FTC — Audit Report / Information 2019

Nov 14, 2019

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2019 AND 2018

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

~1~

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To the Board of Directors and Shareholders of Foxconn Technology Co., Ltd.

Opinion

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

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

Basis for opinion

We conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants”, “Rule No. Financial-Supervisory-Securities-Auditing-1090360805 issued by the Financial Supervisory Commission on February 25, 2020” and generally accepted auditing standards in the Republic of China (ROC GAAS); and in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS) for our audit of the consolidated financial statements as of and for the year ended December 31, 2018. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

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

Key audit matters on the consolidated financial statements for the year ended December 31, 2019 are stated as follows:

～ 2 ～

Revenue cutoff

Description

Refer to Note 4(31) for accounting policy on revenue recognition and Note 6(22) for details of revenues. The Group has three revenue types, including (1) direct shipment from the factory, (2) FOB destination, and (3) hub. For FOB destination and hub, revenue is recognised when goods are shipped to destination or picked up by customers (when control of the products is transferred). The supporting documents for revenue recognition include receipts from customers (FOB destination), reports or other information provided by hub custodians and inventory movement record of hub. As the hubs are located around the world with numerous custodians, the frequency and contents of statements provided by custodians vary, and the process of revenue recognition involves numerous manual procedures, these factors may potentially result in inaccurate timing of sales revenue recognition and discrepancy between the physical inventory quantities in the hubs and the quantities as reflected in accounting records.

Since there are numerous daily revenue from hubs and from FOB destination and the transaction amounts prior to and after the balance sheet date are significant to the financial statements, revenue cutoff has been identified as a key audit matter.

How our audit addressed the matter

We performed the following key audit procedures in respect of the above key audit matter:

• A. Evaluated and tested the Group’s internal controls over revenue recognition.

• B. Tested sales transactions that took place shortly before and after the balance sheet date by verifying the customers’ receipt notes, supporting documents provided by hub custodian, and inventory movement records, and ascertained whether cost of goods sold was recognised in the correct reporting period.

• C. Confirmed physical inventory quantities held by distribution warehouses and agreed to accounting records. Assessed the reasonableness of reconciling items identified through confirmation or physical inventory, if any, and inspected related supporting documents and rationale.

~3~

Provision for inventory valuation losses

Description

Refer to Note 4(14) for accounting policies on inventory valuation, Note 5(2) for uncertainty of accounting estimates and assumptions in relation to inventory valuation losses, and Note 6(6) for details of inventories. As at December 31, 2019, the Group’s inventories and provision for inventory valuation losses amounted NT$2,689,857 thousand and NT$177,266 thousand, respectively.

The Group is primarily engaged in manufacturing and sales of 3C electronic products. Due to rapid technological innovations, short electronic product life cycles and fluctuations in market prices, there is a higher risk of inventory losses arising from market value decline or obsolescence. The Group recognises inventories at the lower of cost and net realisable value, which is determined based on historical data of inventory closeout. Inventory valuation losses are provided against inventory aged over a certain time period and individually identified as obsolete or damaged.

As the amounts of inventory are material, types of inventories vary, the identification of obsolete or damaged inventories and determination of net realisable value are subject to management and audit judgement, we consider provision for inventory valuation losses as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

• A. Ensured consistent application of accounting policies on provision for inventory valuation losses and ascertained compliance with respective accounting guidance.

• B. Validated the appropriateness of system logic of inventory aging report utilised by management in assessing inventory valuation losses and sampled and tested transactions for proper categorisation in inventory aging report.

• C. Assessed the reasonableness of inventory valuation losses through discussion with management as to the determination of net realisable value of obsolete or damaged inventories and validated related supporting documents.

~4~

Offsetting financial assets and liabilities agreements with financial institutions

Description

Refer to Note 4(26) for accounting policies on offsetting financial assets and liabilities, Note 5(1)B. for critical accounting judgements in relation to offsetting financial assets and liabilities, and Note 6(14) for details of offsetting financial assets and liabilities. As of December 31, 2019, the total amount of financial instruments set off was NT$4,035,690 thousand.

The Group entered into financial assets and financial liabilities offsetting agreements with financial institutions. Based on the judgement made by management, the agreement meets the requirements of IAS 32, ‘Financial instruments: Presentation’. In accordance with IAS 32, financial assets and liabilities are offset and reported in the net amount when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

The determination of fulfilling the criteria for offsetting in IAS 32, ‘Financial instruments: Presentation’ is subject to judgment. The Group entered into various offsetting agreements which involve individually significant financial instruments. The financial assets and financial liabilities are presented separately once the offsetting criteria is not met. As these would have a material impact on the consolidated financial statements, we considered the offsetting of financial assets and liabilities as a key audit matter.

How our audit addressed the matter

We performed the following audit procedures in respect of the above key audit matter:

• A. Assessed and tested internal controls over offsetting agreements entered into with financial institutions on financial assets and financial liabilities, and determined whether the offsetting criteria of IAS 32, ‘Financial instruments: Presentation’ was met, accounting processes were followed and there was proper segregation of duties.

• B. Obtained and reviewed the above agreements to ensure that offsetting criteria of IAS 32, ‘Financial instruments: Presentation’ was met and to confirm that the offsetting amount was accurate.

• C. Confirmed the existence and the rights and obligations of financial assets and financial liabilities offsetting agreements with respective financial institutions.

~5~

Other matter – Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of Foxconn Technology Co., Ltd. as of and for the years ended December 31, 2019 and 2018.

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

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

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

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

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

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

As part of an audit in accordance with ROC GAAS, we exercise professional judgment and

~6~

maintain professional skepticism throughout the audit. We also:

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

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

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

• D. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our 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 report. However, future events or conditions may cause the Group to cease to continue as a going concern.

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

• F. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in

~7~

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 of the current period and are therefore the key audit matters. We describe these matters in our 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.

Feng, Jackie Wu, Han-Chi

For and on behalf of PricewaterhouseCoopers, Taiwan

March 30, 2020

---

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

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

~8~

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(4) and 8 6(5) 7 7 6(6) 6(2) 6(3) 6(4) 6(7) 6(8) and 7 6(9), 7 and 8 6(11) 6(12) 6(27) 6(13)	December31,2019 AMOUNT % $ 40,123,656 24 21,081 - 34,717,011 21 13,447,539 8 16,122,773 10 844,462 1 2,512,591 2 283,082 - 108,072,195 66 493,296 - 35,327,626 21 3,874,615 2 5,791,082 4 5,942,398 4 1,282,774 1 1,032,105 1 1,577,962 1 549,302 - 632,462 - 56,503,622 34 $ 164,575,817 100	December31,2018	December31,2018
		AMOUNT $ 40,123,656 21,081 34,717,011 13,447,539 16,122,773 844,462 2,512,591 283,082 108,072,195 493,296 35,327,626 3,874,615 5,791,082 5,942,398 1,282,774 1,032,105 1,577,962 549,302 632,462 56,503,622 $ 164,575,817	AMOUNT $ 52,191,701 567,640 17,663,897 16,504,913 15,634,864 1,070,706 2,905,442 484,697 107,023,860 - 23,085,238 5,367,399 8,713,290 7,515,455 - 970,020 1,767,192 563,501 1,558,380 49,540,475 $ 156,564,335	%
Current assets 1100 Cash and cash equivalents 1110 Current financial assets at fair value through profit or loss 1136 Current financial assets at amortised cost, net 1170 Accounts receivable, net 1180 Accounts receivable due from related parties, net 1200 Other receivables 130X Inventories 1470 Other current assets 11XX Total current assets Non-current assets 1510 Non-current financial assets at fair value through profit or loss 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost, net 1550 Investments accounted for under equity method 1600 Property, plant and equipment 1755 Right-of-use assets 1760 Investment property - net 1780 Intangible assets 1840 Deferred tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets				33 - 11 11 10 1 2 -
				68
				- 15 3 6 5 - 1 1 - 1
				32
				100

(Continued)

~9~

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity	December31,2019 December31,2018 Notes AMOUNT % AMOUNT % 6(14) $ 15,765,436 9 $ 13,877,029 9 6(2) 99,427 - 39,992 - 6,370,560 4 8,169,183 5 7 22,417,094 14 18,381,701 12 6(15) and 7 8,703,833 5 13,768,085 9 6(27) 997,277 1 1,462,978 1 7 149,619 - - - 337,283 - 321,542 - 54,840,529 33 56,020,510 36 6(27) 683,987 1 844,442 - 7 322,580 - - - 123,111 - 109,449 - 1,129,678 1 953,891 - 55,970,207 34 56,974,401 36 6(17) 14,144,852 9 14,144,852 9 6(18) 7,527,178 5 7,767,553 5 6(19) 12,018,153 7 11,103,487 7 46,492 - - - 68,099,323 41 66,542,261 43 6(20) 6,783,427 4 ( 46,492) - 108,619,425 66 99,511,661 64 6(21) ( 13,815) - 78,273 - 108,605,610 66 99,589,934 64 9 11 $ 164,575,817 100 $ 156,564,335 100	December31,2018	December31,2018
			%
Current liabilities 2100 Short-term borrowings 2120 Current financial liabilities at fair value through profit or loss 2170 Accounts payable 2180 Accounts payable to related parties 2200 Other payables 2230 Current tax liabilities 2280 Current lease liabilities 2300 Other current liabilities 21XX Total current liabilities Non-current liabilities 2570 Deferred tax liabilities 2580 Non-current lease liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Equity attributable to owners of parent Share capital 3110 Ordinary share Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3320 Special reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 31XX Total equity attributable to owners of parent 36XX Non-controlling interests 3XXX Total equity Commitments and Contingent Liabilities Significant Subsequent Events 3X2X Total liabilities and equity			9 - 5 12 9 1 - -
			36
			- - -
			-
			36
			9 5 7 - 43 -
			64 -
			64
			100

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

~10~

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018

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

Items

Years ended December 31, 2019 2018 Notes AMOUNT % AMOUNT % 6(22) and 7 $ 99,802,129 100 $ 142,057,432 100 6(6)(25) and 7 ( 89,851,743 ) ( 90) ( 128,564,689) ( 91) 9,950,386 10 13,492,743 9 6(25) and 7 ( 580,807 ) ( 1) ( 672,972) - ( 1,851,921 ) ( 2) ( 2,455,196) ( 2) ( 2,223,366 ) ( 2) ( 1,758,191) ( 1) ( 4,656,094 ) ( 5) ( 4,886,359) ( 3) 5,294,292 5 8,606,384 6 6(10)(23) 3,493,221 3 3,196,930 2 6(24) 139,184 - 194,392 - ( 458,576 ) - ( 545,878) - 6(7) ( 91,843 ) - ( 119,377) - 3,081,986 3 2,726,067 2 8,376,278 8 11,332,451 8 6(27) ( 1,339,164 ) ( 1) ( 2,181,604) ( 2) $ 7,037,114 7 $ 9,150,847 6

4000 Operating revenue 5000 Operating costs 5900 Gross profit from operations Operating expenses 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Net operating income Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of loss of associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Tax expense 8200 Profit

(Continued)

~11~

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2019 AND 2018

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

Items

Years ended December 31, 2019 2018 Notes AMOUNT % AMOUNT % 6(16) ( $ 7,489 ) - ($ 93) - 6(3) 10,378,477 10 ( 39,037,972) ( 27) 1,498 - 869 - 10,372,486 10 ( 39,037,196) ( 27) 6(20)(21) ( 3,547,959 ) ( 3) 6,569 - ( 3,547,959 ) ( 3) 6,569 - $ 6,824,527 7 ($ 39,030,627) ( 27) $ 13,861,641 14 ($ 29,879,780) ( 21) $ 7,129,801 7 $ 9,146,659 6 ( 92,687 ) - 4,188 - $ 7,037,114 7 $ 9,150,847 6 $ 13,953,729 14 ($ 29,882,259) ( 21) ( 92,088 ) - 2,479 - $ 13,861,641 14 ($ 29,879,780) ( 21) 6(28) $ 5.04 $ 6.47 $ 5.01 $ 6.41

Components of other comprehensive income that will not be reclassified to profit or loss 8311 Other comprehensive income, before tax, actuarial gains (losses) on defined benefit plans 8316 Unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Other comprehensive income (loss) that will not be reclassified to profit or loss Components of other comprehensive income loss that will be reclassified to profit or loss 8361 Exchange differences on translation 8360 Other comprehensive (loss) income that will be reclassified to profit or loss 8300 Total other comprehensive income (loss) for the year 8500 Total comprehensive income (loss) Profit (loss) attributable to: 8610 Owners of parent 8620 Non-controlling interests Comprehensive income attributable to: 8710 Owners of parent 8720 Non-controlling interests Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

~12~

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

Year ended December 31, 2018 Balance at January 1, 2018 Effects of retrospective application and retrospective restatement Balance at January 1 after adjustments Profit Other comprehensive income (loss) Total comprehensive income (loss) Appropriations and distribution of 2017 earnings: Legal reserve Cash dividends Changes in equity of associates and joint ventures accounted for using equity method Disposal of investments in equity instruments designated at fair value through other comprehensive income Balance at December 31, 2018 Year ended December 31, 2019 Balance at January 1, 2019 Profit (loss) Other comprehensive income (loss) Total comprehensive income (loss) Appropriations and distribution of 2018 earnings: Legal reserve Special reserve Cash dividends Changes in equity of associates and joint ventures accounted for using equity method Balance at December 31, 2019	Notes								Equityat	tri	butableto owners of t	he parent	he parent								Non-controlling interests		Total equity
			Ordinaryshare		Capital surplus				RetainedEarnings						Other EquityInterest				Total
							Legal reserve		Special reserve		Unappropriated retained earnings	Exchange differences on translation of foreign financial statements			Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income	Unrealised gains (losses) on available- for-sale financial assets
	6(20) 6(19) 6(20) 6(19)		$ 14,144,852 - 14,144,852 - - - - - - - $ 14,144,852 $ 14,144,852 - - - - - - - $ 14,144,852		$ 7,768,067 - 7,768,067 - - - - - ( 514 ) - $ 7,767,553 $ 7,767,553 - - - - - - ( 240,375 ) $ 7,527,178		$ 10,106,948 - 10,106,948 - - - 996,539 - - - $ 11,103,487 $ 11,103,487 - - - 914,666 - - - $ 12,018,153		$ - - - - - - - - - - $ - $ - - - - - 46,492 - - $ 46,492		$ 63,516,070 ( 16,843 ) 63,499,227 9,146,659 776 9,147,435 ( 996,539 ) ( 5,092,147 ) - ( 15,715 ) $ 66,542,261 $ 66,542,261 7,129,801 ( 5,991 ) 7,123,810 ( 914,666 ) ( 46,492 ) ( 4,526,353 ) ( 79,237 ) $ 68,099,323		($ 2,586,289 ) - ( 2,586,289 ) - 8,278 8,278 - - - - ($ 2,578,011 ) ($ 2,578,011 ) - ( 3,548,558 ) ( 3,548,558 ) - - - - ($ 6,126,569 )		$ - 41,569,491 41,569,491 - ( 39,037,972 ) ( 39,037,972 ) - - - - $ 2,531,519 $ 2,531,519 - 10,378,477 10,378,477 - - - - $ 12,909,996		$ 41,569,491 ( 41,569,491 ) - - - - - - - - $ - $ - - - - - - - - $ -		$ 134,519,139 ( 16,843 ) 134,502,296 9,146,659 ( 39,028,918 ) ( 29,882,259 ) - ( 5,092,147 ) ( 514 ) ( 15,715 ) $ 99,511,661 $ 99,511,661 7,129,801 6,823,928 13,953,729 - - ( 4,526,353 ) ( 319,612 ) $ 108,619,425		$ 75,794 - 75,794 4,188 ( 1,709 ) 2,479 - - - - $ 78,273 $ 78,273 ( 92,687 ) 599 ( 92,088 ) - - - - ($ 13,815 )		$ 134,594,933 ( 16,843 ) 134,578,090 9,150,847 ( 39,030,627 ) ( 29,879,780 ) - ( 5,092,147 ) ( 514 ) ( 15,715 ) $ 99,589,934 $ 99,589,934 7,037,114 6,824,527 13,861,641 - - ( 4,526,353 ) ( 319,612 ) $ 108,605,610

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

~13~

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Income and expenses having no effect on cash flows Depreciation (including investment property and right-of-use assets) Amortisation Expected credit gain Net loss (gain) on financial assets or liabilities at fair value through profit or loss Gain on disposal of investments Gain on disposal of property, plant and equipment Interest expense Interest income Dividend income Share of loss of associates accounted for using equity method Changes in assets/liabilities relating to operating activities Changes in operating assets Accounts receivable net Accounts receivable due from related parties Other receivables Inventories Other current assets Net changes in liabilities relating to operating activities Accounts payable Accounts payable to related parties Other payables Other current liabilities Other non-current liabilities Cash inflow generated from operations Income taxes paid Net cash flows from operating activities

