Lemtech-KY - Audit Report / Information 2019

Stock code: 4912

Lemtech Holdings Co., Limited and subsidiaries

Consolidated Financial Report and Independent Auditors' Report For the Years Ended December 31, 2019 and 2018

Address: Genesis Building, 5th Floor, Genesis Close, PO Box 446, Cayman Islands, KY1-1106 Phone: (+886) 2-8684-1618

The independent auditors' report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China, If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' report and consolidated financial statements, the Chinese version shall prevail.

Independent Auditors' Report

Lemtech Holdings Co., Limited public notice:

Audit opinion

We have audited the accompanying consolidated financial statements of Lemtech Holdings Co., Limited and its subsidiaries (the company), which comprise the consolidated balance sheet as of December 31, 2019 and 2018, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the company as of December 31, 2019, and of its consolidated financial performance and its consolidated cash flows for the periods from January 1 to December 31, 2019 and 2018 in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRS, IAS, IFRIC and SIC endorsed by the FSC.

Basis for Auditor's Opinions

We have performed the audit of 2019 in accordance with Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants, FSC Letter Jin-Guan-Zheng-Shen-Zi No. 1090360805, dated Feb. 25, 2020 and the auditing standards generally accepted in the Republic of China; the audit of 2018 has been performed in accordance with Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities required under said standards will be detailed in the paragraph about the external auditor's responsibility on auditing consolidated financial statements. We are independent of the company in accordance with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other obligations under the Norm. We are convinced that we have acquired enough and appropriate audit evidence to serve as the basis of audit opinion.

Key Audit Matters

Key Audit Matters refer to matters that, in our professional judgement, were of most significance in our audit of the 2019 Consolidated Financial Statements of the company. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming out opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matters for the consolidated financial statements of Lemtech Holdings Co., Limited and its subsidiaries (the company) for 2019 are stated as follows: Key Audit Matters: the authenticity of sales revenue of specific customers

The revenue of the company is mainly derived from computer, communication, consumer electronics and automotive parts. Since the materiality and the Statements on Auditing Standards has defaulted revenue recognition as a significant risk. Therefore, the assessment of the authenticity of sales transactions with major customers meeting the certain conditions was listed as a key audit matter. For details of the revenue recognition policy, please refer to Notes 4 and 26 of the consolidated financial report.

We understand the industry and economic environment of the company. In addition to testing the relevant internal controls, we select samples of major customers meeting certain conditions from sales of 2019, and verify the shipping orders, invoices and receipts to confirm the authenticity of the revenue.

Responsibility of the management and the governing body for the Consolidated Financial Statements

It is the management's responsibility to fairly present the consolidated financial statements in conformity with "Regulations Governing the Preparation of Financial Reports by Securities Issuers" and IFRS, IAS, IFRIC and SIC endorsed by the FSC, and to sustain internal controls respecting preparation of the consolidated financial statements so as to avoid material misstatements due to fraud or errors therein.

In preparing the consolidated financial statements, the responsibility of management includes assessing the company's ability to continue as a going concern, disclosing going concern related matters, as well as adopting going concern basis of accounting unless the management intends to liquidate the company or terminate the business, or has no realistic alternative but to do so.

The governing bodies of the company (including the audit committee) have the responsibility to oversee the procedures for financial reporting.

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatement may arise from frauds or errors. If it could be reasonably anticipated that the misstated individual amounts or aggregated sums could have influence on the economic decisions made by the users of the consolidated financial statements, they will be deemed as material.

We have utilized our professional judgment and maintained professional skepticism when exercising auditing work according to the auditing standards generally accepted in the Republic of China. We also execute the following tasks:

Identify and assess the risks of material misstatement within the consolidated financial statements, whether due to fraud or error; design and execute counter-measures in response to those risks; and obtain sufficient and appropriate audit evidence to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Understand internal controls relevant to the audit in order to design appropriate audit procedures under the circumstances. However, the purpose is not to express an opinion on the effectiveness of the company's internal control.

Evaluate the appropriateness of accounting policies adopted and the reasonableness of accounting estimates and relevant disclosures made by management.
Based on the audit evidence obtained, to conclude on the appropriateness of management's use of the going concern basis of accounting and whether a material uncertainty exists for events or conditions that may cast significant doubts on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements; or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or circumstances may cause the company to no longer continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements (including relevant notes), and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient and appropriate audit evidence regarding the financial information of entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the audit. We remain solely responsible for our audit opinion.

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

We also provide governing bodies with a declaration that we have complied with the Norm of Professional Ethics for Certified Public Accountant of the Republic of China regarding independence, and to communicate with them on all relationships and other matters that may possibly be deemed to impair our independence (including relevant preventive measures).

From the matters communicated with the governing body, we determined the key audit matters for the company's 2019 consolidated financial statements. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Deloitte & Touche

Taipei, Taiwan (Republic of China) Mar. 25, 2020

Notes to Readers

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

The independent auditors' report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors' report and consolidated financial statements, the Chinese version shall prevail.

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

Lemtech Holdings Co., Limited and subsidiaries

Consolidated Balance Sheet

Dec. 31, 2019 and 2018

Unit: NTD thousands

	Dec. 31,2019		Dec. 31,2018
	Sum $ 942,332 79,436 4,684 2,076,706 5,540 17,122 13 736,718 85,068 2,047 3,949,666 32,923 1,808,305 233,101 82,387 42,204 15,372 13,789 41,228 7,032 - 2,276,341 $ 6,226,007 $ 965,312 79,408 183,304 1,466,225 190,962 26,001 47,803 15,145 2,974,160 3,392 580,601 350,000 220,133 120,340 6,888 1,281,354 4,255,514 474,720 802,102 13,500 731,348 744,848 68,349 ) 1,953,321 17,172 1,970,493 $ 6,226,007		Sum $ 550,292 3,842 5,379 2,220,152 - 17,828 31 900,520 103,923 3,147 3,805,114 33,502 1,230,891 - - 22,634 20,847 - 194,248 2,977 88,214 1,593,313 $ 5,398,427 $ 1,009,466 66,510 300,787 1,134,173 200,410 13,318 - 7,403 2,732,067 910 576,478 - 208,160 - 6,708 792,256 3,524,323 395,411 784,347 13,500 662,990 676,490 1,375 1,857,623 16,481 1,874,104 $ 5,398,427	%
				10 - - 41 - - - 17 2 - 70 1 23 - - - - - 4 - 2 30 100 19 1 5 21 4 - - - 50 - 11 - 4 - - 15 65 7 15 - 13 13 - 35 - 35 100

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

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)

Lemtech Holdings Co., Limited and subsidiaries

Consolidated Statement of Comprehensive Income Jan. 1 to Dec. 31, 2019 and Jan. 1 to Dec. 31, 2018

Unit: NTD thousands

Except for earnings per share which are in NTD


		%			%
( (	( (		( (	(

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Code 7900 Earnings Before Tax (EBT) 7950 Income tax fees (Note 28) 8200 Net profit for this period Other comprehensive income (loss) 8360 Items that may be reclassified subsequently to gain or loss: 8361 Exchange differences on translation of foreign financial statements 8300 Other comprehensive income (net, after tax) 8500 Total comprehensive income (loss) during this period Net income attributable to 8610 Shareholders of the parent 8620 Uncontrolled equity 8600 Total comprehensive income (loss) attributable to 8710 Shareholders of the parent 8720 Uncontrolled equity 8700 Earnings Per Share (Note 29) From continuing business 9710 Basic 9810 Diluted		2019				2018
		Sum		%		Sum		%
	( ( (	$ 336,858 74,519 ) 262,339 69,514 ) 69,514) $ 192,825 $ 259,447 2,892 $ 262,339 $ 189,723 3,102 $ 192,825 $ 5.47 $ 5.35	( ( (	7 2) 5 1 ) 1 ) 4 5 - 5 4 - 4	( ( (	$ 542,164 136,761) 405,403 9,189) 9,189) $ 396,214 $ 382,474 22,929 $ 405,403 $ 376,028 20,186 $ 396,214 $ 8.06 $ 7.91	(	9 2) 7 - - 7 6 1 7 6 1 7

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

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) Lemtech Holdings Co., Limited and subsidiaries Consolidated Statement of Changes in Equity Jan. 1 to Dec. 31, 2019 and Jan. 1 to Dec. 31, 2018

		Equityattributable to owners	Equityattributable to owners				Unit: NTD thousands Uncontrolled equity Total equity	Unit: NTD thousands Uncontrolled equity Total equity	Unit: NTD thousands Uncontrolled equity Total equity
SHARE CAPITAL $ 395,411 - - - - - - - - 395,411 - 79,082 - - - - 227 - $ 474,720	Capital reserve $ 678,811 - - 79,798 25,738 - - - - 784,347 - - 13,154 - - - 4,601 - $ 802,102	Retained earnings Special reserve Unappropriated retained earnings $ 28,925 $ 363,944 ( 15,425 ) 15,425 - ( 98,853 ) - - - - - 382,474 - - - 382,474 - - 13,500 662,990 - ( 98,853 ) - ( 79,082 ) - ( 13,154 ) - 259,447 - - - 259,447 - - - - $ 13,500 $ 731,348		Exchange differences on translation of foreign financial statements
		Special reserve $ 28,925 ( 15,425 ) - - - - - - - 13,500 - - - - - - - - $ 13,500
		(	( ( ( (	( ( ( ( (	$ 7,821 - - - - - 6,446 ) 6,446 ) - 1,375 - - - - 69,724 ) 69,724 ) - - $ 68,349 )	$ ( ( ( (	( ( ( (	$ 144,700 - - ( 79,798 ) - 22,929 2,743 ) ( 20,186 68,607 ) ( 16,481 - ( - - 2,892 210 ( 3,102 - 2,411 ) ( $ 17,172	$ 1,619,612 - 98,853 ) - 25,738 405,403 9,189) 396,214 68,607 ) 1,874,104 98,853 ) - - 262,339 69,514) 192,825 4,828 2,411) $ 1,970,493

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

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) Lemtech Holdings Co., Limited and subsidiaries Consolidated Statement of Cash Flows Jan. 1 to Dec. 31, 2019 and Jan. 1 to Dec. 31, 2018

Unit: NTD thousands

Code Cash flows from operating activities A10000 Net income before tax of the current year A20010 Income and expenses having no effect on cash flows A20100 Depreciation expense A20200 Amortization A20300 Expected credit impairment loss A20900 Finance costs A21200 Interest income A22300 Share of gain (loss) of affiliates and joint ventures accounted for under equity method A22500 Gain (loss) on disposal of Property, Plant and Equipment A23200 Gains from disposal of investments accounted for using equity method A20400 Net Losses from Financial Assets and Liabilities Measured at Fair Value through Profit or Loss A23800 Allowance for inventories A24100 Foreign currency net (gains) losses A29900 Amortization of prepaid lease payments A30000 Net changes in operating assets and liabilities A31130 Notes receivable A31150 Accounts receivable A31180 Other receivables A31200 Inventories A31230 Prepayments A31240 Other current assets A32125 Contract liabilities A32130 Notes payable A32150 Accounts payable A32180 Other payables A32230 Other current liabilities A33000 Cash from operating activities A33300 Interest paid A33500 Income tax paid AAAA Net cash flows from operating activities	2019	2018
	$ 336,858 246,395 10,802 5,673 58,919 ( 7,902 ) ( 321 ) ( 592 ) ( 2,163 ) 2,489 46,758 ( 20,094 ) - 695 162,992 1,600 132,636 ( 30,935 ) 3,083 12,898 ( 117,483 ) 300,761 ( 47,798 ) 7,709 1,102,980 ( 43,376 ) ( 40,039) 1,019,565	$ 542,164 166,693 5,632 12,011 45,642 ( 10,268 ) ( 14,633 ) 527 - 1,990 11,583 35,482 2,295 19,697 ( 420,329 ) ( 9,867 ) ( 293,103 ) ( 4,352 ) ( 3,147 ) 20,866 216,089 137,721 45,134 ( 2,758) 505,069 ( 39,601 ) ( 40,917) 424,551

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Code Cash flows from investing activities B07500 Interest received B00040 Acquisition of financial assets at amortized cost B00050 Disposal of financial assets at amortized cost B01800 Acquisition of affiliates B02200 Acquisition of net cash outflow from subsidiaries B02700 Purchase of property, plant, and equipment B02800 Disposal of Property, Plant and Equipment B04500 Purchase of intangible asset B04600 Proceeds from disposal of intangible assets B06100 Decreases in finance lease receivables B03700 Refundable deposits paid B03800 Refundable deposits refunded BBBB Net cash flows used in investing activities Cash flows from financing activities C00200 Decrease in short-term borrowings C01200 Proceeds from issuing bonds C01600 Increase in long-term borrowings C01700 Repayment of long-term loan C04020 Cash payments for the principal portion of the lease liability C03000 Guarantee deposits received C03100 Guarantee deposits refunded C04500 Dividend paid to shareholders C05800 Changes in non-controlling interests CCCC Net Cash Inflows (Outflows) from Financing Activities DDDD Effect of exchange rate changes on cash and cash equivalents EEEE Increases (decreases) in cash and cash equivalents E00100 Cash and cash equivalents at beginning of year E00200 Cash and cash equivalents at end of year	2019 $ 7,165 ( 75,594 ) - ( 10,000 ) ( 120,534 ) ( 597,659 ) 34,929 ( 5,358 ) 1,626 5,130 ( 3,395 ) - ( 763,690 ) ( 44,154 ) - 350,000 - ( 50,458 ) 180 - ( 98,853 ) - 156,715 ( 20,550 ) 392,040 550,292 $ 942,332	2018
		$ 10,449 - 151,886 ( 8,987 ) - ( 376,435 ) 1,946 ( 5,976 ) - - - 3,742 ( 223,375) ( 526,156 ) 597,375 - ( 141,566 ) - - ( 512 ) ( 98,853 ) ( 78,656) ( 248,368) ( 12,425) ( 59,617 ) 609,909 $ 550,292

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

Lemtech Holdings Co., Limited and subsidiaries Notes to the Consolidated Financial Statements

Jan. 1 to Dec. 31, 2019 and Jan. 1 to Dec. 31, 2018

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

I. Company History

Lemtech Holdings Co., Limited (hereinafter referred to as the "company") was established in the British Cayman Islands in September 2009. It is founded during organizational restructure mainly to apply for registration with the Taipei Exchange to facilitate stock trading. After the restructuring, the company became the controlling company of Lemtech Global Solution Co. Ltd. (hereinafter referred to as "Global Solution"), and obtained shares of Global Solution at a conversion ratio of 24.99: 1. The company, Global Solution and its subsidiaries (hereinafter referred to as the "combined company") mainly engaged in the production and design of various types of fine blanking die, non-metal die-casting toolings, computer connectors, computer cooling modules and other new electronic plug-ins and the sales of self-produced products. The company's stock has been traded in the Taipei Exchange since Apr. 29, 2011, and it was listed and traded in the Taiwan Stock Exchange Corporation since May 21, 2015.

The company's functional currency is New Taiwan Dollars.

II. Date and procedures of Authorization of Financial Statements The consolidated financial reports were approved by the Board of Directors on Mar. 25, 2020.

III. Applicability of Newly Issued and Revised Standards and Interpretations
(I) The company has adopted new issuance of or amendments to International Financial Reporting Standards (“IFRSs”) as endorsed by the Financial Supervisory Commission (“FSC”)
- With the exception of the following, the applicability of the aforementioned revised Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and announced by the FSC should not result in major changes to the accounting policies of the combined company:
- IFRS 16 "Leases"
  - IFRS 16 stipulates accounting treatments for the identification of lease agreements and lessors and lessees. It will replace IAS 17 "Leases", IFRIC 4 "Determining Whether an Arrangement Contains a Lease", and related interpretations. Please refer to Note 4 for related accounting policies.

Definitions of leases

The combined company shall elect to determine whether contracts signed (or changed) after Jan. 1, 2019 are (or include) leases in accordance with IFRS 16. The lease contracts identified in accordance with IAS 17 and IFRIC 4 shall not be reassessed and shall be processed in accordance with transitional regulations in IFRS 16. The combined company is the lessee.

The combined company shall recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheet except for

leases of low-value asset and short-term leases which shall be recognized on a straight-line basis. On the consolidated statement of comprehensive income, the depreciation expenses on right-of-use asset and interest expenses computed by using effective interest method on the lease liability shall be presented separately. In the consolidated statement of cash flows, cash payments for principle portion of the of lease liabilities shall be classified in financing activities, whereas cash payments for interest portion of the of lease liabilities shall be classified in operating activities. Prior to the application of IFRS 16, expense for operating lease contracts were recognized as expense on a straight-line basis. The lease prepayments for the acquisition of land use rights in China are recognized in the prepaid lease payments. Cash flow from operating leases is shown in operating activities on the Consolidated Statement of Cash Flows. Contracts classified as finance leases are recognized as lease assets and lease payables in the consolidated balance sheet. The combined company is expected to adjust the cumulative impact of the retroactive application of IFRS 16 to the retained earnings on Jan. 1, 2019, without recompiling the comparative information. Current agreements processed as operating lease under IAS 17 will be discounted by the remaining lease payments at the lessee’s incremental borrowing rate of interest on Jan. 1, 2019. All right-of-use assets will be measured as lease liabilities on that day with the recognized prepayment adjusted and the rent payable or amount payable. IAS 36 will be applicable to impairment assessment on all right-of -use assets recognized.

The combined company is eligible for application of the following practical expedients:

(1) Lease liabilities with reasonably similar characteristics under the same portfolio are measured at a single one discount rate.
(2) Lease terms that end before Dec. 31, 2019, will be treated as short-term leases.
(3) Original direct cost is not included in right-of-use asset measurement on Jan. 1, 2019.
(4) When measuring lease liabilities, decisions on lease terms are clarified after use.

For leases classified as finance lease under IAS 17 before, the carrying amount of the leased asset and the lease liability of Dec. 31, 2018 will be adopted as the carrying amount of the right-of-use asset and the lease liability on Jan. 1, 2019.

The weighted average incremental borrowing rate of interest applicable to lease liabilities recognized by the combined company on Jan. 1, 2019 was 4.04%. The difference between the amount of lease liabilities and the total amount of future minimum lease payments under non-cancellable operating leases on Dec. 31, 2018 is explained as follows:

Total amount of future minimum lease payments under non-cancellable operating leases on Dec. 31, $ 109,342

2018

2018
Less: Short-term leases to which exemption is
applicable	(	771 )
Undiscounted total amount total on Jan. 1, 2019		$ 108,571
Present value discounted at the incremental
borrowing rate of interest on Jan. 1, 2019		$ 118,565
Plus: Extended lease options		6,238
Lease liabilities balance on Jan. 1, 2019		$ 124,803

Adjustments in assets, liabilities and equity on Jan. 1, 2019 due to the first-time adoption of IFRS 16 were as follows:

Prepayments Long-term prepaid lease payments Right-of-use assets Impact of assets Lease liabilities - current Lease liabilities - non-current Impact of liabilities	Balance before adjustments ofJan. 1,2019	First-time adoption adjustment	Adjusted balance as of Jan. 1,2019
	$ 2,251 88,214 - $ 90,465 $ - - $ -	( $ 2,251 ) ( 88,214 ) 215,268 $ 124,803 ( $ 32,992 ) ( 91,811 ) ( $ 124,803 )	$ - - 215,268 $ 215,268 ( $ 32,992 ) ( 91,811 ) ( $ 124,803 )

IFRIC 23 “Uncertainty over Income Tax Treatments” IFRIC 23 clarifies that when there is uncertainty about the tax treatment of the income, the combined Company must assume that the tax authorities will be able to take all relevant information for review. If it is decided that the tax treatment of its application is likely to be accepted by the tax authorities, the income, tax base, unused tax losses, unused tax credits and tax rates must be consistent with the tax treatment used in reporting the income tax. Otherwise, the combined company shall reflect the effect of uncertainty for each uncertain tax treatment by using either the most likely amount or the expected value, depending on which method the entity expects to better predicts the resolution of the uncertainty. The combined company will reassess its judgments and estimates if facts and circumstances change.
(II) Applicable IFRSs endorsed by the Financial Supervisory Commission (hereinafter referred to as the "FSC") in 2020

New Standards, Interpretations, and Effective Date Issued Amendments by IASB Amendment to IFRS 3 "Definition of a Jan. 1, 2020 (Note 1) Business" Amendments to IFRS 9, IAS 39 and IFRS 7 Jan. 1, 2020 (Note 2)

New Standards, Interpretations, and Effective Date Issued Amendments by IASB "Interest Rate Benchmark Reform" Amendment to IAS 1 and IAS 8 "Definition of Jan. 1, 2020 (Note 3) Material"

Note 1: Corporate mergers with an acquisition date between the starting date of the annual report on Jan. 1, 2020 and assets acquired after this date shall be applicable to this amendment.

