FTC - Interim / Quarterly Report 2019

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS JUNE 30, 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.

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REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

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

Introduction

We have reviewed the accompanying consolidated balance sheets of Foxconn Technology Co., Ltd. and subsidiaries (the “Group”) as at June 30, 2019 and 2018, and the related consolidated statements of comprehensive income for the three-month and six-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the six-month periods then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As explained in Notes 4(3) and 6(7), we did not review the financial statements of certain insignificant consolidated subsidiaries, investments accounted for using equity method and the information disclosed in Note 13, which statements reflect total assets (including investments accounted for using equity method) of NT$40,114,398 thousand and NT$29,470,699 thousand, constituting 24% and 16% of the consolidated total assets, and total liabilities of NT$6,555,617 thousand and NT$4,634,862 thousand, constituting 10% and 7% of the consolidated total liabilities as at June 30, 2019 and 2018, respectively, and total comprehensive (loss) income (including share of profit (loss) and other comprehensive (loss)

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income of associates accounted for using equity method) of (NT$50,817) thousand, NT$155,949 thousand, NT$804,882 thousand and NT$288,793 thousand, constituting (11%), 3%, 16% and (3%) of the consolidated total comprehensive (loss) income for the three-month and six-month periods then ended, respectively.

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries, investments accounted for using equity method and the information disclosed in Note 13 been reviewed by independent accountants, that we might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at June 30, 2019 and 2018, and of its consolidated financial performance for the three-month and six-months periods then ended, as well as its consolidated cash flows for the six-month periods then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Feng, Jackie Wu, Han-Chi

For and on behalf of PricewaterhouseCoopers, Taiwan

August 12, 2019

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

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.

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FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2019, DECEMBER 31, 2018 AND JUNE 30, 2018

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of June 30, 2019 and 2018 are reviewed, not audited)

				June 30, 2019			December 31, 2018			June 30, 2018
	Assets	Notes		AMOUNT	%		AMOUNT	%		AMOUNT	%
	Current assets
1100	Cash and cash equivalents	6(1)	`$`	`54,314,839`	`33`	`$`	`52,191,701`	`33`	`$`	`49,787,056`	`26`
1110	Current financial assets at fair	6(2)
	value through profit or loss			`176,391`	`-`		`567,640`	`-`		`721,229`	`1`
1136	Current financial assets at	6(4)
	amortised cost			`22,977,647`	`14`		`17,663,897`	`11`		`31,289,433`	`17`
1170	Accounts receivable, net	6(5)		`14,188,674`	`9`		`16,504,913`	`11`		`15,432,762`	`8`
1180	Accounts receivable due from	7
	related parties, net			`12,039,670`	`8`		`15,634,864`	`10`		`13,423,472`	`7`
1200	Other receivables	7		`4,907,532`	`3`		`1,070,706`	`1`		`2,481,883`	`1`
130X	Inventories	6(6)		`3,633,198`	`2`		`2,905,442`	`2`		`4,681,306`	`3`
1470	Other current assets			`473,579`	`-`		`484,697`	`-`		`607,046`	`-`
11XX	Total current assets			`112,711,530`	`69`		`107,023,860`	`68`		`118,424,187`	`63`
	Non-current assets
1510	Non-current financial assets at	6(2)
	fair value through profit or loss			`525,370`	`-`		`-`	`-`		`-`	`-`
1517	Non-current financial assets at	6(3)
	fair value through other
	comprehensive income			`24,590,370`	`15`		`23,085,238`	`15`		`48,634,138`	`26`
1535	Non-current financial assets at	6(4)
	amortised cost			`4,070,102`	`3`		`5,367,399`	`3`		`5,519,400`	`3`
1550	Investments accounted for	6(7)
	using equity method			`8,750,447`	`5`		`8,713,290`	`6`		`6,784,735`	`3`
1600	Property, plant and equipment	6(8) and 7		`6,980,119`	`4`		`7,515,455`	`5`		`7,363,199`	`4`
1755	Right-of-use assets	6(9), 7 and 8		`2,004,463`	`1`		`-`	`-`		`-`	`-`
1760	Investment property, net	6(11)		`1,071,251`	`1`		`970,020`	`1`		`806,427`	`-`
1780	Intangible assets	6(12)		`1,717,193`	`1`		`1,767,192`	`1`		`-`	`-`
1840	Deferred tax assets			`698,892`	`1`		`563,501`	`-`		`581,153`	`-`
1900	Other non-current assets	6(13)		`681,898`	`-`		`1,558,380`	`1`		`1,251,031`	`1`
15XX	Total non-current assets			`51,090,105`	`31`		`49,540,475`	`32`		`70,940,083`	`37`
1XXX	Total assets		`$`	`163,801,635`	`100`	`$`	`156,564,335`	`100`	`$`	`189,364,270`	`100`
				(Continued)

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FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2019, DECEMBER 31, 2018 AND JUNE 30, 2018

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of June 30, 2019 and 2018 are reviewed, not audited)

Liabilities and Equity	Notes	June 30, 2019	June 30, 2018
		AMOUNT `$` `24,563,753` `-` `6,881,178` `13,256,097` `15,946,218` `751,302` `308,540` `254,389` `61,961,477` `589,431` `834,783` `119,858` `1,544,072` `63,505,549` `14,144,852` `7,812,561` `12,018,153` `46,492` `63,731,609` `2,466,098` `100,219,765` `76,321` `100,296,086` `$` `163,801,635`	AMOUNT `$` `28,051,146` `-` `5,846,512` `14,648,431` `19,104,552` `743,956` `-` `360,007` `68,754,604` `618,547` `-` `128,174` `746,721` `69,501,325` `14,144,852` `7,742,945` `11,103,487` `-` `60,100,905` `26,693,981` `119,786,170` `76,775` `119,862,945` `$` `189,364,270`	%
Current liabilities 2100 Short-term loans 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 3X2X Total liabilities and equity	6(14) 6(2) 7 6(15) and 7 7 7 6(17) 6(18) 6(19) 6(20) 6(21) 9			`15` `-` `3` `8` `10` `-` `-` `-`
				`36`
				`1` `-` `-`
				`1`
				`37`
				`7` `4` `6` `-` `32` `14`
				`63` `-`
				`63`
				`100`

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

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FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

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

Items	Notes	Thr	ee months e	nded June 30
		2019		2018
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 Components of other comprehensive income that will not be reclassified to profit or loss 8316 Unrealised gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8310 Other comprehensive income (loss) that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation 8360 Other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive income (loss), net 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.

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FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

Notes				Equityat	butable to owners of t	heparent	heparent					Non-controlling interests	Total equity
	Ordinaryshare	Capital surplus		Retained Earnings				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`	`$` `7,768,067` `-` `7,768,067` `-` `-` `-` `-` `-` `(` `25,122 )` `$` `7,742,945` `$` `7,767,553` `-` `-` `-` `-` `-` `-` `45,008` `$` `7,812,561`	`$` `10,106,948` `-` `10,106,948` `-` `-` `-` `996,539` `-` `-` `$` `11,103,487` `$` `11,103,487` `-` `-` `-` `914,666` `-` `-` `-` `$` `12,018,153`	`$` `-` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-` `$` `-` `-` `-` `-` `-` `46,492` `-` `-` `$` `46,492`	`$` `63,516,070` `(` `16,843 )` `63,499,227` `2,690,364` `-` `2,690,364` `(` `996,539 )` `(` `5,092,147 )` `-` `$` `60,100,905` `$` `66,542,261` `2,676,859` `-` `2,676,859` `(` `914,666 )` `(` `46,492 )` `(` `4,526,353 )` `-` `$` `63,731,609`		`($` `2,586,289 )` `-` `(` `2,586,289 )` `-` `1,352,902` `1,352,902` `-` `-` `-` `($` `1,233,387 )` `($` `2,578,011 )` `-` `1,205,636` `1,205,636` `-` `-` `-` `-` `($` `1,372,375 )`	`$` `-` `41,569,491` `41,569,491` `-` `(` `13,642,123 )` `(` `13,642,123 )` `-` `-` `-` `$` `27,927,368` `$` `2,531,519` `-` `1,306,954` `1,306,954` `-` `-` `-` `-` `$` `3,838,473`		`$` `41,569,491` `(` `41,569,491` `)` `-` `-` `-` `-` `-` `-` `-` `$` `-` `$` `-` `-` `-` `-` `-` `-` `-` `-` `$` `-`	`$ 134,519,139` `(` `16,843 )` `134,502,296` `2,690,364` `(` `12,289,221 )` `(` `9,598,857 )` `-` `(` `5,092,147 )` `(` `25,122 )` `$ 119,786,170` `$` `99,511,661` `2,676,859` `2,512,590` `5,189,449` `-` `-` `(` `4,526,353 )` `45,008` `$ 100,219,765`	`$` `75,794` `-` `75,794` `516` `465` `981` `-` `-` `-` `$` `76,775` `$` `78,273` `(` `2,844 )` `892` `(` `1,952 )` `-` `-` `-` `-` `$` `76,321`	`$ 134,594,933` `(` `16,843` `)` `134,578,090` `2,690,880` `(` `12,288,756` `)` `(` `9,597,876` `)` `-` `(` `5,092,147` `)` `(` `25,122` `)` `$ 119,862,945` `$` `99,589,934` `2,674,015` `2,513,482` `5,187,497` `-` `-` `(` `4,526,353` `)` `45,008` `$ 100,296,086`

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

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

SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars) (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Income and expenses having no effect on cash
flows
Depreciation (including investment property)

Amortization

Expected credit loss (gain)

Net loss (gain) on financial assets or liabilities
at fair value through profit or loss
Gain on disposal of property, plant and
equipment

Interest expense
Interest income

Dividend income

Share of loss of associates and joint ventures
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
Other non-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 Notes
2019
2018
$
3,080,984 $
3,690,763
6(25)
1,059,356
1,005,745
6(25)
70,189
10,429
12(2)
1,057 (
6,875 )
391,542 (
767,201 )
6(24)
(
134,302 ) (
214,411 )
195,766
280,093
6(23)
(
1,323,221 ) (
1,095,482 )
6(23)
(
364,464 ) (
173,761 )
6(7)
152,419
58,162
2,354,325
1,487,460