Years ended December 31, Notes 2019 2018 $ 8,376,278 $ 11,332,451 6(25) 1,974,922 1,894,552 6(25) 127,848 21,513 12(2) ( 976 ) ( 5,685 ) 652,616 ( 573,619 ) 6(24) ( 13,108 ) - 6(24) ( 140,844 ) ( 284,224 ) 458,576 545,876 6(23) ( 2,363,864 ) ( 2,052,109 ) 6(23) ( 394,167 ) ( 394,419 ) 6(7) 91,843 119,377 2,970,604 1,288,810 ( 1,234,257 ) 23,132,231 19,957 246,152 316,949 1,598,329 191,344 ( 115,173 ) ( 1,651,083 ) 906,236 4,451,939 ( 17,857,559 ) 661,266 ( 5,854,454 ) 23,512 147,781 18,865 ( 44,497 ) 14,538,220 14,051,569 ( 1,924,602 ) ( 2,312,860 ) 12,613,618 11,738,709

(Continued)

~14~

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Increase in financial assets at amortised cost-current Decrease in financial assets at amortised cost - current Acquisition of financial assets at fair value through profit or loss Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from disposal of investments accounted for using equity method Net decrease in financial assets at amortised cost - non-current Net increase in financial assets at amortised cost - non-current Cash paid for business combination Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in net receivable/ payable on raw materials Decrease in refundable deposits Decrease in other non-current assets Interest received Dividend received Net cash acquired from business combination Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Cash dividends paid Payments of lease liabilities Interest paid Net cash flows used in financing activities Effect of changes in foreign currency exchange rates on cash Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Years ended December 31, Notes 2019 2018 ($ 19,299,106 ) ($ 7,254,272 ) 1,121,520 9,765,213 ( 569,559 ) - - 290,985 11,617 - 1,369,020 1,367,609 - ( 2,279,350 ) ( 4,319,741 ) - 6(7) - ( 8,034,291 ) 6(30) ( 1,171,246 ) ( 1,916,428 ) 6(30) 302,709 541,661 ( 252,395 ) ( 337,968 ) 49,714 - 15,067 11,229 2,393,023 2,033,139 394,167 394,419 - 1,032,433 ( 19,955,210 ) ( 4,385,621 ) 15,670,709 13,877,018 ( 13,691,926 ) ( 23,364,844 ) 6(19) ( 4,526,353 ) ( 5,092,147 ) ( 332,920 ) - ( 428,227 ) ( 596,552 ) ( 3,308,717 ) ( 15,176,525 ) ( 1,417,736 ) 625,604 ( 12,068,045 ) ( 7,197,833 ) 52,191,701 59,389,534 $ 40,123,656 $ 52,191,701

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

~15~

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2019 AND 2018

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

1. HISTORY AND ORGANISATION

The Company was originally known as Q-RUN Technology Co., Ltd. and established on April 26, 1990. On March 1, 2004, the Company merged with Foxconn Precision Components Co., Ltd. and was renamed as Foxconn Technology Co., Ltd. The Company and its subsidiaries (collectively referred herein as “the Group”) are primarily engaged in manufacturing, processing and sales of case, heat dissipation modules and consumer electronics products.

1. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on March 30, 2020.

1. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS (1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

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

==> picture [478 x 49] intentionally omitted <==

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

Effective Date by
International Accounting
New Standards, Interpretations and Amendments Standards Board
----- End of picture text -----

New Standards, Interpretations and Amendments	Effective Date by International Accounting Standards Board
Amendments to IFRS 9, ‘Prepayment features with negative	January 1, 2019
compensation’
IFRS 16, ‘Leases’	January 1, 2019
Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’	January 1, 2019
Amendments to IAS 28, ‘Long-term interests in associates and joint	January 1, 2019
ventures’
IFRIC 23, ‘Uncertainty over income tax treatments’	January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019

Effects of the Group’s financial condition and financial performance arising from the above standards and interpretations based on the Group’s assessment are as follows:

IFRS 16, ‘Leases’

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

• B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased ‘right-of-use asset’ and ‘lease liability’ both by $1,308,751 with respect to the lease contracts of lessees on January 1, 2019, and increased ‘right-of-use asset’ and decreased ‘other non-current assets’ both by $575,582 with respect to the land use right contracts of the Group.

~16~

• C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:

• (a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.

• (b) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.

• (c) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.

• D. The Group calculated the present value of lease liabilities by using the weighted average incremental borrowing interest rate of 0.944% ~ 4.9%.

• E. The Group recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

follows:
Operating lease commitments disclosed by applying IAS 17 as at	$	1,481,637
December 31, 2018
Less: Low-value assets	(	5,866)
Total lease contracts amount recognised as lease liabilities by applying
IFRS 16 on January 1, 2019	$	1,475,771
Incremental borrowing interest rate at the date of initial application		0.944%～4.9%
Lease liabilities recognised as at January 1, 2019 by applying IFRS 16	$	1,308,751

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

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

follows:
New Standards,Interpretations and Amendments	Effective Date by International Accounting Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 9, IAS 39 and IFRS 7, ‘Interest rate benchmark reform’	January 1, 2020 January 1, 2020 January 1, 2020

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

~17~

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

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

Effective Date by International Accounting New Standards, Interpretations and Amendments Standards Board Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets To be determined by between an investor and its associate or joint venture’ International Accounting Standards Board IFRS 17, ‘Insurance contracts’ January 1, 2021 Amendments to IAS 1, ‘Classification of liabilities as current or nonJanuary 1, 2022 current’

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

(2) Basis of preparation

• A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

• (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

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

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

• B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

(3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

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

~18~

• (b) Inter-company material transactions, balances and unrealised gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure the consistency with the policies adopted by the Group.

• (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

• (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity.

• (e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial recognition of a financial asset or the cost on initial recognition of the associate or joint venture. Any difference between fair value and carrying amount is recognised in profit or loss. All amounts previously recognised in other comprehensive income in relation to the subsidiary are reclassified to profit or loss.

~19~

B. Subsidiaries included in the consolidated financial statements:

Investor	Subsidiary Main Business Activities Foxconn Investment holdings in companies Precision in Mainland China, Hong Kong Components and America primarily engaged Holding Co., in manufacturing, sale, research Ltd. and development of computer thermal module and computer components Q-RUN Investment holdings in companies Holdings Ltd. in Mainland China, Hong Kong, Singapore and America primarily engaged in manufacturing, sale, research and development of aluminum magnesium case and computer components Huazhun Investment holdings in R.O.C. Investment companies Co., Ltd. Atkinson Investment holding and Holdings Ltd. reinvestment	December December 31,2019 31,2018 100 100 100 100 100 100 100 100 Ownership (%)	Note
		December 31,2019 100 100 100 100
Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Precision Components Holding Co., Ltd.

~20~

Investor	Subsidiary	Main Business Activities Investment holding and reinvestment Investment holding and reinvestment Investment holding and reinvestment Investment holding and reinvestment Sales, investment holdings and reinvestment Investment holding and reinvestment Investment holding and reinvestment Investment holding and reinvestment Investment holding and reinvestment Investment holding and reinvestment Investment holding and reinvestment Investment holding and reinvestment	December December 31,2019 31,2018 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Ownership (%)	Note
			December 31,2019 100 100 100 100 100 100 100 100 100 100 100 100
Q-RUN Holdings Ltd. Q-RUN Holdings Ltd. Q-RUN Holdings Ltd. Q-RUN Holdings Ltd. Q-RUN Holdings Ltd. Atkinson Holdings Ltd. Atkinson Holdings Ltd. Atkinson Holdings Ltd. Q-RUN Far East Corporation Q-RUN Far East Corporation Q-RUN Far East Corporation Q-RUN Far East Corporation	Q-RUN Far East Corporation World Trade Trading Ltd. High Tempo International Ltd. FTC Technology Inc. Foxconn Technology Pte. Ltd. Kenny International Ltd. Double Wealth Profits Ltd. Precious Star International Ltd. Eastern Star Limited Foreign Technology Ltd. Topfry Industrial Ltd. Gold Glory International Ltd.

~21~

Investor	Subsidiary	Main Business Activities Investment holding and reinvestment Investment holding and reinvestment Electrical board components processing; manufacturing and marketing of optoelectronics and computer cables Manufacturing and marketing of power plug and wall socket, micro ribbon connectors for terminals, etc. Manufacturing and marketing of computer components (computer thermal module) Production of LED lamps and LED display; engagement in smart light pole and other products in relation to LED Manufacturing and marketing of computer components (computer thermal module) Manufacturing and marketing of computer components and peripherals and computer cases	December December 31,2019 31,2018 100 100 100 100 - - 22.76 22.76 100 100 100 100 65 65 87.63 87.63 Ownership (%)	Note
			December 31,2019 100 100 - 22.76 100 100 65 87.63
Q-RUN Far East Corporation Foxconn Technology Pte. Ltd. Kenny International Ltd. Kenny International Ltd. Double Wealth Profits Ltd. Fuzhun Precision (Shenzhen) Industry Co., Ltd. Fuzhun Precision (Shenzhen) Industry Co., Ltd. Eastern Star Limited	New Glory Holdings Ltd. FTP Technology Inc. Fu Rui Precision Components (Kunshan) Co., Ltd. Fu Yu Precision Components (Kunshan) Co., Ltd. Fuzhun Precision (Shenzhen) Industry Co., Ltd. Fuyu Technology (Nanyang) Co., Ltd. Champ Tech Optical (Foshan) Corporation Hon Fujin Precision Industry (Taiyuan) Co., Ltd.			(b) (b) (a)

~22~

Investor	Subsidiary	Main Business Activities New alloy material, precision molds, new electronic components, portable computers and their components Manufacturing and marketing of computer components and related peripherals, computer cases and metal stamping Research, development, production and sales of aluminum alloy materials, rail vehicle components, car accessories and electronic components; manufacturing and sales of structured metal products and metal container (not including precious metal and electroplating) Manufacture and sale of automobile parts; manufacture and sale of aluminum alloy parts used for automobiles and electronics Manufacturing and marketing of computer case – electronic and electrical components Manufacturing and marketing of power plug and wall socket, micro ribbon connectors for terminals, etc.	December December 31,2019 31,2018 100 100 12.37 12.37 70 70 100 100 100 100 77.24 77.24 Ownership (%)	Note
			December 31,2019 100 12.37 70 100 100 77.24
Eastern Star Limited Precious Star International Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Topfry Industrial Ltd. Gold Glory International Ltd.	Fuzhun Precision (Hebi) Electronics Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Qingdao Hiyn Materials Co., Ltd. Fuzhun Precision Industry (Shenyang) Co., Ltd. Fuhuigang Industral (Shenzhen) Co., Ltd. Fu Yu Precision Components (Kunshan) Co., Ltd.			(b)

~23~

==> picture [491 x 50] intentionally omitted <==

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

Ownership (%)
December December
Investor Subsidiary Main Business Activities 31, 2019 31, 2018 Note
----- End of picture text -----

Investor	Subsidiary	Main Business Activities	December 31, 2019 Owners	December 31, 2018 hip (%)	Note
Fu Yu	Champ	Manufacturing and marketing	35	35	(a)
Precision	Tech	of computer components
Components	Optical	(computer thermal module)
(Kunshan)	(Foshan)
Co., Ltd.	Corporation
New Glory	YanTai	Manufacturing and marketing of	100	100
Holdings	Fuzhun	computer case – electronic and
Limited	Precision	electrical components
	Electronics
	Co., Ltd.
New Glory	Nanning	Manufacturing and marketing of	100	100
Holdings	Funing	computer components
Limited	Precision	(computer thermal module)
	Electronics
	Co., Ltd.

  - (a) Champ Tech Optical (Foshan) Corporation was acquired by the Company in 2018 through the Company’s subsidiaries, Fuzhun Precision (Shenzhen) Industry Co., Ltd. and Fu Yu Precision Components (Kunshan) Co., Ltd. and included in the consolidated financial statements since the effective date of share transfer. Please refer to Note 6(29) for the details.

  - (b) The Company’s subsidiary, Fu Yu Precision Components (Kunshan) Co., Ltd., merged with the subsidiary, Fu Rui Precision Components (Kunshan) Co., Ltd, with the effective date set on December 31, 2018.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates: None.

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

• (4) Foreign currency translation

The consolidated financial statements are presented in NTD, which is the Company’s functional and the Group’s presentation currency.

• A. Foreign currency transactions and balances

• (a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognised in profit or loss in the period in which they arise.

• (b) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognised in profit or loss.

~24~

  - (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognised in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.

  - (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

• B. Translation of foreign operations

  • (a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

    • i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;

    • ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and

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

  • (b) When the foreign operation partially disposed of or sold is an associate, exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even the Group still retains partial interest in the former foreign associate after losing significant influence over the former foreign associate, such transactions should be accounted for as disposal of all interest in these foreign operations.

  • (c) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even the Group still retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.

• (5) Classification of current and non-current items

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

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

  • (b) Assets held mainly for trading purposes;

  • (c) Assets that are expected to be realised within twelve months from the balance sheet date;

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

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

  • (a) Liabilities that are expected to be paid off within the normal operating cycle;

  • (b) Liabilities arising mainly from trading activities;

  • (c) Liabilities that are to be paid off within twelve months from the balance sheet date;

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

~25~

classification.

(6) Cash equivalents

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

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

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income. Financial assets at amortised cost or fair value through other comprehensive income are designated as at fair value through profit or loss at initial recognition when they eliminate or significantly reduce a measurement or recognition inconsistency.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

• D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

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

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:

  • (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

  • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

  • (a) The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

  • (b) Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

• (9) Financial assets at amortised cost

• A. Financial assets at amortised cost are those that meet all of the following criteria:

  • (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

  • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.

~26~

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.

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

• (10) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• C. The Group’s operating pattern of accounts receivable that are expected to be factored is for the purpose of receiving contract cash flow and selling, and the accounts receivable are subsequently measured at fair value, with any changes in fair value recognised in other comprehensive income.

• (11) Impairment of financial assets

For financial assets at amortised cost, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.

• (12) Derecognition of financial assets

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

• (13) Leasing arrangements (lessor) operating leases

Lease income from an operating lease (net of any incentives given to the lessee) is recognised in profit or loss on a straight-line basis over the lease term.

• (14) Inventories

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

• (15) Investments accounted for under equity method / associates

• A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 per cent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognised at cost.

• B. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

~27~

• C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognises change in ownership interests in the associate in ‘capital surplus’ in proportion to its ownership.

• D. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.

• E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.

• F. Upon loss of significant influence over an associate, the Group remeasures any investment retained in the former associate at its fair value. Any difference between fair value and carrying amount is recognised in profit or loss.

• G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognised in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.

• (16) Property, plant and equipment

• A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.

• B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

• C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant in relation to the total cost of the item must be depreciated separately.

• D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year-end. If expectations for the assets’ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets’ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, ‘Accounting Policies, Changes in Accounting Estimates and Errors’, from the date of the change. The estimated useful lives for buildings and structures, machinery and equipment and other equipment are 3~55 years, 1~10 years and 1~10 years, respectively.

~28~

(17) Leasing arrangements (lessee) - right-of-use assets/ lease liabilities Effective 2019

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of lowvalue assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of fixed payments, less any lease incentives receivable. The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the right-of-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost comprising the following: (a) The amount of the initial measurement of lease liability;

  • (b) Any lease payments made at or before the commencement date; and

  • (c) Any initial direct costs incurred by the lessee;

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

• (18) Leases (lessee)

Prior to 2019

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

• (19) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 8 ~ 55 years.

• (20) Intangible assets

• A. Goodwill arises in a business combination accounted for by applying the acquisition method.

• B. Patent rights and technical skill are amortised on a straight-line basis over their estimated useful lives of 5 years.

• (21) Impairment of non-financial assets

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

• B. The recoverable amounts of goodwill that have not yet been available for use are evaluated periodically. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognised in profit or loss shall not be reversed in the following years.

• C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to

~29~

benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

(22) Loans

Loans comprise long-term and short-term bank loans and other long-term and short-term loans. Loans are recognised initially at fair value, net of transaction costs incurred. Loans are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the loans using the effective interest method.

(23) Accounts and notes payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (24) Financial liabilities at fair value through profit or loss

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges.

• B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

(25) Derecognition of financial liabilities

A financial liability is derecognised when the obligation specified in the contract is either discharged or cancelled or expires.

(26) Offsetting financial instruments

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

(27) Non-hedging derivatives

Non-hedging derivatives are initially recognised at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognised in profit or loss.

(28) Employee benefits

A. Short-term employee benefits

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

B. Pensions

(a) Defined contribution plans

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

~30~

  - (b) Defined benefit plans

     - i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.

     - ii. Remeasurements arising on defined benefit plans are recognised in other comprehensive income in the period in which they arise and are recorded as retained earnings.

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

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

• (29) Income tax

• A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or items recognised directly in equity, in which cases the tax is recognised in other comprehensive income or equity.

• B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.

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

• D. Deferred tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. At each balance sheet date, unrecognised and recognised deferred tax assets are reassessed.

~31~

• E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.