Note 2: This amendment shall apply retrospectively to the accounts in the fiscal years starting after Jan. 1, 2020.

Note 3: Accounts in the fiscal years starting after Jan. 1, 2020 shall be applicable to this amendment.

As of the date the consolidated financial reports were authorized for publication, the combined company is continuously assessing the possible impacts on its financial position and financial performance upon the initial application of the aforementioned standards and interpretations. Any relevant impact will be disclosed when the assessment is completed.

(III)

Standards issued by IASB but not yet endorsed by FSC

Effective Date New Standards, Interpretations, and Published by IASB Amendments (Note 1) Amendments to IFRS 10 and IAS 28 "Sale or To be determined Contribution of Assets between an Investor and its Associate or Joint Venture" IFRS17 "Insurance Contracts" Jan. 1, 2021 Amendment to IAS 1 "Classification of Jan. 1, 2020 Liabilities as Current or Non-Current''

Note 1: Unless otherwise specified, the aforementioned New/Revised/Amended Standards and Interpretations shall be effective for the fiscal year after the reporting period.

IV. Summarized Remarks on Significant Accounting Policies

(I) Statement of Compliance

The Consolidated Financial Report was formulated in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs endorsed by the FSC that have entered into effect.

(II) Basis of Preparation

The consolidated financial reports were prepared on a historical cost basis, except for financial instruments measured at fair value.

The fair value measurement is classified into 3 levels based on the observability and importance of related input:

Level 1 inputs: Quoted (unadjusted) prices of identical assets or liabilities obtainable in active markets on the measurement date.
Level 2 inputs: Inputs, other than quoted market prices within level 1, that are observable directly (i.e. the price) or indirectly (deduced from the price) for the assets or liabilities.
Level 3 inputs: Unobservable inputs for the assets or liabilities.
(III) Classification of current and non-current assets and liabilities
Current assets include:
Assets held primarily for the purpose of trading;
Assets expected to be realized within 12 months after the balance sheet date; and
Cash and cash equivalent (excluding assets restricted from being exchanged or used to settle a liability for at least 12 months after the balance sheet date).

Current liabilities include:

Liabilities held primarily for the purpose of trading;
Liabilities to be settled within 12 months after the balance sheet date; and
Liabilities with a repayment deadline that cannot be unconditionally deferred till at least 12 months after the balance sheet date.
The company shall classify all other assets or liabilities that are not specified above as non-current.
(IV) Basis of Consolidation
The Consolidated Financial Report includes the financial reports of the company and its wholly owned subsidiaries. Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of comprehensive income from the effective date of acquisition and up to the effective date of disposal, as appropriate. The financial reports of subsidiaries have been reorganized to bring uniformity in their accounting policies and those of the combined company. In the Consolidated Financial Report, all intercompany transactions, account balances, income and expenses between the entities have been offset. A subsidiary's total comprehensive income is attributed to the shareholders of the company and non-controlling interests, even if non-controlling interests become deficit balance in the process.

When a change is effected in the ownership of the subsidiary, the combined company does not lose control of it and it will be treated as equity transaction. The carrying amounts of the combined company and its non-controlling interests have been adjusted to reflect the relative changes in the interest of the subsidiaries. The difference between the adjusted amount in non-controlling interest and the fair value of consideration will be considered as interest belonging to the owners of the company.

Please refer to Note 13, Attachment 7 and Attachment 8 for details, shareholding ratio, and business items of subsidiaries.

(V) Business combination

The acquisition method is applied to business combinations. Acquisition costs are listed in the period of its incurrence and service.

Goodwill is measured at the aggregate of the fair value of the consideration transferred, the acquisition-date fair value of the acquirer's previously-held equity interest in the acquiree and the net of the acquisition-date amounts of the identifiable assets acquired, and liabilities assumed.

‑ Where the acquirer holds non controlling interests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the acquiree’s net assets in the event of liquidation at the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets. Other non-controlling interests are measured at fair value.

The combined company did not adopt the acquisition method to deal with business combinations done for organizational restructuring, but adopted the book value method.

(VI) Foreign Currency
In preparing each individual financial statement, transactions denominated in a currency other than the entity’s functional currency (i.e. foreign currency) are translated into the entity's functional currency by using the exchange rate at the date of the transaction before they are recorded by each entity.

Monetary items denominated in foreign currencies are translated at the closing rates on the balance sheet date. Except for the following items, foreign exchange differences arising from settlement or translation of monetary items are recognized in gain or loss in the year in which they arise.

Monetary items receivable or payable to foreign operating agencies whose settlement is currently neither planned nor likely to occur in the foreseeable future (thus forming part of the net investment in the foreign operating agency), such foreign exchange differences shall be recognized initially in other comprehensive income and reclassified from equity to gain or loss on disposal of the net investment.

Non-monetary items measured at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. The resulting exchange difference is recognized in gain or loss. For items whose changes in fair value are recognized in other comprehensive income, the resulting exchange difference is recognized in other comprehensive income.

Non-monetary items measured at historical cost that are denominated in foreign currencies are translated at the rates of exchange prevailing on the transaction dates and are not re-translated.

In the preparation of the consolidated financial statements, the assets and liabilities of foreign operations (including subsidiaries and affiliated enterprises based or conducted in a country or currency other than the company's function currency) are translated into New Taiwan dollar at the closing rate of exchange prevailing at the balance sheet date. Income

and expense items are translated at the average exchange rates for the period. Where exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity and attributed to the proprietors of the company and non-controlling interests as appropriate.

(VII) Inventories Inventories include raw materials, materials, work in progress and finished goods. The value of inventory shall be determined based on the cost and Net Realizable Value (NRV), whichever is lower. With the exception of inventory of the same category, individual items shall be assessed when comparing the cost and NRV. The NRV is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. Cost of inventory is calculated using weighted-average method.
(VIII) Investment in the affiliates Affiliates are entities over which the combined company has significant influence but they are neither subsidiaries nor joint ventures. The combined company follows equity method for investment in affiliates. Under the equity method, the investment on affiliates is initially recognized at cost and adjusted thereafter for the post-acquisition change in the investor's interest in gain and loss, shares in other comprehensive income and profit distribution by the affiliates. Also, the combined company's interest in affiliates and joint ventures are recognized in accordance with the shareholding ratio.
Any excess of acquisition cost over the combined company's share of an affiliate's or a joint venture's identifiable assets and liabilities measured at the fair value on the date of acquisition is recognized as goodwill. The goodwill shall be included in the carrying amount of the investment but not allowed for amortization. If the combined company's share of the net fair value of the identifiable assets and liabilities exceeds acquisition cost, the excessive amount is recognized immediately in gain or loss. When the combined company's share of loss derived from the investment of an affiliate equals or exceeds the combined company's interest (including the carrying amount of the investment and other long-term substantial interests in the affiliate's net asset in proportion to ownership percentage), the combined company shall cease recognizing losses further. The combined company only recognizes extra losses and liabilities to the extent that there is a legal obligation, constructive obligation, or payment on behalf of an affiliate.

When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount (higher of the value in use and fair value less costs to sell) with its carrying amount. Any impairment loss will not be recognized as a charge against the carrying amount of an investment (including goodwill). Any reversal of the impairment loss shall be recognized after subsequent increases in the recoverable amount of investment.

Gain or loss in upstream and downstream transactions between the combined company and the affiliates or transactions between investees needs to be shown in the Consolidated Financial Report when not affecting the interests of the combined company or the affiliate.

(IX) Property, Plant and Equipment Property, Plant and Equipment are recognized at cost and subsequently measured at cost less accumulated depreciation and impairment. Property, Plant and Equipment under construction are recognized at cost less accumulated impairment. The cost shall include professional service expenses and the cost of loans eligible for capitalization. Such assets shall be classified into appropriate Property, Plant and Equipment categories upon completion and reaching the expected use status and the depreciation shall begin.

The depreciation of Property, Plant and Equipment is recognized on straight-line basis and each major part/component will be shown independently. Where the lease term is less than the useful life of an asset, the depreciation is recognized over the lease term. The combined company must conduct at least one annual review at the end of each year to assess the estimated useful life, residual value, and depreciation methods and infer the effect of changes in accounting estimates. When derecognizing Property, Plant and Equipment, the difference between the net disposal proceeds and the carrying amount of the asset shall be recognized in gain or loss.

(X) Goodwill The value of goodwill received through business combination has to be shown as the amount of goodwill recognized on the acquisition date and subsequently evaluated as cost less accumulated impairment loss. To evaluate impairment, the goodwill is distributed among various cash-generating units or cash-generating groups which the combined company hopes to derive benefit from the overall performance after business combination (hereinafter referred to as the "cash-generating units").

The cash-generating units that were allocated the goodwill will compare the unit's carrying amount and its recoverable amount including goodwill every year (and whenever there are signs of impairment) to evaluate the impairment of the unit. If the goodwill was obtained by the cash-generating unit through a business combination in the current year, an impairment test is to be conducted prior to the end of the current year. If the recoverable amount of the cash-generating unit that received goodwill is lower than the carrying amount, the loss on impairment is added to the carrying cost of the unit that got goodwill allocation. The proportion of reduction in other carrying amounts of assets in the unit will be used to reduce the carrying cost of such asset. Any impairment loss is recognized directly as loss in the current period. Loss in impairment of goodwill cannot be reversed subsequently.

When disposing a certain operation within the cash-generating unit with amortized goodwill, the amount of goodwill related to the disposed

operations is included in the carrying amount of the operations to determine the disposal of gain or loss.

(XI) Intangible assets
Intangible assets acquired separately Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and loss. Amortization is recognized using the straight-line method. The combined company must conduct at least one annual review at the end of each year to assess the estimated useful life, residual value, and depreciation methods and infer the effect of changes in accounting estimates.
Acquisition from business combinations Intangible assets acquired in a business combination are recognized at fair value at the acquisition date, with goodwill recognized separately and are subsequently measured the same separately as intangible assets acquired separately.
Derecognition
- When derecognition of an intangible asset, the difference between the net proceed of disposal and the carrying amount of the asset is recognized in gain or loss for the period.
(XII) Impairment of tangible, intangible assets and contract costs On each balance sheet date, the combined company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If there is any sign of impairment, an estimate is made of its recoverable amount. If it is not possible to determine the recoverable amount of an individual asset, the combined company must determine the recoverable amount for the asset's cash-generating unit. The recoverable amount is the fair value minus cost of sales or its value in use, whichever is higher. If the individual asset or recoverable amount of the cash generating unit is lower than the carrying amount, the carrying amount of the asset or of the cash generating unit will be reduced to the extent of recoverable amount and the impairment loss will be recognized in gain or loss.
The amount of the impairment loss on inventories, property, plant and equipment and intangible assets recognized due to customer contracts shall be recognized, firstly, in accordance with rules governing the impairment of inventory and the above rules governing the recognition of impairment. Secondly, where the carrying amount of the contract cost relevant assets exceeds the sum of the estimated balance that the relevant product or service is expected to be received minus relevant costs, such amount shall be recognized as impairment loss. Subsequently, the carrying amount of the contract cost relevant assets shall be accounted for in the cash-generating unit in which they belong in order to conduct impairment assessment on the cash-generating unit. When the impairment loss is subsequently reversed, the carrying amount of an asset, the cash generating unit, or the contract cost-related asset is reversed to the extent not exceed the carrying amount (minus

amortization or depreciation) of the asset, cash generating unit, or contract cost-related asset that had not been impaired in the previous years. The reversed impairment loss will be recognized in gain or loss. (XIII) Financial instruments Financial assets and liabilities will be recognized in the balance sheet when the combined company becomes a party to the contract of financial instrument.

When recognizing the original financial assets and liabilities, if they are not measured at fair value through profit or loss, it is assessed based on the fair value plus the cost of transaction, that is, of its acquisition or issuance of the financial assets or financial liabilities. The transaction costs directly attributable to the acquisition or issuance of financial assets or financial liabilities at fair value through profit or loss shall be immediately recognized in profit and loss.

Financial assets

Regular trading of financial assets shall be recognized and derecognized in accordance with trade date accounting.

(1) Measurement types
The combined company holds financial assets that are classified as financial assets measured at amortized cost. Financial assets measured at amortized cost
When the combined company's investments in financial assets satisfy the following two conditions simultaneously, they are classified as financial assets measured at amortized cost:
A. Held under a certain business model of which the objective of holding the financial assets is to collect contractual cash flows; and
B. The cash flows on specific dates that are generated from the contractual terms of the financial assets are solely payments of the principal and interest on the principal amount outstanding.

Financial assets measured at amortized cost (including cash and cash equivalents, notes receivable, accounts receivable, other receivables and refundable deposits measured at amortized cost) are measured at the aggregate carrying amount of the financial asset after initial recognition and determined by using the effective interest method. Any foreign currency exchange gains and losses are recognized in gain or loss.

Except for the following two circumstances, interest revenue is calculated at the value of effective interest rate times the gross carrying amount of financial assets:

A. The interest income of a credit-impaired financial asset purchased or provided for the founding is calculated by multiplying the credit-adjusted effective interest rate by the amortized cost of the financial asset.
B. Financial assets that are not credit impairment from purchases or at the time of founding but subsequently become credit impairments shall be calculated by multiplying

the effective interest rate in the reporting period after the credit impairment by the cost after the amortization of financial assets.

Cash equivalents include fixed deposits obtained within three months with high liquidity and relatively low price changes convertible to cash any time. They are used for meeting short-term cash commitments.

(2) Impairment of financial assets and contract assets
On each balance sheet date, the combined company assesses the impairment loss of financial assets (including accounts receivable) and finance lease receivables measured at amortized cost based on expected credit losses.

Loss allowance shall be recognized for accounts receivable and finance lease receivable based on lifetime expected credit losses. Other financial assets are first assessed based on whether the credit risk has increased significantly since the original recognition. If there is no significant increase in risks, an allowance for expected credit loss shall be recognized based on a 12-month period. If the risks have increased significantly, loss allowance shall be recognized in the lifetime of such assets.

The expected credit loss is the weighted average credit loss determined by the risk of default. The 12-month expected credit losses represent the expected credit losses from possible defaults of the financial instrument within 12 months after the reporting date. The lifetime expected credit losses represent the expected credit losses from all possible defaults of the financial instrument during the expected period of existence.

For the purpose of internal credit risk management, without consideration of the collateral held, the combined company shall determined that a default of financial instrument has occurred if one of the following applies:

A. Internal or external information indicates that it is not possible for the debtor to settle the debt.
B. Overdue for more than one year, unless there is reasonable evidence showing that a delayed basis of default is more appropriate.

The impairment loss of all financial assets is accrued from their carrying amount based on the allowance account. However, the allowance for the investment in the debt instruments measured at fair value through other comprehensive income is recognized in other comprehensive income and shall not reduce its carrying amount.

(3) Derecognition of financial assets

The combined company may only derecognize the financial assets when the contractual rights to the cash flow from the asset expire or when the company transfers all the risks and rewards of ownership of the financial assets to other enterprises substantially.

On derecognition of a financial asset measured at amortized cost in its entirety, the difference between the carrying amount and the sum of the consideration received is recognized in gain or loss. On derecognition of a debt instruments measured at fair value through other comprehensive income in its entirety, the difference between the financial asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income and accumulated in equity is recognized in gain or loss. When the company's equity instruments are measured at fair value through other comprehensive income, the accumulated gain or loss is transferred directly to retained earnings and is not reclassified to gain or loss.

Financial liabilities
(1) Subsequent measurement

All financial liabilities are measured at amortized cost, using the effective interest method, except for:

Financial liabilities at fair value through profit or loss (FVTPL) Financial liabilities at fair value through profit or loss are designated as measured at fair value through profit or loss. The combined company designated the financial liabilities as being measured at fair value through profit or loss in the original recognition in the following cases:

A. it eliminates or significantly reduces a measurement or recognition inconsistency; or
B. a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the investment is provided internally on that basis to the key management personnel.
C. Designate the overall mixed (combined) contract containing one or more embedded derivatives.

Once designated as financial liabilities at fair value through profit or loss, its amount of changes in fair value due to changes in credit risk is recognized in other comprehensive income, and will not be reclassified to profit or loss, will only be reclassified to retained earnings when derecognizing such financial liabilities. Except for the interest accrued, which is recognized in financial costs, the changes in fair value of such liability are reported in other gains and losses. However, if change in fair value due to credit risk is recognized in other comprehensive income, its will cause or worsen the accounting mismatch, then such changes in fair value of the liability in its entirety shall be fully recognized in gain or loss.

Please refer to Note 35 for the methods in determining fair values.

(2) Derecognition of financial liabilities

When derecognizing financial liabilities, the difference between its carrying amount and the paid consideration (including any transferred non-cash assets or liabilities assumed) shall be recognized in gain or loss.

Convertible bonds

Compound financial instruments issued by the combined company (convertible bonds) are classified separately as financial liabilities and equity in accordance with the substance of contractual arrangements and the definitions of a financial liability and an equity instrument.

On initial recognition, fair value of the liability component is calculated by using the prevailing market interest rate of similar non-convertible instruments. This amount is recorded as a liability amortized at effective interest method until extinguished upon conversion or the instrument’s maturity date. The liability component of an embedded derivative instrument is measured at fair value.

Conversion option is the equity component of a compound financial instrument which is measured at the amount of the fair value of the overall compound instrument deducted by the fair value of the liability component. The amount of the conversion option net of tax is recognized as equity so is not subsequently remeasured. When the conversion option is exercised, the associated liability component and the amounts recognized in equity are transferred to share capital and reserves – premium. If the conversion option of convertible bonds remains unexercised at the maturity date, the amount recognized in equity will be transferred to capital surplus – premium.

Transaction costs that relate to the issuance of the convertible bonds are divided into liability (list the carrying amount of liability) and equity (list in equity) components and in proportion to the respective values of the liability and equity components of the overall instrument.

(XIV) Revenue Recognition

After the combined company identifies its performance obligations in contracts with customers, it shall amortize the transaction costs to each obligation in the contract and recognize revenue upon satisfaction of performance obligations.

Revenue from sales of goods

Revenue is derived from the sales of computer, communication, consumer electronics and automotive components. Because the customer has the right to use the product when it is sold, and bears the risk of loss or damage to it, the combined company recognizes the revenue and accounts receivable at that point.

(XV) Leases
2019

The combined company assesses whether a contract is (or contains) a lease on the execution date of the contract.