3,919,040
23,036,276
928,369 (
44,978 )
(
699,801 ) (
650,699 )
16,479 (
389,832 )
8,377
10,212
(
1,371,640 ) (
442,951 )
(
5,211,950 ) (
20,740,230 )
(
1,726,421 ) (
1,838,608 )
(
71,924 )
206,073
8,393 (
26,540 )
1,282,573
3,393,645
(
1,141,774 ) (
1,519,416 )
140,799
1,874,229

(Continued)

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

SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at amortised cost-
current
Acquisition of financial assets at fair value through
profit or loss
Net decrease (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) decrease in net receivable/payable on raw
materials
Decrease in refundable deposits
Interest received
Dividends received
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
Payments of lease liabilities
Interest paid
Net cash flows from financing activities
Effect of changes in foreign currency exchange rates
on cash
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period Notes
2019
2018
($
5,139,246 ) ($
10,739,437 )
(
569,559 )
-
1,369,020 (
928,140 )
(
4,319,741 )
-
6(7)
- (
6,069,128 )
6(30)
(
749,575 ) (
1,088,510 )
6(30)
93,867
181,167
(
842,135 )
990,388
48,340
-
1,363,566
1,129,450
364,464
173,761
(
8,380,999 ) (
16,350,449 )
10,674,482
4,733,742
(
191,274 )
-
(
175,353 ) (
250,709 )
10,307,855
4,483,033
55,483
390,709
2,123,138 (
9,602,478 )
52,191,701
59,389,534
$
54,314,839 $
49,787,056

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

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FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (Reviewed, not audited)

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.

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

These consolidated financial statements were reported to the Board of Directors and issued on August 12, 2019.

3. 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 [469 x 47] 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	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

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‘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.

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:

ollows:
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:
	Effective Date by
	International
	Accounting
New Standards,Interpretations and Amendments	Standards Board
Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of	January 1, 2020
Material’
Amendments to IFRS 3, ‘Definition of a business’	January 1, 2020
The above standards and interpretations have no significant impact to the Group’s financial condition
and financial performance based on the Group’s assessment.

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

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

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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

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 Accounting Standard 34, “Interim financial reporting” endorsed by the FSC.

(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 International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “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.
(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.

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(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.
B. Subsidiaries included in the consolidated financial statements:

Investor	Subsidiary	Main BusinessActivities Investment holdings in companies in Mainland China, Hong Kong and America primarily engaged in manufacturing, sale, research and development of computer thermal module and computer components Investment holdings in companies in Mainland China, Hong Kong, Singapore and America primarily engaged in manufacturing, sale, research and development of aluminum magnesium case and computer components Investment holdings in R.O.C. companies Investment holding and reinvestment	June 30, December June 30, 2019 31,2018 2018 100 100 100 100 100 100 100 100 100 100 100 100 Ownership (%)	Note
			June 30, December 2019 31,2018 100 100 100 100 100 100 100 100
Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Precision Components Holding Co., Ltd.	Foxconn Precision Components Holding Co., Ltd. Q-RUN Holdings Ltd. Huazhun Investment Co., Ltd. Atkinson Holdings Ltd.			(a) (b) (a) (b) (a) (b)

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Investor	Subsidiary	June 30, December June 30, Main BusinessActivities 2019 31,2018 2018 Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Sales, investment holdings 100 100 100 and reinvestment Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Ownership (%)	Note
			(a) (b) (a) (b) (a) (b) (a) (b) (a) (b) (a) (b) (a) (b) (a) (b)

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Investor	Subsidiary	June 30, December June 30, Main BusinessActivities 2019 31,2018 2018 Investment holding and 100 100 100 reinvestment Investment holding and 100 100 100 reinvestment Electrical board components - - 100 processing; manufacturing and marketing of optoelectronics and computer cables Manufacturing and marketing of 22.76 22.76 - power plug and wall socket, micro ribbon connectors for terminals, etc. Manufacturing and marketing of 100 100 100 computer components (computer thermal module) Production of LED lamps and 100 100 100 LED display; engagement in smart light pole and other products in relation to LED Manufacturing and marketing 65 65 - of computer components (computer thermal module) Manufacturing and marketing of 87.63 87.63 87.63 computer components and peripherals and computer cases Ownership (%)
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.

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Ownership (%)

		Ownership (%)
Investor	Subsidiary	June 30, December June 30, Main BusinessActivities 2019 31,2018 2018 New alloy material, precision 100 100 100 molds, new electronic components, portable computers and their components Manufacturing and marketing of 12.37 12.37 12.37 computer components and related peripherals, computer cases and metal stamping Research, development, 70 70 70 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 100 100 100 automobile parts; manufacture and sale of aluminum alloy parts used for automobiles and electronics Manufacturing and marketing of 100 100 100 computer case – electronic and electrical components Manufacturing and marketing of 77.24 77.24 100 power plug and wall socket, micro ribbon connectors for terminals, etc.	Note
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.		(a) (b) (a) (b) (a) (b) (a) (b) (a) (b) (d)

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Ownership (%)
June 30, December June 30,
Investor Subsidiary Main Business Activities 2019 31, 2018 2018 Note
----- End of picture text -----

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

Co., Ltd.

(a) As the aforementioned subsidiaries do not meet the definition of significant subsidiaries, their financial statements for the second quarter of 2019 were not reviewed by independent accountants.
(b) As the aforementioned subsidiaries do not meet the definition of significant subsidiaries, their financial statements for the second quarter of 2018 were not reviewed by independent accountants.
(c) 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.
(d) 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.

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

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

(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 repru chase agveement 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.

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(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.
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

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 labour, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.

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(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.
C. When changes in an associate’s equity are not recognised in 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 capitalised.
B. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

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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.

(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.

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(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 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.

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(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.

(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.
- iii. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.
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

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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.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realise the asset and settle the liability simultaneously.
F. The interim period income tax expense is recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.
G. If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognises the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognised outside profit or loss is recognised in other comprehensive income or equity while the effect of the change on items recognised in profit or loss is recognised in profit or loss.

(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.

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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.
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:

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(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 June 30, 2019, information on the carrying amount of inventories is provided in Note 6(6).

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Cash equivalents Time deposits Repurchase Agreement Bond	June 30,2019 5,279 $ 33,529,124 20,648,436 132,000 54,314,839 $	December31,2018 224 $ 46,647,344 5,412,133 132,000 52,191,701 $	June 30,2018
			1,554 $ 29,256,282 20,484,220 45,000
			49,787,056 $

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. The Group has no cash and cash equivalents pledged to others. Time deposits with maturity in excess of three months on June 30, 2019, December 31, 2018 and June 30, 2018, have been listed under “financial assets at amortised cost-current”.

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

Assets June 30, 2019 December 31, 2018 June 30, 2018 Current items: Financial assets mandatorily measured at fair value through Derivatives $ 176,391 $ 567,640 $ 721,229 Non-current items: Financial assets mandatorily measured at fair value through profit or loss Fund $ 525,370 $ - $ - Liabilities Current items: Financial liabilities held for trading Derivatives $ - $ 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).
B. Amounts recognised in profit or loss in relation to financial assets and liabilities at fair value through profit or loss are listed below:

hrough profit or loss are listed below:
			Forthe three-monthperiods ended June 30,
			2019		2018
Financial assets and liabilities mandatorily
measured at fair value through profit or
loss
Derivatives		$	158,678	$	713,153
Fund	(		29,713)		-
		$	128,965	$	713,153
			Forthe six-monthperiods ended June 30,
			2019		2018
Financial assets and liabilities mandatorily
measured at fair value through profit or
loss
Derivatives		$	248,668	$	532,231
Fund	(		40,285)		-
		$	208,383	$	532,231

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C. The Group entered into contracts relating to derivative financial assets or liabilities which were not accounted for under hedge accounting. The information is listed below:

June 30, 2019

	June 30,2019	June 30,2019
Derivative instruments Current items: Cross currency swap contracts Foreign exchange contracts Derivative instruments Current items: Cross currency swap contracts Foreign exchange contracts Derivative instruments Current items: Cross currency swap contracts Foreign exchange contracts	Contract period 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 TWD (SELL) 4,567,904 2019/03~2020/03 USD (BUY) 152,000 Contract amount (Nominal Principal inthousands) December31,2018
	TWD (SELL) 1,900,275 USD (BUY) 65,000 TWD (SELL) 2,186,925 USD (BUY) 75,000 TWD (SELL) 7,708,750 USD (BUY) 250,000 TWD (SELL) 4,443,720 USD (BUY) 152,000 Contract amount (Nominal Principal inthousands) June 30, 2018	Contract period
		2018/03~2019/03 2018/04~2019/04 2018/12~2019/01 2018/03~2019/03
	TWD (SELL) 1,898,800 USD (BUY) 65,000 TWD (SELL) 2,186,925 USD (BUY) 75,000 TWD (SELL) 4,316,454 USD (BUY) 152,000 TWD (BUY) 6,226,874 USD (SELL) 216,143 Contract amount (Nominal Principal in thousands)	Contractperiod
		2018/03~2019/03 2018/04~2019/04 2018/03~2019/03 2018/3~2018/10

(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.

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(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.

D. 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.
E. 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	June30,2019 24,590,370 $	December31,2018 June 30, 2018 23,085,238 $ 48,634,138 $

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.
C. 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:

		Three-monthperiods ended June 30,	Three-monthperiods ended June 30,	Three-monthperiods ended June 30,
		2019		2018
Fair value change recognised in other
comprehensive income (loss)	($	890,776)	($	8,288,693)
		Six-monthperiods ended June 30,
		2019		2018
Fair value change recognised in other
comprehensive income (loss)	$	1,306,954	($	13,642,123)

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 three-month and sixmonth periods ended June 30, 2019 and 2018, the Group recognised gain (loss) amounting to ($11,155), ($6,676,386), $2,156,639 and ($12,457,843), respectively.