(30) Dividends

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

• (31) Revenue recognition

• A. The Group is primarily engaged in manufacturing and sales of consumer electronics products. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

• B. Revenue from these sales is recognised based on the price specified in the contract, net of the estimated sales discounts and allowances. Revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.

• C. A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

(32) Government grants

Government grants are recognised at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises expenses for the related costs for which the grants are intended to compensate.

• (33) Business combinations

• A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Group measures at the acquisition date components of non-controlling interests in the acquiree that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be measured at the acquisition-date fair value.

~32~

• B. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree recognised and the fair value of previously held equity interest in the acquiree is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognised directly in profit or loss on the acquisition date.

• (34) Operating segments

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

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

• ASSUMPTION UNCERTAINTY

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

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

• A. Revenue recognition

• The Group provides integrated electronics manufacturing services to meet the following criteria by judgment, and recognises revenue on a gross basis:

• (a) The Group is primarily responsible for the provision of goods or services;

• (b) The Group assumes the inventory risk before transferring the specified goods or services to the customer or after transferring control of the goods or services to the customer.

• (c) The Group has discretion in establishing prices for the goods or services.

• B. Offsetting financial instruments

The determination of whether the Group’s financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(2) Critical accounting estimates and assumptions

• Evaluation of inventories

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

As of December 31, 2019, information on the carrying amount of inventories is provided in Note 6(6).

~33~

6. DETAILS OF SIGNIFICANT ACCOUNTS

• (1) Cash and cash equivalents

TAILS OF SIGNIFICANT ACCOUNTS Cash and cash equivalents
	December 31, 2019		December 31, 2018
Cash on hand and revolving funds	$	2,678	$	224
Checking accounts and demand
deposits		34,460,821		46,647,344
Cash equivalents
Time deposits		5,619,157		5,412,133
Repurchase Agreement Bond		41,000		132,000
	$	40,123,656	$	52,191,701

• A. The Group associates with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. Time deposits with maturity in excess of three months and restricted time deposits on December 31, 2019 and 2018 have been listed under “financial assets at amortised cost - current”.

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

Assets Current items: Financial assets mandatorily measured at fair value through profit or loss Derivatives Non-current items: Financial assets mandatorily measured at fair value through profit or loss Fund Liabilities Current items: Financial liabilities held for trading Derivatives	December 31,2019 21,081 $ 493,296 $ 99,427 $	December 31,2018
		567,640 $
		- $
		39,992 $

• A. To enhance the strategic cooperation network of integrating resources and developing the semiconductor industry, the Group’s subsidiary, Hon Fujin Precision Industry (Taiyuan) Co., Ltd., invested in Jinan Fujie Industrial Investment Fund Partnership in the amount of RMB 125 million in January 2019 (limited partnership).

~34~

• B. Amounts recognised in profit or loss in relation to financial assets and liabilities at fair value through profit or loss are listed below:

		Years ended	December 31,
		2019	2018
Financial assets and liabilities mandatorily
measured at fair value through profit or loss
Derivatives	$	89,167	766,548 $
Fund	(	46,623)	-
	$	42,544	766,548 $
	December 31,2019
	Contract amount
Derivative instruments	(Nominal Principal in thousands)		Contractperiod
Current items:
Cross currency swap contracts	TWD (SELL)	924,300	2019/03~2020/03
	USD (BUY)	30,000
	TWD (SELL)	4,291,170	2019/03~2020/03
	HKD (BUY)	1,090,878
Forward exchange contracts	USD (SELL)	16,000	2019/11~2020/2
	CNH (BUY)	112,480
	USD (SELL)	13,000	2019/11~2020/3
	CNH (BUY)	91,221
	USD (SELL)	5,000	2019/12~2020/4
	CNH (BUY)	35,135
	USD (SELL)	10,000	2019/12~2020/3
	CNH (BUY)	70,350
	USD (SELL)	10,000	2019/11~2020/1
	CNH (BUY)	70,420
	USD (SELL)	25,000	2019/11~2020/2
	CNH (BUY)	175,700
	USD (SELL)	10,000	2019/12~2020/3
	CNH (BUY)	70,175
Foreign exchange contracts	TWD (SELL)	4,567,904	2019/03~2020/03
	USD (BUY)	152,000

~35~

==> picture [460 x 50] intentionally omitted <==

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

December 31, 2018
Contract amount
Derivative instruments (Nominal Principal in thousands) Contract period
----- End of picture text -----

Derivative instruments	(Nominal Principa	l in thousands)	Contractperiod
Current items:
Cross currency swap contracts	TWD (SELL)	1,900,275	2018/03~2019/03
	USD (BUY)	65,000
	TWD (SELL)	2,186,925	2018/04~2019/04
	USD (BUY)	75,000
	TWD (SELL)	7,708,750	2018/12~2019/01
	USD (BUY)	250,000
Foreign exchange contracts	TWD (SELL)	4,443,720	2018/03~2019/03
	USD (BUY)	152,000

• (a) Cross currency swap contracts

The Group signed cross currency swap contracts aiming to satisfy capital requirement. In terms of exchange rate swaps, the principal in two currencies are exchanged at the beginning and the end of period to reduce exchange rate risk. In terms of rate swaps, the fixed interest rates of two currencies are exchanged to reduce interest rate risk.

• (b) Forward exchange contracts

• The Group signed forward exchange contracts to hedge exchange rate risks arising from the activities listed below:

• i. Business activity: The payables due from importing materials and supplies as well as receivables from exports.

• ii. Investment activity: The payment due from importing machinery and equipment.

• iii. Financial activity: Assets and liabilities (financing) resulted from long-term or short-term loans.

• (c) Foreign exchange contracts

The Group entered into foreign exchange contracts to satisfy capital requirement. The principal in two currencies are swapped using the same exchange rate at the beginning and the end of the period to reduce exchange rate risk.

• C. The counterparties of derivative instruments held by the Group are all banks with good credit quality or financial institutions with investment grade credit ratings that are above A.

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

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

Items Non-current items: Equity instruments	December31,2019 35,327,626 $	December31,2018
		23,085,238 $

• A. The Group has elected to classify investments that are considered to be strategic investments as financial assets at fair value through other comprehensive income.

• B. The Group has no financial assets at fair value through other comprehensive income pledged to others.

~36~

• C. The Group sold $290,985 equity investments at fair value which resulted in cumulative losses on disposal amounting to $15,715 during the year ended December 31, 2018.

• D. Amounts recognised in profit or loss and other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

	Years ended	December 31,
	2019	2018
Fair value change recognised in other
comprehensive income (loss)	10,378,477 $	39,037,972) ($
Cumulative losses reclassified to retained
earnings due to derecognition	$-	15,715 $

The abovementioned fair value change that were recognised in other comprehensive income (loss) arose mainly from change in fair value of SHARP CORPORATION. For the years ended December 31, 2019 and 2018, the Group recognised gain (loss) amounting to $10,128,031 and ($37,227,088), respectively.

(4) Financial assets at amortised cost

($37,227,088), respectively. Financial assets at amortised cost
Items Current items: Capital guarantee financial products Time deposits with maturity in excess of three months Pledged time deposits Non-current items: Bank debentures-trust fund	December 31,2019 18,800,350 $ 15,905,898 10,763 34,717,011 $ 3,874,615 $	December 31,2018
		17,136,611 $ 527,286 -
		17,663,897 $
		5,367,399 $

• A. Please refer to Note 6(23) for information on recognised gains and losses on financial assets at amortised cost. The Group entered into a capital guarantee financial product contract with banks, with returns ranging from 3.05% to 3.88% and 3.5% to 4.55% for the years ended December 31, 2019 and 2018, respectively.

• B. In March 2018 and December 2017, the Group invested in the trust fund named Guangdong Finance Trust - Peng Yun Tian Hua Collection Fund Trust for RMB 500 million and RMB 1 billion, respectively. The fund was mainly created for the investment in Guangzhou Guangyin Nanyue Intelligent Technology Industrial Investment Partnership. This investment is included in “financial assets at amortised cost-non-current.”

As of December 31, 2019, the Group cumulatively received returns in the amount of RMB 600 million in accordance with the investment agreement.

• C. Details of the Group’s financial assets at amortised cost pledged to others as collateral as of December 31, 2019 are provided in Note 8. As of December 31, 2018, the Group has no financial assets at amortised cost pledged to others.

• D. Investments that the Group invests in are all with high credit quality.

~37~

(5) Notes and accounts receivable

Notes and accounts receivable
	December 31,2019		December 31,2018
Notes receivable	$	1,159	$	40,383
Accounts receivable		13,451,424		16,470,930
		13,452,583		16,511,313
Less: Allowance for bad debts	(	5,044)	(	6,400)
	$	13,447,539	$	16,504,913

A. The Group does not hold any collateral as security.

• B. Information relating to credit risk is provided in Note 12(2).

(6) Inventories

(7)

The cost of inventories recognised as expense for the year: Investments accounted for using equity method December 31, 2019 December 31,2018 Raw materials 298,547 $ 782,637 $ Work in process 383,085 791,105 Finished goods 2,008,225 1,469,894 2,689,857 3,043,636 Less: Allowance for inventory obsolescence and market price decline 177,266) ( 138,194) ( 2,512,591 $ 2,905,442 $ 2019 2018 Cost of inventories sold 90,032,852 $ 128,891,992 $ Loss on inventory obsolescence and market price decline 33,955 18,760 Revenue from sale of scraps 215,064) ( 346,063) ( 89,851,743 $ 128,564,689 $ Years ended December 31, Investees December 31,2019 December 31,2018 IDG Energy Investment Limited 5,400,904 $ 5,906,110 $ Syntrend Creative Park Co., Ltd. 281,351 286,222 FSK Holdings Limited 108,827 111,311 FE Holding USA, Inc. - 2,397,867 Foxstar Technology Co., Ltd. - 11,780 5,791,082 $ 8,713,290 $

A. On December 13, 2017, the Board of Directors resolved to acquire 1,485,000 thousand common shares of IDG Energy Investment Limited, a listed company in Hong Kong, at HKD 1 per share. The total investment amount was $5,572,590 (HKD 1,485,000 thousand), representing an ownership stake of 24%. The aforementioned investment was completed in January 2018. However, the Group’s ownership stake decreased to 22.51% since the investee converted its issued

~38~

convertible bonds in 2019.

• B. In 2018, the Group subsequently acquired the common stock of FE Holdings USA, Inc. at USD 1 per share in accordance with the resolution passed by the Board of Directors in January 2018. The total investment amount was $2,461,701 (USD 80,400 thousand), representing an ownership stake of 33%. However, the Group’s ownership stake decreased to 15.5% and lost significant control over the investee since the Group did not participate in the capital increase proportionally to its ownership stake in 2019. The investment was transferred to financial assets at fair value through other comprehensive income which resulted in gains on disposal of investments amounting to $10,237, shown as ‘other gains and losses’.

• C. On October 31, 2019, the Group transferred all its ownership stake in Foxstar Technology Co., Ltd. to Zhonghe (Nanyang) Information Technology Service Center (Limited Partnership) which resulted in gains on disposal of investments amounting to $2,871, shown as ‘other gains and losses’.

• D. The Group’s share of the operating results in all individually immaterial associates are summarized below:

below:
		Years ended	December31,
		2019		2018
Loss for the year from continuing operations	($	91,843)	($	119,377)
Other comprehensive loss, net of tax	(	17,754)	(	44,496)
Total comprehensive loss for the year	($	109,597)	($	163,873)

• E. The Group’s investment, IDG Energy Investment Limited, has quoted market prices. As of December 31, 2019 and 2018, the fair value was $5,772,923 and $6,696,088, respectively.

~39~

2019

(8) Property, plant and equipment

roperty, plant and equipment			2019
At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Additions Reclassifications Transfer Disposals Depreciation charge Net exchange differences Closing net book amount as at December 31 At December 31 Cost Accumulated depreciation	Land 51,850 $ - 51,850 $ 51,850 $ - - - - - - 51,850 $ 51,850 $ - 51,850 $	Buildings and structures	Machinery and equipment Others 22,794,113 $ 4,940,438 $ 20,174,278) ( 4,087,663) ( 2,619,835 $ 852,775 $ 2,619,835 $ 852,775 $ 241,473 188,811 12,876 21,855 - - 346,408) ( 28,045) ( 842,537) ( 311,147) ( 62,513) ( 27,028) ( 1,622,726 $ 697,221 $ 18,457,368 $ 4,391,845 $ 16,834,642) ( 3,694,624) ( 1,622,726 $ 697,221 $
		8,509,762 $ 5,172,309) ( 3,337,453 $ 3,337,453 $ 103,061 367,279 194,851) ( 4,799) ( 395,765) ( 119,813) ( 3,092,565 $ 8,455,120 $ 5,362,555) ( 3,092,565 $

~40~

2018

At January 1 Cost Accumulated depreciation Opening net book amount as at January 1 Additions Reclassifications Transfer Disposals Acquired from business combinations Depreciation charge Net exchange differences Closing net book amount as at December 31 At December 31 Cost Accumulated depreciation	Land Buildings and structures Machinery and equipment Others 51,850 $ 7,698,313 $ 24,473,429 $ 4,816,001 $ - 4,752,068) ( 21,188,157) ( 4,172,290) ( 51,850 $ 2,946,245 $ 3,285,272 $ 643,711 $ 51,850 $ 2,946,245 $ 3,285,272 $ 643,711 $ - 247,493 508,305 474,415 - 475,119 166,098 1,788 - 278,998) ( - - - 11,611) ( 281,719) ( 9,103) ( - 447,567 72,630 66,476 - 425,937) ( 1,078,290) ( 305,382) ( - 62,425) ( 52,461) ( 19,130) ( 51,850 $ 3,337,453 $ 2,619,835 $ 852,775 $ 51,850 $ 8,509,762 $ 22,794,113 $ 4,940,438 $ - 5,172,309) ( 20,174,278) ( 4,087,663) ( 51,850 $ 3,337,453 $ 2,619,835 $ 852,775 $

The significant components of buildings and structures include main plants and leasehold improvements, which are depreciated over 20~55 and 3~11 years, respectively.

~41~

(9) Leasing arrangements - lessee Effective 2019

• A. The Group leases various assets including land use right, buildings and structures as well as other equipment. Except for the rental period of land use right which is 50 years, rental contracts are typically made for periods of 1 to 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but leased assets may not be used as security for borrowing purposes.

• B. Short-term leases with a lease term of 12 months or less comprise business vehicles.

• C. The carrying amount of right-of-use assets and the depreciation charge are as follows:

December 31,2019 Carrying amount Land use right 821,111 $ Buildings and structures 444,485 Others 17,178 1,282,774 $	Year ended December 31,2019
	Depreciation charge
	24,897 $ 287,361 15,907
	328,165 $

• D. For the year ended December 31, 2019, the additions to right-of-use assets was $77,270.

• E. Information on profit or loss in relation to lease contracts is as follows:

		Year ended
	December 31,2019
Items affecting profit or loss
Interest expense on lease liabilities	$	51,375
Expense on short-term lease contracts		46,696
Expense on leases of low-value assets		4,599

• F. For the year ended December 31, 2019, the Group’s total cash outflow for leases was $435,590.

• G. Information about the right-of-use assets that was pledged to others as collateral is provided in Note 8.

• H. Information on leases acquired from business combinations is provided in Note 6(29).

• (10) Leasing arrangements - lessor

• Effective 2019

• A. The Group leases various assets including buildings. Rental contracts are typically made for periods of 1 and 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

• B. For the year ended December 31, 2019, the Group recognised rent income in the amount of $218,538 based on the operating lease agreement, which does not include variable lease payments.

• C. The maturity analysis of the lease payments under the operating leases is as follows:

2020 2021 2022 2023 2024	December 31,2019
	166,693 $ 156,175 20,489 8,062 1,831
	353,250 $

~42~

(11) Investment property

Investment property
At January 1 Cost Accumulated depreciation and impairment Opening net book amount as at January 1 Transfer in Depreciation charge Net exchange differences Closing net book amount as at December 31 At December 31 Cost Accumulated depreciation and impairment At January 1 Cost Accumulated depreciation and impairment Opening net book amount as at January 1 Transfer in Depreciation charge Net exchange differences Closing net book amount as at December 31 At December 31 Cost Net exchange differences		2019
	Land $ 95,910 - 95,910 $ $ 95,910 - - - 95,910 $ $ 95,910 - 95,910 $
	Land $ 95,910 - 95,910 $ $ 95,910 - - - 95,910 $ $ 95,910 - 95,910 $

~43~

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

Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the year	2019 2018 171,802 $ 133,695 $ 97,308 $ 84,943 $ Years ended December 31,

• B. The fair value of the investment property held by the Group as at December 31, 2019 and 2018 was $1,919,825 and $1,920,639, respectively. Valuations were made using the income approach which is categorised within Level 3 in the fair value hierarchy.