The combined company is a Lessor Leases in which the lessee assumes substantially all of the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.
When the combined company subleases the right-of-use asset, it determines the classification of the sublease by the right-of-use asset (not the underlying asset). However, if the main lease is a short-term lease where the recognition exemption is applicable for the combined company, the sublease is classified as an operating lease. Under finance leases, lease payments are fixed payments. Net lease investment is measured as the sum of the present value of lease receivables and unguaranteed residual value plus the original direct cost and expressed as finance lease receivable. Financing income is allocated to each accounting period to reflect the fixed rate of return on the unexpired net lease investment of the combined company in each period.
The combined company is a Lessee
A right-of-use asset and a lease liability are recognized for all leases at the inception date of such leases, except for leases qualified for recognition exemption, e.g. leases with low-value underlying assets and short-term leases, for which an expense is recognized on a straight-line basis over the lease term.

The right-of-use asset is initially measured at cost (including the original amount of the lease liability), and subsequently measured at the cost less accumulated depreciation and accumulated impairment losses, and the remeasurement of lease liabilities is adjusted. Right-of-use assets are expressed separately in the consolidated balance sheet.

A right-of-use asset is depreciated on a straight-line basis over the period from the lease commencement date to the end of its useful lives, or to the end of the lease term, whichever is earlier.

A lease liability is initially measured at the present value of lease payments (including fixed payments). If the interest rate implicit in a lease can be easily determined, the lease payment is discounted at the interest rate. If the interest rate cannot be easily determined, the lessee's incremental borrowing rate of interest shall be used.

Subsequently, lease liabilities are measured at the amortized cost using the effective interest rate method, and interest expense is amortized over the lease term. In the case that future lease payments change as a result of a change in the lease term, the combined company remeasures the lease liability and correspondingly adjusts the right-of-use asset, except in the case when the carrying amount of the right-of-use asset has reduced to zero, in which case any residual remeasured amount shall be recognized in gain or loss. Lease liabilities are expressed separately in the consolidated balance sheet. 2018

Leases in which the lessee assumes substantially all of the risks and rewards of ownership are classified as finance leases. All other leases are classified as operating leases.

The combined company is a Lessee
- Payment for operating leases are recognized as expenses during the lease period based on straight-line method.
Land and Building Leases
- When leases include land and building elements, the Company classifies them as finance or operating leases based on whether most risks and rewards from ownership of the elements have been transferred to the lessee. Minimum lease payments shall be apportioned to land and buildings in proportion to the fair value of land and building lease rights on the lease start date.
- If lease payments can be allocated reliably between these two elements, then each element is classified under relevant lease. If lease payments cannot be allocated reliably between the two elements, the entire lease is classified under finance lease. If both elements clearly meet the standards of operating leases, the entire lease is classified under operating lease.
(XVI) Government subsidies
Government subsidies are only recognized when they can be reasonably assured that the combined company will comply with the conditions imposed by government subsidies and that such subsidies will be recognized when received.

If the government subsidy is used to compensate fees or losses that had occurred, or is given to the combined company for the purpose of immediate financial support without related future costs, it can be recognized as income within the collectible period.

(XVII) Employee benefits
Short-term employee benefits
- Related liabilities for short-term employee benefits are measured by the non-discounted amount expected to be paid in exchange for employee services.
Benefits after retirement

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

(XVIII) Income tax

Income tax expenses are the sum of current income tax and deferred income tax.

Current income tax

A tax is levied on the unappropriated earnings of the subsidiary in Taiwan pursuant to the Income Tax Act and is recognized as income tax expense in the year when the shareholders' meeting resolves to appropriate the earnings.

Adjustments to income tax payable from previous years are recognized in the income tax of current year.

Deferred income tax

Deferred income tax is calculated based on the temporary difference between the carrying amount of the assets and liabilities and the taxable basis of the taxable income.

Deferred income tax liabilities are generally recognized for all taxable temporary differences and deferred income tax assets are recognized when there are likely to be taxable income for the deductible temporary differences or the carryforward of unused tax losses.

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

The carrying amount of the deferred income tax assets is re-examined at each balance sheet date and the carrying amount is reduced for assets that are no longer likely to generate sufficient taxable income to recover all or part of the assets. Assets that have not been recognized as deferred income tax assets are re-examined at each balance sheet date and the carrying amount is increased for assets that are likely to generate sufficient taxable income to recover all or part of the assets.

Deferred income tax assets and liabilities are measured at the tax rate of the period of expected repayment of liabilities or realization of assets. The rate is based on the tax rate and tax laws that have been enacted prior to the balance sheet date or have been substantially legislated. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the balance sheet date, to recover or settle the carrying amount of its assets and liabilities.

Current and deferred taxes for the year

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

If current income or deferred tax arises from business combination, tax effects are included in the accounting for business combination.

V. Significant accounting judgments and assumptions, and major sources of estimation uncertainty

When the combined company adopts accounting policies, the management must make judgments, estimates and assumptions based on historical experience and other critical factors for related information that are not readily available from other sources. Actual results may differ from original estimates.

The management shall continue to review the estimates and basic assumptions. If an amendment of estimates only affects the current period, it shall be recognized in the current period of amendment; if an amendment of accounting estimates affects the current year and future periods, it shall be recognized in the current year and future periods.

The management shall continue to review the estimates and basic assumptions. If an amendment of estimates only affects the current period, it shall be recognized in the current period of amendment; if an amendment of accounting estimates affects the current year and future periods, it shall be recognized in the current year and future periods.	asic assumptions. eriod, it shall be ent of accounting recognized in the	asic assumptions. eriod, it shall be ent of accounting recognized in the
VI. Cash and cash equivalents Dec. 31,2019 Dec. 31,2018 Cash on hand and revolving funds $ 1,339 $ 640 Checking accounts and demand deposits 910,415 549,652 Cash equivalents (investments with original maturity date of less than three months) Bank fixed deposit 30,578 - $ 942,332 $ 550,292 Bank Interest rates at the balance sheet date were categorized into different internals listed as follows: Dec. 31,2019 Dec. 31,2018 Bank deposits 0.0001%~0.35% 0.01%~0.33% Fixed deposits 2.15% - VII. Financial instruments measured at fair value through profit or loss Dec. 31,2019 Dec. 31,2018 Financial liabilities – current Designation as at fair value through profit or loss Derivatives (hedge unspecified)-Redemption Option (Note 22) $ 3,392 $ 910 VIII. Financial assets at amortized cost Dec. 31,2019 Dec. 31,2018 Current Domestic investment Bank deposits - restricted $ 4,355 $ 3,842 Fixed deposits with original maturity over 3 months - restricted 75,081 - $ 79,436 $ 3,842	Dec. 31,2018
	0.01%~0.33% - loss Dec. 31,2018
	$ 910 Dec. 31,2018
		$ 3,842 - $ 3,842

Bank Interest rates at the balance sheet date were categorized into different internals listed as follows:

For details on pledges, please refer to Note 37.

As of Dec. 31, 2019, the annual rate of fixed deposits with original date due of more than three months is 2.25%.

IX. Credit Risk Management for Debt Instruments

All debt instruments invested by the combined company are financial assets measured at amortized cost.

Dec. 31, 2019

Measured at amortized

Total carrying amount Loss allowance Amortized cost Dec. 31, 2018 Total carrying amount Loss allowance Amortized cost		cost
	$ 79,436 - $ 79,436 Measured at amortized cost
		$ 3,842 - $ 3,842

To mitigate credit risk, the management of the combined company shall perform credit rating assessments to assess the default risk of debt instrument investment institutions. For credit rating items which lacks external rating information, appropriate internal rating shall be given by referencing public financial information. The combined company continuously tracks information such as material information from the financial institutions to monitor changes in the credit risk of the debt instruments it has invested in, and evaluates whether the credit risk of the debt instrument investments has increased significantly since its original recognition.

The combined company takes stock of the historical default records and current financial conditions of financial institutions provided by the internal credit rating team, so as to measure the 12-month expected credit loss or the lifetime expected credit loss of the debt instrument investment.

The combined company’s current credit risk rating mechanism and the total carrying amount of investments in debt instruments at each credit rating are as follows:

follows:
Credit Rating	Definition	Basis of Recognition of Expected Credit Losses
Norma l	The debtor has a low credit risk and is fully capable of paying off contractual cash flows.	12-month expected credit losses

The total book value of each credit rating debt instrument investment and the applicable expected credit loss rate are as follows: Dec. 31, 2019

Dec. 31, 2019
Credit Rating Normal Dec. 31, 2018 Credit Rating Normal	Expected credit loss rate 0% Expected credit loss rate 0%	Total carryingamount
		Measured at amortized cost
		$ 79,436 Total carryingamount
		Measured at amortized cost
		$ 3,842

X. Notes receivable, accounts receivable and other receivables

Notes receivable Measured at amortized cost Total carrying amount Less: Loss allowance Accounts receivable Measured at amortized cost Total carrying amount Less: Loss allowance Other comprehensive income measured at fair value Other receivables Others	Dec. 31,2019 $ 4,684 - $ 4,684 $ 2,109,054 ( 32,348 ) - $ 2,076,706 $ 17,122		Dec. 31,2018
	(	(	$ 5,379 - $ 5,379 $ 2,118,093 28,077 ) 130,136 $ 2,220,152 $ 17,828

Accounts receivable

(I) Accounts receivable measured at amortized cost

The average credit granting period for product sales of combined company is 150 days. The combined company adopts a policy of treating transactions with counterparties approved by the company's credit ratings assessment and where necessary, sufficient collateral is obtained to mitigate the risk of financial losses arising from defaults. The combined company shall use publicly obtainable financial information and past transaction records to grade main customers. The combined company continues to monitor credit risk exposure and the credit ratings of counterparties and distributes total transaction amounts among qualified customers only. It also manages credit risk exposure through reviews and credit line approval through the audit committee. The combined company recognizes loss allowance for accounts receivable in accordance with lifetime expected credit loss. Lifetime expected credit losses are calculated based on the bad debt provision matrix which accounts for the customer's past default records, current financial status, and economic conditions in the industry. GDP forecasts and the outlook of the industry are also considered. The combined company separates individual customers into different risk groups and recognizes loss allowance based on the expected loss rate of each group. The combined company has no notes receivable that are overdue but for which allowance has not been recognized as of the balance sheet date, and considering that no impairment has occurred in the past, the expected credit impairment loss rate of notes receivable is set at 0%. The combined company writes off accounts receivable when there is information indicating that the debtor is experiencing severe financial

difficulty and there is no realistic prospect of recovery of the receivables. For accounts receivable that have been written off, the combined company continues to engage in enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognized in gain or loss.

Measurement of loss allowance for notes receivable and accounts receivable based on provisional matrix by the combined company is as follows:

Dec. 31, 2019

follows: Dec. 31, 2019
Not overdue 1 - 60 days overdue 61 - 120 days overdue 121 - 180 days overdue 181 - 240 days overdue 241 - 365 days overdue Over Expected credit loss rate 0%~17.94% 0%~27.47% 9.09%~33.06% 14.29%~40.01% 25%~59.97% 28.31%~100% 25. Total carrying amount $ 1,882,993 $ 178,413 $ 18,494 $ 10,881 $ 882 $ 4,586 $ Loss allowance (lifetime expected credit loss) ( 1,547) ( 3,004) ( 4,990) ( 3,221) ( 405) ( 2,115) ( Amortized cost $ 1,881,446 $ 175,409 $ 13,504 $ 7,660 $ 477 $ 2,471 $ Dec. 31, 2018 Not overdue 1 - 60 days overdue 61 - 120 days overdue 121 - 180 days overdue 181 - 240 days overdue 241 - 365 days overdue Over Expected credit loss rate 0%~4.7% 0%~5.43% 0%~11.56% 0%~19.88% 0%~26.32% 0%~49.69% 7.7 Total carrying amount $ 1,688,447 $ 458,183 $ 31,483 $ 42,054 $ 901 $ 6,619 $ Loss allowance (lifetime expected credit loss) ( 1,271) ( 3,721) ( 1,884) ( 1,216) ( 18) ( 1,039) ( Amortized cost $ 1,687,176 $ 454,462 $ 29,599 $ 40,838 $ 883 $ 5,580 $ Changes in loss allowance for accounts receivable are as 2019 Opening balance $ 28,077 : Impairment loss recognized 5,673 : Amounts actual written off ( 4 ) Foreign currency translation differences ( 1,398) Balance at the end of the year $ 32,348	241 - 365 days overdue		Over	due over 365 days		Total
	28.31%~100% $ 4,586 ( 2,115) $ 2,471 241 - 365 days overdue	(	25. $	83%~100% 17,489 17,066) 423 due over 365 days		$ 2,113,738 ( 32,348) $ 2,081,390 Total
			$
			Over
			7.7 $ (
			$
				(	$ 16,619 12,011 - 553) $ 28,077

Compared with the opening balance, the total carrying value of accounts receivable in 2019 and 2018 experienced a net decrease of NT$139,175 thousand and a net increase of NT$420,329 thousand, respectively, and resulted in increases in the loss allowance of NT$5,673 thousand and NT$12,011 thousand, respectively. The increase in the loss allowance in 2019 was mainly due to the increase in the number of aging days of accounts receivable.

(II) Accounts receivable measured at fair value through other comprehensive income
- For the larger amount of receivables, the combined company will decide whether to sell it to the bank without recourse depending on the conditions of the working capital. The combined company's business model for managing such accounts receivable is achieved by receiving contractual cash flows and selling financial assets. Therefore, such accounts receivables are measured at fair value through other comprehensive income.
XI. Finance lease receivables

The composition of finance lease receivables in 2019 is as follows:

Dec. 31, 2019

Undiscounted lease payments

Year 1		$	6,381
Year 2			6,381
Year 3			6,381
Year 4			1,862
			21,005
Less: unearned finance income	(		1,676 )
Lease payment receivable			19,329
Net investment in a lease
(expressed as finance lease
receivables)		$	19,329

The combined company sub-leased part of the leased plant in April, 2019 and received a fixed lease payment of NT$6,381 thousand per year. Since the remaining period of the main lease was fully sub-leased, it was classified as a finance lease.

The interest rate implicit in a lease during the lease period will not change after determination on the contract date. The interest rate implicit in the finance lease as of Dec. 31, 2019 is 5% per annum.

The combined company measures the loss allowance of finance lease receivables based on lifetime expected credit losses. Finance lease payment receivables are pledged by leased equipment. As of the balance sheet date, there were no overdue outstanding finance lease receivables. At the same time, considering counterparties' past default records, the future development of the relevant industry of the subject if the lease and the value of collateral, the combined company deemed that no impairment has occurred for the above financial lease payment receivable.

XII.

Inventory

payment receivable. Inventory
Finished goods Work-in-process Raw material	Dec. 31,2019 $ 413,233 178,556 144,929 $ 736,718	Dec. 31,2018
			$ 518,020 209,601 172,899 $ 900,520

In 2019 and 2018, the cost of sales for inventories was NT$4,011,648 thousand and NT$4,757,020 thousand, respectively. The cost of sales includes inventory losses of NT$46,758 thousand and NT$11,583 thousand.

XIII. Subsidiaries

Subsidiaries included in the consolidated financial reports The entities of the Consolidated Financial Report are as follows:

Investor company	Name of subsidiaries	Business activities	Percentage of equity interest held	Percentage of equity interest held	Description
			Dec. 31, 2019	Dec. 31, 2018
Lemtech Global Solution Co. Ltd. Lemtech Global Solution Co. Ltd.	Lemtech Global Solution Co. Ltd. (formerly Super Solution Co., Ltd., hereinafter referred to as "Global Solution") Lemtech Precision Material (China) Co., Ltd (China) (formerly Kunshan Lemtech Precision Material Co., Ltd, hereinafter referred to as	Investment holding companies Production and design of various types of fine blanking die, non-metal die-casting toolings, computer connectors, computer cooling modules and other new electronic plug-ins, as well as sales of self-produced	100 0.2	100 0.2	On Nov. 23, 2009, all shares were obtained by a stock swap. Merged LDC Precision Engineering Co., Ltd (Kunshan) in on Mar. 17, 2010. (Note

	"Lemtech Precision Material")	products, etc.			2)
Lemtech Global	Zhenjiang Emtron Surface	Surface treatment of mechanical, electronic	83.33	-	Investment funds
Solution Co. Ltd.	Treatment Limited Company	and automotive components			were remitted on
	(hereinafter referred to as				Jan. 22, 2019. (Note
	"Emtron Company")				3)
Lemtech Global	Lemtech Industrial Services	Sales of electronics and computer	57	-	Notes 1 and 4.
Solution Co. Ltd.	Ltd (hereinafter referred to as	peripheral component
	"LIS")
Lemtech Global	Lemtech Cooling System	Investment holding companies	100	-	Established on Jun.
Solution Co. Ltd.	Limited (hereinafter referred				12, 2019, and funds
	to as "Lemtech Cooling")				remitted for the
					shares on Aug. 22,
					2019. (Note 1)
Global Solution	Lemtech Precision Material	Production and design of various types of	99.8	99.8	Merged LDC
	(China) Co., Ltd (China)	fine blanking die, non-metal die-casting			Precision
	(formerly Kunshan Lemtech	toolings, computer connectors, computer			Engineering Co., Ltd
	Precision Material Co., Ltd,	cooling modules and other new electronic			(Kunshan) in on
	hereinafter referred to as	plug-ins, sales of self-produced products,			Mar. 17, 2010. (Note
	"Lemtech Precision Material")	etc.			2)
Lemtech Cooling	Lemtech Philippine Thermal	Manufacturing, purchasing, sales,	100	-	Established on Jul.
	System Inc. (hereinafter	distribution, wholesale sales, and precision			15, 2019, and funds
	referred to as "Lemtech	metal stamping tools, customized metal			remitted for the
	Philippine")	hinges, cooling modules, slides, mechanical			shares on Oct. 30,
		components and other related items			2019. (Note 1)
Lemtech Cooling	Lemtech Energy Solutions	Manufacture and wholesale of machinery	100	-	Notes 5 and 6.
	Corporation (Taiwan)	and equipment, molds, electrical and
	(hereinafter referred to as	audio-visual electronic products, other
	"Lemtech Energy Solutions	electrical and electronic machinery,
	Corporation", formerly	automobiles and their parts, and other
	Lemtech Cryomax System	optical and precision equipment
	Corp.)
Lemtech Cooling	Kunshan Lemtech Electronics	R & D, manufacturing, and sales of	100	-	Established on Oct.
	Technology Co., Ltd.	self-produced electronic components,			9, 2019, and funds
	(hereinafter referred to as	special electronic materials, and cooling			remitted for the
	"Lemtech Electronics	modules; engaged in the production of the			shares on Dec. 3,
	Company")	same products of the parent company and			2019. (Note 1)
		the wholesale, import and export of raw
		materials and mechanical equipment used
		by the parent company
Lemtech	LDC Precision Engineering	Manufacture and wholesale of electrical	100	100	Established on May
Precision	Co., Ltd. (hereinafter referred	appliances, audio-visual electronic			10, 2010.
Material	to as "LDC Company")	products, other electrical and electronic
		machinery, automobiles and automotive
		parts, other optical and precision
		machinery
Lemtech	Lemtech Technology Limited	Sales of automotive, electronics and	100	100	Established on Apr.
Precision	(hereinafter referred to as	computer peripheral parts			9, 2014.
Material	"Lemtech HK")
Lemtech	Lemtech Precision Material	Manufacture of automotive parts (sunroof,	100	100	Operations began on
Precision	(CZECH) s.r.o. (hereinafter	brakes, seat belts, airbags, etc.) and			Jan. 1, 2017. (Note 1)
Material	referred to as "Lemtech CZ")	assemblies (drive shafts for steering wheel,
		etc.), supply of consumer electronics parts
		and server product
Lemtech HK	Lemtech USA Inc. (hereinafter	U.S. business development, business	100	100	Established on May
	referred to as "Lemtech USA")	information collection, provision of market			31, 2013. (Note 1)
		intelligence and industry information
Lemtech HK	Lemtech Industrial Services	Sales of electronics and computer	-	57	Established on Dec.
	Ltd (hereinafter referred to as	peripheral component			17, 2015, and funds
	"LIS")				remitted for the
					shares on Apr. 12,
					2016. (Notes 1 & 4)
LIS	Kunshan Lemtech Slide	Design and production of slide rails, shafts	100	100	Established on Jul.
	Technology Co., Ltd. (China)	and related accessories, and sales of			21, 2016. (Note 1)
	(hereinafter referred to as	self-produced products, etc.
	"Lemtech Slide Company")
Notes:

Lemtech Philippine, Lemtech Electronics Company, Emtron Company, Lemtech Cooling, Lemtech Energy Solutions Corporation, Lemtech USA, Lemtech CZ, LIS, LDC Company, and Lemtech Slide Company are all non-essential subsidiaries. Except LDC Company, the financial reports of the

rest have not been audited by a certified public accountant; however, the management of the combined company deemed that the fact that the financial reports of the above-mentioned non-essential subsidiaries have not been audited by a certified public accountant would not resulted in significant differences.