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(4) Financial assets at amortised cost

Items		June 30,2019	December31,2018	December31,2018		June 30,2018
Current items:
Capital guarantee financial	$	18,573,377	$	17,136,611	$	22,383,633
products
Time deposits with maturity
in excess of three months		4,404,270		527,286		8,905,800
	$	22,977,647	$	17,663,897	$	31,289,433
Non-current items:
Bank debentures-trust fund	$	4,070,102	$	5,367,399	$	5,519,400

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 3.9% to 4.05% and 3.5% to 4.9% for the six-month periods ended June 30, 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.”

For the first half of 2019, the Group cumulatively received returns in the amount of RMB 600 million in accordance with the investment agreement.

C. As of June 30, 2019, December 31, 2018 and June 30, 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.

(5) Notes and accounts receivable

Notes and accounts receivable
			June 30, 2019	December31,2018				June 30, 2018
Notes receivable		$	72,582	$	40,383		$	15,844
Accounts receivable			14,124,675		16,470,930			15,422,965
			14,197,257		16,511,313			15,438,809
Less: Allowance for bad debts	(		8,583)	(	6,400)	(		6,047)
		$	14,188,674	$	16,504,913		$	15,432,762

A. The Group does not hold any collateral as security.
B. Information relating to credit risk is provided in Note 12(2).

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(6) Inventories

Inventories
			June 30,2019	December31,2018					June 30,2018
Raw materials		$	719,143		$	782,637		$	1,410,836
Work in process			569,678			791,105			420,990
Finished goods			2,474,990			1,469,894			3,019,244
			3,763,811			3,043,636			4,851,070
Less: Allowance for inventory
obsolescence and market
price decline	(		130,613)	(		138,194)	(		169,764)
		$	3,633,198		$	2,905,442		$	4,681,306

The cost of inventories recognised as expense for the period:

			Three-monthperiods ended June 30,	Three-monthperiods ended June 30,	Three-monthperiods ended June 30,	Three-monthperiods ended June 30,
			2019			2018
Cost of inventories sold		$	20,422,318		$	29,965,288
Gain on inventory obsolescence and
market price decline	(		203,544)	(		147,448)
Revenue from sale of scraps	(		29,942)	(		47,468)
		$	20,188,832		$	29,770,372
			Six-monthperiods ended June 30,
			2019			2018
Cost of inventories sold		$	31,929,428		$	61,937,367
(Gain) loss on inventory obsolescence and
market price decline	(		8,455)			29,372
Revenue from sale of scraps	(		54,276)	(		127,385)
		$	31,866,697		$	61,839,354

As the Group sold some inventory with net realisable value lower than its cost, the allowance for inventory obsolescence and market price decline was reversed for the three-month periods ended June 30, 2019 and 2018 and six-month period ended June 30, 2019.

(7) Investments accounted for using equity method

Investees IDG Energy Investment Limited FE Holding USA, Inc. Syntrend Creative Park Co., Ltd. FSK Holdings Limited Foxstar Technology Co., Ltd.	June 30,2019 5,951,708 $ 2,401,818 282,628 103,802 10,491 8,750,447 $	December31,2018
		5,906,110 $ 2,397,867 286,222 111,311 11,780
		8,713,290 $

A. Investment income or loss for the period was recognised based on the investees’ financial statements which were not reviewed by independent accountants.

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B. 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 convertible bonds in 2019.
C. 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. For the six-month period ended June 30, 2018, the total investment amount was $496,538 (USD 16,700 thousand). For the year ended December 31, 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 21.09% since the Group did not participate in the capital increase proportionally to its ownership stake in 2019.
D. The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarised below:

		Three-month periods ended June 30,	Three-month periods ended June 30,	Three-month periods ended June 30,
		2019		2018
Loss for the period from continuing operations	($	122,525)	($	33,006)
Other comprehensive income, net of tax		23,822		5,630
Total comprehensive loss for the period	($	98,703)	($	27,376)

		Six-monthperiods ended June 30,
		2019		2018
Loss for the period from continuing operations	($	152,419)	($	58,162)
Other comprehensive income, net of tax		51,351		7,085
Total comprehensive loss for the period	($	101,068)	($	51,077)

E. The Group’s investment, IDG Energy Investment Limited, has quoted market prices. As of June 30, 2019, December 31, 2018 and June 30, 2018, the fair value was $6,496,430, $6,696,088 and $6,281,981, respectively.

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(8) Property, plant and equipment

Property, plant and equipment
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 June 30 At June 30 Cost Accumulated depreciation			2019
	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 $ 77,541 84,735 3,838 21,539 - - 6,671) ( 4,521) ( 443,587) ( 172,681) ( 32,191 3,119 2,283,147 $ 784,966 $ 22,441,465 $ 5,001,087 $ 20,158,318) ( 4,216,121) ( 2,283,147 $ 784,966 $
		8,509,762 $ 5,172,309) ( 3,337,453 $ 3,337,453 $ 81,156 199,391 141,262) ( 4,799) ( 207,646) ( 37,501 3,301,794 $ 8,738,558 $ 5,436,764) ( 3,301,794 $

~34~

2018

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 June 30 At June 30 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 $ - 164,758 442,252 406,377 - 52,977 91,962 1,319 - 46,149) ( - - - 4,731) ( 246,644) ( 6,475) ( - 211,777) ( 594,279) ( 161,955) ( - 18,584 32,781 1,387 51,850 $ 2,919,907 $ 3,011,344 $ 884,364 $ 51,850 $ 7,794,197 $ 23,302,059 $ 5,007,500 $ - 4,874,290) ( 20,290,715) ( 4,123,136) ( 51,850 $ 2,919,907 $ 3,011,344 $ 884,364 $

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

(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:

Land use right Buildings and structures Others	June30,2019 Bookvalue 874,104 $ 1,106,301 24,058 2,004,463 $	Three-month period ended June30,2019
		Depreciationcharge
		8,570 $ 82,339 4,464
		95,373 $

D. For the three-month and six-month periods ended June 30, 2019, the additions to right-of-use assets were $0 and $9,914, respectively.
E. Information on profit or loss in relation to lease contracts is as follows:

Items affecting profit or loss Interest expense on lease liabilities Expense on leases of low-value assets	Three-month Six-month period ended period ended June30,2019 June 30, 2019 14,384 $ 29,773 $ 862 1,908

F. For the three-month and six-month periods ended June 30, 2019, the Group’s total cash outflow for leases were $110,378 and $222,955, respectively.
G. Information about the right-of-use assets that was pledged to others as collateral is provided in Note 8.
H. Information about 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 six-month period ended June 30, 2019, the Group recognised rent income in the amount of $90,006 based on the operating lease agreement, which does not include variable lease payments.

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

		June 30,2019
2019	$	90,743
2020		151,571
2021		151,571
2022		19,056
2023		3,309
2024		2,973
	$	419,223

(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 June 30 At June 30 Cost Accumulated depreciation and impairment		2019
	Land $ 95,910 - 95,910 $ $ 95,910 - - - 95,910 $ $ 95,910 - 95,910 $	Buildings and structures
		1,855,197 $ 981,087) ( 874,110 $ $ 874,110 141,262 48,498) ( 8,467 975,341 $ 2,013,068 $ 1,037,727) ( 975,341 $

~37~

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 June 30 At June 30 Cost Net exchange differences	Land Buildings and structures Total $ 95,910 1,451,442 $ 1,547,352 $ - 753,394) ( 753,394) ( 95,910 $ 698,048 $ 793,958 $ $ 95,910 $ 698,048 793,958 $ - 46,149 46,149 - 37,734) ( 37,734) ( - 4,054 4,054 95,910 $ 710,517 $ 806,427 $ $ 95,910 1,576,515 $ 1,672,425 $ - 865,998) ( 865,998) ( 95,910 $ 710,517 $ 806,427 $ 2018

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

property are shown below:
Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period	Three-monthperiods ended June 30,
	2019 2018 35,983 $ 30,046 $ 25,613 $ 18,978 $ Six-monthperiods endedJune30,	2018
		30,046 $
		18,978 $
	2019 84,356 $ 48,498 $	2018
		73,415 $
		37,734 $

B. The fair value of the investment property held by the Group as at June 30, 2019, December 31, 2018 and June 30, 2018 was $1,921,271, $1,920,639 and $1,288,499, respectively. Valuations were made using the income approach which is categorised within Level 3 in the fair value hierarchy.

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(12) Intangible assets

Patent rights and technicalskills January 1 Cost 589,672 $ Accumulated impairment - 589,672 $ At January 1 589,672 $ Amortisation 70,189) ( Net exchange differences 7,158 June 30 526,641 $ June 30 Cost 596,198 $ Accumulated impairment 69,557) ( 526,641 $	Goodwill Total 1,177,520 $ 1,767,192 $ - - 1,177,520 $ 1,767,192 $ 1,177,520 $ 1,767,192 $ - 70,189) ( 13,032 20,190 1,190,552 $ 1,717,193 $ 1,190,552 $ 1,786,750 $ - 69,557) ( 1,190,552 $ 1,717,193 $ 2019

A. The information relating to business combination is provided in Note 6(29).
B. Goodwill allocated to the cash-generating units of production and sales of mechanical components’ operating segments amounts to $1,190,552.
(13) Other non-current assets

Receivable from payment on behalf of others Long-term prepaid rents Prepayments for equipment Other assets - others	June 30, 2019 596,234 $ - 37,096 48,568 681,898 $	December 31, 2018 589,708 $ 871,945 37,552 59,175 1,558,380 $	June 30,2018 602,842 $ 553,039 44,392 50,758 1,251,031 $

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 expenses of $3,540 and $7,037 for the three-month and six-month periods ended June 30, 2018, respectively.
B. Information on long-term prepaid rents classified to right-of-use assets since January 1, 2019 is provided in Note 6(9).