• (12) Intangible assets

Intangible assets
Patent rights and technical skills Goodwill Total January 1 Cost 589,672 $ 1,177,520 $ 1,767,192 $ Accumulated impairment - - - 589,672 $ 1,177,520 $ 1,767,192 $ At January 1 589,672 $ 1,177,520 $ 1,767,192 $ Amortisation 127,848) ( - 127,848) ( Net exchange differences 17,233) ( 44,149) ( 61,382) ( December 31 444,591 $ 1,133,371 $ 1,577,962 $ December 31 Cost 567,563 $ 1,133,371 $ 1,700,934 $ Accumulated impairment 122,972) ( - 122,972) ( 444,591 $ 1,133,371 $ 1,577,962 $ 2019		2019
			Total
			1,767,192 $ -
			1,767,192 $
			1,577,962 $

~44~

January 1 Cost Accumulated impairment At January 1 Acquired from business combinations Net exchange differences December 31 December 31 Cost Accumulated impairment	Patent rights and technical skills - $ - - $ - $ 588,321 1,351 589,672 $ 589,672 $ - 589,672 $	Goodwill - $ - - $ - $ 1,174,174 3,346 1,177,520 $ 1,177,520 $ - 1,177,520 $ 2018	Total - $ - - $
			- $ 1,762,495 4,697
			1,767,192 $
			1,767,192 $ -
			1,767,192 $

• A. The information relating to business combination is provided in Note 6(29).

• B. As of December 31, 2019 and 2018, goodwill allocated to the cash-generating units of production and sales of mechanical components’ operating segments amounted to $1,133,371 and $1,177,520, respectively.

• C. Goodwill is allocated to the Group’s cash-generating units identified according to operating segment. The recoverable amount of all cash-generating units has been determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on financial budgets approved by the management covering a five-year period. Cash flows beyond the fiveyear period were extrapolated using the estimated growth rates stated below.

The recoverable amount of all cash-generating units calculated using the value-in-use exceeded their carrying amount, so goodwill was not impaired. The key assumptions used for value-in-use calculations are as follows:

calculations are as follows:
Year ended December 31, 2019 Gross margin Growth rate Discount rate	China
	14.50% 2% 13.73%

Management determined budgeted gross margin based on past performance and their expectations of market development. The weighted average growth rates used are consistent with the projection included in industry reports. The discount rates used were pre-tax and reflected specific risks relating to the relevant operating segments.

~45~

(13) Other non-current assets

Other non-current assets
Receivable from payment on behalf of others Prepayments for equipment Long-term prepaid rents Other assets - others	December 31,2019 570,044 $ 24,591 - 37,827 632,462 $	December 31,2018 589,708 $ 37,552 871,945 59,175
		1,558,380 $

• A. The long-term prepaid rents are for the use right contract that the Group signed for the use of the land in China. The long-term prepaid rents are for the use right contract that the Group signed for the use of the land in China. All rentals had been paid on the contract date. The Group recognised rental expense of $13,825 for the year ended December 31, 2018.

• B. Information on long-term prepaid rents classified to right-of-use assets since January 1, 2019 is provided in Note 6(9).

(14) Short-term loans

provided in Note 6(9). Short-term loans
Type of loans Bank loans Secured loans Unsecured loans Other short-term loans Type of loans Bank loans Unsecured loans Other short-term loans	December 31,2019 Interest rate range 134,750 $ 5.66% 15,535,975 0.59%~3.20% 94,711 4.35% 15,765,436 $ December 31,2018 Interest rate range 13,778,627 $ 0.69%~5.09% 98,402 4.35% 13,877,029 $	Collateral Land use right None " Collateral
		None "

• A. Information on abovementioned collateral is provided in Note 8.

• B. The Group has signed an agreement to offset financial assets and liabilities with financial institutions. Details of the offset as of December 31, 2019 and 2018 are as follows:

• December 31, 2019

	December 31,2019
Gross amount of recognised financial liabilities 4,035,690 $	Gross amount of recognised financial assets in the balance sheet 4,035,690 $ December 31,2018	Net amount of financial liabilities presented in the balance sheet
		- $
Gross amount of recognised financial liabilities 97,422 $	Gross amount of recognised financial assets in the balance sheet 97,422 $	Net amount of financial liabilities presented in the balance sheet
		- $

~46~

(15) Other payables

Awards and salaries payable Employees’ compensation payable Consumption goods expense payable Payable on mold expense Payables for miscellaneous purchase Processing fees payable Repairs and maintenance expense payable Payable for purchases made by parties on behalf of others Payables for equipment Payable for purchases made by parties on behalf of others - related parties Payable for investments Others

December 31,2019 December 31,2018 1,920,762 2,304,170 1,460,134 1,398,777 1,421,777 1,168,506 560,989 1,392,253 510,735 347,573 419,639 320,983 149,090 166,094 56,713 413,314 55,068 447,938 10,916 287,304 - 4,144,880 2,138,010 1,376,293 8,703,833 $ 13,768,085 $

• The information on the abovementioned payable for investments is provided in Note 6(29).

• (16) Pensions

• A. Defined benefit plans

  • (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee.

  • (b) The amounts recognised in the balance sheet are as follows (shown as ‘other non-current liabilities’):

iabilities’):
	December	31,2019	December	31,2018
Present value of defined benefit obligations	(	57,744)	(	51,634)
Fair value of plan assets		39,056		38,843
Net defined benefit liability	($	18,688)	($	12,791)

~47~

(c) Movements in net defined benefit liabilities are as follows:

		Present value of	Present value of
		defined benefit			Fair value of		Net defined
			obligations		plan assets	benefit liability
2019
Balance at January 1	($		51,634)	$	38,843	($	12,791)
Current service cost			-		-		-
Interest income	(		581)		446	(	135)
	(		52,215)		39,289	(	12,926)
Remeasurements
Return on plan assets (Note)			-		1,433		1,433
Change in demographic
assumptions	(		345)		-	(	345)
Change in financial
assumptions	(		1,724)		-	(	1,724)
Experience adjustments	(		6,853)		-	(	6,853)
	(		8,922)		1,433	(	7,489)
Pension fund contribution			-		1,727		1,727
Paid pension			3,393	(	3,393)		-
			3,393	(	1,666)		1,727
Balance at December 31	($		57,744)	$	39,056	($	18,688)
		Present value of
		defined benefit			Fair value of		Net defined
			obligations		plan assets	benefit liability
2018
Balance at January 1	($		55,950)	$	41,646	($	14,304)
Current service cost	(		71)		-	(	71)
Interest income	(		699)		532	(	167)
	(		56,720)		42,178	(	14,542)
Remeasurements
Return on plan assets (Note)			-		1,154		1,154
Change in demographic
assumptions	(		121)		-	(	121)
Change in financial
assumptions	(		604)		-	(	604)
Experience adjustments	(		522)		-	(	522)
	(		1,247)		1,154	(	93)
Pension fund contribution			-		1,844		1,844
Paid pension			6,333	(	6,333)		-
			6,333	(	4,489)		1,844
Balance at December 31	($		51,634)	$	38,843	($	12,791)

Note: The amount included in interest income or expense is excluded.

~48~

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

• (e) The principal actuarial assumptions used were as follows:

The principal actuarial assumptions used were as	follows:	follows:
Discount rate Future salary increases	Years ended December 31,
	2019 0.80% 2.00%	2018
		1.125%
		2.00%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

December 31,2019 Effect on present value of defined benefit obligation December 31,2018 Effect on present value of defined benefit obligation	Increase Decrease Increase Decrease 0.25% 0.25% 0.25% 0.25% 1,350 $ 1,396) ($ 1,340) ($ 1,303 $ 1,231 $ 1,272) ($ 1,225) ($ 1,191 $ Discount rate Future salary increases	Increase Decrease Increase Decrease 0.25% 0.25% 0.25% 0.25% 1,350 $ 1,396) ($ 1,340) ($ 1,303 $ 1,231 $ 1,272) ($ 1,225) ($ 1,191 $ Discount rate Future salary increases
		Decrease 0.25%
		1,303 $
		1,191 $

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

(f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2020 are $1,700.

B. Defined contribution plans

(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of

~49~

Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The subsidiaries in mainland China have defined contribution pension plans and the Group contributes an amount monthly based on 14%~20% of employees’ monthly salaries and wages to an independent fund administered by a government agency. The plan is administered by the government of mainland China. Other than the monthly contributions, the Group does not have further pension liabilities.

• (c) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2019 and 2018 were $620,396 and $788,662, respectively.

• (17) Share capital

As of December 31, 2019, the Company’s authorised capital was $15,000,000 (including subscription warrant or 50 million shares reserved for convertible bonds issued by the Company), and the paid-in capital was $14,144,852, consisting of 1,414,485 thousand ordinary shares with a par value of $10 (in dollars) per share.

• (18) Capital surplus

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

(19) Retained earnings

• A. In accordance with the Company’s Articles of Incorporation, current year’s earnings must be distributed in the following order:

• (a) Covering accumulated deficit;

• (b) Setting aside as legal reserve equal to 10% of current year’s net income after tax and distribution pursuant to clause (A);

• (c) Setting aside a special reserve in accordance with applicable legal and regulatory requirements;

The remaining earnings along with the unappropriated earnings at the beginning of the period are considered as accumulated distributable earnings. In accordance with dividend policy, the proposal of earnings appropriation is prepared by the Board of Directors and resolved by the shareholders.

The Company is at the growing stage. The Company’s stock dividend policy shall consider the Company’s current and future investment environment, capital needs, local and foreign competition situation and capital budget, along with shareholders’ profit and the Company’s long-term financial plans. The shareholders’ dividends are appropriated based on accumulated distributable earnings, which shall not be lower than 15% of the distributable earnings for the period and the cash dividends shall not be less than 10% of the shareholders’ dividends.

• B. According to related regulations, 10% of the balance of earnings after tax less the accumulated loss of prior years should be set aside as legal reserve, until such legal reserve amount reaches the total authorised capital. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

~50~

• C. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.

• D. The appropriations of earnings for 2018 and 2017 had been resolved at the stockholders’ meeting on June 21, 2019 and June 22, 2018, respectively. Details are summarized below:

Legal reserve Special reserve Cash dividends	Dividends per Dividends per Amount share(in dollars) Amount share(in dollars) 914,666 $ 996,539 $ 46,492 - 4,526,353 3.2 $ 5,092,147 3.6 $ 5,487,511 $ 6,088,686 $ Years ended December 31, 2018 2017	Dividends per Dividends per Amount share(in dollars) Amount share(in dollars) 914,666 $ 996,539 $ 46,492 - 4,526,353 3.2 $ 5,092,147 3.6 $ 5,487,511 $ 6,088,686 $ Years ended December 31, 2018 2017	Dividends per Dividends per Amount share(in dollars) Amount share(in dollars) 914,666 $ 996,539 $ 46,492 - 4,526,353 3.2 $ 5,092,147 3.6 $ 5,487,511 $ 6,088,686 $ Years ended December 31, 2018 2017
		2017
		Amount 996,539 $ - 5,092,147 6,088,686 $	Dividends per share(in dollars)
			3.6 $

The appropriations for 2019 has not yet been approved at the Board of Directors’ meeting as of March 30, 2020. The information on distribution of earnings will be posted in the “Market Observation Post System” of the TSEC.

E. For the information relating to employees’ compensation, please refer to Note 6(26).

(20) Other equity items

At January 1 Revaluation of fair value Currency translation differences: - Group - Associates At December 31		2019

~51~

2018

Unrealised gain (loss) on

	Unrealised gain (loss) on	Unrealised gain (loss) on	Unrealised gain (loss) on
	financial assets					Unrealised
			at fair value		gain (loss) on
		through other			available-for			Currency
	comprehensive					-sale		translation
			income	financial assets				adjustments		Total
At January 1	$		-	$		41,569,491	($	2,586,289)	$	38,983,202
Adjustments under new
standards			41,569,491	(		41,569,491)		-		-
Revaluation of fair value	(		39,037,972)			-		-	(	39,037,972)
Currency translation
differences:
- Group			-			-		52,774		52,774
- Associates			-			-	(	44,496)	(	44,496)
At December 31	$		2,531,519	$		-	($	2,578,011)	($	46,492)

(21) Non-controlling interests

Operating revenue At January 1 Shares attributable to non-controlling interests: (Loss) profit for the year Currency translation differences At December 31 Revenue from contracts with customers	2019 2018 78,273 $ 75,794 $ 92,687) ( 4,188 599 1,709) ( 13,815) ($ 78,273 $ 2019 2018 99,802,129 $ 142,057,432 $ Years ended December 31,

(22) Operating revenue

Revenue from contracts with customers

The Group derives revenue from the transfer of goods and services at a point in time in the following categories:

categories:
Revenue from contracts with customers	Year ended December 31, 2019
	Electronic Production and products sales of mechanical tradingservices components 65,823,754 $ 33,797,040 $	Others 181,335 $	Total
			99,802,129 $

~52~

(23)

Other income Electronic Production and products sales of mechanical tradingservices components Others Total Revenue from contracts with customers 93,382,273 $ 48,441,894 $ 233,265 $ 142,057,432 $ Year ended December 31,2018 2019 2018 Interest income: Interest income from bank deposits 1,428,216 $ 1,315,250 $ Interest income from capital guarantee financial products 935,648 736,859 Dividend income 394,167 394,419 Government grants revenue 366,446 403,227 Rental revenue 218,538 172,651 Others 150,206 174,524 3,493,221 $ 3,196,930 $ Years ended December 31,

(24) (25)

Other gains and losses Expenses by nature 2019 2018 Gains on disposal of property, plant and equipment 140,844 $ 284,224 $ Net currency exchange gains (losses) 126,310 713,184) ( Gains on financial assets (liabilities) at fair value through profit or loss 42,544 766,548 Gains on disposal of investments 13,108 - Others 183,622) ( 143,196) ( 139,184 $ 194,392 $ Years ended December 31, 2019 2018 Employee benefit expense 8,614,971 $ 10,602,510 $ Depreciation 1,974,922 1,894,552 Amortisation 127,848 21,513 10,717,741 $ 12,518,575 $ Years ended December 31,

~53~

(26) Employee benefit expense

Employee benefit expense
		Years ended	December 31,
		2019		2018
Wages and salaries	$	6,910,476	$	8,377,582
Labor and health insurance fees		330,750		383,629
Pension costs		620,531		788,900
Other personnel expenses		753,214		1,052,399
	$	8,614,971	$	10,602,510

• A. According to the Company’s Articles of Incorporation, if the Company accrues profit (referring to profit before tax prior to deducting the appropriation of employees’ compensation and directors’ remuneration), 4%~6% should be appropriated as employees’ compensation.

• B. For the years ended December 31, 2019 and 2018, employees’ compensation was accrued at $325,135 and $666,180, respectively. The aforementioned amounts were recognised in salary expenses. For the years ended December 31, 2019 and 2018, the employees’ compensation was estimated and accrued based on 4% and 6% of profit of current year distributable as of the end of reporting period, respectively.

• C. Employees’ compensation for 2018 as resolved by the Board of Directors was in agreement with those amounts recognised in the 2018 financial statements. In 2018, the employees’ compensation was distributed in the form of cash amounting to $666,180.

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

(27) Income tax

• A. Components of income tax expense:

Stock Exchange. ome tax Components of income tax expense:
		Years ended	December 31,
		2019		2018
Current tax:
Current tax on profits for the year	$	1,431,034	$	1,789,472
Tax on undistributed surplus earnings		181,368		386,685
Prior year income tax overestimation	(	118,899)	(	38,729)
Total current tax		1,493,503		2,137,428
Deferred tax:
Origination and reversal of temporary
differences	(	154,339)	(	50,397)
Impact of change in tax rate		-		94,573
Income tax expense	$	1,339,164	$	2,181,604

~54~

B. Reconciliation between income tax expense and accounting profit:

		Years ended	December 31,	December 31,
		2019		2018
Tax calculated based on profit before tax and	$	2,344,829	$	3,104,240
statutory tax rate (Note)
Tax effects of unrecognised deferred tax assets	(	1,068,134)	(	1,365,165)
Impact of change in tax rate		-		94,573
Additional tax on undistributed earnings		181,368		386,685
Prior year income tax overestimation	(	118,899)	(	38,729)
Income tax expenses		1,339,164		2,181,604
Origination and reversal of temporary differences		154,339	(	44,176)
Prior year income tax overestimation		118,899		158,729
Prepaid income tax	(	723,768)	(	834,132)
Prior year income tax payable		139,705		-
Acquired from business combinations		-		18,162
Net exchange differences	(	31,062)	(	17,209)
Current income tax liabilities	$	997,277	$	1,462,978

Note: The basis for computing the applicable tax rate are the rates applicable in the respective countries where the Group entities operate.

