MHC — Audit Report / Information 2018

Nov 12, 2018

MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS DECEMBER 31, 2018 AND 2017

REPORT OF INDEPENDENT ACCOUNTANTS

PWCR18000279

To the Board of Directors and Shareholders of MiTAC Holdings Corporation

Opinion

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

In our opinion, based on our audits and the audit reports of other independent accountants, as described in the Other matters section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the MiTAC Group as at December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants” and generally accepted auditing standards in the Republic of China (ROC GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the MiTAC Group in accordance with the Code of Professional Ethics for Certified Public Accountants in the Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. Based on our audits and the audit reports of the other independent accountants, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Key audit matters

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

Key audit matters for the MiTAC Group’s consolidated financial statements of the current period are stated as follows:

Sales revenue recognition

Description

For accounting policies on sales revenue recognition, please refer to Note 4(31). Considering that the sales revenue are material to its financial statements, the types of MiTAC Group products and sales terms are various, the timing of revenue recognition can only be determined when the controls of ownership for products are transferred to the customers based on contract terms of each different customer. Thus, we identified the sales revenue recognition as a key audit matter.

How our audit addressed the matter

We performed audit procedures including discussing with management and evaluating the policy of revenue recognition; tested the effectiveness of design and implementation of internal controls over recognition of revenue; sampled transaction terms and prices of customers and verified the supporting documents for delivery to ensure the accuracy of payment time and amount; selected sales transactions around the fiscal year-end date and verified transaction documents to ensure sales revenue are recorded in the proper period.

Valuation of inventory

Description

The MiTAC Group’s inventories were mainly engaged in manufacturing and selling computer and its peripherals and communications products. Since the industry involved rapidly changing technology and were affected by market demand, there was higher risk of incurring inventory valuation losses or having obsolete inventory. The MiTAC Group’s inventories were measured at the lower of cost and net realisable value. For a description of accounting policy on inventory valuation, please refer to Note 4(14), and for accounting estimates and assumption uncertainty in relation to inventory valuation, please refer

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to Note 5(2). Considering the MiTAC Group’s inventories were significant, items were voluminous and the valuation is associated with subjective judgement, we identified valuation of inventory as a key audit matter.

How our audit addressed the matter

We performed audit procedures including discussing with management and evaluating the policy of inventory valuation, tested inventory aging report, checked the logic in inventory aging calculation and confirmed that the classification of obsolete or slow-moving inventories was appropriate, and tested the materials which were used to determine the net realized of obsolete or slow-moving inventories in order to assess the reasonableness of allowance for inventory valuation losses.

Other matter- reference to reports of other independent accountants

We did not audit certain investments accounted for using the equity method that were included in the consolidated financial statements, whose financial statements were prepared under a different financial reporting framework. The Company converted the financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission. Share of profit (loss) of associates and joint ventures accounted for using equity method amounted to NT$1,108,426 thousand and NT$1,250,651 thousand for the years ended December 31, 2018 and 2017, respectively. Investments accounted for using equity method amounted to NT$10,783,025 thousand and NT$9,238,721 thousand as at December 31, 2018 and 2017, respectively. Those financial statements before adjustments were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent accountants.

Other matter - Parent company only financial reports

We have audited and expressed an unqualified opinion on the parent company only financial statements of MiTAC Holdings Corporation as at and for the years ended December 31, 2018 and 2017.

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

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

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

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

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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 ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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As part of an audit in accordance with ROC GAAS, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

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

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

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

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

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

6.

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s 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.