The combined company introduced strategic shareholders to expand business in China. The board of directors resolved to sell 10% of the shares of Lemtech Precision Material, and completed the relevant equity transfer on Oct. 21, 2015. The board of directors resolved that Lemtech Global Solution Co. Ltd. shall reacquired 0.2% of the shares of the subsidiary Lemtech Precision Material and Global Solution acquired the 9.8% of the shares of the subsidiary Lemtech Precision Material on Sep. 28, 2018. For details on the relevant transactions, please refer to Note 32.
In order to continue to expand the production supply chain of automobile components in China and achieve stability and improve gross profit, the combined company signed a contract on Jan. 23, 2019 and paid the total transaction amount of NT$111,966 thousand, or US$3,640 thousand, to acquire 83.33% of the equity and debt of Emtron Company, which completed equity transfer on Jan. 23, 2019. For details on the relevant transactions, please refer to Note 31.
In accordance with the company's operating plan, future development and goals of enhancing the company's competitiveness, the combined company adjusted its investment structure in accordance with board resolution. In April, 2019, LIS held by Lemtech HK was assigned to be held by Lemtech Global Solution Co. Ltd.
Lemtech Cryomax System Corp. was established on Apr. 2, 2015. On Nov. 10, 2018, Global Solution acquired 50% of the equity of Lemtech Cryomax System Corp., and obtained a gain from a bargain purchase from Lemtech Cryomax System Corp. at NT$298 thousand. Participated in capital increase in cash in January, 2019, and the shareholding ratio remained unchanged after the capital increase. The company name was changed to Lemtech Energy Solutions Corporation since October 2019.
Corresponding to the company's operating plan, future development and goals of enhancing the company's competitiveness, the combined company adjusted the investment structure in accordance with board resolution, and assigned 50% of equity of Lemtech Energy Solutions Corporation (formerly Lemtech Cryomax System Corp.) held by Lemtech Global Solution Co. Ltd to Lemtech Cooling. And Lemtech Cooling shall acquire the remaining 50% equity of Lemtech Energy Solutions Corporation (formerly Lemtech Cryomax System Corp.). Relevant contracts were executed on Jul. 1, 2019, and the total transaction amount of NT$30,000 thousand was paid and the equity transfers completed. For details on the relevant transactions, please refer to Note 31.
XIV.

Investment using equity method

refer to Note 31. Investment using equity method
Affiliates not individually significant Aapico Lemtech (I) Lemtech Energy Solutions Corporation	Dec. 31,2019 $ 32,923 -	Dec. 31,2018
			$ 29,692 3,810

(formerly Lemtech Cryomax System Corp.)

(II)

$ 32,923 $ 33,502
(I) The combined company signed an investment agreement with Thai listed company Aapico Hitech Plc. (AH: TB) on Mar. 1, 2013, invested in cash, and jointly established Aapico Lemtech (Thailand) Co. on Mar. 1, 2013. , Ltd. (hereinafter referred to as "Aapico Lemtech"). In accordance with the company's operating plan, on Jun. 30, 2016, the combined company adjusted the equity held of Aapico Lemtech, the holding is assigned to Global Solution to Lemtech HK.
(II) The combined company adjusted the investment structure on Jul. 1, 2019. For details, please refer to Notes 13 and 6.
(III) The ratios of ownership, equities, and voting rights of the combined company in affiliate enterprises are as follows:

Name	Business activities R&D, production, manufacturing and assembly of automotive, electronics and computer peripheral parts Manufacture and wholesale of machinery and equipment, molds, electrical and audio-visual electronic products, other electrical and electronic machinery, automobiles and their parts, and other optical and precision equipment	Principal place of business	Percentage of Ownership and Votes	Percentage of Ownership and Votes
			Dec. 31,2019	Dec. 31,2018
Aapico Lemtech Lemtech Energy Solutions Corporation (formerly Lemtech Cryomax System Corp.)		Thailand Taiwan	40% 100% (Subsidiaries included in the consolidated financial reports)	40% 50%

The gain and loss and other comprehensive income proportions of affiliates using the equity method in 2019 and 2018 were recognized and disclosed based on the financial report of the investee without CPAs' verification during the same period; however, the management of the combined company deemed that no significant influence will occur from the use of such financial reports.

For the information of the main business and products, main place of business and country registered for the aforementioned affiliates, please refer to Attachment 7, "Information of Invested Companies".

XV. Property, Plant and Equipment

For self-use

2019 $ 1,808,305

(I) for self-use - 2019

Cost Balance as of Jan. 1, 2019 Additions Acquired through business combinations Disposal Reclassification Net exchange differences Balance as of Dec. 31, 2019 Accumulated depreciation and impairment Balance as of Jan. 1, 2019 Depreciation expense Disposal Reclassification Net exchange differences Balance as of Dec. 31, 2019 Net balance as of Dec. 31, 2019		Land		Buildings	Machinery equipment	Transportation equipment	Office equipment	Leasehold improvements	Other Equipment $ 362,046 20,851 3,786 ( 7,246 ) 24,020 ( 12,319) $ 391,138 $ 169,724 57,042 ( 3,252 ) 56 ( 7,454) $ 216,116 $ 175,022	Un a	finished constructions nd equipment to be tested	Total
		$ - 444,705 - - 48,893 - $ 493,598 $ - - - - - $ - $ 493,598	( (	$ 507,950 68 150 - - 18,860) $ 489,308 $ 64,297 25,151 - - 2,975) $ 86,473 $ 402,835	$ 852,434 94,666 40,471 ( 63,186 ) 136,195 ( 35,098) $ 1,025,482 $ 326,068 96,918 ( 35,745 ) - ( 14,477) $ 372,764 $ 652,718	$ 33,078 1,544 918 ( 2,602 ) 21 ( 1,251) $ 31,708 $ 18,851 4,313 ( 1,395 ) - ( 763) $ 21,006 $ 10,702	$ 40,452 2,631 269 ( 4,622 ) 34 ( 1,405) $ 37,359 $ 29,004 3,773 ( 3,017 ) - ( 1,085) $ 28,675 $ 8,684	$ 69,904 14,419 - - ( 405 ) ( 2,616) $ 81,302 $ 31,775 9,864 - ( 56 ) ( 1,448) $ 40,135 $ 41,167		( ( (	$ 4,746 23,972 - 90 ) 4,872 ) 177 ) $ 23,579 $ - - - - - $ - $ 23,579	$ 1,870,610 602,856 45,594 ( 77,746 ) 203,886 ( 71,726) $ 2,573,474 $ 639,719 197,061 ( 43,409 ) - ( 28,202) $ 765,169 $ 1,808,305

In 2019, as there is no indicator of impairment, the combined company did not conduct impairment assessment.

Depreciation expenses are calculated on a straight-line basis according to the following durable years:

id not conduct impairment assessment. Depreciation expenses are calculated on a o the following durable years:	straight-line basis according
Buildings	20 years
Machinery equipment	3 to 10 years
Office equipment	2 to 10 years
Transportation equipment	5 years
Leasehold improvements	1 to 5 years
Other Equipment	2 to 10 years

(II)

Please refer to Note 37 for the amount of property, plant and equipment pledged as collateral for borrowings. 2018

Cost Balance as of Jan. 1, 2018 Additions Disposal Reclassification Net exchange differences Balance as of Dec. 31, 2018 Accumulated depreciation and impairment Balance as of Jan. 1, 2018 Disposal Reclassification Depreciation expense Net exchange differences Balance as of Dec. 31, 2018 Net balance as of Dec. 31, 2018		Buildings		Machinery equipment	Transportation equipment	Transportation equipment		Office equipment	Leasehold improvements	Leasehold improvements		Other Equipment	Unfinished constructions and equipment to be tested		Total
	( ( ( (	$ 488,017 35,915 - 6,101 ) 9,881) $ 507,950 $ 39,767 - 153 ) 25,956 1,273) $ 64,297 $ 443,653	( ( ( (	$ 701,327 176,779 18,765 ) 7,146 14,053) $ 852,434 $ 275,837 16,323 ) - 73,460 6,906) $ 326,068 $ 526,366	( ( ( (	$ 28,941 10,781 6,085 ) - 559) $ 33,078 $ 21,249 6,063 ) - 4,153 488) $ 18,851 $ 14,227	( ( ( (	$ 36,730 5,747 1,334 ) - 691) $ 40,452 $ 25,371 1,327 ) - 5,537 577) $ 29,004 $ 11,448	( (	$ 29,994 34,420 - 6,101 611) $ 69,904 $ 27,896 - - 4,572 693) $ 31,775 $ 38,129	( ( ( ( (	$ 189,718 184,442 152 ) 8,140 ) 3,822) $ 362,046 $ 120,364 150 ) - 53,015 3,505) $ 169,724 $ 192,322	$ 6,508 4,746 - ( 6,375 ) ( 133) $ 4,746 $ - - - - - $ - $ 4,746	( ( ( ( ( (	$ 1,481,235 452,830 26,336 ) 7,369 ) 29,750) $ 1,870,610 $ 510,484 23,863 ) 153 ) 166,693 13,442) $ 639,719 $ 1,230,891

In 2018, as there is no indicator of impairment, the combined company did not conduct impairment assessment.

Depreciation expenses are calculated on a straight-line basis according to the following durable years:

Buildings 20 years Machinery equipment 5 to 10 years Office equipment 5 years Transportation equipment 5 years Leasehold improvements 2 to 3 years Other Equipment 2 to 5 Years

XVI.

Lease Agreement (I) Right-of-use assets - 2019 Carrying value of right-of-use assets Land use rights Building Transportation Equipment Addition to right-of-use assets Depreciation expenses of right-of-use		2019
		$ 84,920 143,859 4,322 $ 233,101 $ 41,610

assets Land use rights Building Transportation Equipment		2019
		$ 2,224 45,457 1,653 $ 49,334

The right-of-use asset includes long-term prepaid rent for leased land in China, and the combined company has obtained certificate for the land use rights of such land.

(II) Lease liabilities - 2019

use rights of such land. Lease liabilities - 2019
Carrying amount of lease liabilities current noncurrent		2019
		$ 47,803 $ 120,340

The discount rate intervals for lease liabilities are as follows:

Building Transportation equipment	2019
	1.1%~7.42% 3.16%

(III) Important Leasing Activities and Terms

The combined company rent certain land, buildings, and transportation equipment as plant, office, and office use by employees. The lease period is 2 to 50 years. At the end of the lease term, the combined company has no preferential right to take over the leased building.

(IV) Sublease

For information on subleasing, please refer to Note 11.

(IV) Sublease For information on subleasing, please refer to Note 11.
(V) Other lease information 2019 Expense on leases of low-value assets Total cash outflow from lease		2019
		$ 6,950 $ 57,408

The combined company choose to apply recognition exemptions to some buildings and transportation equipment that qualify as leases of low-value assets. Consequently, the combined company does not recognize any right-of-use assets or lease liabilities for the said leases. 2018

The total minimum future payable amount for operating leases that cannot be canceled are as follows:

cannot be canceled are as follows:
Less than 1 year 1 - 5 years		2018
		$ 29,145 80,197 $ 109,342

XVII.

Goodwill

2019

Cost Opening balance Acquisition through business combinations for the current year (Note 31) Net exchange differences ( Balance at the end of the year Accumulated impairment losses Opening balance Recognized Impairment of the Year Balance at the end of the year Net balance at the end of the year	$ - 82,740 353) $ 82,387 $ - - $ - $ 82,387

The combined company acquired Zhenjiang Emtron Surface Treatment Limited Company on Jan. 22, 2019, gained goodwill of NT$78,155, which is mainly due to the benefits expected from a stable production supply chain of automotive components in China.

The combined company acquired Lemtech Energy Solutions Corporation (formerly Lemtech Cryomax System Corp.) on Jul. 1, 2019, gained goodwill of NT$4,585, which was mainly due to the benefits expected from the production and sales of server cooling products in Taiwan.

The company conducts impairment assessment on the recoverable amount of goodwill on the end of the annual financial reporting period, and conducts impairment tests when specific events or environmental changes indicate that goodwill may be impaired. When the combined company tests whether the goodwill is impaired, it uses the value in use as the basis for calculating the recoverable amount. The value in use calculation is based on cash flow forecasted by the company's financial forecasts for the next 5 years. XVIII. Other Intangible Assets

Other Intangible Assets
Cost Balance as of Jan. 1, 2019 Separate acquisition Reclassification Acquired through business combinations Disposal Net exchange differences Balance as of Dec. 31, 2019 Accumulated amortization and impairment Balance as of Jan. 1, 2019 Amortization Disposal	Computer software cost	Fair value of franchises and customer relationships		Total
	$ 45,758 5,358 431 - ( 3,924 ) ( 1,378) $ 46,245 ( $ 23,124 ) ( 5,514 ) 2,298	(	$ - - - 26,811 - - $ 26,811 $ - 5,288 ) -	$ 45,758 5,358 431 26,811 ( 3,924 ) ( 1,378) $ 73,056 ( $ 23,124 ) ( 10,802 ) 2,298

XIX.

XX.

Net exchange differences		776		-			776
Balance as of Dec. 31, 2019	( $	25,564 ) (	$	5,288	)	( $	30,852 )
Net balance as of Dec. 31,
2019	$	20,681	$	21,523		$	42,204
Cost
Balance as of Jan. 1, 2018	$	40,441	$	-		$	40,441
Separate acquisition		5,976		-			5,976
Net exchange differences	(	659)		-		(	659)
Balance as of Dec. 31, 2018	$	45,758	$	-		$	45,758
Accumulated amortization
and impairment
Balance as of Jan. 1, 2018	( $	17,876 )	$	-		( $	17,876 )
Amortization	(	5,632 )		-		(	5,632 )
Net exchange differences		384		-			384
Balance as of Dec. 31, 2018	($	23,124)	$	-		($	23,124)
Net balance as of Dec. 31,
2018	$	22,634	$	-		$	22,634
Amortized expenses were calculated on a straight-line basis over estimated
useful lives listed as follows:
Computer software				3	to 10 years
Fair value of franchises	and	customer
relationships					5 years
Prepaid lease payment
					Dec.	31,	2018
Current					$	2,251
Noncurrent						88,214
					$	90,465

As of Dec. 31, 2018, out of all prepaid lease payments, the land use right of lands located in China was NT$90,465 thousand. The combined company has obtained all the land use right certificates. Other Assets

all the land use right certificates. Other Assets
Current Prepayments Prepayments for goods Prepaid lease payment - current Other prepayments Other current assets Temporary payment Payments for Other	Dec. 31,2019 $ 37,356 - 47,712 $ 85,068 $ 154 1,893	Dec. 31,2018
			$ 6,022 2,251 95,650 $ 103,923 $ - 3,147

XXI.

Noncurrent Prepayments for equipment Refundable deposit Prepaid lease payment - non-current Loans (I) Short-term loans Unsecured loans Bank loans	$ 2,047 $ 41,228 7,032 - $ 48,260 Dec. 31,2019 $ 965,312	$ 3,147 $ 194,248 2,977 88,214 $ 285,439 Dec. 31,2018	$ 3,147 $ 194,248 2,977 88,214 $ 285,439 Dec. 31,2018
			$ 1,009,466

	The interest rates of the bank's revolving loans were	The interest rates of the bank's revolving loans were	1.2% to 5.22% and	1.2% to 5.22% and
	3.16% to 5.5% on Dec. 31, 2018 and	2019, respectively.
(II)	Long-term loans
		Dec. 31,2019	Dec. 31,	2018
	Secured loans (Note 37)
	Bank loans (1)	$ 350,000	$	-
	Less: Portion due within one
	year	-		-
	Long-term loans	$ 350,000	$	-

The bank loans were secured by pledging the company's owned land as collateral (Note 37). The maturity date of the loan is May 31, 2022. As of Dec. 31, 2019 the effective annual interest rate is 1.47%. The combined company obtained a new bank loan of NT$350,000 thousand from Jan. 1 to Dec. 31, 2019. The purpose of this loan is mainly used to purchase land.

XXII. Corporate Bonds Payable

mainly used to purchase land. Corporate Bonds Payable
unsecured convertible bonds Less: Discount on corporate bonds payable	Dec. 31,2019 $ 595,000 ( 14,399) $ 580,601	Dec. 31,2018
	(	(	$ 600,000 23,522) $ 576,478

Unsecured convertible bonds

The company issued 6 thousand units of unsecured convertible bonds in New Taiwan Dollars in Taiwan on Jul. 30, 2018 with a nominal amount of NT$100 thousand per unit and an interest rate of 0%, issued at a premium of 100.5% of the par value, or NT$600,000 thousand; the total amount received is NT$603,000 thousand.

(I) Holders of each unit of corporate bonds per unit have the right to convert to ordinary shares of the company at NT$220 per share, and the conversion period is from Oct. 31, 2018 to Jul. 30, 2021.
(II) Where the abovementioned corporate bonds are not converted during the conversion period, the outstanding corporate bonds will redeemed in cash at par value on Jul. 30, 2021.

(III) At the end of two years from the issuance date (Jul 30, 2020), bondholders have the right to sell the bonds back to the company at par value.

(III) At the end of two years from the issuance date (Jul 30, 2020), bondholders have the right to sell the bonds back to the company at par value.	(III) At the end of two years from the issuance date (Jul 30, 2020), bondholders have the right to sell the bonds back to the company at par value.	(III) At the end of two years from the issuance date (Jul 30, 2020), bondholders have the right to sell the bonds back to the company at par value.
These convertible bonds include assets, liabilities and equity components; the
equity component is recorded in capital surplus-stock options under		equity. The
equity component is initial recognized at the effective interest rate of 1.55%.
Issuance price (net of transaction costs of NT$5,383 thousand)		$ 598,455
Equity component (less the equity transaction cost of NT$242
thousand)	(	25,738)
Liability component (less the liability transaction cost of
NT$5,625 thousand)		572,717
Interest calculated at the effective interest rate of 1.55%		3,761
Liability component as of December 31, 2018		$ 576,478
Liability component as of Jan. 1, 2019		$ 576,478
Interest calculated at the effective interest rate of 1.55%		8,944
Corporate bonds converted into ordinary shares	(	4,821)
Liability component as of Dec. 31, 2019		$ 580,601

As of December 31, 2019, corporate bonds with a nominal amount of NT$5,000 have been converted into 23,000 ordinary shares of the company. XXIII. Notes payable and accounts payable

Notes payable and accounts payable
Notes payable Arising from operations Accounts payable Arising from operations	Dec. 31,2019 $ 183,304 $ 1,466,225	Dec. 31,2018
			$ 300,787 $ 1,134,173

The average credit period for accounts payable is approximately 120 days, and interest is not added to accounts payable. The Group has established financial risk management policies to ensure that all payables are paid within the pre-agreed credit terms.