~55~

C. Amounts of deferred tax assets or liabilities as a result of temporary differences are as follows:

Recognised in profit January1 or loss Temporary differences: Deferred tax assets: Reserve for inventory obsolescence and market price decline 3,146 $ - $ Permanent loss on market value decline of long-term equity investments 16,222 - Differences in useful lives of property, plant and equipment 488,040 16,481 Unused compensated absences for employees 13,374 2,869 Others 42,719 17,682) ( 563,501 $ 1,668 $ Deferred tax liabilities: Foreign investment income using equity method 505,142) ($ 62,485 $ Unrealised exchange gain - 41,018) ( Unrealised valuation gain on financial instruments 105,530) ( 105,530 Others 233,770) ( 25,674 844,442) ($ 152,671 $			2019

~56~

Acquired from Recognised Business in profit January1 combinations or loss Temporary differences: Deferred tax assets: Reserve for inventory obsolescence and market price decline 2,674 $ - $ 472 $ Permanent loss on market value decline of long-term equity investments 13,789 - 2,433 Differences in useful lives of property, plant and equipment 523,064 - 24,232) ( Unused compensated absences for employees 17,075 2,073 4,604) ( Others 13,058 - 31,037 569,660 $ 2,073 $ 5,106 $ Deferred tax liabilities: Foreign investment income using equity method 498,864) ($ - $ 6,278) ($ Unrealised exchange gain 62,526) ( - 62,526 Unrealised valuation gain on financial instruments - - 105,530) ( Others - 233,770) ( - 561,390) ($ 233,770) ($ 49,282) ($		2018
		Recognised in other Net comprehensive exchange income differences December 31 - $ - $ 3,146 $ - - 16,222 - 10,792) ( 488,040 - 1,170) ( 13,374 869 2,245) ( 42,719 869 $ 14,207) ($ 563,501 $ - $ - $ 505,142) ($ - - - - - 105,530) ( - - 233,770) ( - $ - $ 844,442) ($		December 31
				3,146 $ 16,222 488,040 13,374 42,719
				563,501 $

~57~

• D. The Company did not recognise taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2019 and 2018, the temporary differences unrecognised as deferred tax liabilities were $98,103,567 and $87,657,473, respectively. Abovementioned taxable temporary differences arose from the differences between estimated carrying amounts of long-term investments in foreign subsidiaries and tax payable. The Company will not dispose the subsidiaries in the foreseeable future nor remit back earnings and thus, did not recognise deferred income tax liabilities.

• E. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority.

• F. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% and income tax rate on undistributed surplus earnings was reduced from 10% to 5% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

(28) Earnings per share

income tax rate. Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Weighted average number of ordinary Earnings Amount shares outstanding per share after tax (shares in thousands) (in dollars) 7,129,801 $ 1,414,485 5.04 $ 7,129,801 $ - 8,389 7,129,801 $ 1,422,874 5.01 $ Year ended December 31,2019
		5.04 $
		5.01 $

~58~

Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Year ended December 31,2018	Year ended December 31,2018	Year ended December 31,2018
	Amount after tax 9,146,659 $ 9,146,659 $ - 9,146,659 $	Weighted average number of ordinary shares outstanding (shares in thousands) 1,414,485 13,146 1,427,631	Earnings per share (in dollars)
			6.47 $
			6.41 $

(29) Business combinations

A. The Group’s Fuzhun Precision (Shenzhen) Industry Co., Ltd. and Fu Yu Precision Components (Kunshan) Co., Ltd. acquired 100% equity of Champ Tech Optical (Foshan) Corporation from Function Well Limited, which is the subsidiary of Hon Hai Precision Industry Co., Ltd., at the amount of RMB 989,220 thousand. The record date for equity transfer was set on December 1, 2018, as resolved by the Board of Directors on November 3, 2018. The abovementioned share capital was paid in January 2019.

~59~

• B. The following table summarizes the consideration paid for Champ Tech Optical (Foshan) Corporation and the fair values of the assets acquired and liabilities assumed at the acquisition date:

date:
Purchase consideration - cash paid	$	4,413,896
Fair value of the identifiable assets acquired and liabilities assumed
Cash		1,032,433
Accounts receivable, net (including related parties)		3,953,358
Inventories		522,446
Other current assets		219,361
Property, plant and equipment		586,405
Right-of-use assets		340,199
Intangible assets (patent rights and technical skills)		588,247
Other non-current assets		13,177
Short-term loans	(	98,213)
Accounts payable (including related parties)	(	2,049,787)
Other payables	(	1,589,767)
Current tax liabilities	(	18,162)
Other current liabilities	(	25,799)
Other non-current liabilities	(	1,472)
Deferred tax liabilities	(	233,205)
Total identifiable net assets		3,239,221
Goodwill (RMB 263,262 thousand)	$	1,174,675

• C. Had Champ Tech Optical (Foshan) Corporation been consolidated from January 1, 2018, the consolidated statement of comprehensive income for the year ended December 31, 2018 would show operating revenue of $143,827,851 as well as profit before income tax of $11,812,094, respectively.

(30) Supplemental cash flow information

Investing activities with partial cash payments:

respectively. Supplemental cash flow information Investing activities with partial cash payments:
			Years ended December 31,
			2019		2018
Purchase of property, plant and equipment	$		778,376	$	2,022,523
Add: Opening balance of payable on equipment			447,938		341,843
Less: Ending balance of payable on equipment	(		55,068)	(	447,938)
Cash paid during the year	$		1,171,246	$	1,916,428
			Years ended	December 31,
			2019		2018
Disposal of property, plant and equipment		$	520,096	$	586,657
Add: Opening balance of receivable on equipment			47,250		2,254
Less: Ending balance of receivable on equipment	(		264,637)	(	47,250)
Cash received during the year		$	302,709	$	541,661

Disposal of property, plant and equipment Add: Opening balance of receivable on equipment Less: Ending balance of receivable on equipment Cash received during the year

~60~

(31) Changes in liabilities from financing activities:

For the years ended December 31, 2019 and 2018, changes in liabilities from financing activities all arose from the changes on cash flows from financing activities and effects of exchange rate, noncash items were excluded. Please refer to consolidated statements of cash flows for more information.

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

information. LATED PARTY TRANSACTIONS Names of related parties and relationship
Names of relatedparties Hon Hai Precision Industry Co., Ltd. and Subsidiaries (Hon Hai and Subsidiaries) Function Well Limited Foxconn Precision Electronics (Taiyuan) Co., Ltd. Foxstar Technology Co., Ltd. Pan-International Industrial Corporation and Subsidiaries Eson Precision Ind. Co., Ltd. and Subsidiaries Sharp Corporation and Subsidiaries Innolux Corporation CyberTAN Technology Inc. and Subsidiaries Foxsemicon Integrated Technology (Shanghai) INC. General Interface Solution Holding Limited and Subsidiaries SIO International Holdings Limited Taiwan Branch Qingdao Haiyuan Industrial Co., Ltd.	Relationshipwith the Group
	Entities with significant influence to the Group 〞 〞 Associate of the Group Other related party 〞 〞 〞 〞 〞 〞 〞 〞

(2) Significant related party transactions

A. Sales

nificant related party transactions Sales eral Interface Solution Holding Limited and Subsidiar International Holdings Limited Taiwan Branch gdao Haiyuan Industrial Co., Ltd.	ies 〞 〞 〞
Sales of goods and services: Entities with significant influence to the Group -Hon Hai and Subsidiaries Other related parties	Years ended December 31,
	2019 2018 24,235,332 $ 45,511,832 $ 98,099 107,689 24,333,431 $ 45,619,521 $

Except for circumstances in which there are no similar transactions for reference and the prices and credit periods are negotiated by both parties, the aforementioned related party is offered prices very close to those offered to other customers and given a payment period of 30 to 90 days. For transactions involving the sale of raw materials to the aforementioned related party and subsequent repurchase of goods made from the same raw materials from the same party, the initial sale of raw materials is eliminated due to economic substance.

~61~

B. Purchases

Purchases of goods and services: Entities with significant influence to the Group -Hon Hai and Subsidiaries Other related parties	2019 2018 60,470,014 $ 89,679,113 $ 4,440,251 4,081,892 64,910,265 $ 93,761,005 $ Years ended December 31,

Except for circumstances in which there are no similar transactions for reference and the prices and payment terms are negotiated by both parties, the Group makes purchases from the aforementioned related party at the prevailing market price, with payment periods of 30 to 90 days.

C. Receivables from related parties

days. Receivables from related parties
	December 31,2019		December 31,2018
Accounts receivable:
Entities with significant influence to the Group
-Hon Hai and Subsidiaries	$	16,077,902	$	15,608,822
Other related parties		49,719		30,740
		16,127,621		15,639,562
Less: Allowance for uncollectible accounts	(	4,848)	(	4,698)
		16,122,773		15,634,864
Other receivables-purchases made on behalf of
associates:
Entities with significant influence to the Group
-Hon Hai and Subsidiaries		51,333		431,926
Other receivables-sale of property, plant and
equipment:
Entities with significant influence to the Group
-Hon Hai and Subsidiaries		86,365		32,245
		137,698		464,171
	$	16,260,471	$	16,099,035

The receivables from related parties arise mainly from sales transactions. The amount is due three months after the invoice date. The receivables are unsecured and non-interest bearing.

~62~

D. Payables to related parties

Payables to related parties
	December 31,2019		December 31,2018
Accounts payable:
Entities with significant influence to the Group
-Hon Hai and Subsidiaries	$	21,227,820	$	17,215,433
Other related parties		1,189,274		1,166,268
		22,417,094		18,381,701
Other payables:
Entities with significant influence to the Group
-Hon Hai and Subsidiaries
Payables for equipment		7,862		305,264
Purchases made by associates on behalf
of the Company		10,916		287,304
Management service fees		-		314,305
Payables for investments		-		4,144,880
Others		554,610		1,295,729
Other related parties:
Others		18,069		25,449
		591,457		6,372,931
	$	23,008,551	$	24,754,632
The payables to related parties arise mainly from purchase transactions and			are at arm’s-length,
non-interest bearing and payable within 30~90 days.
The information on other payables-payables for investment is provided in Note 7(2)G(c).

E. Management service fees payable F. Raw materials purchased on behalf of others Management service fees Entities with significant influence to the Group -Hon Hai and Subsidiaries Entities with significant influence to the Group -Hon Hai and Subsidiaries Raw materials purchased on behalf of associates Associates purchasing raw materials on behalf of the Group		Years ended December 31,	Years ended December 31,
			2018
			403,301 $

~63~

G. Property transactions

• (a) Acquisition of property:

Years ended December 31, 2019 2018 Acquisition of property, plant and equipment: Entities with significant influence to the Group -Hon Hai and Subsidiaries $ 103,497 $ 416,275

• (b) Proceeds from sale of property, plant and equipment:

roceeds from sale of property, plant and equipment: Acquisition of property, plant and equipment: Entities with significant influence to the Group -Hon Hai and Subsidiaries 103,497 $ $	416,275
Proceeds from Proceeds from sale of property, sale of property, Sale of property, plant and plant and plant and equipment: equipment Gain equipment Entities with significant influence to the Group -Hon Hai and Subsidiaries 112,174 $ 99,682 $ 350,299 $ Years ended December 31, 2019 2018	Gain
	226,989 $

• (c) Acquisition of subsidiaries

The Group acquired 100% equity of Champ Tech Optical (Foshan) Corporation from the subsidiary of Hon Hai Precision Industry Co., Ltd. , Function Well Limited, as resovled by the Board of Directors on November 13, 2018. The information is provided in Note 6(29). On December 31, 2018, the balance of abovementioned payable for investment was $4,144,880 which was paid in January 2019.

• H. Lease transactions - lessee

• (a) The Group leases plant from entities with significant influence on the Group. Rental contracts are typically made for periods of 1 to 6 years. Rents are paid at the beginning or end of each month.

• (b) Acquisition of right-of-use assets:

The Group acquired right-of-use assets for the year ended December 31, 2019 from related parties amounting to $42,699. On January 1, 2019 (the date of initial application of IFRS 16), the Group increased right-of-use assets by $483,038.

• (c) Lease liabilities:

• i. Outstanding balance:

the Group increased right-of-use assets by $483,038. Lease liabilities: i. Outstanding balance:
ii. Interest expense Current: Entities with significant influence to the Group Non-current: Entities with significant influence to the Group Entities with significant influence to the Group	December 31,2019
	133,935 $
	225,062 $
	Year ended December 31,2019
	21,481 $

~64~

• I. Loans to/ from related parties: Loans from related parties

• (a) Outstanding balance:

ns to/ from related parties: ns from related parties Outstanding balance:
	December 31, 2019		December31,2018
Other related parties	$	94,711	$		98,402
nterest expense
		Years ended	December 31,
		2019			2018
Other related parties	$	4,343		$	4,900

• (b) Interest expense

Other related parties

J. Rental income

Foxconn Precision Electronics (Taiyuan) Co., Ltd. (referred herein as “Foxconn (Taiyuan)”), a subsidiary of Hon Hai, leases part of plants, offices and dormitories in Taiyuan from the Group in April, 2016. Lease price is agreed upon by both parties and the Group collects rent monthly from Foxconn (Taiyuan) in accordance with the agreement. The rental income under operating leases for the years ended December 31, 2019 and 2018 were $117,258 and $92,212, respectively.

(3) Key management compensation

for the years endedDecember 31, 2019 and 2018 we Key management compensation	re $117,258 and $92,212, respectively.	re $117,258 and $92,212, respectively.
Salaries and other short-term employee benefits Post-employment benefits Share-based payments	Years ended December 31,
	2019 26,031 $ 523 28,666 55,220 $	2018
		51,363 $ 495 24,818
		76,676 $

8. PLEDGED ASSETS

On December 31, 2019 and 2018, the book value of the Group’s assets pledged as collateral is as follows:

Pledge assets Land use right (shown as ‘right-of-use assets’) Pledged time deposits (shown as ‘financial assets at amortised cost - current’)	December 31,2019 December 31,2018 Purpose 112,040 $ - $ Short-term borrowings 10,763 $ - $ Customs guarantee Book value

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Contingencies None.

(2) Commitments

• A. Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

December 31, 2019 December 31, 2018 Property, plant and equipment $ 49,964 $ 233,593

~65~

B. Operating lease commitments:

The future aggregate minimum lease payments for operating lease commitments of leasing dormitory are as follows:

ormitory are as follows:
Not later than one year Later than one year but not later than five years Later than five years	December31,2018
	373,831 $ 1,007,281 100,525 1,481,637 $

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

As of March 30, 2020, the Group has implemented relevant measures in response to COVID-19 pandemic since the beginning of 2020. The subsidiaries in China have gradually resumed work in February 2020 and the Group has liaised with customers and suppliers for delivery arrangements. The extent to which the Group’s operations is affected by the delay in production resumption depends on the subsequent control of the pandemic situaion.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to operate with the goal to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total loans (including “current and non-current loans” as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as “equity” as shown in the consolidated balance sheet less total intangible assets.

During 2019, the Group’s strategy, which was unchanged from 2018, was to maintain the gearing ratio below 70%.

(2) Financial instruments

A. Financial instruments by category

io below 70%. nancial instruments Financial instruments by category
Financial assets Financial assets at fair value through profit or loss Financial assets at fair value through comprehensive income Financial assets at amortised cost Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities at amortised cost Lease liabilities	December 31,2019 514,377 $ 35,327,626 109,130,056 144,972,059 $ 99,427 $ 53,256,923 53,356,350 $ 472,199 $	December 31,2018
		567,640 $ 23,085,238 108,433,480
		132,086,358 $
		39,992 $ 54,195,998
		54,235,990 $
		- $

~66~

Note:

Financial assets at amortised cost included cash, accounts receivable, accounts receivable due from related parties and other receivables; financial liabilities at amortised cost included short-term loans, accounts payable, accounts payable to related parties and other payables.

• B. Risk management policies

• (a) Risk categories:

The Group employs a comprehensive financial risk management and control system to clearly identify, measure and control the various kinds of financial risk it faces, including market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk.

• (b) Management objectives:

  • i. Except for market risk, which is controlled by outside factors, the remainder of the foregoing types of risks can be controlled internally or removed from business processes. Therefore, the goal in managing each of these risks is to reduce them to zero.

  • ii. As for market risk, the goal is to optimize its overall position through strict analysis, suggestion, execution and audit processes, and proper consideration of a) long-term trends in the external economic/financial environment, b) internal operating conditions, and c) the actual effects of market fluctuations.

  • iii. The Group’s overall risk management policy focuses on the unpredictable items in financial markets and seeks to reduce the risk that potentially pose adverse effects on the Group’s financial position and financial performance.

  • iv. For the information on the derivative financial instruments that the Group entered into, please refer to Note 6(2).

• (c) Management system:

  • i. Risk management is executed by the Group’s finance department by following policies approved by the Board. Through cooperation with the Group's operating units, finance department is responsible for identifying, evaluating and hedging financial risks.

  • ii. The Board has a written policy covering overall risk management. It also has written policies covering specific issues, such as exchange rate risk, interest rate risk, credit risk, derivative and non-derivative financial instruments used, and the investment of excess working capital.

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. Nature :

The Group is a multinational group in the Electronic manufacturing services industry. Most of the exchange rate risk from operating activities comes from:

• (i) Foreign exchange risk arises from different exchange rates to functional currency as the invoice dates of accounts receivable and payable denominated in non-functional foreign currency are different. Because the amount after the assets and liabilities are offset is insignificant, income/loss is insignificant as well. (Note: The Group has several sites in various countries and thus is exposed to various foreign exchange risks. The main risk arises from USD and RMB.)