Wen, Fang-Yu Cheng, Ya-Huei

For and on behalf of PricewaterhouseCoopers, Taiwan February 26, 2019

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

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MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Assets	Notes 6(1) 6(2) 6(3) 6(4) 6(6) and 12(2) 6(6) and 7 7 6(7) 6(8) and 8 6(3) 6(4) 6(5) 6(9) 6(10) 6(11) 6(12) 6(28) 6(8) and 8	December31,2018 AMOUNT % $ 5,725,216 12 114,424 - 837,497 2 - - 92,212 - 4,720,458 10 360,980 1 76,621 - 52,824 - 6,488,102 14 524,001 1 41,214 - 19,033,549 40 3,190,291 7 - - - - 16,714,037 35 7,154,611 15 1,128,292 2 102,788 - 440,054 1 282,529 - 29,012,602 60 $ 48,046,151 100	December31,2017	December31,2017
		AMOUNT $ 5,725,216 114,424 837,497 - 92,212 4,720,458 360,980 76,621 52,824 6,488,102 524,001 41,214 19,033,549 3,190,291 - - 16,714,037 7,154,611 1,128,292 102,788 440,054 282,529 29,012,602 $ 48,046,151	AMOUNT $ 8,056,991 9,313 - 1,091,146 85,441 4,042,515 489,414 59,453 39,529 6,221,954 370,565 33,140 20,499,461 - 1,957,284 1,113,478 14,903,681 6,697,711 1,146,830 134,987 436,762 295,069 26,685,802 $ 47,185,263	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1120 Financial assets at fair value through other comprehensive income - current 1125 Available-for-sale financial assets - current 1150 Notes receivable - net 1170 Accounts receivable - net 1180 Accounts receivable - related parties - net 1200 Other receivables 1220 Current income tax assets 130X Inventories 1410 Prepayments 1470 Other current assets 11XX Total Current Assets Non-current assets 1517 Financial assets at fair value through other comprehensive income - non-current 1523 Available-for-sale financial assets - non-current 1543 Financial assets carried at cost - non-current 1550 Investments accounted for using equity method 1600 Property, plant and equipment 1760 Investment property - net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets				17 - - 2 - 9 1 - - 13 1 -
				43
				- 4 2 32 14 3 - 1 1
				57
				100

(Continued)

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MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Liabilities and Equity

December31,2018 December31,2017 Notes AMOUNT % AMOUNT % 6(13) $ - - $ 2,137,655 5 6(14) 1,295 - 10,312 - 6(22) 165,442 - - - 5,281,232 11 5,194,178 11 7 57,817 - 71,262 - 7 3,326,748 7 3,467,054 7 6(28) 233,017 - 327,433 1 6(17) 133,202 - 182,337 - 238,831 1 261,594 1 9,437,584 19 11,651,825 25 6(17) 124,095 - 109,293 - 6(28) 378,264 1 320,954 - 6(15) 302,881 1 354,575 1 805,240 2 784,822 1 10,242,824 21 12,436,647 26 6(18) 9,367,677 19 8,190,022 17 6(19) 23,370,899 49 22,537,691 49 6(20) 837,787 2 579,686 1 4,131,139 9 3,111,427 7 6(21) 448,912 1 852,239 1 6(16) ( 353,087 ) ( 1 ) ( 522,449 ) ( 1) 37,803,327 79 34,748,616 74 9(1)(2) 11 $ 48,046,151 100 $ 47,185,263 100

Current liabilities 2100 Short-term borrowings 2120 Financial liabilities at fair value through profit or loss - current 2130 Contract liabilities - current 2170 Accounts payable 2180 Accounts payable - related parties 2200 Other payables 2230 Current income tax liabilities 2250 Provisions - current 2300 Other current liabilities 21XX Total current Liabilities Non-current liabilities 2550 Provisions - non-current 2570 Deferred income tax liabilities 2600 Other non-current liabilities 25XX Total non-current liabilities 2XXX Total liabilities Share capital 3110 Common shares Capital surplus 3200 Capital surplus Retained earnings 3310 Legal reserve 3350 Unappropriated retained earnings Other equity interest 3400 Other equity interest 3500 Treasury stocks 3XXX Total equity Significant Contingent Liabilities And Unrecognized Contract Commitments Significant Events After the Balance Sheet Date 3X2X Total liabilities and equity

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

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MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