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(14) Short-term loans

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 Type of loans Bank loans Unsecured loans Other short-term loans	June30,2019 44,771 $ 24,419,492 99,490 24,563,753 $ December31,2018 13,778,627 $ 98,402 13,877,029 $ June30,2018 27,949,957 $ 101,189 28,051,146 $	Interest rate range 5.65% 0.59%~5.09% 4.35% Interestraterange	Collateral
			Land use right None " Collateral None " Collateral
		0.69%~5.09% 4.35% Interest rate range
		0.49%~5.00% 4.35%	None "

A. Information about abovementioned collateral is provided in Note 8.
B. The Group has signed an agreement to offset financial assets and liabilities with financial institutions. On June 30, 2018, the offset balance of such financial assets and liabilities was $0. Details of the offset as of June 30, 2019 and December 31, 2018 are as follows:

June 30, 2019

	June 30,2019
Gross amount of recognised financial liabilities 503,451 $	Gross amount of recognised financial assets in the balance sheet 503,451 $ December31,2018	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
		- $

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(15) Other payables

Other payables
Dividends payable Payable for purchases made by parties on behalf of others Awards and salaries payable Employees’ compensation payable Consumption goods expense payable Payable on mold expense Payables for miscellaneous purchase Processing fees payable Payable for purchases made by parties on behalf of others - related parties Payables for equipment Payable for investments Others	June 30,2019 4,526,353 $ 3,454,818 1,719,786 1,561,516 1,386,655 871,576 373,589 262,261 204,230 63,217 - 1,522,217 15,946,218 $	December31,2018 - $ 413,314 2,304,170 1,398,777 1,168,506 1,392,253 347,573 320,983 287,304 447,938 4,144,880 1,542,387 13,768,085 $	June 30,2018
			5,092,147 $ 2,925,477 2,163,375 1,293,674 1,197,037 561,714 398,103 - 3,139,441 - - 2,333,584
			19,104,552 $

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

(16) Pensions

A. Defined benefit plans

(a) The Company and its domestic subsidiaries have 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 and its domestic subsidiaries contribute 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) For the aforementioned pension plan, the Group recognised pension costs of $413, $502, $794 and $995 for the three-month and six-month periods ended June 30, 2019 and 2018, respectively.
(c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2020 are $1,600.

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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 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 threemonth and six-month periods ended June 30, 2019 and 2018 were $167,424, $202,038, $361,906 and $399,244, respectively.
(17) Share capital

As of June 30, 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 paidin 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 capitalised 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

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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.
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 summarised below:

Legal reserve Special reserve Cash dividends	Dividends per Dividends per Amount share (indollars) 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 endedDecember31, 2018 2017	Dividends per Dividends per Amount share (indollars) 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 endedDecember31, 2018 2017
		Dividends per Amount share (in dollars) 996,539 $ - 5,092,147 3.6 $ 6,088,686 $

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

2019

At January 1 Revaluation of fair value Currency translation differences: - Group - Associates At June 30	Unrealised gain (loss) on financial assets at fair value through other Currency comprehensive translation income adjustments Total 2,531,519 $ 2,578,011) ($ 46,492) ($ 1,306,954 - 1,306,954 - 1,154,285 1,154,285 - 51,351 51,351 3,838,473 $ 1,372,375) ($ 2,466,098 $

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2018

					2018
		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		41,569,491	(		41,569,491)	-		-
Revaluation of fair value	(	13,642,123)			-	-	(	13,642,123)
Currency translation
differences:
- Group		-			-	1,345,817		1,345,817
- Associates		-			-	7,085		7,085
At June 30		27,927,368 $		$	-	1,233,387) ($		26,693,981 $

(21) Non-controlling interests

Six-month periods ended June 30,

2019 At January 1 78,273 $ Shares attributable to non-controlling interests: (Loss) profit for the period 2,844) ( Currency translation differences 892 At June 30 76,321 $	2018 75,794 $ 516 465
	76,775 $

(22) Operating revenue

Operating revenue
Revenue from contracts with customers Revenue from contracts with customers	Three-monthperiods ended June 30,
	2019 2018 22,820,411 $ 32,704,271 $ Six-monthperiods ended June 30,	2018
		32,704,271 $
	2019 35,527,706 $	2018
		66,799,430 $

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

Three-month period ended June 30, 2019

Revenue from contracts with customers	Electronic Production and products sales of mechanical tradingservices components 13,499,437 $ 9,261,994 $	Others 58,980 $	Total
			22,820,411 $

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Other income Electronic Production and products sales of mechanical trading services components Others Total Revenue from contracts with customers 21,750,334 $ 10,918,229 $ 35,708 $ 32,704,271 $ Electronic Production and products sales of mechanical trading services components Others Total Revenue from contracts with customers 18,774,299 $ 16,638,403 $ 115,004 $ 35,527,706 $ Electronic Production and products sales of mechanical trading services components Others Total Revenue from contracts with customers 42,585,993 $ 24,145,379 $ 68,058 $ 66,799,430 $ Three-monthperiod ended June 30,2018 Six-monthperiod ended June 30,2019 Six-month period ended June 30, 2018 2019 2018 Interest income: Interest income from bank deposits 335,819 $ 417,715 $ Interest income from capital guarantee financial products 483,223 277,431 Government grants revenue 2,716 6,111 Rental revenue 39,559 35,014 Dividend income 364,464 173,761 Others 21,607 53,533 1,247,388 $ 963,565 $ Three-monthperiods ended June 30,	Electronic Production and products sales of mechanical trading services components Others 21,750,334 $ 10,918,229 $ 35,708 $ Electronic Production and products sales of mechanical trading services components Others 18,774,299 $ 16,638,403 $ 115,004 $ Three-monthperiod ended June 30,2018 Six-monthperiod ended June 30,2019 Six-month period ended June 30, 2018	Total
		32,704,271 $ Total
		35,527,706 $

		Total
		66,799,430 $

(23) Other income

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Interest income: Interest income from bank deposits Interest income from capital guarantee financial products Government grants revenue Rental revenue Dividend income Others	Six-monthperiods ended June 30,	Six-monthperiods ended June 30,
	2019 694,054 $ 629,167 200,724 90,006 364,464 44,052 2,022,467 $	2018
		747,135 $ 348,347 101,345 88,303 173,761 86,478
		1,545,369 $

(24) Other gains and losses

Other gains and losses
			Three-monthperiods endedJune30,
			2019			2018
Gains on disposal of property, plant and equipment		$	64,804		$	213,427
Net currency exchange gains (losses)			63,919	(		500,376)
Gains on financial assets (liabilities) at fair value
through profit or loss			128,965			713,153
Others	(		48,535)	(		26,169)
		$	209,153		$	400,035
			Six-monthperiods ended June 30,
			2019			2018
Gains on disposal of property, plant and equipment		$	134,302		$	214,411
Net currency exchange losses	(		118,268)	(		690,143)
Gains on financial assets (liabilities) at fair value
through profit or loss			208,383			532,231
Others	(		75,474)	(		42,756)
		$	148,943		$	13,743

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(25) Expenses by nature

Three-month periods ended June 30,

Employee benefit expense Depreciation Amortisation

	2019		2018
$	2,056,754	$	2,605,980
	527,318		523,681
	41,605		5,647
$	2,625,677	$	3,135,308
	Six-monthperiods ended		June 30,
	2019		2018
$	4,023,062	$	4,750,377
	1,059,356		1,005,745
	70,189		10,429
$	5,152,607	$	5,766,551

(26) Employee benefit expense

Three-month periods ended June 30,

Employee benefit expense	Three-monthperiods ended June 30,	Three-monthperiods ended June 30,
Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses	2019 2018 1,572,016 $ 2,108,575 $ 89,226 94,081 167,837 202,540 227,675 200,784 2,056,754 $ 2,605,980 $ 2019 2018 3,086,729 $ 3,733,444 $ 182,562 190,767 362,700 400,239 391,071 425,927 4,023,062 $ 4,750,377 $ Six-monthperiods ended June 30,
		3,733,444 $ 190,767 400,239 425,927
		4,750,377 $

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 three-month and six-month periods ended June 30, 2019 and 2018, employees’ compensation was accrued at $133,805, $108,416, $187,383 and $144,416, respectively. The aforementioned amounts were recognised in salary expenses. For the six-month periods ended June 30, 2019 and 2018, the employees’ compensation was estimated and accrued based on 6% and 4% of profit of current year distributable as of the end of reporting period.

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C. Employees’ compensation for 2018 and 2017 as resolved by the Board of Directors was in agreement with those amounts recognised in the 2018 and 2017 financial statements. In 2018 and 2017, the employees’ compensation was distributed in the form of cash amounting to $666,180 and $457,835, respectively.
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:
			Three-monthperiods ended June 30,
			2019		2018
Current tax:
Current tax on profits for the period		$	231,589	$	426,114
Tax on undistributed surplus earnings			181,368		386,685
Prior year income tax overestimation	(		141,807)	(	103,149)
Total current tax			271,150		709,650
Deferred tax:
Origination and reversal of temporary
differences			10,885		11,640
Income tax expense		$	282,035	$	721,290

			Six-month periods ended June 30,
			2019		2018
Current tax:
Current tax on profits for the period		$	460,138	$	725,812
Tax on undistributed surplus earnings			181,368		386,685
Prior year income tax overestimation	(		141,807)	(	103,149)
Total current tax			499,699		1,009,348
Deferred tax:
Origination and reversal of temporary
differences	(		92,730)	(	103,188)
Impact of change in tax rate			-		93,723
Income tax expense		$	406,969	$	999,883

B. The Company’s income tax returns through 2016 have been assessed and approved by the Tax Authority.
C. 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.