• (ii) Changes in exchange rates of functional currencies to presentation currency at

~67~

different timing will cause another foreign exchange risk.

• (iii) Except for the above transactions (operating activities) recognised in the income statement, assets and liabilities recognised in the balance sheet and the net investment in foreign operations also result in the exchange rate risk.

• ii. Management:

• (i) For such risks, the Group has set up policies requiring companies in the Group to manage its exchange rate risks.

• (ii) As to the exchange rate risk arising from the difference between various functional currencies and the reporting currency in the consolidated financial statements, it is managed by the Group’s finance department.

• iii. Sources of risk:

• (i) U.S. dollars and NT dollars:

Foreign exchange risk arises primarily from gains or losses from translating U.S. dollar-denominated assets, such as cash, cash equivalents, accounts receivable, other receivables and time deposits with maturity in excess of three months, and U.S. dollar-denominated liabilities, such as loans, accounts payable and other payables, into New Taiwan dollars.

• (ii) U.S. dollars and RMB:

Foreign exchange risk arises primarily from gains or losses from translating U.S. dollar-denominated cash, cash equivalents, accounts receivable and other receivables, other assets, loans, accounts payable and other payables and other liabilities, into RMB.

• iv. The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

December 31, 2019

(Foreign currency: functional currency) Financial assets Monetary items USD：NTD USD：RMB Non-monetary items Foreign operations USD：NTD Financial liabilities Monetary items USD：NTD USD：RMB	Foreign currency amount (in thousands) 452,771 $ 661,966 3,980,566 624,622 436,913	Exchange rate 29.98 6.9762 29.98 29.98 6.9762	Book value (NTD) 13,574,075 $ 19,845,741 119,337,372 18,726,168 13,098,652	Degree of variation 1% 1% 1% 1%	Effect on profit or loss
					135,741 $ 198,457 187,262 130,987

~68~

December 31, 2018

(Foreign currency: functional currency) Financial assets Monetary items USD：NTD USD：RMB Non-monetary items Foreign operations USD：NTD Financial liabilities Monetary items USD：NTD USD：RMB	Foreign currency amount (in thousands) 512,724 522,009 3,506,812 783,808 211,022	Exchange rate 30.72 6.8632 30.72 30.72 6.8632	Book value (NTD) 15,750,881 $ 16,036,116 107,729,262 24,078,582 6,482,596	Degree of variation 1% 1% 1% 1%	Effect on profit or loss
					157,509 $ 160,361 240,786 64,826

• v. Total exchange gain (loss), including realised and unrealised, arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2019 and 2018 amounted to $126,310 and ($713,184), respectively.

Price risk

• i. Nature

The Group primarily invests in domestic and foreign publicly traded and unlisted equity instruments, which are accounted for as financial assets at fair value through other comprehensive income. The price of those equity instruments will be affected by the uncertainty of the future value of the investment.

• ii. Extent

If the price of such equity instrument rises or falls by 1%, with all other factors held constant, the impact on other comprehensive income due to equity instruments measured at fair value through other comprehensive income would increase/decrease $353,276 and $230,852 for the years ended December 31, 2019 and 2018, respectively.

Cash flow and fair value interest rate risk

The Group’s interest rate risk arises from short-term loans. Short-term loans with floating rates expose the Group to cash flow interest rate risk, but most of the risks are offset by cash and cash equivalents with variable interest rates.

If short-term loans interest rates rise or fall by 1%, with all other factors held constant, profit after tax would decrease/increase by $126,123 and $111,016 for the years ended December 31, 2019 and 2018, respectively.

~69~

(b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments.

• According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. The Group assesses the credit quality of the customers by taking into account their financial position, past experience and other factors to conduct its internal risk management.

Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored. Major credit risk arises from cash and cash equivalents, derivative financial instruments, deposits and short-term investments with banks and financial institutions, and other financial instruments. The counterparties are banks with good credit quality, financial institutions with investment grade credit ratings and government agencies, so there is no significant default concerns and credit risk.

• ii. If the contract payments were past due over 90 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• iii. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

• (i) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;

• (ii) The disappearance of an active market for that financial asset because of financial difficulties;

• (iii) Default or delinquency in interest or principal repayments;

• (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

• iv. The ageing analysis of accounts receivable (including related parties) that were past due but not impaired is as follows:

but not impaired is as follows:
Not past due 0 to 90 days 91 to 180 days 181 to 270 days 271 to 360 days Over 360 days	December 31,2019 22,637,102 $ 6,571,514 275,907 56,099 12,860 26,722 29,580,204 $	December 31,2018
		23,335,285 $ 8,315,469 407,623 50,835 31,115 10,548
		32,150,875 $

The above ageing analysis was based on past due date.

• v. As of December 31, 2019 and 2018, accounts receivable (including related parties) and notes receivable were all from contracts with customers. As of January 1, 2018, the balance of receivables (including related parties) from contracts with customers amounted to $52,915,581.

• vi. The Group assesses the expected credit losses of accounts receivable (including related parties) as follows:

~70~

• (i) Accounts receivable are divided into segments according to the Group’s credit rating standards; expected credit losses for each segment are assessed based on the specific loss rate or provision matrix for the segment.

• (ii) Loss rates are calculated based on past and current information, taking into account forward-looking information provided by the Business Indicators Database of the National Development Council and the Basel Committee on Banking Supervision.

• (iii) As of December 31, 2019 and 2018, the loss allowance for accounts receivable (including related parties), assessed using loss rate or provision matrix, is as follows:

December 31, 2019 Expected loss rate Total book value Allowance for uncollectible accounts December 31, 2018 Expected loss rate Total book value Allowance for uncollectible accounts	Group1 and 2 0.03% 27,027,980 $ 8,104 $ Group1 and 2 0.03% 28,836,795 $ 8,633 $	Group3 0.07% 1,845,826 $ 1,293 $ Group3 0.07% 2,579,666 $ 1,804 $	Group4 0.07% 706,398 $ 495 $ Group4 0%~2.27% 734,414 $ 661 $	Total
				29,580,204 $
				9,892 $
				Total
				32,150,875 $
				11,098 $

• Group 1: Standard Poor’s, Fitch’s, or Moody’s rating of A-level, or rated as A-level in accordance with the Group’s credit policies for those that have no external credit ratings.

• Group 2: Standard Poor’s or Fitch’s rating of BBB, Moody’s rating of Baa, or rated as B or C in accordance with the Group’s credit policies for those that have no external credit ratings.

• Group 3: Standard Poor’s or Fitch’s rating of BB + and below, or Moody’s rating of Ba1 and below.

• Group 4: Rated as other than A, B, or C in accordance with the Group’s credit policies for those that have no external credit ratings.

• vii. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable (including related parties) is as follows:

		2019
At January 1	$		11,098
Gain on reversal of expected credit impairment loss	(		976)
Effect of foreign exchange	(		230)
At December 31	$		9,892

~71~

		2018
At January 1_IAS 39	$	-
Adjustments under new standards		16,843
At January 1_IFRS 9		16,843
Gain on reversal of expected credit impairment loss	(	5,685)
Effect of foreign exchange	(	60)
At December 31	$	11,098

(c) Liquidity risk

• i. Cash flow forecasting is performed by each of the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed loan facilities at all times so that the Group does not breach loan limits or covenants (where applicable) on any of its loan facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements, for example, currency restrictions.

• ii. The Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for non-derivative financial liabilities and to the expected maturity date for derivative financial liabilities.

Except for lease liabilities listed below, as of December 31, 2019 and 2018, the Group’s non-derivative financial liabilities (including short-term loans, accounts payable and other payables) and derivative financial liabilities (including foreign exchange contracts, cross currency swap contracts and forward foreign exchange contracts) will expire within 1 year.

1 year.
December 31, 2019		Less than 1year		Between 1 to 2years		Over 2years		Total
		168,937 $		165,327 $		208,535 $		542,799 $
Lease liability

(3) Fair value estimation

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

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability takes place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in derivative instruments is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability.

• B. Fair value information of investment property at cost is provided in Note 6(11).

• C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

~72~

(a) The related information of the nature of the assets and liabilities is as follows:

December 31, 2019 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Derivative instruments Financial assets at fair value through profit or loss-non-current fund Financial assets at fair value through other comprehensive income Equity instruments Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Derivative instruments December 31, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Derivative instruments Financial assets at fair value through other comprehensive income Equity instruments Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Derivative instruments	Level 1 - $ - $ 33,042,314 $ - $ Level 1 - $ 23,085,238 $ - $	Level 2 21,081 $ - $ - $ 99,427 $ Level 2 567,640 $ - $ 39,992 $	Level 3 - $ 493,296 $ 2,285,312 $ - $ Level 3 - $ - $ - $	Total
				21,081 $ 493,296 $
				35,327,626 $
				99,427 $
				Total
				567,640 $
				23,085,238 $
				39,992 $

~73~

• (b) The methods and assumptions the Group used to measure fair value are as follows:

• i. The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed shares

Market quoted price Closing price

• ii. The fair value of foreign investment fund is measured by reference to counterparty quotes.

• iii. When assessing non-standard and low-complexity financial instruments, for example, interest rate swap contracts and foreign exchange contracts, the Group adopts valuation technique that is widely used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

• iv. The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate.

• v. The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and nonfinancial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.

• vi. The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.

• D. As Sharp Corporation held by the Group ended its lock-up period since September 2018, the Group transferred the fair value from Level 2 to Level 1 at the end of the month when the event occurred.

• E. For the years ended December 31, 2019 and 2018, there was no transfer into or out from Level 3.

• F. The financial assets at fair value through profit or loss, categorised within Level 3 on December 31, 2019 pertain to the investment fund partnership invested through the subsidiary, Hon Fujin Precision Industry (Taiyuan) Co., Ltd. and equity investment in FE HOLDINGS USA, INC. invested through the subsidiary, Q-Run Holdings Ltd.. The qualitative information of significant unobservable inputs and sensitivity analysis of changes in significant unobservable inputs to valuation models used in Level 3 measurement are net asset value and market price method.

~74~

Fair value Significant Range Relationship at December, Valuation unobservable (weighted of inputs to 31, 2019 technique input average) fair value Non-derivative equity instrument: Private equity Net asset value fund and market Not applicable Not applicable Not applicable investment $ 493,296 price method Unlisted Net asset value Not applicable Not applicable Not applicable shares $ 2,285,312

• G. The Group has carefully assessed the valuation models and parameters used to measure fair value. However, use of different valuation models or parameters may result in different measurement. The following is the effect of profit or loss from financial assets categorised within Level 3 if the inputs used to valuation models have changed:

December 31, 2019 Recognised in profit or loss Input Change Favourable change Unfavourable change Financial assets Other $ 2,778,608 ±1% $ 27,786 ($ 27,786)

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: Please refer to table 1.

• B. Provision of endorsements and guarantees to others: None.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.

• D. Acquisition or sale of the same security with the accumulated cost reaching $300 million or 20% of paid-in capital or more: Please refer to table 3.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 4.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.

• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes 6(2), 6(24) and 12(3).

• J. Significant inter-company transactions during the reporting periods: Please refer to table 6.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

(3) Information on investments in Mainland China

• A. Basic information: Please refer to table 8.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 6.

~75~

14. SEGMENT INFORMATION

(1) General information

The Group is primarily engaged in the assembly and sales of cases, heat dissipation modules and consumer electronics products. The chief operating decision-maker manages abovementioned items by business activities. Currently, business activities can be categorised into trading services of electronic products and manufacturing and sales of mechanism and components.

Revenue and operating income of operating segments are used by the Group’s chief operating decision-maker for imputation of internal costs and allocation of expenses to segment profit (loss) and are used as an indication for assessment of performance and allocation of resources.

(2) Measurement of segment information

The financial information of reportable segments provided to the chief operating decision maker is as follows:

as follows:
External revenue Inter-segment revenue Segment revenue Measurement of segment profit or loss Depreciation and amortisation Interest income Interest expense Total segment assets (Note)	Year	ended December 31, 2019
	Electronic products tradingservices 65,823,754 $ 712,353 66,536,107 $ 2,315,241 $ 7,169 $ 171,341 $ 337,293 $ - $	Production and sales of mechanical components 33,797,040 $ 2,003,692 35,800,732 $ 4,052,311 $ 2,093,847 $ 2,192,227 $ 69,348 $ - $	Total
			99,620,794 $ 2,716,045
			102,336,839 $ 6,367,552 $
			2,101,016 $
			2,363,568 $
			406,641 $
			- $

~76~

External revenue Inter-segment revenue Segment revenue Measurement of segment profit or loss Depreciation and amortisation Interest income Interest expense Total segment assets (Note)	Electronic products tradingservices 93,382,273 $ 397,978 93,780,251 $ 3,702,732 $ 13,604 $ 293,460 $ 520,655 $ - $ Year	Production and sales of mechanical components Total 48,441,894 $ 141,824,167 $ 5,874,544 6,272,522 54,316,438 $ 148,096,689 $ 4,687,718 $ 8,390,450 $ 1,876,584 $ 1,890,188 $ 1,844,683 $ 2,138,143 $ 24,761 $ 545,416 $ - $ - $ ended December 31,2018	Production and sales of mechanical components Total 48,441,894 $ 141,824,167 $ 5,874,544 6,272,522 54,316,438 $ 148,096,689 $ 4,687,718 $ 8,390,450 $ 1,876,584 $ 1,890,188 $ 1,844,683 $ 2,138,143 $ 24,761 $ 545,416 $ - $ - $ ended December 31,2018
			8,390,450 $
			1,890,188 $
			2,138,143 $
			545,416 $
			- $

Note: The measurement of operating segment assets is not provided to the operating decision-maker; thus, the measurement that shall be disclosed is zero.

The adoption of IFRS 16, ‘Leases’, had the following impact on the segment information in 2019:

Electronic Production and

	Electronic	Production and
Depreciation expense increased Segment assets increased Segment liabilities increased	products trading services 686 $ 2,001 $ 2,010 $	sales of mechanical components 327,479 $ 1,280,773 $ 470,189 $	Total
			328,165 $
			1,282,774 $
			472,199 $

(3) Reconciliation for segment income (loss)

Sales between segments are carried out at arm’s length. The revenue from external parties reported to the chief operating decision-maker is measured in a manner consistent with that in the income statement.

A reconciliation of reportable segment profit or loss to the profit/ (loss) before tax and discontinued operations for the years ended December 31, 2019 and 2018 is provided as follows:

		Years ended December	Years ended December	31,
Operatingrevenue		2019		2018
Reportable segments income	$	102,336,839	$	148,096,689
Other segments income		181,335		233,265
Elimination of inter-segment revenue	(	2,716,045)	(	6,272,522)
Total corporate revenue	$	99,802,129	$	142,057,432
		Years ended December		31,
Profit and loss		2019		2018
Profit of reported segment	$	6,367,552	$	8,390,450
Profit of other operating segments		669,562		760,397
Profit before income tax	$	7,037,114	$	9,150,847

~77~

(4) Information on product

nformation on product
		Years ended	December 31,
		2019		2018
Electronic products	$	65,823,754	$	93,382,273
Mechanism and components		33,797,040		48,441,894
Others		181,335		233,265
	$	99,802,129	$	142,057,432

(5) Geographical information

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

Years ended December 31,

China Japan Taiwan USA Others	Non-current Revenue assets 31,255,589 $ 9,687,827 $ 61,241,815 - 1,561,632 197,551 1,223,767 2 4,519,326 9 99,802,129 $ 9,885,389 $ 2019	2018	2018
	Revenue 31,255,589 $ 61,241,815 1,561,632 1,223,767 4,519,326 99,802,129 $	Revenue 47,434,625 $ 80,855,315 1,676,443 4,879,435 7,211,614 142,057,432 $	Non-current assets
			10,719,420 $ - 205,991 31 13
			10,925,455 $

(6) Major customer information

Details of customers contributing more than 10% of operating revenue of the Group for the years ended December 31, 2019 and 2018 are as follows:

Years ended December 31,

Customer A Group B Group	Revenue % 60,618,293 $ 61% 24,235,332 24% 84,853,625 $ 2019	2018	2018
		Revenue 84,156,871 $ 45,511,832 129,668,703 $	%
			59% 32%

~78~

Foxconn Technology Co., Ltd. and Subsidiaries

Table 1

Loans to others Year ended December 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Reason for short-term financing Allowance for doubtful accounts Maximum outstanding balance during the year ended December 31, 2019 Balance at December 31, 2019 Actual amount drawn down No. Creditor Borrower General ledger account Is a relatedparty Interest rate Nature of loan Amount of transactions with the borrower	Collateral	Limit on loans granted to a singleparty	Ceiling on total loansgranted	Note
	Item Value
1 Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Qingdao Hiyn Materials Co., Ltd. Other receivables Y 681,614 $ 215,165 $ 215,165 $ 4.35000% Short-term financing $ - Business operation $ - 1 Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Fuzhun Precision Industy (shenyang) Co., Ltd. Other receivables Y 195,241 189,345 86,066 3.91500% Short-term financing - Business operation - 2 Q-Run Holdings Ltd. YanTai Fuzhun Precision Electronics Co., Ltd. Other receivables Y 632,200 - - 0.00000% Short-term financing - Business operation - 3 FOXCONN TECHNOLOGY PTE. LTD. YanTai Fuzhun Precision Electronics Co., Ltd. Other receivables Y 609,940 600,780 600,780 2.11538% Short-term financing - Business operation -	None $ - None - None - None -	4,035,829 $ 32,585,828 32,585,828 32,585,828	16,143,317 $ 65,171,656 65,171,656 65,171,656	Note 1 Note 2 Note 2 Note 2

Note 1: For short-term loans, limit on loans granted for a single party is 10% of the lending company’s net assets and ceiling on total loans is 40% of the Company’s net assets based on the latest audited or reviewed financial statements. Note 2: Limit on loans granted for a single foreign company whose voting rights are 100% owned directly and indirectly by the Company is 30% of the Company’s net assets and 60% for ceiling on total loans.