XXIV. Other liabilities

pre-agreed credit terms. Other liabilities
Current Other payables Equipment payment and construction payment payable Payroll and bonus payable Benefits payable	Dec. 31,2019 $ 10,616 87,445 3,498	Dec. 31,2018
		$ 5,419 76,131 1,018

(Continued)

(Continued from previous page)

Dec. 31,2019 Dec. 31,2018 Remuneration payable to employees, directors and supervisors 32,246 32,986 Interest payable 4,160 3,789 Commissions payable 822 1,029 Customs and logistics fees payable 25,691 26,396 Others 26,484 53,642 $ 190,962 $ 200,410 Other liability Temporary receipt $ 7,036 $ 255 Others 8,109 7,148 $ 15,145 $ 7,403 XXV. Equity (I) Capital Ordinary stock Dec. 31,2019 Dec. 31,2018 Authorized shares (in thousands shares) 100,000 100,000 Authorized capital stock $ 1,000,000 $ 1,000,000 Number of shares issued and fully paid (in thousand shares) 47,472 39,541 Issued capital $ 474,720 $ 395,411	Dec. 31,2018	Dec. 31,2018
	32,986 3,789 1,029 26,396 53,642 $ 200,410 $ 255 7,148 $ 7,403 Dec. 31,2018

100,000		100,000 $ 1,000,000 39,541 $ 395,411
$ 1,000,000
47,472
$ 474,720

The change in the company's equity is due to the conversion of some of the convertible bonds. For details, please refer to Note 22.

On Jun. 17, 2019, shareholders' meeting of the company resolve to convert the surplus of NT$79,082 thousand into capital, with a denomination amount of NT$10 per share. The capital increase base date was Aug. 21, 2018, and the paid-in capital after the capital increase is NT$474,720.

is NT$474,720.
(II) Capital surplus May be used to cover deficiencies, to issue cash or to set aside capital. Impact of functional currency changes Stock issuance premium Premium on conversion of convertible bonds Difference between the proceeds received from acquisition or disposal of shares to a subsidiary and its carrying amount	Dec. 31,2019	Dec. 31,2018 ( $ 68,246 ) 356,379 389,635 80,841
	( $ 68,246 ) 356,379 394,236 93,995

Not for any purpose Issuance of convertible bonds with recognized equity component	25,738 $ 802,102	25,738 $ 784,347

Such capital surplus may be used to cover deficiencies or, in the absence of deficiencies, to pay out cash or to set aside capital, subject to a ratio of paid-up capital each year.

(III) Retained earnings and dividend policy

According to the company's articles of association, the laws and regulations of the Cayman Islands and listing regulations, in the case of a surplus in the company's annual final accounts, such surplus shall be first subject to taxation, reimbursement of accumulated deficit, followed by a provision for special reserve,if any. Unless the board of directors resolves to keep the remainder as retained earnings, any remainder may be distributed as stock dividend and cash dividend for the shareholders based on their shareholding ratios. Such distribution shall be proposed by the board of directors and submitted to the shareholders' meeting for resolution.

The company's dividend policy considers factors such as the company's stable growth, sustainable operation, capital requirements, sound financial structure, and maintenance of shareholders' equity. The total shareholder dividend shall be not less than 10% of the distributable surplus and may be distributed in stock or in cash, of which cash dividends shall account for no less than 50% of the total dividend distributed. If the company has incurred no loss, it may allocate all or part of the legal capital reserve and capital surplus in accordance with the laws or regulations of the competent authority in consideration of the company's financial, business and operating factors.

For distribution of dividends or bonuses in accordance with the preceding article, the company may, in accordance with the listing regulations, by resolution of the shareholders' meeting, issue all or a portion of the dividends and bonuses by issuing new shares; amounts less than one share may be distributed in cash.

For the valuation basis and actual distribution of the remuneration of employees and directors and supervisors, please refer to Note 27 (6) for remuneration of employees and directors and supervisors.

The company appropriates and reverses special reserve in accordance with the regulations in Jin-Guan-Zheng-Fa's Letter No. 1010012865 from the FSC and "Q&A on the Applicability of the Appropriation of Special Reserve after the Adoption of the International Financial Reporting Standards (IFRSs)".

The company held shareholders' meetings on Jun. 17, 2019 and Jun. 11, 2018. The distribution of earnings for 2018 and 2017 was resolved as follows:

follows:
Special reserve Cash dividend		2018		2017
		$ - $ 98,853	(	$ 15,425) $ 98,853

Stock dividend Cash dividend capital bonus for each share (NT$) Stock dividend capital bonus for each share (NT$)	$ 79,082 $ 2.5 $ 2	$ - $ 2.5 $ -

The company's proposal for distribution of earnings and dividend per share for 2019 was proposed by the board of directors on Mar. 25, 2019: 2019 Special reserve $ 54,849 Cash dividend $ 118,680 Cash dividend capital bonus for each share (NT$) $ 2.5	The company's proposal for distribution of earnings and dividend per share for 2019 was proposed by the board of directors on Mar. 25, 2019: 2019 Special reserve $ 54,849 Cash dividend $ 118,680 Cash dividend capital bonus for each share (NT$) $ 2.5	The company's proposal for distribution of earnings and dividend per share for 2019 was proposed by the board of directors on Mar. 25, 2019: 2019 Special reserve $ 54,849 Cash dividend $ 118,680 Cash dividend capital bonus for each share (NT$) $ 2.5
		$ 54,849 $ 118,680 $ 2.5

		The distribution of earnings for 2019 is	subject to the resolution of the	subject to the resolution of the	subject to the resolution of the	subject to the resolution of the	subject to the resolution of the
		shareholders' meeting to be held on June	15, 2020.
	(IV)	Special reserve
					2019		2018
		Opening balance			$ 13,500		$ 28,925
		Reversal of special reserve
		Reversal on deduction of other equity
		items			-	(	15,425)
		Balance at the end of the year			$ 13,500		$ 13,500
	(V)	Non-controlling interests
					2019		2018
		Opening balance			$ 16,481		$ 144,700
		Net profit for the period			2,892		22,929
		Other comprehensive income for the year
		Exchange differences on translation of
		foreign financial statements			210	(	2,743 )
		Acquisition of non-controlling interests
		in Lemtech Precision Material (Note 32)			-	(	148,405 )
		Acquisition of non-controlling interests
		in subsidiaries Emtron Company (Note
		33)		(	2,411)		-
		Balance at the end of the year			$ 17,172		$ 16,481
XXVI.	Revenue
				2019			2018
	Revenue from contracts with customers
	Revenue from sales of goods		$	5,042,657		$ 6,043,090

(I) Revenue from the sale of goods

Revenue from sales of goods derived from the sales of computer, communication, consumer electronics and automotive components. Because the customer has the right to use the product when the product is sold, and bears the risk of loss or damage to the product, the

combined company recognizes the revenue and accounts receivable at that point.

that point.
(II) Contract Balance Notes receivable Accounts receivable Contract liabilities - Current	Dec. 31,2019	Dec. 31,2018	Jan. 1,2018
	$ 4,684 2,076,706	$ 5,379 2,220,152 $ 2,225,531 $ 66,510	$ 25,076 1,811,281
	$ 2,081,390		$ 1,836,357
	$ 79,408		$ 45,644

(III) Disaggregation of Revenue from Customer Contracts For details of the disaggregation of revenue, please refer to XXVII. Continuing Operations Net Profit (I) Other income 2019 Interest income Bank deposits $ 7,165 Net lease investment 737 7,902 Subsidy income 6,365 Others 765 $ 15,032 (II) Other gains and losses 2019 Financial assets and financial liabilities Financial liability at fair value through profit or loss ( $ 2,489 ) Gains on disposal of affiliates 2,163 Foreign exchange loss - net ( 3,032 ) Gain (loss) from disposal of property, plant, and equipment 592 Others (10,693) ($ 13,459) (III) Financing costs 2019 Interest on bank loans ( $ 43,747 ) Interest on convertible bonds ( 8,944 ) Interest on lease liabilities ( 6,228) ($ 58,919) (IV) Depreciation and amortization 2019 Depreciation expenses summarized by function Operating costs $ 173,869 Operating expenses 72,526	(III) Disaggregation of Revenue from Customer Contracts For details of the disaggregation of revenue, please refer to XXVII. Continuing Operations Net Profit (I) Other income 2019 Interest income Bank deposits $ 7,165 Net lease investment 737 7,902 Subsidy income 6,365 Others 765 $ 15,032 (II) Other gains and losses 2019 Financial assets and financial liabilities Financial liability at fair value through profit or loss ( $ 2,489 ) Gains on disposal of affiliates 2,163 Foreign exchange loss - net ( 3,032 ) Gain (loss) from disposal of property, plant, and equipment 592 Others (10,693) ($ 13,459) (III) Financing costs 2019 Interest on bank loans ( $ 43,747 ) Interest on convertible bonds ( 8,944 ) Interest on lease liabilities ( 6,228) ($ 58,919) (IV) Depreciation and amortization 2019 Depreciation expenses summarized by function Operating costs $ 173,869 Operating expenses 72,526	(III) Disaggregation of Revenue from Customer Contracts For details of the disaggregation of revenue, please refer to XXVII. Continuing Operations Net Profit (I) Other income 2019 Interest income Bank deposits $ 7,165 Net lease investment 737 7,902 Subsidy income 6,365 Others 765 $ 15,032 (II) Other gains and losses 2019 Financial assets and financial liabilities Financial liability at fair value through profit or loss ( $ 2,489 ) Gains on disposal of affiliates 2,163 Foreign exchange loss - net ( 3,032 ) Gain (loss) from disposal of property, plant, and equipment 592 Others (10,693) ($ 13,459) (III) Financing costs 2019 Interest on bank loans ( $ 43,747 ) Interest on convertible bonds ( 8,944 ) Interest on lease liabilities ( 6,228) ($ 58,919) (IV) Depreciation and amortization 2019 Depreciation expenses summarized by function Operating costs $ 173,869 Operating expenses 72,526	Note 43. 2018	Note 43. 2018	Note 43. 2018
		$ 7,165 737 7,902 6,365 765 $ 15,032 2019			$ 10,268 - 10,268 13,500 2,531 $ 26,299 2018
( ( ( (		$ 2,489 ) 2,163 3,032 ) 592 10,693) $ 13,459) 2019	( ( ( ( (		$ 1,990 ) - 49,300 ) 527 ) 7,268) $ 59,085) 2018
( ( ( (		$ 43,747 ) 8,944 ) 6,228) $ 58,919) 2019	( ( (		$ 41,881 ) 3,761 ) - $ 45,642) 2018
	$ 173,869 72,526			$ 96,875 69,818

$ 246,395 $ 166,693 Amortized cost summarized by function Operating costs $ 201 $ 111 Operating expenses 10,601 5,521 $ 10,802 $ 5,632 (V) Employee benefits 2019 2018 Short-term employee benefits $ 568,756 $ 610,857 Benefits after retirement Defined contribution plans 21,473 24,157 Total employee benefit expenses $ 590,229 $ 635,014 Summarized by functions Operating costs $ 271,367 $ 320,597 Operating expenses 318,862 314,417 $ 590,229 $ 635,014 (VI) Remuneration for employees, directors and supervisors Based on the company's article of association, more than 0.5% and less than 2 % of the current year's pre-tax profit shall be allocated as remuneration for employees, directors and supervisors. Remunerations for employees, directors and supervisors for 2019 and 2018 were resolved by the board of directors on Mar. 25, 2020 and Mar. 27, 2019, respectively.		$ 246,395 $ 201 10,601 $ 10,802 2019		$ 166,693 $ 111 5,521 $ 5,632 2018

Estimated ratio

respectively. Estimated ratio
Remunerations for employees Remuneration for directors and supervisors Amount Employee Bonus Remuneration for directors and supervisors	2019	2018
	1% 1% 2019	0.5% 1% 2018
	Cash	Cash
	$ 2,648 2,648	$ 1,946 3,892

If changes are made to the amount after the publication of the consolidated annual financial report, they apply in accordance with accounting estimation changes and will be included in the financial reports of the following year.

Remunerations for employees, directors and supervisors for 2017 and 2018 were resolved by the board of directors on Mar. 27, 2019 and Mar. 22, 2018, respectively.

22, 2018, respectively.
Remunerations for employees	2018	2017
	Cash	Cash
	$ 1,946	$ 1,510

3,892 1,922

Remuneration for directors and supervisors

The company convened the board of directors on May 24, 2018 and adjusted remuneration distribution ratio. Thus actual distribution amount of remuneration for employee, directors and supervisors was different from the recognized amount in the annual consolidated financial report. The difference was adjusted to the gain and loss for 2018.

2018.
Amounts approved by resolution of the board Amount recognized in the annual financial statements			2017
	Remuneratio ns for employees		Remuneration for directors and supervisors
		$ 1,510 $ 1,510		$ 824 $ 1,922

There is no difference between the actual distribution amount of remuneration for employees, directors and supervisors in 2018 and the amount recognized in the 2018 consolidated financial report.

Please refer to the "Market Observation Post System" of Taiwan Stock Exchange for information on the company's remuneration for employee and for Directors and Supervisors by resolution of the board in 2019 and 2018.

(VII) Gains (losses) on currency exchange

Please refer to the "Market Observation Post System" of Taiwan Stock Exchange for information on the company's remuneration for employee and for Directors and Supervisors by resolution of the board in 2019 and 2018. Gains (losses) on currency exchange	Please refer to the "Market Observation Post System" of Taiwan Stock Exchange for information on the company's remuneration for employee and for Directors and Supervisors by resolution of the board in 2019 and 2018. Gains (losses) on currency exchange	Please refer to the "Market Observation Post System" of Taiwan Stock Exchange for information on the company's remuneration for employee and for Directors and Supervisors by resolution of the board in 2019 and 2018. Gains (losses) on currency exchange	Taiwan Stock for employee d in 2019 and	Taiwan Stock for employee d in 2019 and
2019 2018 Total currency exchange gains $ 94,020 $ 139,532 Total currency exchange losses (97,052) (188,832) Net (loss) gain ($ 3,032) ($ 49,300) ax of continuing operations Main composition of income tax expenses recognized in gain or loss 2019 2018 Current tax Generated in the current year $ 62,235 $ 51,694 Additional tax on undistributed earnings 1,096 - Adjustments from the previous years (10,591) ( 4,451) 52,740 47,243			2018
	(	$ 62,235 1,096 10,591) 52,740	(	$ 51,694 - 4,451) 47,243

XXVIII. Income tax of continuing operations

(I) Main composition of income tax expenses recognized in gain or loss

(Continued)

(Continued from previous page)

2019 2018 Deferred income tax Generated in the current year ( 418 ) 42,882 Undistributed earnings of subsidiaries 22,197 47,729 Changes in tax rates - ( 1,093) 21,779 89,518 Income tax expenses recognized in gain or loss $ 74,519 $136,761 Adjustments for accounting income and income tax expenses are as follows: 2019 2018 Net income before taxes from continuing operations $336,858 $542,164 Income tax expenses calculated as the product of income before income tax and the statutory tax rate $ 63,074 $ 92,676 Non-deductible expenses 566 416 Effects on the deferred income tax of subsidiaries’ earnings 22,197 47,729 Additional tax on undistributed earnings 1,096 - Unrecognized deductible temporary difference ( 3,423 ) 650 Tax rate variation - ( 1,093 ) Others 1,600 834 Adjustments on income tax of prior periods (10,591) ( 4,451) Income tax expenses recognized in gain or loss $ 74,519 $136,761		2019		2018
	( (	$336,858 $ 63,074 566 22,197 1,096 3,423 ) - ( 1,600 10,591) ( $ 74,519		$542,164 $ 92,676 416 47,729 - 650 1,093 ) 834 4,451) $136,761

The tax rate applicable to Long Dachang Company, a subsidiary of the combined company, is 20%; the Chinese subsidiary of the combined company, Liande Fine Materials Co., Ltd., obtained the local government's high-tech enterprise certificate on November 30, 2016, and enjoys a 15% preferential tax rates between 2016 and 2019. (II) Income tax assets and liabilities

Income tax assets and liabilities
Current income tax assets Tax Refund Receivable Current income tax liabilities Income Tax Payable	Dec. 31,2019		Dec. 31,2018
		$ 13 $ 26,001		$ 31 $ 13,318

(III) Deferred income tax assets and liabilities Changes in deferred income tax assets and liabilities were described as follows:

2019

Opening Recognized in Recognized in other Exchange Balance at the balance gain or loss comprehensive income differences end of the year

Deferred income tax assets Temporary differences Allowance for inventory valuation loss Allowance for doubtful accounts Recognition of foreign investment gains and losses by equity method Unrealized gains and losses Deductible loss Others Subtotal of deferred income tax assets	$ 4,595 $ 3,019 4,098 436 8,784 ( 8,679 ) - 545 869 311 2,501 14 $ 20,847 ($ 4,354)	$ - ( $ 244 ) - ( 162 ) - ( 105 ) - - - - - ( 610) $ - ($ 1,121)	$ 7,370 4,372 - 545 1,180 1,905
			$ 15,372

(Continued)

(Continued from previous page)

Deferred income tax liabilities		Opening balance	Recognized in gain or loss	Recognized in other comprehensive income	Recognized in other comprehensive income	Exchange differences	Balance at the end of theyear	Balance at the end of theyear
		$ 87,125 454 12 120,569 $ 208,160	( $ 5,190 ) ( 454 ) - 23,069 $ 17,425		$ 1,933 - - - $ 1,933	( $ 3,169 ) - - ( 4,216) ($ 7,385)		$ 80,699 - 12 139,422 $ 220,133
Temporary differences Recognition of investment gains and losses by foreign equity method Unrealized gain or loss Allowance for doubtful accounts Others Subtotal of deferred income tax liabilities

2018

2018
Deferred income tax assets	Opening balance	Recognized in gain or loss	Recognized in other comprehensive income		Exchange differences	Balance at the end of theyear
	$ 3,903 2,491 3,026 1,201 4,089 2,486 $ 17,196 $ 104,376 - - 7,065 $ 111,441	$ 784 1,690 5,934 ( 1,201 ) ( 3,220 ) 67 $ 4,054 ( $ 17,507 ) 454 12 110,613 $ 93,572		$ - - - - - - $ - $ 434 - - - $ 434	( $ 92 ) ( 83 ) ( 176 ) - - ( 52) ($ 403) ( $ 178 ) - - 2,891 $ 2,713		$ 4,595 4,098 8,784 - 869 2,501 $ 20,847 $ 87,125 454 12 120,569 $ 208,160
Temporary differences Allowance for inventory valuation loss Allowance for doubtful accounts Recognition of investment gains and losses by foreign equity method Unrealized gain or loss Deductible loss Others Subtotal of deferred income tax assets Deferred income tax liabilities
Temporary differences Recognition of foreign investment gains and losses by equity method Unrealized gains and losses Allowance for doubtful accounts Others Subtotal for deferred income tax liabilities

(IV) Income tax approval status

For business income tax returns of LDC Company, part of the combined company, the filed cases before the year 2017 have been approved by the tax collection authority.