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

Items

YearendedDecember31 2018 2017 Notes AMOUNT % AMOUNT % 6(22) and 7 $ 30,751,819 100 $ 48,760,514 100 6(7) and 7 ( 25,963,951 ) ( 84) ( 43,095,337) ( 88) 4,787,868 16 5,665,177 12 6(26)(27) ( 1,093,521 ) ( 4) ( 1,268,344) ( 3) ( 1,174,427 ) ( 4) ( 1,244,975) ( 2) ( 2,186,024 ) ( 7) ( 2,411,977) ( 5) ( 4,453,972 ) ( 15) ( 4,925,296) ( 10) 333,896 1 739,881 2 6(23) 479,033 1 377,546 - 6(24) 850,095 3 ( 91,506) - 6(25) ( 13,078 ) - ( 33,826) - 6(9) 1,822,768 6 1,910,193 4 3,138,818 10 2,162,407 4 3,472,714 11 2,902,288 6 6(28) ( 176,465 ) - ( 321,274) ( 1) $ 3,296,249 11 $ 2,581,014 5 6(15) $ 648 - ( $ 26,532) - 6(3)(21) ( 451,947 ) ( 2) - - 6(9)(21) ( 70,311 ) - ( 4,318) - 6(28) 4,559 - 4,510 - ( 517,051 ) ( 2) ( 26,340) - 6(21) 369,024 1 ( 1,176,850) ( 2) 6(4)(21) - - 725,541 1 6(9)(21) ( 156,370 ) - 26,307 - 212,654 1 ( 425,002) ( 1) ($ 304,397 ) ( 1) ($ 451,342) ( 1) $ 2,991,852 10 $ 2,129,672 4 6(29) $ 3.58 $ 2.81 6(29) $ 3.55 $ 2.79

4000 Operating revenue 5000 Operating costs 5900 Gross profit Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for using equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the year Other comprehensive income (loss) - net Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8320 Share of profit of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 8362 Unrealized income on valuation of available-for-sale financial assets 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8360 Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive loss for the year 8500 Total comprehensive income for the year 9750 Basic earnings per share 9850 Diluted earnings per share

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

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MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

Year 2017 Balance at January 1, 2017 Profit for 2017 Other comprehensive income (loss) for 2017 Total comprehensive income (loss) Distribution of 2016 earnings Legal reserve Reversal of special reserve Cash dividends Employee stock options exercised Subsidiaries received cash dividends paid by the parent company Net change of equity in associates accounted for using equity method Balance at December 31, 2017 Year 2018 Balance at January 1, 2018 Effects on adoption of IFRS 9 Balance at January 1, 2018 after adjustments Profit for 2018 Other comprehensive income (loss) for 2018 Total comprehensive income (loss) Distribution of 2017 earnings Legal reserve Cash dividends Stock dividends Employee stock options exercised Subsidiaries received cash dividends paid by the parent company Change of associates accounted for using equity method Proceeds from disposal of investments accounted for using equity method Treasury stock retired Proceeds from disposal of equity instruments measured at fair value through other comprehensive income Balance at December 31, 2018	Notes		Commonshares		Capitalsurplus				Retained earnings					O	therequityinterest			Treasury stocks		Totalequity
							Legal reserve		Special reserve		Unappropriated retained earnings		Exchange differences on translation of foreign financial statements		Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income		Unrealized gains or losses on available-for-sale financialassets
	6(20) 6(18)(19) 6(19) 6(19) 12(4) 6(21) 6(20) 6(18)(19) 6(19) 6(19) 6(19)(21) 6(18) 6(21)	$ 8,156,048 - - - - - - 33,974 - - $ 8,190,022 $ 8,190,022 - 8,190,022 - - - - - 1,216,899 43,196 - - - ( 82,440 ) - $ 9,367,677		$ 22,446,436 - - - - - - 24,321 30,029 36,905 $ 22,537,691 $ 22,537,691 - 22,537,691 - - - - - - 20,860 15,607 898,481 ( 14,818 ) ( 86,922 ) - $ 23,370,899			$ 307,829 - - - 271,857 - - - - - $ 579,686 $ 579,686 - 579,686 - - - 258,101 - - - - - - - - $ 837,787	$ 65,691 - - - - ( 65,691 ) - - - - $ - $ - - - - - - - - - - - - - - - $ -		$ 2,785,617 2,581,014 ( 26,340 ) 2,554,674 ( 271,857 ) 65,691 ( 2,022,698 ) - - - $ 3,111,427 $ 3,111,427 214,703 3,326,130 3,296,249 4,138 3,300,387 ( 258,101 ) ( 1,054,646 ) ( 1,216,899 ) - - ( 15,584 ) - - 49,852 $ 4,131,139		$ 894,221 - ( 1,169,851 ) ( 1,169,851 ) - - - - - - ($ 275,630 ) ($ 275,630 ) - ( 275,630 ) - 212,654 212,654 - - - - - - - - - ($ 62,976 )		$ - - - - - - - - - - $ - $ - 1,067,345 1,067,345 - ( 521,189 ) ( 521,189 ) - - - - - 15,584 - - ( 49,852 ) $ 511,888		$ 383,020 - 744,849 744,849 - - - - - - $ 1,127,869 $ 1,127,869 ( 1,127,869 ) - - - - - - - - - - - - - $ -		($ 522,449 ) - - - - - - - - - ($ 522,449 ) ($ 522,449 ) - ( 522,449 ) - - - - - - - - - - 169,362 - ($ 353,087 )	$ 34,516,413 2,581,014 ( 451,342 ) 2,129,672 - - ( 2,022,698 ) 58,295 30,029 36,905 $ 34,748,616 $ 34,748,616 154,179 34,902,795 3,296,249 ( 304,397 ) 2,991,852 - ( 1,054,646 ) - 64,056 15,607 898,481 ( 14,818 ) - - $ 37,803,327