Table 1, Page 1

Expressed in thousands of NTD (Except as otherwise indicated)

Foxconn Technology Co., Ltd. and Subsidiaries

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) Year ended December 31, 2019

Table 2

Securities held by Marketable securities Relationship with the securities issuer General ledger account		As of Decem	ber31,2019	Note
	Number of shares	Bookvalue	Ownership (%) Fairvalue
Foxconn Technology Co., Ltd. Common stock of CyberTAN Technology Inc. None Financial assets at fair value through other comprehensive income - non-current 〞 Common stock of Pan-International Industrial Corp. 〞 〞 〞 Common stock of Innolux Corporation 〞 〞 〞 Common stock of Advanced Optoelectronic Technology, Inc. 〞 〞 Huazhun Investment Co., Ltd. Common stock of Innolux Corporation 〞 〞 〞 Common stock of Advanced Optoelectronic Technology, Inc. 〞 〞 Q-Run Holdings Ltd. Common stock of China Harmony Auto Holding Ltd. 〞 〞 〞 Common stock of FE Holdings USA, Inc. 〞 〞 Foxconn Technology Pte. Ltd. Common stock of Sharp Corporation 〞 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Jinan Fujie Industrial Investment Fund Partnership (limited partnership) 〞 Financial assets at fair value through profit or loss - non-current Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Bank of Beijing for RMB public structured deposits - 14 〞 Financial assets at amortised cost - current 〞 Bank of Beijing for RMB public structured deposits - 15 〞 〞 〞 Bank of Beijing for RMB public structured deposits - 16 〞 〞 〞 Bank of Beijing for RMB public structured deposits - 17 〞 〞 〞 Bank of Beijing for RMB public structured deposits - 18 〞 〞 〞 Bank of Beijing for RMB public structured deposits - 19 〞 〞 〞 Bank of Beijing for RMB public structured deposits - 21 〞 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Fortune Shuttle No. 1 〞 〞 Fuzhun Precision (Shenzhen) Industry Co., Ltd. Shanghai Commercial & Savings Bank “Winner” Currency and Bond Series (Drip into Gold) Financial product (WG19011S) 〞 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Guangdong Finance Trust - Peng Yun Tian Hua Collection Fund Trust 〞 Financial assets at amortised cost - non-current 〞 Guangdong Finance Trust - Peng Yun Tian Hua Collection Fund Trust 〞 〞 Fuzhun Precision (Shenzhen) Industry Co., Ltd. Guangdong Finance Trust - Peng Yun Tian Hua Collection Fund Trust 〞 〞	10,035,348 1,079,986 127,556,349 1,000 121,036,800 7,672,000 38,452,340 8,040 64,640,000 - - - - - - - - - - - - -	183,647 $ 25,164 1,062,544 18 1,008,237 138,096 583,171 2,285,312 30,041,437 493,296 2,174,510 2,174,510 2,159,051 2,157,583 2,157,354 2,156,898 2,154,117 3,018,861 647,466 861,020 2,152,575 861,020	3.05 183,647 $ 0.21 25,164 1.31 1,062,544 0 18 1.25 1,008,237 5.31 138,096 2.44 583,171 15.50 2,285,312 12.14 30,041,437 9.09 493,296 - 2,174,510 - 2,174,510 - 2,159,051 - 2,157,583 - 2,157,354 - 2,156,898 - 2,154,117 - 3,018,861 - 647,466 - 861,020 - 2,152,575 - 861,020

Table 2, Page 1

Table 3

Foxconn Technology Co., Ltd. and Subsidiaries

Aggregate purchases or sale of the same securities reaching $300 million or 20% of paid-in capital or more

Year ended December 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Investor Marketable securities General ledger account Counterparty (Note 4) Relationship with the investor (Note 4)	Balance as at January1,2019	Addition	Disposal		Ba Dece	lance as at mber 31,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Bookvalue Number of shares	Gain (loss) on disposal	Number of shares	Amount
Fuzhun Precision (Shenzhen) Industry Co., Ltd. Guangdong Finance Trust - Peng Yun Tian Hua Collection Fund Trust Note 3 Guangdong Yuecai Intrust & Investment Company None Fuzhun Precision (Shenzhen) Industry Co., Ltd. Shanghai Commercial & Savings Bank “Winner” Currency and Bond Series (Drip into Gold) Financial product (WG19006S) Note 2 The Shanghai Commercial & Savings Bank 〞 Fuzhun Precision (Shenzhen) Industry Co., Ltd. Shanghai Commercial & Savings Bank “Winner” Currency and Bond Series (Drip into Gold) Financial product (WG19008S) Note 2 The Shanghai Commercial & Savings Bank 〞 Fuzhun Precision (Shenzhen) Industry Co., Ltd. Shanghai Commercial & Savings Bank “Winner” Currency and Bond Series (Drip into Gold) Financial product (WG19011S) Note 2 The Shanghai Commercial & Savings Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (18JG2723) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (19JG0313) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (19JG0314) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (19JG0669) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (19JG1261) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (18JG2528) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (19JG0670) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (19JG1585) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (19JG2120) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞	- RMB 350,000 thousand - - - - - - - RMB 350,000 thousand - - - - - - - - - RMB 130,000 thousand - - - - - -	- - - RMB 150,000 thousand - RMB 150,000 thousand - RMB 150,000 thousand - - - RMB 300,000 thousand - RMB 300,000 thousand - RMB 400,000 thousand - RMB 600,000 thousand - - - RMB 200,000 thousand - RMB 600,000 thousand - RMB 600,000 thousand	- RMB 170,650 thousand RMB 150,000 thousand - RMB 150,879 thousand RMB 150,000 thousand - RMB 150,893 thousand RMB 150,000 thousand - - - - RMB 351,276 thousand RMB 350,000 thousand - RMB 301,333 thousand RMB 300,000 thousand - RMB 301,367 thousand RMB 300,000 thousand - RMB 402,589 thousand RMB 400,000 thousand - RMB 602,604 thousand RMB 600,000 thousand - RMB 130,479 thousand RMB 130,000 thousand - RMB 201,295 thousand RMB 200,000 thousand - RMB 603,005 thousand RMB 600,000 thousand - RMB 603,885 thousand RMB 600,000 thousand	RMB 20,650 thousand RMB 879 thousand RMB 893 thousand - RMB 1,276 thousand RMB 1,333 thousand RMB 1,367 thousand RMB 2,589 thousand RMB 2,604 thousand RMB 479 thousand RMB 1,295 thousand RMB 3,005 thousand RMB 3,885 thousand	- - - - - - - - - - - - -	RMB 200,000 thousand - - RMB 150,395 thousand - - - - - - - - -

Table 3, Page 1

Investor Marketable securities General ledger account Counterparty (Note 4) Relationship with the investor (Note 4)	Balance as at January1,2019	Addition	Disposal		Ba Dece	lance as at mber 31,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Bookvalue Number of shares	Gain (loss) on disposal	Number of shares	Amount
Fuzhun Precision (Hebi) Electronics Co., Ltd. Fortune Shuttle No. 1 Note 2 Shanghai Pudong Development Bank 〞 Fu Rui Precision Components (Kunshan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (18JG2621) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fu Rui Precision Components (Kunshan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0714) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fu Yu Precision Components (Kunshan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0555) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fu Yu Precision Components (Kunshan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0588) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fu Yu Precision Components (Kunshan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG1213) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fu Yu Precision Components (Kunshan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG1519) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Fu Yu Precision Components (Kunshan) Co., Ltd Bank of Communications for Yun Tong Fortune 67 Days structured deposits Note 2 Bank of Communications 〞 Fu Yu Precision Components (Kunshan) Co., Ltd Bank of Communications for Yun Tong Fortune 90 Days structured deposits Note 2 Bank of Communications 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (18JG2060) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (18JG2061) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (18JG2704) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (18JG2675) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0239) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0240) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0305) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞	- - - RMB 250,000 thousand - - - - - - - - - - - - - - - RMB 300,000 thousand - RMB 500,000 thousand - RMB 300,000 thousand - RMB 500,000 thousand - - - - - -	- RMB 700,000 thousand - - - RMB 250,000 thousand - RMB 100,000 thousand - RMB 150,000 thousand - RMB 150,000 thousand - RMB 250,000 thousand - RMB 150,000 thousand - RMB 200,000 thousand - - - - - - - - - RMB 300,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand	- - - - RMB 252,625 thousand RMB 250,000 thousand - RMB 252,500 thousand RMB 250,000 thousand - RMB 100,689 thousand RMB 100,000 thousand - RMB 151,150 thousand RMB 150,000 thousand - RMB 151,105 thousand RMB 150,000 thousand - RMB 252,441 thousand RMB 250,000 thousand - RMB 151,074 thousand RMB 150,000 thousand - RMB 201,899 thousand RMB 200,000 thousand - RMB 303,078 thousand RMB 300,000 thousand - RMB 505,250 thousand RMB 500,000 thousand - RMB 301,033 thousand RMB 300,000 thousand - RMB 501,800 thousand RMB 500,000 thousand - RMB 300,995 thousand RMB 300,000 thousand - RMB 501,733 thousand RMB 500,000 thousand - RMB 501,679 thousand RMB 500,000 thousand	- RMB 2,625 thousand RMB 2,500 thousand RMB 689 thousand RMB 1,150 thousand RMB 1,105 thousand RMB 2,441 thousand RMB 1,074 thousand RMB 1,899 thousand RMB 3,078 thousand RMB 5,250 thousand RMB 1,033 thousand RMB 1,800 thousand RMB 995 thousand RMB 1,733 thousand RMB 1,679 thousand	- - - - - - - - - - - - - - - -	RMB 701,228 thousand - - - - - - - - - - - - - - -

Table 3, Page 2

Investor Marketable securities General ledger account Counterparty (Note 4) Relationship with the investor (Note 4)	Balance as at January1,2019	Addition	Disposal		Ba Dece	lance as at mber 31,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Bookvalue Number of shares	Gain (loss) on disposal	Number of shares	Amount
Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0318) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0574) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0575) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0599) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0916) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0317) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG0825) RMB public structured deposits Note 2 Shanghai Pudong Development Bank 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 01 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 02 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 03 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 04 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 05 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 06 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 08 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 09 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 10 Note 2 Bank of Beijing 〞	- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -	- RMB 300,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 300,000 thousand - RMB 300,000 thousand - RMB 200,000 thousand - RMB 200,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 300,000 thousand - RMB 500,000 thousand	- RMB 300,995 thousand RMB 300,000 thousand - RMB 501,794 thousand RMB 500,000 thousand - RMB 501,847 thousand RMB 500,000 thousand - RMB 301,125 thousand RMB 300,000 thousand - RMB 301,063 thousand RMB 300,000 thousand - RMB 201,345 thousand RMB 200,000 thousand - RMB 200,854 thousand RMB 200,000 thousand - RMB 505,111 thousand RMB 500,000 thousand - RMB 505,167 thousand RMB 500,000 thousand - RMB 505,049 thousand RMB 500,000 thousand - RMB 505,104 thousand RMB 500,000 thousand - RMB 505,049 thousand RMB 500,000 thousand - RMB 504,993 thousand RMB 500,000 thousand - RMB 504,986 thousand RMB 500,000 thousand - RMB 302,959 thousand RMB 300,000 thousand - RMB 504,799 thousand RMB 500,000 thousand	RMB 995 thousand RMB 1,794 thousand RMB 1,847 thousand RMB 1,125 thousand RMB 1,063 thousand RMB 1,345 thousand RMB 854 thousand RMB 5,111 thousand RMB 5,167 thousand RMB 5,049 thousand RMB 5,104 thousand RMB 5,049 thousand RMB 4,993 thousand RMB 4,986 thousand RMB 2,959 thousand RMB 4,799 thousand	- - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - -

Table 3, Page 3

Investor Marketable securities General ledger account Counterparty (Note 4) Relationship with the investor (Note 4)	Balance as at January1,2019	Addition	Disposal		Ba Dece	lance as at mber 31,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Bookvalue Number of shares	Gain (loss) on disposal	Number of shares	Amount
Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 11 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 12 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 13 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 14 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 15 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 16 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 17 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 18 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 19 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 21 Note 2 Bank of Beijing 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of China for RMB Continuous Serial Deposits Note 2 Bank of China 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Yun Tong Fortune Increasing Profits 32 Days Financial Products Note 2 Bank of Communications 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Yun Tong Fortune Increasing Profits 33 Days Financial Products Note 2 Bank of Communications 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Yun Tong Fortune Increasing Profits 34 Days Financial Products Note 2 Bank of Communications 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Communications for Yun Tong Fortune 94 Days structured deposits Note 2 Bank of Communications 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Communications for Yun Tong Fortune 95 Days structured deposits Note 2 Bank of Communications 〞	- - - - - - - - - - - - - - - - - - - - - - - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - - - -	- RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 200,000 thousand - - - - - - - RMB 500,000 thousand - RMB 500,000 thousand	- RMB 504,799 thousand RMB 500,000 thousand - RMB 504,852 thousand RMB 500,000 thousand - RMB 504,905 thousand RMB 500,000 thousand - - - - - - - - - - - - - - - - - - - - - - RMB 201,968 thousand RMB 200,000 thousand - RMB 501,819 thousand RMB 500,000 thousand - RMB 501,876 thousand RMB 500,000 thousand - RMB 501,933 thousand RMB 500,000 thousand - RMB 505,215 thousand RMB 500,000 thousand - RMB 505,271 thousand RMB 500,000 thousand	RMB 4,799 thousand RMB 4,852 thousand RMB 4,905 thousand - - - - - - - RMB 1,968 thousand RMB 1,819 thousand RMB 1,876 thousand RMB 1,933 thousand RMB 5,215 thousand RMB 5,271 thousand	- - - - - - - - - - - - - - - -	- - - RMB 505,101 thousand RMB 505,101 thousand RMB 501,510 thousand RMB 501,169 thousand RMB 501,116 thousand RMB 501,010 thousand RMB 500,364 thousand - - - - - -

Table 3, Page 4

Investor Marketable securities General ledger account Counterparty (Note 4) Relationship with the investor (Note 4)	Balance as at January1,2019	Addition	Disposal		Ba Dece	lance as at mber 31,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Bookvalue Number of shares	Gain (loss) on disposal	Number of shares	Amount
Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Communications for Yun Tong Fortune 96 Days structured deposits Note 2 Bank of Communications 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Jinan Fujie industrial investment fund partnership (limited partnership) Note 1 Jinan Industrial Development Investment Group Co., Ltd. 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Guangdong Finance Trust - Peng Yun Tian Hua Collection Fund Trust Note 3 Guangdong Yuecai Intrust & Investment Company 〞	- - - - - RMB 850,000 thousand	- RMB 500,000 thousand - RMB 125,000 thousand - -	- RMB 505,326 thousand RMB 500,000 thousand - - - - RMB 200,150 thousand RMB 150,000 thousand	RMB 5,326 thousand - RMB 50,150 thousand	- - -	- RMB 114,583 thousand RMB 700,000 thousand

Note 1 ： Recorded in “Financial assets at fair value through profit or loss - non-current”. Therefore, the balance as at December 31, 2019 was shown at fair value. Note 2 ： Recorded in “financial assets at amortised cost-current”.

Note 3 ： Recorded in “financial assets at amortised cost-non-current”.