XXIX. Earnings per share

tax collection authority. Earnings per share
Basic earnings per share Total basic earnings per share Diluted earnings per share Total diluted earnings per share		Unit: NT$ per share 2019 2018
		$ 5.47 $ 5.35		$ 8.06 $ 7.91

When calculating earnings per share, the impact of the issuance of bonus shares has been retroactively adjusted, the base day of which was August 21, 2019. Due to the retroactive adjustment, changes in the basic and diluted earnings per share in 2018 are as follows:

Unit: NT$ per share

Basic earnings per share Diluted earnings per share	Before retrospective adjustment $ 9.67 $ 9.49	After retrospective adjustment	After retrospective adjustment
			$ 8.06 $ 7.91

For the calculation of earnings per share and the weighted average number of ordinary shares are as follows: Net profit for the period

ordinary shares are as follows: Net profit for the period
Net profit attributable to owners of the Company Net profit used in calculating basic earnings per share Impact on ordinary shares with dilutive effect: after-tax interest on convertible bonds Net profit used in calculating diluted earnings per share Number of shares Weighted average number of ordinary shares for the purpose of calculating basic earnings per share Impact on ordinary shares with dilutive effect: Convertible bonds Employee remuneration Weighted average number of ordinary shares for the purpose of calculating diluted earnings per share	2019	2018
	$ 259,447 $ 382,474 $ 259,447 $ 382,474 8,944 3,761 $ 268,391 $ 386,235 Unit: Thousand shares 2019 2018
	47,467 2,705 24 50,196	47,449 1,390 15 48,854

If the combined company chooses to offer employees remuneration by way of shares or cash, then while calculating the diluted earnings per share, assuming that the remuneration is paid in the form of stocks, the potential ordinary shares with dilutive effect will be included in the weighted average number of outstanding shares to calculate the diluted earnings per share. The dilutive effect of such potential ordinary stocks shall continue to be considered when calculating the diluted earnings per share before resolving the number of stocks to be distributed as employee compensation in the following year.

XXX. government subsidies

The combined company obtained subsidies for patents of NT$6,365 thousand and NT$13,500 thousand from the Kunshan Municipal People's Government in 2019 and 2018. In 2019 and 2018, the amounts were recognized in other income at NT$6,365 thousand and NT$13,500 thousand.

XXXI. Business Combination

(I) Acquisition of subsidiaries

Main operating activities Date of Ownership interest Transfer

Emtron Company Lemtech Energy Solutions Corporation (formerly Lemtech Cryomax System Corp.)	Surface treatment of mechanical, electronic and automotive components Manufacture and wholesale of machinery and equipment, molds, electrical and audio-visual electronic products, other electrical and electronic machinery, automobiles and their parts, and other optical and precision equipment	Acquisition Jan. 22, 2019 Jul. 1, 2019	with voting power/Acquisition percentage(%) 83.33% 100%	consideration	consideration
					$ 111,966 $ 30,000

The combined company's acquisition of Lianchuang Company and Liande Kinetic Company in 2019 respectively in order to continuously expand the combined company's stable operation of the production and supply chain of automotive parts in China and server cooling products manufacturing and sales operations in Taiwan.

(II)	Transfer consideration
		Lemtech Energy
			Solutions		Emtron
		Corporation		Company
	Cash	$ 15,000			$ 111,966
	Investment accounted for using
	equity method		15,000		-
		$ 30,000			$ 111,966
(III)	Assets acquired and liabilities assumed		on acquisition date
		Lemtech Energy
			Solutions		Emtron
		Corporation		Company
	CURRENT ASSETS
	Cash and cash equivalents	$	4,710	$	1,722
	Accounts receivable and
	other receivables		11,096		13,619
	Prepayments		458		895
	Inventory		9,377		1,630
	Prepaid expenses		-		1,983
	NON-CURRENT ASSETS
	Property, plant, and
	equipment		4,138		41,456
	Intangible assets		-		26,811
	Long-term unamortized
	expenditures		-		2,405
	Right-of-use assets		508		68,577
	Other non-current assets		1,213		-

CURRENT LIABILITIES Accounts payable and other payables ( $ 5,505 ) ( Lease liabilities ( 510 ) ( Other current liabilities ( 33 ) NON-CURRENT LIABILITIES Long-term loans - ( Lease liabilities - ( Other non-current liabilities ( 37) $ 25,415 (	$ 38,946 ) 6,338 ) - 66,036 ) 62,239 ) - $ 14,461)

(IV) Non-Controlling Interests Emtron Company's non-controlling interest (16.67% of ownership interest) is measured in accordance with the identifiable assets entitled for the share of non-controlling interest on the acquisition date.

(V) Goodwill arising from the acquisition

Transfer consideration Investment accounted for using equity method Plus: Fair value of identifiable net assets acquired Minus: Fair value of identifiable net assets acquired Long-term liabilities paid for others Obtained negative value of non-controlling interests (16.77% ownership interest in Emtron Company) Goodwill arising on acquisition	Lemtech Energy Solutions Corporation	Lemtech Energy Solutions Corporation		Emtron Company
	(	$ 15,000 15,000 - 25,415 ) - - $ 4,585	( (	$ 111,966 - 14,461 - 45,861 ) 2,411) $ 78,155

The goodwill arising from the acquisition of Lemtech Energy Solutions Corporation and Emtron Company mainly comes from controlling the premium. In addition, the consideration paid for the business combination includes the expected overall effect of the business combination, profit growth, future market development, and value of employee of Lemtech Energy Solutions Corporation and Emtron Company. However, such benefits do not meet the recognition criteria for an intangible asset, thus they are not separately recognized.

Goodwill arising from the business combination is not expected to be a tax deduction item.

(VI) Net cash inflow from acquisition of subsidiary

Lemtech Energy Solutions Emtron Corporation Company

Consideration paid in cash Less: Cash and cash equivalents acquired (	$ 15,000 4,710) ( $ 10,290	$ 111,966 1,722) $ 110,244

XXXII. Equity transactions with non-controlling interests

In September 2018, the combined company and Global Solution obtained the remaining 0.2% and 9.8% equity from the external shareholders other than Lemtech Precision Material, and the prices were NT$1,412 thousand and NT$77,244 thousand, respectively. After the purchase of equity, the entire combined company's shareholding ratio increased from 90% to 100%, held by Lemtech Holdings Co., Limited and Global Solution respectively at 0.2% and 99.8%. the combined company over the subsidiaries, the combined company will treat such transactions as equity transactions. The adjustment for the difference arising from the equity transaction increased the capital reserve by NTD 79,798 thousand.

As the above-mentioned transactions did not change the control over such subsidiaries, the Company treated the transactions as equity transactions.

subsidiaries, the Company treated the transactions as equity	transactions.	transactions.
Cash consideration paid The amount of non-controlling interest that shall be transferred in accordance with the changes in equity out of the carrying amount of net assets of the subsidiaries Adjustment of other equity items attributable to owners of the company `－`Exchange differences on translation of foreign financial statements Difference in equity transactions Equitytransaction balance adjustment Capital reserve - Difference in the share price and nominal value of the acquired or disposed shares of subsidiaries	Subsidiary Lemtech Precision Material
	2018
	( $ 78,656 ) 148,405 10,049 $ 79,798 Liande Precision Materials Subsidiary
		2018
		$ 79,798

XXXIII. Cash flow information

(I) Non-cash transactions In 2019 and 2018, the combine company conducted the following investments and financing activities in non-cash transactions: The adjustment of cash payments for the purchase of real property, plant and equipment is as follows:

2019 2018

Added this year (including prepayment for equipment) Reclassification of molds on inventory Changes in equipment payments and construction payments payable ( Cash amount paid for procurement of property, plants and equipment	$ 602,856 - 5,197) $ 597,659	$ 366,468 7,216 2,751 $ 376,435

(II) Changes in liabilities from financing activities 2019

2019
Short-term borrowing Lease liabilities (Note 3) 2018 Short-term loans	Jan. 1,2019	Cash flow		Changes in non-cash flow New lease Others $ - $ - 41,610 52,188 $ 41,610 $ 52,188 Non-cash flow		Dec. 31,2019
				New lease
	$ 1,009,466 124,803 $ 1,134,269 Jan. 1,2018	( $ 44,154 ) ( 50,458) ($ 94,162) Cash flow				$ 965,312 168,143 $ 1,133,455 Dec. 31,2018
				New lease	Others
	$ 1,535,622	(	$ 526,156)	$ -	$ -	$ 1,009,466

XXXIV. Capital risk management

The combined company manages its capital based on the policy to ensure the continual operations of the entities in the combined company. By optimizing its debts and liabilities, the combined company can maximize return for stakeholders.
The combined company's capital structure consists of net debts (i.e. loans and corporate bonds less cash and cash equivalents) and equities (i.e. equity, capital reserve, retained earnings, and other equity).

The combined company is not subject to any other external capital requirements. The combined company's management periodically reassesses the combined company's capital structure; the inspection items include capital costs of various categories and related risks. The combined Company will distribute dividend, issue new stocks and new debts, repurchase shares, or repay old debts among other methods to balance its overall capital structure (in accordance with the recommendations of its management).

XXXV. Financial Instruments

(I) Fair value information - financial instruments not measured at fair value The combined company's financial assets and financial liabilities whose carrying amounts are not measured at fair value are close to their fair value.
(II) Fair value of financial instruments measured at fair value on a recurring basis
Fair value hierarchy Dec. 31, 2019

Fair value hierarchy Dec. 31, 2019
Financial liabilities at fair value through profit or loss (FVTPL) Corporate bonds payable redemption rights		Level 1		Level 2		Level 3		Total
		$ -		$ -		$ 3,392		$ 3,392

Dec. 31, 2018

Financial liabilities at fair value through profit or loss (FVTPL) Paying corporate bonds		Level 1		Level 2		Level 3		Total
		$ -		$ -		$ 910		$ 910

In 2019, no transfers between Level 1 and 2 fair value measurement occurred.

Reconciliation of financial instruments at Level 3 fair value measurement 2019

occurred. Reconciliation of financial instruments at measurement 2019	Level 3 fair value
Financial liabilities at fair value through profit or loss(FVTPL) Opening balance Recognized in gain or loss (other gains and losses) Disposal/settlement Balance at the end of the year Changes in unrealized benefits or losses in the current year related to liabilities held at the end of the year and recognized in gains or losses. 2018 Financial liabilities at fair value through profit or loss(FVTPL) Opening balance Recognized in gain or loss (other gains and losses) Addition Balance at the end of the year Changes in unrealized benefits or losses in the current year related to liabilities held at the end of the year and recognized in gain or loss	Derivatives instruments
	( $ 910 ) ( 2,489 ) 7 ($ 3,392 ) ($ 2,489 ) Derivatives instruments
	$ - ( 1,990 ) 1,080 ($ 910 ) ($ 1,990 )

2018

The Valuation Technique and Input Value of the Fair Value Measurement of Level 3
The redemption right of corporate bonds payable assumes that the corporate bonds will be redeemed on Jul. 30, 2021. The discount rate adopted is based on government bonds with a similar issue date and duration plus credit risk premium.

(III) Classification of financial instruments

Dec. 31, 2019 Dec. 31, 2018

Financial assets
Financial assets measured at amortized
cost (Note 1)	$ 3,146,641	$ 2,800,470
Financial liabilities
Measured at fair value through gain or
loss
Designation as at fair value through
profit or loss	3,392	910
Valuation of cost after amortization
(Note 2)	3,743,292	3,221,314

Note 1: The balances include cash and cash equivalents, accounts receivable, notes receivable, other receivables, finance lease receivables and refundable deposits, which are measured at amortized cost.
Note 2: The balances include financial liabilities measured at amortized cost such as short-term loans, notes payable, accounts payable, other payables, long-term loans, corporate bonds payable, and guarantee deposits.
(IV) Objectives and policies of financial risk management The main financial instruments of the combined company include cash and cash equivalent, accounts receivable, accounts payable, corporate bonds payable and loans. The financial management department of the combined company provides services to the business units, including coordinating operations in the domestic and international financial markets, and managing financial risks relating to the operations of the combined company based on the degree of risk and the degree of the breadth of the exposure. These risks include market risk (including exchange rate risk, interest rate risk and other price risks), credit risk and liquidity risk. The board of directors manages the overall risk, and its purpose is to minimize the potential adverse impact on the company's financial performance as much as possible.
Market risks
- The combined company’s activities expose it primarily to the financial risks of changes in foreign exchange rates (see (1) and the changes in interest rates (see (2) below).
- The management and measurement of market risks of financial instruments and risk exposure of the combined company remain unchanged.
- (1) Foreign currency exchange risk
  - The combined company mainly operates in China and Taiwan and is exposed to foreign exchange risks arising from various currency risks. The combined company monitors changes in foreign currency exchange rates to ensure that its risks are minimized.

For the carrying amounts of the combined company's monetary assets and monetary liabilities denominated in non-functional

currency on the consolidated balance sheet date (including monetary items that are written off in the consolidated financial statements), please refer to Note 41. Sensitivity analysis

The combined company is mainly impacted by the exchange rate fluctuations in USD.

The following table includes the sensitivity analysis of the combined company’s financial position under circumstances that the exchange rate of a foreign currency to NTD (the function currency) increases or decreases by 1%. The hypothetical increase of 100 basis point (1%) in exchange rates is used in the Management's internal sensitivity analysis report on currency exchange risks; it also reflects the reasonable range of change in exchange rates the management believes would be. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and the adjustment of their translation at the end of the period for a 1% change in exchange rate. The amount in the attachment below indicates that when the NTD appreciates by 1% against the relevant foreign currency, the impact on net profit before tax will be increased. When NTD depreciates by 1% against the relevant foreign currency, the net profit before tax effects will be the same negative amount.

Increase in net profit before tax		Impact of USD	Impact of USD	Impact of USD
		2019 $ 1,387		2018
				$ 4,532

The impact on pre-tax net profit is mainly due to the outstanding accounts receivable and accounts payable denominated in U.S. dollar and for which cash flow hedge has not been adopted on the combined company's balance sheet date.

(2) Interest rate risk

Significant interest-bearing assets and liabilities of the combined company are regularly renegotiated. The combined company's cash flow is exposed to interest rate risk for holding floating rate term bank deposits and loans.

The carrying value of financial assets and liabilities exposed to interest rate risk of the combined company on the balance sheet date are as follows:

date are as follows:
Interest rate risks with cash flow `－`Financial assets `－`Financial liabilities	Dec. 31,2019 $ 1,020,429 1,895,913	Dec. 31,2018
		$ 553,494 1,585,944

Sensitivity analysis

The main interest rate risk of the combined company is bank deposits, financial assets and loans measured at amortized cost.

Sensitivity analysis of circumstances when interest rates increase/decrease by 0.5% is used as to report changes in exchange rate risk to internal management.

Sensitivity analysis refers to the interest-bearing items held by the combined company and affected by interest rate fluctuations of 0.5% at the end of the period. The positive numbers in the following summary table indicate that when the benchmark interest rate rises by 0.5%, in the case where other conditions remain unchanged, how much the net profit before tax for the current period will increase.

interest rate rises by 0.5%, in remain unchanged, how much current period will increase.	the case where other conditions the net profit before tax for the	the case where other conditions the net profit before tax for the	the case where other conditions the net profit before tax for the	the case where other conditions the net profit before tax for the
Increase in net profit before tax	Impact of risinginterest rates
		2019 $ 4,377)		2018
	(		(	$ 5,162)

Credit risk

Credit risks refer to risks that cause financial loss of the combined company due to the counterparty's delay in performing contractual obligations. Due to the nature of the industry in which it operates, the combined company has no significant concentration of credit risk. The combined company has formulated a policy that when assessing the credit line granted to customers, it must obtain appropriate financial information from customers to conduct credit ratings of customers to ensure that sales services do not generate significant credit risk.

The maximum amount of credit risk of the combined company is the net amount of the carrying amount of financial assets after deducting the amounts that can be offset according to regulations and the impairment losses recognized in accordance with regulations without considering collateral and other credit enhancement policies. The main objects of the accounts receivable and other receivables of the combined company are foreign-funded enterprises established in China and internationally renowned manufacturers. The credit risk management and impairment status are detailed in Note 10.

The bank deposits of the combined company and other investment in financial assets are mainly deposited in banks with good credit ratings assigned by international credit rating agencies, so this credit risk is not significant.

Liquidity risk

The combined company supports its business operations and reduces cash flow fluctuation through appropriate management and the maintenance of sufficient cash and cash equivalents. The combined company's management supervises bank financing conditions and ensures compliance with loan contracts.

The bank loans are a significant source of liquidity for the combined company. Please refer to (2) Financing limit below for the unfunded financing amount of the combined company as of Dec. 31, 2018 and 2019.

(1) Liquidity and interest rate risk of non-derivative financial liabilities

Dec. 31, 2019

liabilities Dec. 31, 2019
Floating Rate Instruments-Borrowing Lease liabilities Fixed rate instruments-corporate bonds	Within 1 year	1 to 5years		More than 5 years
	$ 965,312 47,803 - $ 1,013,115		$ 350,000 104,827 595,000		$ - 15,513 - $ 15,513
			$ 1,049,827

Further information on the maturity analysis of lease liabilities is listed as follows:

listed as follows:
Lease liabilities Dec. 31, 2018 Floating Rate Instruments-Borrowing Fixed rate instruments-corporate bonds (2) Credit limit Unsecured bank loan limit `－`Amount used `－`Amount unused Secured bank credit limit `－`Amount used	Within 1 year	1 - 5years			More than 5 years
	$ 55,398 Within 1 year	$ 116,673 1 to 5years	$ 116,673		$ 16,002 More than 5 years
	$ 1,009,466 $ - - 600,000 $ 1,009,466 $ 600,000 Dec. 31,2019 $ 965,312 2,396,901 $ 3,362,213 $ 350,000		$ - 600,000	$ - - $ - Dec. 31,2018
			$ 600,000

					$ 1,009,466 2,787,465 $ 3,796,931 $ -

(V) Information on transfers of financial assets Relevant information of the company's sale of accounts receivable is as follows:

2019: None.

2018

Factoring Amount drawn amount for Received in advance as end Annual interest rate the current amount for the of the current of advance amounts Counterparty period current period period (%) Credit Limit Cathay United Bank $ 985,468 $ 855,332 $ 704,179 3.23%~4.1% $ 1,842,900 ( USD 60,000 )

XXXVI. Related party transactions

All transactions, account balances, income and expenses between the company and its subsidiaries (related parties of the company) are fully offset by intercompany netting and therefore are not shown in this Note. In addition to those disclosed in other Notes, the transactions between the combined company and other related parties are as follows.

(I) The names and relations of related parties Name of related party Relationship with the combined company

Aapico Lemtech Affiliates Lemtech Energy Solutions Affiliated companies (held 100% after Corporation (formerly acquisition on Jul. 1, 2019) Lemtech Cryomax System Corp.)

(II) Operating revenue

Accountingitem Sales	Category of related parties		2019		2018
	Affiliates		$ 9,582		$ 6,788

There are no significant differences between the terms and conditions of sales and collection for related parties and that of general transactions. (III) Purchase

Purchase
Category of related parties Affiliates		2019 $ 14,500		2018
				$ 5,443

There are no significant differences between the terms and conditions of purchase and payment for related parties and that of general transactions.

(IV) Accounts receivable from related parties (excluding loans extended to related parties and contract assets)

Accounting Category of related item parties Dec. 31, 2019 Dec. 31, 2018 Accounts Affiliates $ 667 $ 235 receivable

For related parties for whom outstanding guarantee had not been sought, loss allowance has not been recognized for accounts receivables of related parties on Dec. 31, 2018 and 2019.

