.

Note 2: The amounts are based on the average exchange rate in 2018.

Note 3: The amounts are based on audited 2018 financial statements.

Note 4: The amounts are based on unaudited 2018 financial statements.

Note 5: Please refer to Table 8 for information on investment in Mainland China.

Note 6: AMOD Technology Co., Ltd. and Sunjet Components Corp. merged in December 31, 2018. AMOD Technology Co., Ltd. is the dissolved company, and Sunjet Components Corp. is the surviving company. The number of shares held by Sunjet Components Corp at the end of year including 7,495,631 shares obtained after the merger.

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TABLE 8

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

	Investee Company	Investee Company	Main Businesses and Products	Paid-in Capital	Paid-in Capital	Method of Investment (Note 1)	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2018	Remittance of Funds	Remittance of Funds	Remittance of Funds	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2018	Net Income (Losses) of the Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 2)	Carrying Amount as of December 31, 2018	Accumulated Repatriation of Investment Income as of December 31, 2018
								Outward		Inward
EDOM Technology Co., Ltd. AMOD Technology Co., Ltd. Sunjet Components Corp.	EDOM Trading (Shenzhen) Ltd. EDOM Technology (Shanghai) Ltd. AMOD Technology (Shenzhen) Ltd. Sunjet Components Corp. (Dongguan)		Trade of computer peripherals Trade, research and development of computer peripherals Trade of computer peripherals Trade of electric power equipment and computer peripherals	$ 168,933 (US$ 5,500 thousand) 276,435 (US$ 9,000 thousand) 6,143 (US$ 200 thousand) 81,303 (US$ 2,647 thousand)		b (Note 3) b (Note 4) a b (Note 5)	$ 168,933 (US$ 5,500 thousand) 276,435 (US$ 9,000 thousand) 6,143 (US$ 200 thousand) 50,588 (US$ 1,647 thousand)	$ - - - 30,715 (US$ 1,000 thousand)		$ - - - -	$ 168,933 (US$ 5,500 thousand) 276,435 (US$ 9,000 thousand) 6,143 (US$ 200 thousand) 81,303 (US$ 2,647 thousand)	$ 5,030 8,616 (195) (11,142)	100 100 100 100	$ 5,030 8,616 (195) (11,142)	$ 56,156 179,145 2,398 4,530	$ - - - -

Investment Company		Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2018			Investment Amounts Authorized by Investment Commission, MOEA				Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
EDOM Technology Co., Ltd. AMOD Technology Co., Ltd. Sunjet Components Corp.		$ 445,368 (US$ 14,500 thousand) 6,143 (US$ 200 thousand) 81,303 (US$ 2,647 thousand)			$ 506,798 (US$ 16,500 thousand) 6,143 (US$ 200 thousand) 109,960 (US$ 3,580 thousand)				$3,320,766 × 60% = $1,992,460 - $365,580 × 60% = $219,348

Note 1: a. Direct investment in China.
b. Investment in China through investment in an overseas company.
c. Others.

Note 2: The amounts are based on audited 2018 financial statements.

Note 3: Investment from Honest Rich Trading Ltd. (Western Samoa).

Note 4: Investment from Massive Strong Ltd. (Western Samoa).

Note 5: Investment from Sunjet (HK) Components Ltd. (Hong Kong).

Note 6: AMOD Technology Co., Ltd. and Sunjet Components Corp. merged in December 31, 2018. AMOD Technology Co., Ltd. is the dissolved company, and Sunjet Components Corp. is the surviving company. Due to the current statutory merger procedure, amount of investment stipulated for review by investment commission is not yet submitted by EDOM Technology Co., Ltd.

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EDOM — Annual Report 2018

52280_rns_2018-11-09_63a092ee-1f5a-4bab-8404-17521bb78a48.pdf

EDOM Technology Co., Ltd. and Subsidiaries

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

YU-I TSENG

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

The Impairment of Inventories

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

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

EDOM TECHNOLOGY CO., LTD. AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

Classification, measurement and impairment of financial assets

Impact on assets, liabilities and equity for the current period

Definition of a lease

The Group as lessee

The Group as lessor

Anticipated impact on assets, liabilities and equity

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

e. Business combinations

f. Foreign currencies

j. Investment properties

n. Financial instruments

1) Financial assets

i. Available-for-sale financial assets

ii. Loans and receivables

2017

c) Derecognition of financial assets

2) Equity instruments

3) Financial liabilities

b) Derecognition of financial liabilities

4) Convertible bonds

o. Provisions

p. Revenue recognition

2018

Revenue from the sale of goods

1) Revenue from the sale of goods

q. Leasing

2) Retirement benefits

1) Current tax

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME - 2018

9. FINANCIAL ASSETS AT AMORTIZED COST - 2018

10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

11. FINANCIAL ASSETS MEASURED AT COST - 2017

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET - 2017

13. NOTES RECEIVABLE AND TRADE RECEIVABLES

a. Notes receivable

b. Trade receivables

In 2018

1) At amortized cost

December 31, 2018

2) At FVTOCI

2017

14. INVENTORIES

15. SUBSIDIARIES

16. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

EDOM Annual Report 2018