Note 4 ： Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Table 3, Page 5

Expressed in thousands of NTD (Except as otherwise indicated)

Foxconn Technology Co., Ltd. and Subsidiaries

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

Year ended December 31, 2019

Table 4

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Tra	nsaction		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Note
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Fu Yu Precision Components (Kunshan) Co., Ltd. Fu Yu Precision Components (Kunshan) Co., Ltd. Fuzhun Precision (Hebi) Electronics Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. FOXCONN TECHNOLOGY PTE. LTD. FTC TECHNOLOGY INC. Fuzhun Precision (Shenzhen) Industry Co., Ltd.	Foxconn (Far East) Ltd. and subsidiaries Champ Tech Optical (Foshan) Corporation FTC Technology Inc. Foxconn (Far East) Ltd. and subsidiaries FOXCONN TECHNOLOGY PTE. LTD. Foxconn (Far East) Ltd. and subsidiaries FOXCONN TECHNOLOGY PTE. LTD. Foxconn (Far East) Ltd. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Foxconn (Far East) Ltd. and subsidiaries Champ Tech Optical (Foshan) Corporation	The indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. The investee is an indirect subsidiary of the Company The investee is an indirect subsidiary of the Company The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The investee is an indirect subsidiary of the Company The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The investee is an indirect subsidiary of the Company The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The investee is an indirect subsidiary of the Company The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales	572,283 $ 269,891 226,689 17,827,169 924,955 131,060 4,827,945 1,942,171 1,986,430 3,040,123 196,649 112,208	1 - - 91 5 3 97 71 17 26 82 84	90 days 90 days 90 days 90 days 90 days 90 days 60 days 90 days 90 days 90 days 90 days 90 days	Note Note Note Note Note Note Note Note Note Note Note Note	Note Note Note Note Note Note Note Note Note Note Note Note	477,358 $ 246,485 22,850 13,404,796 204,425 73,881 706,425 652,621 726,492 1,810,975 44,017 -	4 2 - 97 1 9 90 81 17 42 81 -	Note 2

Table 4, Page 1

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Tra	nsaction		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Note
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Nanning Funing Precision Electronics Co., Ltd. YanTai Fuzhun Precision Electronics Champ Tech Optical (Foshan) Corporation Champ Tech Optical (Foshan) Corporation Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Fu Yu Precision Components (Kunshan) Co., Ltd. Fu Yu Precision Components (Kunshan) Co., Ltd. Fuzhun Precision (Hebi) Electronics Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. FOXCONN TECHNOLOGY PTE. LTD.	FOXCONN TECHNOLOGY PTE LTD. Fu Yu Precision Components (Kunshan) Co., Ltd. Foxconn (Far East) Ltd. and subsidiaries FOXCONN TECHNOLOGY PTE. LTD. Foxconn (Far East) Ltd. and subsidiaries Nanning Funing Precision Electronics Co., Ltd. Champ Tech Optical (Foshan) Corporation Fuzhun Precision (Hebi) Electronics Co., Ltd. YanTai Fuzhun Precision Electronics Co., Ltd. INNOLUX CORPORATION SHARP CORPORATION Foxconn (Far East) Ltd. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries Pan-International Industrial Corp. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries Hon Hai Precision Industry Co., Ltd.	The investee is an indirect subsidiary of the Company The investee is an indirect subsidiary of the Company The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The investee is an indirect subsidiary of the Company The indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. The investee is an indirect subsidiary of the Company The investee is an indirect subsidiary of the Company The investee is an indirect subsidiary of the Company The investee is an indirect subsidiary of the Company Other related parties Other related parties The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries Other related parties The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The counterparties of the investee are the investee of the Company accounted for using equity method	Sales Sales Sales Sales Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases	106,963 $ 390,041 571,491 2,888,549 54,707,760 2,180,754 2,249,351 549,591 351,543 1,505,635 1,557,010 2,502,136 283,974 427,791 225,061 1,367,541 1,105,942	4 32 8 39 86 3 4 1 1 2 2 17 7 10 10 11 9	90 days 90 days 90 days 90 days 90 days 30 days 90 days 90 days 90 days 60 days 60 days 90 days 90 days 90 days 90 days 90 days 90 days	Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note	Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note Note	38,214 $ 64,240 223,629 539,484 13,945,450) ( 202,642) ( 418,519) ( 84,344) ( 14,890) ( 226,133) ( 372,863) ( 6,063,456) ( 87,850) ( 198,891) ( 92,181) ( 127,853) ( 571,508) (	5 19 11 28 80) ( 1) ( 2) ( - - 1) ( 2) ( 70) ( 8) ( 18) ( 38) ( 4) ( 20) (

Table 4, Page 2

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Tra	nsaction		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Note
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unit price	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Nanning Funing Precision Electronics Co., Ltd. Champ Tech Optical (Foshan) Corporation Champ Tech Optical (Foshan) Corporation	Pan-International Industrial Corp. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries Pan-International Industrial Corp. and subsidiaries	Other related parties The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries Other related parties	Purchases Purchases Purchases	111,518 $ 197,151 752,435	5 3 13	90 days 90 days 90 days	Note Note Note	Note Note Note	48,650) ($ 42,844) ( 315,264) (	7) ( 2) ( 17) (

Note 1:Except for circumstances in which there are no similar transactions for reference and the prices and credit periods are negotiated by both parties,

the aforementioned related party is offered prices very close to those offered to other customers and given a payment period of 30 to 90 days.

Note 2:For transactions involving the sale of raw materials to the aforementioned related party and subsequent repurchase of goods made from the same raw materials from the same party, the initial sale of raw materials is eliminated due to economic substance.

Table 4, Page 3

Foxconn Technology Co., Ltd. and Subsidiaries

Table 5

Receivables from related parties reaching $100 million or 20% of paid-in capital or more

December 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationshipwith the counterparty	Balance as at December 31,2019	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Fu Yu Precision Components (Kunshan) Co., Ltd. Fuzhun Precision (Hebi) Electronics Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. FOXCONN TECHNOLOGY PTE. LTD. YanTai Fuzhun Precision Electronics Co., Ltd. Champ Tech Optical (Foshan) Corporation Champ Tech Optical (Foshan) Corporation Champ Tech Optical (Foshan) Corporation HIGH TEMPO INTERNATIONAL LTD.	Foxconn (Far East) Ltd. and subsidiaries Champ Tech Optical (Foshan) Corporation Foxconn (Far East) Ltd. and subsidiaries FOXCONN TECHNOLOGY PTE. LTD. FOXCONN TECHNOLOGY PTE. LTD. Foxconn (Far East) Ltd. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Foxconn (Far East) Ltd. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries Foxconn Technology Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. Foxconn Technology Co., Ltd.	The indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. The investee is an indirect subsidiary of the Company The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The investee is an indirect subsidiary of the Company The investee is an indirect subsidiary of the Company The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The investee is an indirect subsidiary of the Company The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The counterparties of the investee are indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. and its subsidiaries The Company’s ultimate parent company The investee is an indirect subsidiary of the Company The Company’s ultimate parent company	477,358 $ 246,485 13,404,796 204,425 706,425 652,621 726,492 1,810,975 229,596 223,629 418,519 539,484 337,901	1.36 0.96 1.43 3.48 3.31 1.58 2.89 1.89 0.28 1.87 1.74 10.71 Not applicable	100,550 $ 77,131 6,297,650 - - 172,072 52,929 96,483 176,929 26,730 7,864 - -	Subsequent collection Subsequent collection Subsequent collection - - Subsequent collection Subsequent collection Subsequent collection Subsequent collection Subsequent collection Subsequent collection - -	99,031 $ 40,807 6,297,650 - - 172,072 52,929 96,483 176,929 26,730 7,864 - -	- $ - - - - - - - - - - - -

(shown as other receivables)(Note 1)

Note 1: Receivables from purchases of materials by investees on behalf of the ultimate parent company.

Table 5, Page 1

Foxconn Technology Co., Ltd. and Subsidiaries

Table 6

Significant inter-company transactions during the reporting period

Year ended December 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)		Transaction	Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 0 0 1 1 2 2 3 3 4 5 6 6 6 7 8	Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. 〝 〝 Hon Fujin Precision Industry (Taiyuan) Co., Ltd. 〝 Fu Yu Precision Components (Kunshan) Co., Ltd. 〝 FOXCONN TECHNOLOGY PTE. LTD. 〝 YanTai Fuzhun Precision Electronics Co., Ltd. HIGH TEMPO INTERNATIONAL LTD. Champ Tech Optical (Foshan) Corporation Champ Tech Optical (Foshan) Corporation 〝 Fuzhun Precision (Shenzhen) Industry Co., Ltd. Nanning Funing Precision Electronics Co., Ltd.	Nanning Funing Precision Electronics Co., Ltd. Fuzhun Precision (Hebi) Electronics Co., Ltd. FTC Technology Inc. YanTai Fuzhun Precision Electronics Co., Ltd. Champ Tech Optical (Foshan) Corporation 〝 〝 FOXCONN TECHNOLOGY PTE. LTD. 〝 FOXCONN TECHNOLOGY PTE. LTD. 〝 Hon Fujin Precision Industry (Taiyuan) Co., Ltd. 〝 Fu Yu Precision Components (Kunshan) Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. 〝 Champ Tech Optical (Foshan) Corporation FOXCONN TECHNOLOGY PTE. LTD.	1 1 1 1 1 1 1 3 3 3 3 3 3 3 2 2 3 3 3 3	Purchases Purchases Sales Purchases Purchases Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Other receivable Accounts receivable Sales Accounts receivable Sales Sales	2,180,754 $ 549,591 226,689 351,543 2,249,351 269,891 246,485 924,955 204,425 4,827,945 706,425 3,040,123 1,810,975 390,041 337,901 418,519 2,888,549 539,484 112,208 106,963	Note 4 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞 〞	2 1 0 0 2 0 0 1 0 5 0 3 1 0 0 0 3 0 0 0

Note 1: The information of transactions between the Company and the subsidiaries should be noted in “Number” column.

Note 2: (1) Number 0 represents the Company.

Note 2: (2) The consolidated subsidiaries are numbered in order from number 1.

Note 2: The transaction relationship with counterparties are as follows:

Note 2: (1) The Company to the consolidated subsidiary.

Note 2: (2) The consolidated subsidiaries to the Company.

Note 2: (3) The consolidated subsidiaries to other consolidated subsidiaries.

Note 3: Disclosure standard of transactions between the Company and subsidiaries is when purchases, sales and receivables (payables) from (to) related parties account for at least $100,000 or 20% of capital. Relative related are not disclosed. Note 4: Except for circumstances in which there are no similar transactions for reference and the prices and credit periods are negotiated by both parties, the aforementioned related party is offered prices very close to those offered to other customers and given a payment period of 30 to 90 days.

Note 5: In calculating the ratio, the transaction amount is divided by consolidated total assets for balance sheet accounts and is divided by consolidated total revenues for income statement accounts. Note 6: For information of loans to others, please refer to table 1.

Table 6, Page 1

Foxconn Technology Co., Ltd. and Subsidiaries

Information on investees

Year ended December 31, 2019

Table 7

Expressed in thousands of NTD

(Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial invest	ment amount	Shares he	ld as at December	31,2019	Net profit (loss) of the investee for the year ended December 31,2019	Investment income (loss) recognised by the Company for the year ended December 31,2019 Note
				Balance as at December31,2019	Balance as at December31,2018	Number of shares	Ownership (%)	Bookvalue
Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd.	Q-Run Holdings Ltd. Foxconn Precision Components Holding Co., Ltd. Huazhun Investment Co., Ltd. Syntrend Creative Park Co., Ltd.	Cayman Islands Cayman Islands Taiwan Taiwan	Investment holding Investment holding Investment Retail of office machinery and equipment and electronic appliances, and information software services	9,851,192 $ 492,742 1,254,780 490,322	9,851,192 $ 492,742 1,254,780 490,322	480,077,600 135,839,643 125,478,000 49,032,250	100 100 100 20	103,757,140 $ 15,580,232 1,197,817 281,350	5,958,873 $ 769,433 7,633 24,399) (	4,024,861 $ 769,433 7,633 4,872) (

Note: Besides Foxconn Precision Components Holding Co., Ltd., Q-Run Holdings Ltd. and Huazhun Investment Co., Ltd. are subsidiaries of the Company, Atkinson Holdings Ltd., Q-Run Far East Corporation, World Trade Trading Ltd., High Tempo International Ltd., FTC Technology Inc., Foxconn Technology Pte. Ltd., Kenny International Ltd., Double Wealth Profits Ltd., Precious Star International Ltd., Eastern Star Limited., Foreign Technology Ltd., Topfry Industrial Ltd., Gold Glory International Ltd., New Glory Holdings Ltd., FTP Technology Inc., Fu Rui Precision Components (Kunshan) Co., Ltd., Fuzhun Precision (Shenzhen) Industry Co., Ltd., Fuyu Technology (Nanyang) Co., Ltd., Champ Tech Optical (Foshan) Corporation, Hon Fujin Precision Industry (Taiyuan) Co., Ltd., Fuzhun Precision (Hebi) Electronics Co., Ltd., Qingdao Hiyn Materials Co., Ltd., Fuhuigang Industrial (Shenzhen) Co., Ltd., Fu Yu Precision Components (Kunshan) Co., Ltd., YanTai Fuzhun Precision Electronics Co., Ltd., Nanning Funing Precision Electronics Co., Ltd. and Fuzhun Precision (Shenyang) Industry Co., Ltd. are subsidiaries of the Company as well.

Table 7, Page 1

Foxconn Technology Co., Ltd. and Subsidiaries

Table 8

Information on investees in Mainland China

Year ended December 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January1,2019	Amount remitt to Mainland C remitted back t year ended Dec	ed from Taiwan hina / Amount o Taiwan for the ember 31,2019	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2019	Net income of investee for the year ended December 31,2019	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the year ended December 31, 2019 (Note 2)	Book value of investments in Mainland China as of December 31,2019	Accumulated amount of investment income remitted back to Taiwan as of December 31,2019	Note
					Remitted to MainlandChina	Remitted back to Taiwan
Fuhuigang Industrial (Shenzhen) Co., Ltd. Fu Yu Precision Components (Kunshan) Co., Ltd. Fuzhun Precision (Shenzhen) Industry Co., Ltd. Fu Rui Precision Components (Kunshan) Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Nanning Funing Precision Electronics Co., Ltd. YanTai Fuzhun Precision Electronics Co., Ltd. Fuzhun Precision (Hebi) Electronics Co., Ltd.	Computer case – electronic and electrical components Manufacturing and marketing of power plug and wall socket, micro ribbon connectors for terminals, etc. Manufacturing and marketing of computer components (computer thermal module) Electrical board components processing; manufacturing and marketing of optoelectronics and computer cables Manufacturing and marketing of computer components and related peripherals, computer cases and metal stamping Manufacturing and marketing of computer components (computer thermal module) Manufacturing and marketing of computer case - electronic and electrical components New alloy material, precision molds, new electronic components, portable computers and their components	232,555 $ 1,174,437 584,610 368,484 12,291,800 293,804 1,184,210 4,428,046	2 2 2 2 2 2 2 2	232,555 $ 590,186 59,960 236,362 4,182,210 - 1,184,210 1,490,006	- $ - - - - - - -	- $ - - - - - - -	232,555 $ 590,186 59,960 236,362 4,182,210 - 1,184,210 1,490,006	11,950 $ 573,782 355,074 - 2,237,024 322,664 17,070) ( 480,682	100 100 100 100 100 100 100 100	11,950 $ 573,782 355,074 - 2,237,024 322,664 17,070) ( 480,682	432,446 $ 6,477,982 4,902,647 - 40,358,293 2,772,895 639,375 7,020,076	- $ - - - - - - -

Table 8, Page 1

Accumulated amount of Investment amount approved Ceiling on investments in remittance from Taiwan to by the Investment Commission Mainland China imposed by Mainland China as of of the Ministry of Economic the Investment Commission Company name December 31, 2019 Affairs (MOEA) of MOEA (Note 3) Foxconn Technology Co., Ltd. $ 7,975,489 $ 21,383,715 $ -

• Note 1: Investment methods are classified into the following three categories:

• Note 1: (1) Directly invest in a company in Mainland China.

• Note 1: (2) Through investing in Q-Run Holdings Ltd. or Foxconn Precision Components Holding Co., Ltd., which then invested in Mainland China.

Note 1: (3) Others.

• Note 2: Investment profit or loss for the period was recognised based on the Mainland investees’ financial statements which were audited by independent accountants.

• Note 3: Pursuant to the amended ‘Guidelines Governing the Review of Investment or Technical Cooperation in the Mainland Area’ dated on August 29, 2008, as the Company has obtained the certificate of being qualified

• Note 3: for operating headquarters, issued by the Industrial Development Bureau, MOEA, the ceiling amount of the investment in Mainland China is not applicable to the Company from May 21, 2015 to May 20, 2018.

• Note 4: The Company needs no approval by Investment Commission of the Ministry of Economic Affairs for investment in Qingdao Hiyn Materials Co., Ltd., Fuzhun Precision (Shenyang) Industry Co., Ltd., Fuyu Technology

• (Nanyang) Co., Ltd. and Champ Tech Optical (Foshan) Corporation which were reinvestedthrough an existing company in Mainland China.

• Note 5: The Company’s subsidiary, Fu Yu Precision Components (Kunshan) Co., Ltd., merged with the subsidiary, Fu Rui Precision Components (Kunshan) Co., Ltd, with the effective date set on December 31, 2018. As of December 31, 2019, the merger is still in process.

Table 8, Page 2