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(28) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares 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) 1,875,465 $ 1,414,485 1.33 $ 1,875,465 $ - 2,970 1,875,465 $ 1,417,455 1.32 $ Three-monthperiod endedJune30,2019 Three-monthperiod endedJune30,2018
	Amount aftertax 1,659,821 $ 1,659,821 $ - 1,659,821 $	Weighted average number of ordinary shares outstanding (sharesinthousands) 1,414,485 7,480 1,421,965	Earnings per share (indollars)
			1.17 $
			1.17 $

~49~

Weighted average number of ordinary Earnings Amount shares outstanding per share aftertax (sharesinthousands) (indollars) 2,676,859 $ 1,414,485 1.89 $ 2,676,859 $ - 9,983 2,676,859 $ 1,424,468 1.88 $ Six-monthperiod endedJune30,2019 Six-monthperiod endedJune30,2018	Weighted average number of ordinary Earnings Amount shares outstanding per share aftertax (sharesinthousands) (indollars) 2,676,859 $ 1,414,485 1.89 $ 2,676,859 $ - 9,983 2,676,859 $ 1,424,468 1.88 $ Six-monthperiod endedJune30,2019 Six-monthperiod endedJune30,2018	Weighted average number of ordinary Earnings Amount shares outstanding per share aftertax (sharesinthousands) (indollars) 2,676,859 $ 1,414,485 1.89 $ 2,676,859 $ - 9,983 2,676,859 $ 1,424,468 1.88 $ Six-monthperiod endedJune30,2019 Six-monthperiod endedJune30,2018
Amount aftertax 2,690,364 $ 2,690,364 $ - 2,690,364 $	Weighted average number of ordinary shares outstanding (sharesinthousands) 1,414,485 8,325 1,422,810	Earnings per share (indollars)
		1.90 $
		1.89 $

(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 the Champ Tech Optical (Foshan) Corporation from Function Well Limited, which is the subsidiary of Hon Hai Precision Industry Co., Ltd. and 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.

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B. The following table summarises 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 three-month and six-month periods ended June 30, 2018 would show operating revenue of $33,309,454 and $67,628,826 as well as profit before income tax of $2,485,644 and $3,856,329, respectively.

(30) Supplemental cash flow information

Investing activities with partial cash payments:

Supplemental cash flow information Investing activities with partial cash payments:
			Six-monthperiods ended		June 30,
			2019		2018
Purchase of property, plant and equipment		$	364,854	$	1,133,856
Add: Opening balance of payable on equipment			447,938		341,843
Less: Ending balance of payable on equipment	(		63,217)	(	387,189)
Cash paid during the period		$	749,575	$	1,088,510

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			Six-monthperiods ended	Six-monthperiods ended	Six-monthperiods ended	June 30,
			2019			2018
Disposal of property, plant and equipment		$	150,293		$	472,261
Add: Opening balance of receivable on equipment			47,250			2,254
Less: Ending balance of receivable on equipment	(		103,676)	(		293,348)
Cash received during the period		$	93,867		$	181,167

(31) Changes in liabilities from financing activities

For the six-month periods ended June 30, 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, non-cash 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

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Names of related parties Relationship with the Group
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information. LATED PARTY TRANSACTIONS Names of related parties and relationship Names of related parties	Relationship with the Group
Hon Hai Precision Industry Co., Ltd. and Subsidiaries	Entities with significant influence to
(Hon Hai and Subsidiaries)	the Group
Function Well Limited	`〞`
Foxconn Precision Electronics (Taiyuan) Co., Ltd.	`〞`
Foxstar Technology Co., Ltd.	Associate of the Group
Pan-International Industrial Corporation and Subsidiaries	Other related party
Eson Precision Ind. Co., Ltd. and Subsidiaries	`〞`
Sharp Corporation and Subsidiaries	`〞`
Innolux Corporation	`〞`
CyberTAN Technology Inc. and Subsidiaries	`〞`
FOXSEMICON INTEGRATED TECHNOLOGY	`〞`
(Shanghai) INC.
Foxconn Global Network	`〞`
Qingdao Haiyuan Industrial Co., Ltd.

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(2) Significant related party transactions

A. Sales

Sales of goods and services: Entities with significant influence to the Group -Hon Hai and Subsidiaries Other related parties Sales of goods and services: Entities with significant influence to the Group -Hon Hai and Subsidiaries Other related parties	2019 2018 6,794,075 $ 10,281,955 $ 10,131 30,643 6,804,206 $ 10,312,598 $ 2019 2018 11,922,942 $ 23,240,805 $ 34,260 63,577 11,957,202 $ 23,304,382 $ Three-monthperiods endedJune30, Six-monthperiods ended June 30,

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.

B. Purchases

Purchases
Purchases of goods and services: Entities with significant influence to the Group -Hon Hai and Subsidiaries Other related parties Purchases of goods and services: Entities with significant influence to the Group -Hon Hai and Subsidiaries Other related parties	Three-monthperiods endedJune30,
	2019 2018 14,728,126 $ 21,209,845 $ 1,029,594 997,103 15,757,720 $ 22,206,948 $ Six-month periods ended June 30,	2018
		21,209,845 $ 997,103
		22,206,948 $
	2019 19,623,323 $ 1,563,941 21,187,264 $	2018
		43,640,878 $ 1,951,677
		45,592,555 $

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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

			June 30,2019	December31,2018	December31,2018			June 30,2018
Accounts receivable:
Entities with significant
influence to the Group
-Hon Hai and Subsidiaries		$	12,030,784	$	15,608,822		$	13,406,964
Other related parties			12,523		30,740			20,581
			12,043,307		15,639,562			13,427,545
Less: Allowance for
uncollectible accounts	(		3,637)	(	4,698)	(		4,073)
			12,039,670		15,634,864			13,423,472
Other receivables-purchases
made on behalf of
associates:
Entities with significant
influence to the Group
-Hon Hai and Subsidiaries			4,232,491		431,926			1,299,918
Other receivables-sale of
property, plant and
equipment:
Entities with significant
influence to the Group
-Hon Hai and Subsidiaries			17,300		32,245			293,348
			4,249,791		464,171			1,593,266
		$	16,289,461	$	16,099,035		$	15,016,738

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.

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D. Payables to related parties

Payables to related parties
Accounts payable: Entities with significant influence to the Group -Hon Hai and Subsidiaries Other related parties Other payables: Entities with significant influence to the Group -Hon Hai and Subsidiaries Payables for investments Purchases made by associates on behalf of the Company Management service fees Payables for equipment Others	June 30,2019 12,181,189 $ 1,074,908 13,256,097 - 204,230 154 24,220 428,540 657,144 13,913,241 $	December31,2018 17,215,433 $ 1,166,268 18,381,701 4,144,880 287,304 314,305 305,264 1,321,178 6,372,931 24,754,632 $	June 30,2018
			13,984,482 $ 663,949 14,648,431 - 3,139,441 44,404 346,067 1,231,841
			4,761,753
			19,410,184 $

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

Management service fees payable
Management service fees Entities with significant influence to the Group -Hon Hai and Subsidiaries Management service fees Entities with significant influence to the Group -Hon Hai and Subsidiaries	Three-monthperiods ended June 30,
	2019 2018 129,554 $ 114,119 $ Six-monthperiods endedJune30,	2018
		114,119 $
	2019 335,567 $	2018
		326,121 $

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F. Raw materials purchased on behalf of others

F. Raw materials purchased on behalf of others
G. Property transactions (a) Acquisition of property: 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 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 Acquisition of property, plant and equipment: Entities with significant influence to the Group -Hon Hai and Subsidiaries Acquisition of property, plant and equipment: Entities with significant influence to the Group -Hon Hai and Subsidiaries	2019 2018 5,483,352 $ 4,392,842 $ 107,905 1,751,056 5,591,257 $ 6,143,898 $ 2019 2018 6,786,942 $ 9,927,822 $ 1,075,535 3,591,520 7,862,477 $ 13,519,342 $ Three-monthperiods endedJune30, Six-month periods ended June 30, 2019 2018 70,908 $ 217,743 $ 2019 2018 76,075 $ 366,420 $ Three-monthperiods ended June 30, Six-monthperiods endedJune30,
		2018 366,420 $

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

roceeds from sale of property, plant and equipment:	roceeds from sale of property, plant and equipment:	roceeds from sale of property, plant and equipment:	roceeds from sale of property, plant and equipment:
Proceeds from Proceeds from sale of property, sale of property, Sale of property, plant and plant and plant and equipment: equipment Gain equipment Gain Entities with significant influence to the Group -Hon Hai and Subsidiaries 18,344 $ 16,698 $ 289,526 $ 202,594 $ Three-monthperiods ended June 30, 2019 2018 Proceeds from Proceeds from sale of property, sale of property, Sale of property, plant and plant and plant and equipment: equipment Gain equipment Gain Entities with significant influence to the Group -Hon Hai and Subsidiaries 25,807 $ 23,874 $ 301,417 $ 201,699 $ Six-monthperiods ended June 30, 2019 2018
			202,594 $

	2019	Proceeds from sale of property, plant and Gain equipment 23,874 $ 301,417 $ 2018
			Gain
			201,699 $

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 to the Group. Rental contracts are typically made for periods of 1 to 5 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 three-month and six-month periods ended June 30, 2019 from related parties amounting to $0 and $1,081, respectively. 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:

se liabilities: Outstanding balance:
Current: Entities with significant influence to the Group Non-current: Entities with significant influence to the Group	June30,2019
	146,459 $
	253,109 $

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ii. Interest expense

Entities with significant influence to the Group	Three-month period Six-month period ended June 30, 2019 ended June 30, 2019 5,102 $ 10,687 $

I. Loans to/ from related parties: Loans from related parties
(a) Outstanding balance:

June 30,2019 Other related parties 99,490 $	December31,2018 June 30,2018 98,402 $ 101,189 $

(b) Interest expense

nterest expense
Other related parties Other related parties	Three-monthperiods ended June 30,
	2019 2018 1,116 $ 1,188 $ Six-month periods ended June 30,
	2019 2,208 $	2018
		2,730 $

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 three-month and six-month periods ended June 30, 2019 and 2018 were $29,523, $23,935, $56,371 and $46,702, respectively.

(3) Key management compensation

for the three-month and six-month periods endedJu $56,371 and $46,702, respectively. Key management compensation	ne 30, 2019 and 2018 were $29,523, $23,93	ne 30, 2019 and 2018 were $29,523, $23,93
Salaries and other short-term employee benefits Post-employment benefits Salaries and other short-term employee benefits Post-employment benefits	Three-monthperiods ended June 30,
	2019 2018 2,269 $ 2,048 $ 131 121 2,400 $ 2,169 $ Six-monthperiods ended June 30,	2018
		2,048 $ 121
		2,169 $
	2019 6,332 $ 261 6,593 $	2018
		5,656 $ 246
		5,902 $

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8. PLEDGED ASSETS

On June 30, 2019 and 2018, the book value of the Group’s assets pledged as collateral is as follows:

Book value

Pledge assets June 30, 2019 June 30, 2018 Purpose Land use right (shown as Short-term loans ‘right-of-use assets’) $ 119,218 $ - SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

(1) Contingencies

None.