(V) Accounts payable - related party (excluding borrowings from related parties)

rties)
Accounting item	Category of related parties	Dec. 31,2019		Dec. 31,2018
Accounts payable	Affiliates		$ -		$ 5,684

(VI) (VII) (VIII)	Advance receipts Categoryof relatedparties Dec. 31,2019 Dec. 31,2018 Affiliates $ - $ 1,193 Endorsements and Guarantees Please attach Schedule II in detail. Remuneration and bonuses of key management personnel 2019 2018 Short-term employee benefits $ 41,616 $ 32,329	Dec. 31,2018	Dec. 31,2018
			$ 32,329

The remuneration for directors and other key management is determined by the remuneration committee based on personal performance and market trends.

XXXVII. Pledged assets

The following assets have been provided as security for the collateral for financing borrowings:

Bank deposits-restricted (accounts for financial assets measured at amortized cost) Land	Dec. 31,2019 $ 75,081 493,598 $ 568,679	Dec. 31,2018	Dec. 31,2018
			$ 3,842 - $ 3,842

XXXVIII. Material contingent liabilities and unrecognized contractual commitments Except for those disclosed in other Notes, significant commitments and contingencies of the combined company on the balance sheet date are as follows: Contingent liabilities

The subsidiary of the combined company was served a civil complaint from King Slide Works Co., Ltd. (hereinafter referred to as "King Slide") on Jun. 26, 2018. The complaint was filed with the Higher People's Court of Jiangsu Province on Jun. 19, 2018 by King Slide, suing Lemtech Precision Material and Lemtech Slide Company for the production, manufacture, and sale of rail products without King Slide's license, infringing its patent rights, and request compensation of CNY 100 million, rights maintenance costs of CNY 183,090, and NT$31,748. The attorney appointed for the case states that since Lemtech Precision Material mainly engages in the research and development, production and sales of precision metal stamping components and toolings with cooling module, automobile modules and components and stamping toolings for other components. For rail products, it only produced stamping components, it is not a manufacturer or dealer of rail product, thus no infringement has occurred in this case. The rail product produced by Lemtech Slide Company are all subject to its relevant patents (some still in the application process), which by the attorney's initial judgment are different from that of King Slide. Furthermore, King Slide failed to produce evidence to proof its claim, thus payment of compensation is unlikely. The case was first trialed in court on Jan. 25, 2019. At

present, the case is still in the process of the first instance trial, and the outcome of the case cannot be predicted.

King Slide filed infringement claims with the Higher People's Court of Jiangsu Province, and issued statement letters to the customers of Lemtech Precision Material, which had a negative impact on the reputation of Lemtech Precision Material. Therefore, the company represented Lemtech Precision Material and filed a claim with the Taiwan Ciaotou District Court on 15 Jan. 2019.

XXXIX. Losses due to major disasters: None XL. Significant subsequent events

The outbreak of COVID-19 in January 2020 resulted in the temporary suspension of the plant of the subsidiary Lemtech Holdings Co., Limited in Suzhou, Jiangsu Province, China. Since the main plant, customers and main suppliers of the subsidiary Lemtech Holdings Co., Limited are not concentrated in the severely affected area, the impact to its operations is limited.

XLI. Information regarding significant assets and liabilities denominated in foreign currencies

The following summary is presented in foreign currencies other than the functional currency. The exchange rates disclosed in the summary refers to the exchange rate of a foreign currency to the functional currency. Foreign currency assets and liabilities with significant influence are as follows:

Unit: Foreign currencies and NTD 1,000

Dec. 31, 2019

Dec. 31, 2019
Foreign currencyassets	Foreign currency	Exchange rate	Carrying amount
	$ 11,683 18,256 3,218 96,182 500 72,875 500 1,161 46,129 13,943 11,377 30,992	30.0325 (USD:NTD) 6.9762 (USD:CNY) 4.3050 (CNY:NTD) 0.1433 (CNY:USD) 0.2760 (JPY :NTD) 0.0641 (JPY : CNY) 33.5900 (EUR:TWD) 7.8026 (EUR:CNY) 0.5847 (PHP : TWD) 30.0325 (USD:NTD) 6.9762 (USD:CNY) 0.0641 (JPY:CNY)	$ 350,869 548,287 13,854 414,117 138 20,114 16,795 38,998 26,971 $1,430,143 $ 418,732 341,680 8,554 $ 768,966
Monetary items USD USD CNY CNY JPY JPY EUR EUR PHP Foreign currency liabilities
Monetary items USD USD JPY

Dec. 31, 2018

Foreign currencyassets	Foreign currency	Exchange rate	Carrying amount
	$ 11,683 18,256 3,218 96,182 500 72,875 500 1,161 46,129 13,943 11,377 30,992	30.0325 (USD:NTD) 6.9762 (USD:CNY) 4.3050 (CNY:NTD) 0.1433 (CNY:USD) 0.2760 (JPY :NTD) 0.0641 (JPY:CNY) 33.5900 (EUR:TWD) 7.8026 (EUR:CNY) 0.5847 (PHP : TWD) 30.0325 (USD:NTD) 6.9762 (CNY:NTD) 0.0641 (JPY:CNY)	$ 350,869 548,287 13,854 414,117 138 20,114 16,795 38,998 26,971 $1,430,143 $ 418,732 341,680 8,554 $ 768,966
Monetary items USD USD CNY CNY JPY JPY EUR EUR Foreign currency liabilities
Monetary items USD USD CNY JPY

The combined company is mainly exposed to foreign currency exchange rate risks of NTD, CNY, USD, CZK and PHP. The following information is aggregated in terms of the functional currency of the foreign currency held. The exchange rate disclosed is the exchange rate of the functional currency into the presentation currency. Foreign exchange gains and losses with significant influence are as follows:

Functional currency NTD CNY USD CZK PHP	2019			2018
	Functional Currency and Presentation Currency	Net exchange gains and losses		Functional Currency and Presentation Currency	Net exchange gains and losses ( $ 24,868 ) ( 121 ) ( 24,311 ) ($ 49,300)
	1.0000 (NTD:NTD) 4.3050 (CNY:NTD) 30.0325 (USD:NTD) 1.3249 (CZK:NTD) 0.5847 (PHP:NTD)	( ( (	$ 2,389 1,145 7,030 ) 992 528) $ 3,032)	1.0000 (NTD:NTD) 4.4720 (RMB: New Taiwan Dollar) 30.6922 (USD:NTD)		$ 24,868 ) 121 ) 24,311 ) $ 49,300)

XLII. Other disclosures

Information on (I) Significant Transactions and (II) Investees:

Financings provided (Attachment 1)
Endorsements/guarantees provided to others (Attachment 2)
Marketable securities held at the end of year (excluding investments in subsidiaries, affiliates and interest in joint ventures) (None)

Accumulated purchase or disposal of individual marketable securities equal to or in excess of NT$300 million or 20% of paid-in capital (None)
Acquisition of real estate at cost in excess of NT$300 million or 20% of paid-in capital (Attachment 3)
Disposal of real estate at cost in excess of NT$300 million or 20% of paid-in capital (None)
Purchases or sales to related parties of at least NT$100 million or 20% of paid-in capital (Attachment 4)
Accounts receivable from related parties equal to or in excess of NT$100 million or 20% of paid-in capital (Attachment 5)
ngage in derivative transactions (Notes 7 and 35)
Others: Business relationships, important transactions and the amounts between parent company and subsidiaries (Attachment 6)
Information on investees (Attachment 7)
(III) Information on investments in China:
Information on any investee company in China; disclose the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, investment gain or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in China. (Attachment 8)
Significant transactions with investee companies in China, either directly or indirectly through a third region, and their prices, payment terms, and unrealized gains or losses. (Attachment 8)
- (1) Purchase amount and percentage, and the ending balance and percentage of payables.
- (2) Sales amount and percentage, and the ending balance and percentage of payments receivables.
- (3) Property transaction amount and the resulting gain or loss.
- (4) Ending balance of endorsement, guarantee or collateral provided and purposes.
- (5) The maximum balance, ending balance, interest rate range and total amount of interest of financing for the current year.
- (6) Other transactions having a significant influence on profit or loss or financial status of the current year, such as providing or receiving services.

XLIII. Department information

The information is provided to the main decision-maker to allocate resources and assess the performance of each department and focus on each type of product or service delivered or provided. information on the Group’s reporting departments is presented as follows:

Taiwan R&D Department

China manufacturing department

Others

Department revenues and the results of operations

(I) The income and results of ongoing operations of the combined Company based on the reporting departments are analyzed as follows:

2019

2019
Revenue from external customers Intercompany revenue Department Revenue Interest income Other company's income Finance costs Depreciation and amortization are of gains (losses) of affiliates accounted for using equity method Income tax expenses (benefits) Departments gain (loss) Departments assets Departments liabilities	Taiwan R&D Department			China manufacturing department		Others	Intercompany netting		Total
		$ 303,453 113,158 $ 416,611 $ 310 198 7,547 - 7,290 $ 22,332 $ 375,493 $ 162,469		$ 3,130,947 74,382 $ 3,205,329 $ 3,116 53,559 218,373 23,262 43,327 $ 298,962 $ 4,182,487 $ 2,165,195		$ 1,608,257 353 $ 1,608,610 $ 23,573 24,259 31,277 588,282 23,902 $ 552,268 $ 7,648,851 $ 2,590,146	$ - ( 187,893) ($ 187,893) ( $ 19,097 ) ( 19,097 ) - ( 611,223 ) ($ 611,223) ($ 5,980,824) ($ 662,296)		$ 5,042,657 - 5,042,657 7,902 7,130 $ 5,057,689 $ 58,919 257,197 321 74,519 $ 262,339 $ 6,226,007 $ 4,255,514

2018

2018
Revenue from external customers Intercompany revenue Department Revenue Interest income Other company's income Finance costs Depreciation and amortization are of gains (losses) of affiliates accounted for using equity method Income tax expenses (benefits) Departments gain (loss) Departments assets Departments liabilities	Taiwan R&D Department			China manufacturing department		Others	Intercompany netting		Total
		$ 217,550 68,037 $ 285,587 $ 904 - 2,617 - 5,675 $ 24,347 $ 259,714 $ 94,438		$ 3,812,697 67,081 $ 3,879,778 $ 3,995 48,472 155,256 269,645 81,109 $ 480,684 $ 4,509,044 $ 2,736,247		$ 2,012,843 302 $ 2,013,145 $ 29,363 21,164 8,820 872,496 49,977 $ 1,027,881 $ 6,516,371 $ 1,808,738	$ - ( 135,420) ($ 135,420) ( $ 23,994 ) ( 23,994 ) - ( 1,127,508 ) - ($ 1,127,509) ($ 5,886,702) ($ 1,115,100)		$ 6,043,090 - 6,043,090 10,268 16,031 $ 6,069,389 $ 45,642 166,693 14,633 136,761 $ 405,403 $ 5,398,427 $ 3,524,323

Interdepartmental sales are based on market prices.

Departmental benefits refer to the profits earned by each department, including the allocated share of headquarter management costs and directors' remuneration, share of gain or loss of affiliates using the equity method, rental income, interest income, disposal of real estate, plant and equipment gains or losses, disposal of investment gains or losses, net gain (loss) from foreign currency exchange, gains or losses from financial instrument valuations, financial costs and income tax expenses. The assessment is provided to the main decision- maker to allocate resources to departments and assess their performance. (II) Revenue from major products and services

The analysis of profits from the main products and services of the combined company's continuing business units is as follows:

Computer, communication and consumer electronics automobile Construction materials Toolings and others		2019 $ 2,845,323 1,749,079 76,140 372,115		2018
				$ 3,871,686 1,705,041 76,076 390,287

$ 5,042,657 $ 6,043,090

(III) Regional information

The combined company mainly operates in two areas - Taiwan and China.

Revenue of the combined company's continuing operations from external customers classified by the location of the business and the non-current assets is listed as follows:

Revenue from external

	Revenue from external
Asia America Europe	customers 2019 2018 $ 4,562,467 $ 5,689,541 289,472 164,330 190,718 189,219 $ 5,042,657 $ 6,043,090	NON-CURRENT ASSETS
	2019 $ 4,562,467 289,472 190,718 $ 5,042,657	Dec. 31,2019 $ 2,260,969 - - $ 2,260,969	Dec. 31,2018
				$ 1,572,466 - - $ 1,572,466

Non-current assets do not include deferred income tax assets. (IV) Information of main customer

The annual revenues of 2019 and 2018 are NT$5,042,657 thousand and NT$6,043,090 thousand, the revenue from single customers of the company reaching more than 10% of the total revenue of the combined company are as follows:

company are as follows:
Customer F (Note) Customer G (Note)		2019 $ 1,132,423 938,320 $ 2,070,743		2018
				$ 1,468,721 1,859,819 $ 3,328,540

Note: This is revenue from electronics categories.

Lemtech Holdings Co., Limited and subsidiaries Loans extended to others 2019

Unit: Unless Specified Otherwise , NTD thousands.

Attachment 1

No. (Note 1)	Lending company	Borrower	General ledger account	Related party or not	Maximum Balance for the Period	Ending balance (Note 2)	Actual Expenditure	Interest range	Nature of loan	Business transaction amount	Reason for short-term financing	Allowance for bad debts recognized	Collateral	Collateral	Limit on loans granted to a single party (Note 3)	Total limit amount of loans (Note 3)	Notes
													Name	Value
0 0 0 1 1 1 1 2 3 4	Lemtech Holdings Co., Limited Lemtech Holdings Co., Limited Lemtech Holdings Co., Limited Lemtech Global Solution Co. Ltd. Lemtech Global Solution Co. Ltd. Lemtech Global Solution Co. Ltd. Lemtech Global Solution Co. Ltd. LDC Precision Engineering Co., Ltd. Lemtech Precision Material Lemtech Technology Limited	Lemtech Precision Material Lemtech Technology Limited Zhenjiang Emtron Surface Treatment Limited Lemtech Precision Material Lemtech Technology Limited Zhenjiang Yelianchuang Surface Treatment Technology Co., Ltd. Lemtech Industrial Services Ltd Lemtech Technology Limited Zhenjiang Yelianchuang Surface Treatment Technology Co., Ltd. Lemtech Industrial Services Ltd	Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables Other receivables	Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes	$ 252,800 252,800 47,085 535,774 31,600 18,960 24,400 15,410 95,436 3,106	$ - - 44,970 202,335 - 17,988 23,984 - 94,710 -	$ - - 26,982 202,335 - 17,988 23,984 - 73,185 -	6.00% 4.50% 3%-4% 3.00% 3.00% 3.80% 4.00% 3.20% 5.00% 4.00%	Necessity of short-term financing Necessity of short-term financing Necessity of short-term financing Necessity of short-term financing Necessity of short-term financing Necessity of short-term financing Necessity of short-term financing Necessity of short-term financing Necessity of short-term financing Necessity of short-term financing	$ - - - - - - - - - -	Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital Operating capital	$ - - - - - - - - - -	`－` `－` `－` `－` `－` `－` `－` `－` `－` `－`	$ - - - - - - - - - -	$ 781,328 781,328 781,328 957,428 957,428 957,428 957,428 76,485 776,837 170,810	$ 781,328 781,328 781,328 957,428 957,428 957,428 957,428 76,485 776,837 170,810

Note 1: Explanations for the numbering column are as follows:

(1) The issuer is coded 0.

(2) Investees are numbered consecutively from 1 in the order presented in the attachment above.

Note 2: If a public company extend loans by submitting each loan for the board resolution in accordance with Article 14 (1) of the Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, although the drawdown had not been made, the amount resolved by the board shall be included in the balance announced in order to disclose the risks borne; however, if subsequently the amount is repaid, the balance after repayment shall be disclosed to reflect the adjustment of risk. If a publicly company authorized the chairman of the board of directors to extend loans in installments or to make a revolving credit line within a certain amount and within a period of one year in accordance with Article 14 (2) of the regulation, the loan limit resolved by the board shall be the reported balance. Although the amount may subsequently be repaid, considering the that further installments may be made, the loan limit resolved by the board shall still be the reported balance.

Note 3: (1) The loan limit to others is approved by the shareholders' meeting of Lemtech Holdings Co., Limited in accordance with the Operational Procedures for Loaning Funds to Others: For loans extended to companies with business ties, 1. the loan limit shall not exceed 20% of the company's net worth; amount of individual loans shall not exceed the total amount of trading between the parties in the most recent year. The amount of trading means the sales or purchasing amount between the parties, whichever is higher. 2. Where the extension of loans for companies with short-term financing needs is necessary, the total amount of loan extended shall not exceed 40% of the company's net value; the amount extended for each individual loans shall not exceed 40% of the company's net value. (2) According to the above regulations, the maximum value of short-term financing extended by Lemtech Holdings Co., Limited out of necessity is net value of NT$1,953,321 thousand x 40% = NT$781,328 thousand; the limit for a single entity is NT$1,953,321 thousand x 40% = NT$781,328 thousand.

(3) According to the above regulations, the maximum value of short-term financing extended by Lemtech Global Solution Co. Ltd. out of necessity is net value of NT$2,393,571 thousand x 40% = NT$957,428 thousand; the limit for a single entity is NT$2,393,571 thousand x 40% = NT$957,428 thousand.

(4) In accordance with the above regulations. According to the above regulations, the maximum value of short-term financing extended by LDC Precision Engineering Co., Ltd. out of necessity is net value of NT$191,213 thousand x 40% = NT$76,485 thousand; the limit for a single entity is NT$191,213 thousand x 40% = NT$76,485 thousand.

(5) In accordance with the above regulations. According to the above regulations, the maximum value of short-term financing extended by Lemtech Precision Material (China) Co., Ltd (China) out of necessity is net value of NT$1,942,092 thousand x 40% = NT$776,837 thousand; the limit for a single entity is NT$1,942,092 thousand x 40% = NT$776,837 thousand.

(6) In accordance with the above regulations. According to the above regulations, the maximum value of short-term financing extended by Lemtech Technology Limited out of necessity is net value of NT$427,024 thousand x 40% = NT$170,810 thousand; the limit for a single entity is NT$427,024 thousand x 40% = NT$170,810 thousand.