(2) Commitments

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

June 30, 2019 December 31, 2018 June 30, 2018 Property, plant and equipment $ 117,997 $ 233,593 $ 289,775

B. Operating lease commitments:

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

dormitory 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 $	June 30, 2018
		405,679 $ 1,418,729 -
		1,824,408 $

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

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 is calculated as “equity” as shown in the consolidated balance sheet less total intangible assets capital.

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

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(2) Financial instruments

A. 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	June30,2019 701,761 $ 24,590,370 112,498,464 137,790,595 $ - $ 60,647,246 1,143,323 61,790,569 $	December31,2018 567,640 $ 23,085,238 108,433,480 132,086,358 $ 39,992 $ 54,195,998 - 54,235,990 $	June30,2018
			721,229 $ 48,634,138 117,934,006
			167,289,373 $
			- $ 67,650,641 -
			67,650,641 $

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 enters into, please refer to Note 6(2).

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(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 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:

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June 30, 2019

		June30,2019
(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 HKD`：`NTD USD`：`RMB (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 (inthousands) 680,660 $ 460,609 3,643,610 554,585 1,091,321 233,106	Exchange Book value rate (NTD) 31.06 21,141,300 $ 6.8747 3,166,549 31.06 113,170,525 31.06 17,225,410 3.98 4,340,184 6.8747 1,602,534 December31,2018	Degree of variation 1% 1% 1% 1% 1%	Effect on profit or loss
				211,413 $ 31,665 172,254 43,402 16,025
	Foreign currency amount (inthousands) 512,724 522,009 3,506,812 783,808 211,022	Exchange Book value rate (NTD) 30.72 15,750,881 $ 6.8632 16,036,116 30.72 107,729,262 30.72 24,078,582 6.8632 6,482,596	Degree of variation 1% 1% 1% 1%	Effect on profit or loss
				157,509 $ 160,361 240,786 64,826

~62~

Foreign currency amount (inthousands) (Foreign currency: functional currency) Financial assets Monetary items USD`：`NTD 620,402 USD`：`RMB 391,133 Non-monetary items Foreign operations USD`：`NTD 4,250,868 Financial liabilities Monetary items USD`：`NTD 1,125,492 USD`：`RMB 392,104	Degree Exchange Book value of Effect on rate (NTD) variation profit or loss 30.46 18,897,445 $ 1% 188,974 $ 6.6166 11,913,911 1% 119,139 30.46 129,481,434 30.46 34,282,486 1% 342,825 6.6166 11,943,488 1% 119,435 June30,2018

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 three-month and six-month periods ended June 30, 2019 and 2018 amounted to $63,919, ($500,376), ($118,268) and ($690,143), 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 increase/decrease $245,904 and $561,224 for the six-month periods ended June 30, 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 increase/decrease by $196,510 and $224,409 for the six-month periods ended June 30, 2019 and 2018, respectively.

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(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 reorganisation 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:

Not past due 0 to 90 days 91 to 180 days 181 to 270 days 271 to 360 days Over 361 days	June 30,2019 23,036,850 $ 2,621,376 357,173 159,543 53,358 12,264 26,240,564 $	December 31, 2018 23,335,285 $ 8,315,469 407,623 50,835 31,115 10,548 32,150,875 $	June 30,2018
			23,915,882 $ 4,543,663 300,377 41,393 33,605 15,590
			28,850,510 $

The above ageing analysis was based on past due date.

v. As of June 30, 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.

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vi. The Group assesses the expected credit losses of accounts receivable (including those from related parties) as follows:
(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 June 30, 2019, December 31, 2018 and June 30, 2018, the loss allowance for accounts receivable (including those from related parties), assessed using loss rate or provision matrix, is as follows:

June 30, 2019 Expected loss rate Total book value Allowance for uncollectible accounts December 31, 2018 Expected loss rate Total book value Allowance for uncollectible accounts June30,2018 Expected loss rate Total book value Allowance for uncollectible accounts	Group1and2 0.03% 23,119,871 $ 7,231 $ Group1and2 0.03% 28,836,795 $ 8,633 $ Group1and2 0.03% 26,337,943 $ 7,933 $	Group 3 0.07% 2,405,959 $ 1,770 $ Group 3 0.07% 2,579,666 $ 1,804 $ Group 3 0.07% 2,025,083 $ 1,418 $	Group4 0.35%~2.59% 714,734 $ 3,219 $ Group4 0%~2.27% 734,414 $ 661 $ Group4 0.01%~0.39% 487,484 $ 769 $	Total
				26,240,564 $
				12,220 $
				Total
				32,150,875 $
				11,098 $
				Total
				28,850,510 $
				10,120 $

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.

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

but not impaired is as follows:
			2019
At January 1		$	11,098
Provision for impairment			1,057
Effect of foreign exchange			65
At June 30		$	12,220
			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	(		6,875)
Effect of foreign exchange			152
At June 30		$	10,120

(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 June 30, 2019, December 31, 2018 and June 30, 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.

June 30, 2019 Lease liability		Less than 1 year		Between 1 to 2 years		Over 2years	Total
		356,276 $		344,341 $		579,296 $	1,279,913 $

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

June 30, 2019 Level 1 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 24,590,370 $ Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Derivative instruments - $	Level 2 176,391 $ - $ - $ - $	Level3 - $ 525,370 $ - $ - $	Total
			176,391 $
			525,370 $
			24,590,370 $
			- $

~67~

December 31, 2018		Level 1		Level 2		Level3		Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
Derivative instruments	$	-	$	567,640	$	-	$	567,640
Financial assets at fair
value
through other
comprehensive income
Equity instruments	$	23,085,238	$	-	$	-	$	23,085,238
Liabilities
Recurring fair value measurements
Financial liabilities at fair value
through profit or loss
Derivative instruments	$	-	$	39,992	$	-	$	39,992
June 30, 2018		Level 1		Level 2		Level3		Total
Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
Derivative instruments	$	-	$	721,229	$	-	$	721,229
Financial assets at fair
value
through other
comprehensive income
Equity instruments	$	3,645,011	$	44,989,127	$	-	$	48,634,138

(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.

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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 six-month periods ended June 30, 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 June 30, 2019 pertain to the investment fund partnership invested through the subsidiary, Hon Fujin Precision Industry (Taiyuan) Co., 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.

Non- derivative equity instrument: Private equity fund investment	Fair value Significant at June 30, Valuation Unobservable 2019 Technique Input Net asset value Not 525,370 $ and market applicable price method	Range (weighted average) Not applicable	Relationship of inputs to fairvalue
			Not applicable

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:

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June 30, 2019 Recognised in profit or loss Input Change Favourable change Unfavourable change Financial assets Other $ 525,370 ±1% $ 5,254 ($ 5,254)

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

For disclosure of investees, except for Q-RUN Holdings Ltd., Huazhun Investment Co., Ltd., Q- RUN Far East Corporation, World Trade Trading Ltd., High Tempo International Ltd., Foxconn Technology Pte. Ltd., Eastern Star Limited and Hon Fujin Precision Industry (Taiyuan) Co., Ltd., the remaining financial statements of Mainland China investees were not reviewed by independent accountants, and the following inter-company transactions within the Group were eliminated when preparing the consolidated statements. Following disclosure information is for reference only.

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.

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)

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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) External revenue Inter-segment revenue Segment revenue Measurement of segment profit or loss Depreciation and amortisation Interest income Interest expense Total segment assets (Note)	Three-monthperiod ended June 30,2019
	Electronic Production and products sales of mechanical trading services components Total 13,499,437 $ 9,261,994 $ 22,761,431 $ 292,021 699,858 991,879 13,791,458 $ 9,961,852 $ 23,753,310 $ 634,383 $ 1,120,038 $ 1,754,421 $ 1,731 $ 523,420 $ 525,151 $ 47,609 $ 771,582 $ 819,191 $ 74,988 $ 12,055 $ 87,043 $ - $ - $ - $ Three-monthperiod ended June 30,2018		Total
			22,761,431 $ 991,879
			23,753,310 $
			1,754,421 $
			525,151 $
			819,191 $
			87,043 $
			- $
	Electronic products trading services 21,750,334 $ 64,158 21,814,492 $ 835,475 $ 3,628 $ 94,528 $ 152,085 $ - $	Production and sales of mechanical components 10,918,229 $ 1,796,412 12,714,641 $ 540,718 $ 524,088 $ 600,464 $ 10,392 $ - $	Total
			32,668,563 $ 1,860,570
			34,529,133 $
			1,376,193 $
			527,716 $
			694,992 $
			162,477 $
			- $

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Six-month period ended June 30, 2019

	Six-monthperiod ended June 30,2019	0,2019
External revenue Inter-segment revenue Segment revenue Measurement of segment profit or loss Depreciation and amortisation Interest income Interest expense Total segment assets (Note) 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 Production and products sales of mechanical trading services components Total 18,774,299 $ 16,638,403 $ 35,412,702 $ 421,738 1,027,255 1,448,993 19,196,037 $ 17,665,658 $ 36,861,695 $ 1,093,635 $ 1,446,091 $ 2,539,726 $ 3,810 $ 961,532 $ 965,342 $ 103,911 $ 1,218,920 $ 1,322,831 $ 144,785 $ 20,660 $ 165,445 $ - $ - $ - $ Electronic Production and products sales of mechanical trading services components Total 42,585,993 $ 24,145,379 $ 66,731,372 $ 123,476 2,951,612 3,075,088 42,709,469 $ 27,096,991 $ 69,806,460 $ 1,487,813 $ 1,032,399 $ 2,520,212 $ 7,089 $ 1,005,739 $ 1,012,828 $ 200,680 $ 894,487 $ 1,095,167 $ 259,008 $ 20,679 $ 279,687 $ - $ - $ - $ Six-monthperiod endedJune30,2018	Total
		35,412,702 $ 1,448,993
		36,861,695 $
		2,539,726 $
		965,342 $
		1,322,831 $
		165,445 $
		- $
		66,731,372 $ 3,075,088
		69,806,460 $
		2,520,212 $
		1,012,828 $
		1,095,167 $
		279,687 $
		- $

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

(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 three-month and six-month periods ended June 30, 2019 and 2018 is provided as follows:

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Three-month periods ended June 30,
Operating revenue 2019 2018
Reportable segments income $ 23,753,310 $ 34,529,133
Other segments income 58,980 35,708
Elimination of inter-segment revenue ( 991,879) ( 1,860,570)
Total corporate revenue $ 22,820,411 $ 32,704,271
Six-month periods ended June 30,
Operating revenue 2019 2018
Reportable segments income $ 36,861,695 $ 69,806,460
Other segments income 115,004 68,058
Elimination of inter-segment revenue ( 1,448,993) ( 3,075,088)
Total corporate revenue $ 35,527,706 $ 66,799,430
Three-month periods ended June 30,
Profit and loss 2019 2018
Profit of reported segment $ 1,754,421 $ 1,376,193
Profit of other operating segments 118,576 290,800
Profit before income tax $ 1,872,997 $ 1,666,993
Six-month periods ended June 30,
Profit and loss 2019 2018
Profit of reported segment $ 2,539,726 $ 2,520,212
Profit of other operating segments 134,289 170,668
Profit before income tax $ 2,674,015 $ 2,690,880
----- End of picture text -----

~73~

Foxconn Technology Co., Ltd. and Subsidiaries

Table 1

Loans to others

For the six-month period ended June 30, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Reason for short-term financing Allowance for doubtful accounts Maximum outstanding balance during the six-month period ended June 30,2019 Balance at June 30,2019 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 $ 668,886 $ 668,886 $ 4.35000% Short-term financing $ - Business operation $ - 2 Q-Run Holdings Ltd. YanTai Fuzhun Precision Electronics Co., Ltd. Other receivables Y 632,200 621,680 621,680 2.66513% Short-term financing - Business operation -	None $ - None -	4,079,563 $ 30,065,930	16,318,252 $ 60,131,680	Note 1 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

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures) For the six-month period ended June 30, 2019

Foxconn Technology Co., Ltd. and Subsidiaries

For the six-month period ended June 30, 2019
Table 2 Securities held by Marketable securities Relationship with the securities issuer General ledger account		Bookvalue Ownership (%) Fairvalue Expressed in thousands of NTD (Except as otherwise indicated) Note As ofJune30,2019
	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. 〞〞 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 〞 Bank of China for RMB Continuous Serial Deposits 〞 Financial assets at amortised cost - current 〞 Bank of Beijing for RMB public structured deposits - 03 〞〞〞 Bank of Beijing for RMB public structured deposits - 04 〞〞〞 Bank of Beijing for RMB public structured deposits - 05 〞〞〞 Bank of Beijing for RMB public structured deposits - 06 〞〞〞 Bank of Beijing for RMB public structured deposits - 08 〞〞〞 Bank of Beijing for RMB public structured deposits - 09 〞〞 Fuzhun Precision (Hebi) Electronics Co., Ltd. Liduoduo (19JG1585) RMB public structured deposits 〞〞 Fu Rui Precision Components (Kunshan) Co., Ltd Shanghai Pudong Development Bank for Liduoduo (19JG1213) RMB public structured deposits 〞〞 Fu Yu Precision Components (Kunshan) Co., Ltd. Shanghai Pudong Development Bank for Liduoduo (19JG1213) RMB public structured deposits 〞〞 Shanghai Pudong Development Bank for Liduoduo (19JG1519) RMB public structured deposits 〞〞 Shanghai Pudong Development Bank for Liduoduo (19JG1574) RMB public structured deposits 〞〞 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 64,640,000 - - - - - - - - - - - - - - - -	150,530 $ 25,542 934,988 15 887,200 113,162 408,888 22,070,045 525,370 904,841 2,267,886 2,266,367 2,266,213 2,265,960 2,262,400 1,357,290 2,713,675 227,456 682,368 1,132,559 226,362 904,460 2,261,182 904,460	3.05 150,530 $ 0.21 25,542 1.28 934,988 - 15 1.22 887,200 5.13 113,162 2.51 408,888 12.14 22,070,045 9.09 525,370 - 904,841 - 2,267,886 - 2,266,367 - 2,266,213 - 2,265,960 - 2,262,400 - 1,357,290 - 2,713,675 - 227,456 - 682,368 - 1,132,559 - 226,362 - 904,460 - 2,261,182 - 904,460

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

For the six-month period ended June 30, 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		Balance a	s at June 30,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Book value 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 〞 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 (19JG1585) 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 〞 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 〞	- RMB 350,000 thousand - RMB 350,000 thousand - - - - - - - - - - - RMB 130,000 thousand - - - RMB 250,000 thousand - - - - - -	- - - - - RMB 300,000 thousand - RMB 300,000 thousand - RMB 400,000 thousand - RMB 600,000 thousand - RMB 600,000 thousand - - - RMB 200,000 thousand - - - RMB 250,000 thousand - RMB 100,000 thousand - RMB 150,000 thousand	- RMB 170,650 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 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 20,650 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 2,625 thousand RMB 2,500 thousand RMB 689 thousand RMB 1,150 thousand	- - - - - - - - - - - - -	RMB 200,000 thousand - - - - - RMB 600,580 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		Balance a	s at June 30,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Book value Number of shares	Gain (loss) on disposal	Number of shares	Amount
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 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 〞 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 〞 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 〞	- - - - - - - RMB 300,000 thousand - RMB 500,000 thousand - RMB 300,000 thousand - RMB 500,000 thousand - - - - - - - - - - - - - - - - - -	- RMB 150,000 thousand - RMB 150,000 thousand - RMB 250,000 thousand - - - - - - - - - RMB 300,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - 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 151,074 thousand RMB 150,000 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 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 1,074 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 995 thousand RMB 1,794 thousand RMB 1,847 thousand RMB 1,125 thousand RMB 1,063 thousand RMB 1,345 thousand	- - - - - - - - - - - - - - - -	- RMB 150,865 thousand RMB 250,433 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		Balance a	s at June 30,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Book value Number of shares	Gain (loss) on disposal	Number of shares	Amount
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 XI' AN BRANCH 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 04 Note 2 XI' AN BRANCH 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 05 Note 2 XI' AN BRANCH 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 06 Note 2 XI' AN BRANCH 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 08 Note 2 XI' AN BRANCH 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Beijing for RMB public structured deposits - 09 Note 2 XI' AN BRANCH 〞 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 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Bank of Communications for Yun Tong Fortune 96 Days structured deposits Note 2 Bank of Communications 〞	- - - - - - - - - - - - - - - - - - - - - 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 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 thousand - RMB 300,000 thousand - RMB 200,000 thousand - - - - - - - RMB 500,000 thousand - RMB 500,000 thousand - RMB 500,000 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 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 505,326 thousand RMB 500,000 thousand	RMB 854 thousand RMB 5,111 thousand RMB 5,167 thousand - - - - - - - RMB 1,819 thousand RMB 1,876 thousand RMB 1,933 thousand RMB 5,215 thousand RMB 5,271 thousand RMB 5,326 thousand	- - - - - - - - - - - - - - - -	- - - RMB 501,442 thousand RMB 501,110 thousand RMB 501,054 thousand RMB 500,999 thousand RMB 500,219 thousand RMB 300,099 thousand RMB 200,066 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		Balance a	s at June 30,2019
	Amount Number of shares (In thousands)	Amount Number of shares (In thousands)	Selling price Book value Number of shares	Gain (loss) on disposal	Number of shares	Amount
Hon Fujin Precision Industry (Taiyuan) Co., Ltd Guangdong Finance Trust - Peng Yun Tian Hua Collection Fund Trust Note 3 Guangdong Yuecai Intrust & Investment Company 〞 Hon Fujin Precision Industry (Taiyuan) Co., Ltd Jinan Fujie industrial investment fund partnership (limited partnership) Note 5 Jinan Industrial Development Investment Group Co., Ltd. 〞	- RMB 850,000 thousand - -	- - - RMB 125,000 thousand	- RMB 200,150 thousand RMB 150,000 thousand - - -	RMB 5,150 thousand -	- -	RMB 700,000 thousand RMB 116,172 thousand

Note 1 ： Recorded in “investments accounted for using equity method”. 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.

Note 5：Recorded in “Financial assets at fair value through profit or loss - non-current”. Therefore, the balance as at June 30, 2019 was shown at fair value.