Lemtech Holdings Co., Limited and subsidiaries Endorsement/guarantee provided for others 2019

Attachment 2	Attachment 2											Unit: NTD thousands	Unit: NTD thousands
No. (Note 1)	Endorsement/guara ntee provider name	Subject of endorsements/guarantees		Limit on endorsement s/guarantee s provided for a single party	Maximum balance for this period	Endorsement and guarantee closing balance	Actual expenditure	Amount of endorsement/gua rantee collateralized by properties	Accumulated endorsements and guarantees amount to net worth stated the most recent financial statement %	Maximum endorsement /guarantee amount allowable	Guarantee provided by parent company to a subsidiary	Guarantee provided by a subsidiary	Guarantee provided to subsidiari es in China
		Name	RELATIONS (Note 2)
0 0 0 0 1	Lemtech Holdings Co., Limited Lemtech Holdings Co., Limited Lemtech Holdings Co., Limited Lemtech Holdings Co., Limited Lemtech Technology Limited	Kunshan Lemtech Slide Technology Co., Ltd. Lemtech Precision Material (Czech) s.r.o. Lemtech Technology Limited Lemtech Precision Material Lemtech Holdings Co., Limited	2 2 2 2 3	$ 2,343,985 2,343,985 2,343,985 2,343,985 512,429	$ 31,600 117,810 808,250 376,680 156,950	$ 29,980 114,206 314,790 359,760 149,900	$ 29,980 114,206 187,045 149,900 149,900	$ - - - - -	1.53% 5.85% 16.12% 18.42% 35.10%	$ 5,859,963 5,859,963 5,859,963 5,859,963 1,281,072	Yes Yes Yes Yes No	No No No No Yes	Yes No No Yes No

Note 1: Explanations for the numbering column are as follows:
(1) The issuer is coded 0.
(2) Investees are numbered consecutively from 1 in the order presented in the attachment above.
Note 2: Listed below are the 6 types of companies to which the company may provide endorsement/guarantee:
(1) A company that has business transactions with the Company.
(2) Companies in which the Company directly and indirectly holds more than 50 percent of the voting shares.
(3) Companies that directly and indirectly holds more than 50 percent of the voting shares in the Company.
(4) Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.
(5) A company fulfills its contractual obligations by providing mutual endorsement/guarantee for another company in the same industry or for joint builders for purposes of undertaking a construction project.
(6) All capital contributing shareholders make endorsement/guarantee for their jointly invested company in proportion to their shareholding percentages.
(7) Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.
Note 3: (1) The endorsement/guarantee limit is determined by Lemtech Global Solution Co. Ltd. in accordance with Articles 36 and 38 of the Securities and Exchange Act and Operational Procedures for Endorsements/Guarantees resolved by the shareholders' meeting: the total amount of endorsement/guarantee provided by Lemtech Global Solution Co. Ltd. shall not exceed 300% of the net worth of the current period. The endorsement/guarantee provided to a single entity shall not exceed 120% of the net worth of the current period. If the endorsement is guaranteed by the business relationship, the amount of endorsement shall not exceed the total amount of transactions with the company in the most recent year (the number of goods purchased or sold between the two parties, whichever is higher). The net worth shall be based on the most current financial statements audited or reviewed by the certified public accountants. Endorsements and guarantees not exceeding 10 percent of this company's net worth may be made between companies in which the company directly and indirectly holds 90% voting interest. However, endorsements and guarantees made between companies in which the company directly and indirectly holds 100% voting interest shall not be subject to the above restriction.
(2) According to the above regulations, the maximum limit for guarantee for endorsement by Liande Holding Co., Ltd. is 1,953,321 (KRW) x 300% = 5,859,963 (KRW); the limit for endorsement guarantee for a single enterprise is 1,953,321 (KRW) × 120% = 2,343,985 (unit).
(3) According to the above provisions, the maximum limit for Lemtech Technology Limited's external endorsement guarantee is 427,024 (RMB) x 300% = 1,281,072 (RMB); the limit for endorsement guarantee for a single enterprise is 427,024 (RMB) x 120% = 512,429 (RMB).

Lemtech Holdings Co., Limited and subsidiaries Acquisition of real estate at cost exceeding of NT$300 million or 20% of paid-in capital 2019

Attachment 3

Unit: unless otherwise stated , NTD thousands.

Company that acquired the real estate	Name of the real estate	Date of occurrence	Transaction amount	Payment status	Counterpart y	RELATIONS	Prior Transaction Whose Counterparty Was a Related Party	Prior Transaction Whose Counterparty Was a Related Party	Prior Transaction Whose Counterparty Was a Related Party	Prior Transaction Whose Counterparty Was a Related Party	Basis of Reference for Price Determination	Purpose of acquisition and usage	Other commitments
							Owner	Relationship with the issuer	Date of transferal	Amount
Lemtech Holdings Co., Limited	Land	2018/11/0 9	$ 488,434	$ 488,434	Note 4	None	N/A	-	-	$ -	Refer to market price of and professional appraisal report on the nearby real estate	Operation and production needs	None

Note 1: If the asset acquired is required to be appraised, the appraisal result shall be indicated on the column titled "Basis of Reference for Price Determination."

Note 2: paid-in capital refers to the paid-in capital of the parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the regulation regarding 20% of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.
Note 3: Date of occurrence means the contracting date for the transaction, payment date, consignment trade date, transfer date, resolution date of the board of directors, or other dates on which the transaction party and amount can be ascertained, whichever is earlier.

Note 4: Disclosure may be exempted where the counterparty to the transaction is a natural person and is not a related party to the company.

Lemtech Holdings Co., Limited Amount of purchases from and sales to related parties reaching NT$100 million or 20% of its paid-in capital 2019

Attachment 4

Unit: unless otherwise stated , NTD thousands.

Name of company selling or purchasing	Counterparty	RELATIONS		Transaction details	Transaction details		Situation and reason of why trading conditions are different fromgeneral trading	Situation and reason of why trading conditions are different fromgeneral trading	Accounts and notes receivable (payable)	Accounts and notes receivable (payable)	Notes
			Purchase/sal e	Sum	% to total purchase (sale)	Loan period	Unit price	Loan period	Balance	% to total accounts receivable (payment)
Lemtech Precision Material LDC Precision Engineering Co., Ltd.	Lemtech Technology Limited Lemtech Technology Limited	Subsidiaries Parent company	Sales Sales	$ 159,226 98,936	4.84% 24.76%	90 days 60 days	According to the company's pricing policy for transfers According to the company's transfer pricing policy system	- -	Accounts receivable $ 111,164 Accounts receivable 26,883	9.51% 19.73%

Lemtech Holdings Co., Limited and subsidiaries Accounts receivable from related parties reaching NT$100 million or 20% of its paid-in capital 2019

				2019
Attachment 5								Unit: NTD thousands
Name of company with accounts receivable on account	Name of the counterparty	RELATIONS	Balance of receivables from relatedparties	Turnover rate	Overdue receivables from related parties		Amounts received from related parties in subsequent period	Allowance for bad debts recognized
					Sum	Action taken
Lemtech Global Solution Co. Ltd. Lemtech Precision Material	Lemtech Precision Material u Lemtech Technology Limited u	bsidiaries bsidiaries	Other receivables $ 205,286 Accounts receivable 111,164	Note 2 1.18	$ - -	`－` `－`	$ 203,096 84,224	$ - -

Note 1: Write-offs for long-term equity investments consolidated from individual entities, adopting the equity method, have been adjusted. Note 2: Categorized as other receivables, thus turnover rate is not calculated.

Unit: NTD thousands

Lemtech Holdings Co., Limited and subsidiaries Business relations between parent company and subsidiaries and material transactions 2019

Attachment 6

No.	Name of the trader	Name of the transaction counterparty	Relationship with counterparty (Note)	Conditions of transactions	Conditions of transactions	Conditions of transactions	Conditions of transactions
				Account	Amount (NTD thousands)	Terms of transaction	% to total consolidated revenue or total assets
0 0 1 1 1 2 2 2 3 3 3 3 3 3 3 3 4 4 5 5	Lemtech Holdings Co., Limited Lemtech Holdings Co., Limited Zhenjiang Emtron Surface Treatment Limited Zhenjiang Emtron Surface Treatment Limited Zhenjiang Emtron Surface Treatment Limited Lemtech Global Solution Co. Ltd. Lemtech Global Solution Co. Ltd. Lemtech Global Solution Co. Ltd. Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Technology Limited Lemtech Technology Limited Lemtech Industrial Services Ltd Lemtech Industrial Services Ltd	Zhenjiang Emtron Surface Treatment Limited Lemtech Philippine Thermal System Inc. Lemtech Global Solution Co. Ltd. Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Industrial Services Ltd Lemtech Precision Material (Czech) s.r.o. Lemtech Technology Limited Lemtech Technology Limited Lemtech Technology Limited Lemtech Technology Limited Lemtech Philippine Thermal System Inc. Lemtech Philippine Thermal System Inc. Kunshan Lemtech Electronics Technology Co., Ltd. Kunshan Lemtech Slide Technology Co., Ltd. Kunshan Lemtech Slide Technology Co., Ltd. Kunshan Lemtech Slide Technology Co., Ltd. Kunshan Lemtech Slide Technology Co., Ltd.	1 1 3 3 3 1 1 3 1 1 1 1 1 3 3 3 3 3 1 1	Other receivables (payables) Other receivables (payables) Other payables (receivables) Other payables (receivables) Sales revenue (purchase) Other receivables (payables) Interest revenue (expense) Other receivables (payables) Accounts receivable (payables) Accounts receivable (payment) Accounts payable (receivable) Sales revenue (purchase) Purchases (sales revenue) Accounts receivable (payables) Sales revenue (purchase) Other receivables (payables) Purchases (sales revenue) Accounts payable (receivable) Accounts payable (receivable) Purchases (sales revenue)	$ 27,412 26,971 18,108 74,853 13,240 205,286 16,509 24,154 17,768 111,164 23,936 159,226 25,402 22,318 22,971 32,248 67,216 16,153 12,165 54,839	General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of Transaction General Terms of	0.44% 0.43% 0.29% 1.20% 0.26% 3.30% 0.33% 0.39% 0.29% 1.79% 0.38% 3.16% 0.50% 0.36% 0.46% 0.52% 1.33% 0.26% 0.20% 1.09%

No.	Name of the trader	Name of the transaction counterparty	Relationship with counterparty (Note)		Conditions of	transactions
				Account	Amount (NTD thousands)	Terms of transaction	% to total consolidated revenue or total assets
6 6	LDC Precision Engineering Co., Ltd. LDC Precision Engineering Co., Ltd.	Lemtech Technology Limited Lemtech Technology Limited	3 3	Sales revenue (purchase) Accounts receivable (payables)	98,936 26,833	Transaction General Terms of Transaction General Terms of Transaction	1.96% 0.43%

Note 1: The information on business dealings between the parent company and subsidiaries should be numbered in the "Code" column with the following coding method: 1 Parent company will be coded "0".
The subsidiaries are coded from "1" in the order presented in the table above.
Note 2: The transaction relationships with the counterparties are as follows. Please specify the type (the same transaction shall not be disclosed repetitively for transaction between the parent company and the subsidiaries or between the subsidiaries. For example, if the parent company has already disclosed its transaction with a subsidiary, the subsidiary does not need to disclose the information again; for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, the other one does not need to disclose it again.) 1. Parent company to subsidiary.
Subsidiary to parent company.
Between subsidiaries.
Note 3: For calculations of ratio of the transaction amount accounts to consolidated total revenue or total assets, where the item is either an asset or a liability, the ratio of the ending balance to the consolidated total assets shall be calculated; where the item is either a gain or a loss, the ratio of the aggregated amount at the end of the period to the consolidated total revenue shall be calculated.

Note 4: Because there are no similar transactions to follow, the terms and conditions of the transaction are negotiated between the two parties based on actual operation needs. Note 5: The above transactions have been offset in the consolidated statements.

Note 6: whether to list the material transactions situation in this attachment shall be determined by the company with the materiality principle.

Unit: NTD thousands

Lemtech Holdings Co., Limited and subsidiaries Name of investee, location, etc. 2019

Attachment 7

Investor company	Name of investees	Location	Principal business activities	Original investment amount	Original investment amount	Balance at the end of theperiod	Balance at the end of theperiod	Balance at the end of theperiod	Net gain or loss of the investee	Recognized investment gain/loss of the currentperiod	Notes
				End of the period	End of last year	Number of shares	Ratio %	Carrying amount
The company The company The company Lemtech Cooling System Limited Lemtech Cooling System Limited Lemtech Precision Material Lemtech Precision Material Lemtech Precision Material Lemtech Technology Limited Lemtech Technology Limited Lemtech Technology Limited Lemtech Global Solution Co. Ltd.	Controllable Lemtech Global Solution Co. Ltd. Lemtech Cooling System Limited Lemtech Industrial Services Ltd Lemtech Energy Solutions Corporation (formerly Lemtech Cryomax System Corp.) Lemtech Philippine Thermal System Inc. Lemtech Technology Limited LDC Precision Engineering Co., Ltd. Lemtech Precision Material (Czech) s.r.o. Lemtech USA Inc. Lemtech Industrial Services Ltd With significant influence Aapico Lemtech Co., Ltd. Lemtech Energy Solutions Corporation (formerly Lemtech Cryomax System Corp.)	Republic of Mauritius Hong Kong Independent State of Samoa Taiwan Republic of the Philippines Hong Kong Taiwan Czech Republic United States of America Independent State of Samoa Thailand Taiwan	General investment General investment Sales of electronics and computer peripheral components Manufacture and wholesale of machinery and equipment, molds, electrical and audio-visual electronic products, other electrical and electronic machinery, automobiles and their parts, and other optical and precision equipment Manufacturing, purchasing, sales, distribution, wholesale sales, and precision metal stamping tools, customized metal hinges, cooling modules, slides, mechanical components and other related items Sales of automotive, electronics and computer peripheral parts Manufacture and wholesale of electrical appliances, audio-visual electronic products, other electrical and electronic machinery, automobiles and automotive parts, other optical and precision machinery Manufacture of automotive parts (sunroof, brakes, seat belts, airbags, etc.) and assemblies (drive shafts for steering wheel, etc.), supply of consumer electronics parts and server product U.S. business development, business information collection, provision of market intelligence and industry information Sales of electronics and computer peripheral components R & D, production, manufacturing and assembly of automotive, electronics and computer peripheral parts Manufacture and wholesale of machinery and equipment, molds, electrical and audio-visual electronic products, other electrical and electronic machinery, automobiles and their parts, and other optical andprecision equipment	$ 112,397 154,220 6,583 30,000 6,100 597 9,524 195,984 1,502 - 16,452 -	$ 112,397 - - - - 597 9,524 195,984 1,502 46,792 16,452 3,650	2,500,000 7,000,000 1,425,000 3,000,000 11,000,000 - - - - - 160,000 -	100 100 57 100 100 100 100 100 100 - 40 -	$ 2,393,571 136,599 32,006 26,053 ( 4,536 427,024 191,213 99,453 724 - 32,923 -	$ 295,297 ( 12,760 19,869 ( 5,814 ( 11,088 25,156 25,936 ( 27,406 653 19,868 4,021 ( 5,814	$ 295,297 ( 12,760 ) 11,328 ( 3,580 ) ( 11,088 ) 25,156 25,936 ( 27,406 ) 653 ( 3 ) 1,420 ( 1,099 )	Subsidiaries Subsidiaries Subsidiaries Subsidiaries Subsidiaries Third-tier subsidiary Third-tier subsidiary Third-tier subsidiary Third-tier subsidiary Third-tier subsidiary Investees recognized under the equity method Investees recognized under the equity method

Note 1: Please refer to Attachment 8 for information on investee in China.

Lemtech Holdings Co., Limited and subsidiaries Information on investments in China

2019

Attachment 8 Unit: NTD thousands / foreign currency thousnads

For investments in China, disclose the name of the investee, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, gain or loss for the period, carrying amount of the investment, repatriated investment gains:

Investee Company	Principal business activities	Actual paid-in capital	Method of investment	Beginning balance of accumulated outflow of investment from Taiwan	Remittance or recovery of investment amount in the currentperiod	Remittance or recovery of investment amount in the currentperiod	Ending balance of accumulated outflow of investment from Taiwan	Net gain or loss of the investee	The company's percentage of ownership directly or indirectly%	Investment gains (losses) recognized in the current period	Carrying amount of investment	Investment revenue transferred back to Taiwan as of the end of the period
					Outflow	Inflow
Zhenjiang Emtron Surface Treatment Limited Lemtech Precision Material Lemtech Precision Material Kunshan Lemtech Slide Technology Co., Ltd. Kunshan Lemtech Electronics Technology Co., Ltd.	Surface treatment of mechanical, electronic and automotive components Production and design of various types of fine blanking die, non-metal die-casting toolings, computer connectors, computer cooling modules and other new electronic plug-ins, sales of self-produced products, etc. Production and design of various types of fine blanking die, non-metal die-casting toolings, computer connectors, computer cooling modules and other new electronic plug-ins, sales of self-produced products, etc. Design and production of slide rails, shafts and related accessories, and sales of self-produced products, etc. R & D, manufacturing, and sales of self-produced electronic components, special electronic materials, and cooling modules; engaged in the production of the same products of the parent company and the wholesale, import and export of raw materials and mechanical equipment used by the parent company	$ 65,043 ( RMB 14,352 ) 273,372 ( RMB 63,000 ) 273,372 ( RMB 63,000 ) 69,758 ( RMB 15,000 ) 60,990 ( RMB 14,060 )	83.33% equity held by Lemtech Holdings Co., Limited 99.8% equity held by Lemtech Global Solution Co. Ltd. 0.2% equity held by Lemtech Holdings Co., Limited 100% invested by Lemtech Industrial Services Ltd. 100% owned by Lemtech Cooling System Limited	$ - - - - -	$	$	$ - - - - -	( $ 28,899 ) 309,736 309,736 18,446 ( 77 )	83.33% 99.8% 0.2% 100% 100%	( $ 22,810 ) (Note) 309,117 (Note) 619 (Note) 18,446 (Note) ( 77 ) (Note)	$ 43,218 1,938,208 3,884 48,158 60,451	$ - - - - -

Note: The investment gain (loss) is recognized in accordance with the parent company's financial statements for the same period audited by a certified public accountant.

Limit on the amount of investment in China

Accumulated investment remitted from Taiwan to China at the end of the period	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Upper limit on the amount of investment in China authorized by MOEAIC
$ -	Not applicable	Not applicable

Significant transactions with the investees in China directly or indirectly through businesses in a third region: Attachment 6.
Endorsements, guarantees or provision of collateral directly or indirectly between the company and the investees in China through business in a third region: Attachment 2. 5. Financing extended directly or indirectly between the company and the investees in China through business in a third region: Attachment 1. 6. Other transactions that have significant influence on the profits and losses or financial status of the current period: none.

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Lemtech-KY — Audit Report / Information 2019

52435_rns_2019-11-14_0d757448-68bc-4e73-848d-1e3b378b572f.pdf

Lemtech Holdings Co., Limited and subsidiaries

Consolidated Financial Report and Independent Auditors' Report For the Years Ended December 31, 2019 and 2018

Independent Auditors' Report

Lemtech Holdings Co., Limited public notice:

Audit opinion

Basis for Auditor's Opinions

Key Audit Matters

Responsibility of the management and the governing body for the Consolidated Financial Statements

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

Deloitte & Touche

Notes to Readers

Lemtech Holdings Co., Limited and subsidiaries

Consolidated Balance Sheet

(Continued from previous page)

Unit: NTD thousands

(Continued from previous page)

I.

Company History

2018

(III)

X. Notes receivable, accounts receivable and other receivables

Accounts receivable

XII.

XVI.

(III) Important Leasing Activities and Terms

XIX.

XX.

XXI.

Unsecured convertible bonds

(Continued from previous page)

(Continued from previous page)

(Continued)

(Continued from previous page)

2018

XXXIII. Cash flow information

XXXIV. Capital risk management

Sensitivity analysis

XXXVI. Related party transactions

XLII. Other disclosures

2019

2018

(III) Regional information

Attachment 1

Lemtech Holdings Co., Limited and subsidiaries Endorsement/guarantee provided for others 2019

Lemtech Holdings Co., Limited and subsidiaries Acquisition of real estate at cost exceeding of NT$300 million or 20% of paid-in capital 2019

Attachment 3

Lemtech Holdings Co., Limited Amount of purchases from and sales to related parties reaching NT$100 million or 20% of its paid-in capital 2019

Attachment 4

Lemtech Holdings Co., Limited and subsidiaries Accounts receivable from related parties reaching NT$100 million or 20% of its paid-in capital 2019

Lemtech Holdings Co., Limited and subsidiaries Business relations between parent company and subsidiaries and material transactions 2019

Attachment 6

Lemtech Holdings Co., Limited and subsidiaries Name of investee, location, etc. 2019

Attachment 7

Lemtech Holdings Co., Limited and subsidiaries Information on investments in China

2019

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Lemtech-KY Audit Report / Information 2019