Table 3, Page 4

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

Foxconn Technology Co., Ltd. and Subsidiaries

For the six-month period ended June 30, 2019

Table 4

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		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. 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. FTC TECHNOLOGY INC. YanTai Fuzhun Precision Electronics Co., Ltd. Champ Tech Optical (Foshan) Corporation Champ Tech Optical (Foshan) Corporation Foxconn Technology Co., Ltd.	Foxconn (Far East) Ltd. and subsidiaries FTC Technology Inc. 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 Fu Yu Precision Components (Kunshan) Co., Ltd. Foxconn (Far East) Ltd. and subsidiaries FOXCONN TECHNOLOGY PTE. LTD. Foxconn (Far East) Ltd. and subsidiaries	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 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.	Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Sales Purchases	263,552 $ 113,026 8,697,736 404,072 2,128,430 841,656 917,067 626,925 110,292 244,995 280,003 1,465,665 15,815,526	1 1 91 4 97 64 18 12 85 65 8 42 84	90 days 90 days 90 days 90 days 60 days 90 days 90 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	313,142 $ 26,208 9,395,514 132,336 753,162 702,615 677,699 799,678 44,067 109,396 265,516 860,343 7,415,298) (	3 - 97 1 93 66 19 22 87 20 11 36 68) (	Note 2

Table 4, Page 1

Purchaser/seller	Counterparty	Relationshipwith the counterparty		Transaction	Transaction		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. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Foxconn Technology Co., Ltd. Hon Fujin Precision Industry (Taiyuan) Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. Fu Yu Precision Components (Kunshan) Co., Ltd. Champ Tech Optical (Foshan) Corporation	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 Pan-International Industrial Corp. and subsidiaries	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 Other related parties	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases	928,185 $ 931,465 298,704 110,731 413,713 523,511 2,875,231 453,250 197,706 330,758	5 5 2 1 2 3 34 9 10 12	30 days 90 days 90 days 90 days 60 days 60 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	- $ 421,333) ( 241,812) ( 108,998) ( 267,187) ( 344,050) ( 3,805,895) ( 454,454) ( 150,632) ( 253,299) (	- 4) ( 2) ( 1) ( 2) ( 3) ( 71) ( 11) ( 13) ( 16) (

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 2

Table 5

Foxconn Technology Co., Ltd. and Subsidiaries

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

June 30, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationshipwith the counterparty	Balance as at June 30,2019	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. Fuzhun Precision (Hebi) Electronics Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. FOXCONN TECHNOLOGY PTE. LTD. YanTai Fuzhun Precision Electronics Co., Ltd. YanTai Fuzhun Precision Electronics Co., Ltd. YanTai Fuzhun Precision Electronics Co., Ltd.	Foxconn (Far East) Ltd. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries Foxconn (Far East) Ltd. and subsidiaries FOXCONN TECHNOLOGY PTE. LTD. FOXCONN TECHNOLOGY PTE. LTD. Foxconn (Far East) Ltd. and subsidiaries Foxconn Technology Co., Ltd. Foxconn (Far East) Ltd. and subsidiaries Hon Fujin Precision Industry (Taiyuan) Co., Ltd. Foxconn (Far East) Ltd. and subsidiaries Fu Yu Precision Components (Kunshan) Co., Ltd. Foxconn Technology Co., Ltd.	The indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. The indirect subsidiaries of Hon Hai Precision Industry Co., Ltd. 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 Company’s ultimate parent 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 Company’s ultimate parent company	313,142 $ 3.00 4,232,491 Not applicable 9,395,514 3.33 132,336 7.03 753,162 5.74 702,615 2.68 241,812 3.45 677,699 5.54 799,678 2.28 280,755 0.33 109,396 8.77 108,998 8.00 (shown as other receivables)(Note 1)		25,085 $ - 2,548,670 - - 278,345 27,718 50,525 235,602 113,144 - 10,449	Subsequent collection - Subsequent collection - - Subsequent collection Subsequent collection Subsequent collection Active collection Subsequent collection - Active collection	30,217 $ - 685,197 - - 374,277 241,812 163,802 - 75,469 - -	- $ - - - - - - - - - - -

Table 5, Page 1

Creditor	Counterparty	Relationshipwith the counterparty	Balance as at June 30,2019	Turnover rate	Overdue receivables	Overdue receivables	Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
					Amount	Action taken
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 Foxconn Technology Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. Foxconn Technology Co., Ltd.	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	265,516 $ 3.43 421,333 2.84 860,343 13.63 654,079 Not applicable (shown as other receivables)(Note 2)		35,071 $ - - -	Subsequent collection - - -	83,224 $ - - -	- - - -

Note 1: Receivables from purchases of materials on behalf of Foxconn (Far East) Ltd. and subsidiaries. Note 2: Receivables from purchases of materials by investees on behalf of the ultimate parent company.

Table 5, Page 2

Foxconn Technology Co., Ltd. and Subsidiaries

Table 6

Significant inter-company transactions during the reporting period

For the six-month period ended June 30, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Transaction

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets
0 0 0 0 0 1 1 2 2 3 4 4 5 5 5 6 7 7 7	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. 〝 Fuzhun Precision (Hebi) Electronics Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. 〝 YanTai Fuzhun Precision Electronics Co., Ltd. 〝 YanTai Fuzhun Precision Electronics Co., Ltd. HIGH TEMPO INTERNATIONAL LTD. Champ Tech Optical (Foshan) Corporation Champ Tech Optical (Foshan) Corporation 〝	Nanning Funing Precision Electronics Co., Ltd. YanTai Fuzhun Precision Electronics Co., Ltd. Champ Tech Optical (Foshan) Corporation Fuzhun Precision (Hebi) Electronics Co., Ltd. FTC Technology Inc. FOXCONN TECHNOLOGY PTE. LTD. 〝 FOXCONN TECHNOLOGY PTE. LTD. 〝 Foxconn Technology Co., 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 Co., Ltd. FOXCONN TECHNOLOGY PTE. LTD. 〝	1 1 1 1 1 3 3 3 3 2 3 3 3 3 2 2 2 3 3	Purchases Purchases Purchases Purchases Sales Sales Accounts receivable Sales Accounts receivable Accounts receivable Sales Accounts receivable Sales Accounts receivable Accounts receivable Other receivable Accounts receivable Sales Accounts receivable	928,185 $ 110,731 931,465 298,704 113,026 404,072 132,336 2,128,430 753,162 241,812 626,925 799,678 244,995 109,396 108,998 654,079 421,333 1,465,665 860,343	Note 4 〞〞〞〞〞〞〞〞〞〞〞〞〞〞〞〞〞〞	3 0 0 1 0 1 0 6 0 0 2 0 1 0 0 0 0 4 1

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

Table 7

Information on investees

For the six-month period ended June 30, 2019

Expressed in thousands of NTD

(Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares	held as at June 30,2019	held as at June 30,2019	Net profit (loss) of the investee for the six-month period ended June 30,2019	Investment income (loss) recognised by the Company for the six-month period ended June 30,2019	Note
				Balance as at June 30,2019	Balance as at June 30,2018	Numberofshares	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	97,344,760 $ 15,825,765 1,135,976 282,628	1,974,330 $ 300,277 325 18,008) (	1,974,330 $ 300,277 325 3,594) (

Note 1: 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

Information on investees in Mainland China

Table 8

For the six-month period ended June 30, 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 remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the six-month period ended June 30, 2019	Amount remitted from Taiwan to Mainland China / Amount remitted back to Taiwan for the six-month period ended June 30, 2019	Accumulated amount of remittance from Taiwan to Mainland China as of June 30,2019	Net income of investee for the six- month period ended June 30,2019	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the six-month period ended June 30, 2019 (Note 2)	Book value of investments in Mainland China as of June 30,2019	Accumulated amount of investment income remitted back to Taiwan as of June 30,2019	Note
					Remitted to Mainland China	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	240,932 $ 1,216,744 605,670 381,758 12,734,600 304,388 1,226,870 4,587,562	2 2 2 2 2 2 2 2	240,932 $ 611,447 62,120 244,877 4,332,870 - 1,226,870 1,543,682	`-` `$` `-` `-` `-` `-` `-` `-` `-`	`-` `$` `-` `-` `-` `-` `-` `-` `-`	240,932 $ 611,447 62,120 244,877 4,332,870 - 1,226,870 1,543,682	5,249 $ 186,156 171,978 - 667,464 89,667 62,194 335,288	100 100 100 100 100 100 100 100	5,249 $ 186,156 171,978 - 667,464 89,667 62,194 335,288	447,391 $ 6,409,545 4,961,660 - 40,795,629 2,675,636 750,513 7,220,844	`-` `$` `-` `-` `-` `-` `-` `-` `-`	Note 5

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 June 30, 2019 Affairs (MOEA) of MOEA (Note 3) Foxconn Technology Co., Ltd. $ 8,262,798 $ 22,154,042 $ -

Note 1: Investment methods are classified into the following three categories:
(1) Directly invest in a company in Mainland China.
(2) Through investing in Q-Run Holdings Ltd. or Foxconn Precision Components Holding Co., Ltd., which then invested in Mainland China.
(3) Others.
Note 2: Investment profit or loss for the period was recognised based on the Mainland investees’ financial statements which were unreviewed by independent accountants, except for Hon Fujin Precision Industry (Taiyuan) Co., Ltd.
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
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 31, 2018 to May 20, 2021.

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 June 30, 2019, the merger is still in process.

Table 8, Page 2

AI assistant

FTC — Interim / Quarterly Report 2019

52024_rns_2019-11-14_40fde4ed-23e0-49fa-ab3a-cc4341b2dd88.pdf

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

August 12, 2019

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2019, DECEMBER 31, 2018 AND JUNE 30, 2018

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 2019, DECEMBER 31, 2018 AND JUNE 30, 2018

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

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

SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

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

SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

FOXCONN TECHNOLOGY CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SIX-MONTH PERIODS ENDED JUNE 30, 2019 AND 2018

1. HISTORY AND ORGANISATION

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

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

(3) Basis of consolidation

(4) Foreign currency translation

(5) Classification of current and non-current items

(6) Cash equivalents

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

(9) Financial assets at amortised cost

(10) Accounts and notes receivable

(11) Impairment of financial assets

(12) Derecognition of financial assets

– (13) Leasing arrangements (lessor) operating leases

(14) Inventories

(16) Property, plant and equipment

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

Effective 2019

(18) Leases (lessee)

Prior to 2019

(19) Investment property

(20) Intangible assets

(21) Impairment of non-financial assets

(22) Loans

(23) Accounts and notes payable

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

(25) Derecognition of financial liabilities

(26) Offsetting financial instruments

(27) Non-hedging derivatives

(28) Employee benefits

(29) Income tax

(30) Dividends

(31) Revenue recognition

(32) Government grants

(34) Operating segments

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

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

A. Revenue recognition

(2) Critical accounting estimates and assumptions

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

(a) Cross currency swap contracts

(b) Forward exchange contracts

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

(4) Financial assets at amortised cost

(5) Notes and accounts receivable

(6) Inventories

(7) Investments accounted for using equity method

(8) Property, plant and equipment

(9) Leasing arrangements - lessee

(10) Leasing arrangements - lessor

Effective 2019

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

(11) Investment property

(12) Intangible assets

FTC Interim / Quarterly Report 2019