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

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MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Bad debts expense Expected credit loss Loss on inventory market value decline Depreciation Amortization Amortization of long-term prepaid rent Interest income Interest expense Dividend income (Gain) loss of financial assets/liabilities at fair value through profit or loss Share of profit of associates and joint ventures accounted for using equity method (Gain) loss on disposal of investments Gain on disposal of property, plant and equipment Changes in operating assets and liabilities Changes in operating assets Notes receivable Accounts receivable Other receivables Inventories Prepayments Other current assets Changes in operating liabilities Accounts payable Other payables Other current liabilities Contract liabilities Provisions for liabilities Accrued pension liabilities Cash inflow generated from operations Payment of interest Receipt of interest Payment of income tax Cash dividend received Net cash flows from operating activities

Notes 2018 2017 $ 3,472,714 $ 2,902,288 12(2) - 8,041 12(2) 17,794 - 6(7) 30,550 58,895 6(10)(11)(26) 632,615 573,363 6(12)(26) 95,402 95,933 7,144 6,855 6(23) ( 90,939 ) ( 56,677 ) 6(25) 13,078 33,826 6(23) ( 189,020 ) ( 127,379 ) 6(2)(14)(24) ( 5,480 ) 33,837 6(9) ( 1,822,768 ) ( 1,910,193 ) 6(24) ( 872,181 ) 1,266 6(24) ( 33,898 ) ( 61,703 ) ( 6,771 ) ( 71,832 ) ( 281,655 ) 4,795,933 ( 16,031 ) 15,995 ( 126,167 ) 136,660 ( 153,436 ) ( 95,511 ) 55,748 - ( 37,093 ) ( 3,548,815 ) ( 138,861 ) ( 348,692 ) ( 117,633 ) 131,791 ( 19,453 ) - ( 34,158 ) ( 40,361 ) ( 56,270 ) ( 80 ) 323,231 2,533,440 ( 14,523 ) ( 33,385 ) 89,802 55,522 ( 225,601 ) ( 242,932 ) 876,424 873,609 1,049,333 3,186,254

(Continued)

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MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(Expressed in thousands of New Taiwan dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of financial assets at fair value through profit or loss Decrease (increase) in other financial assets Acquisition of financial assets at fair value through other comprehensive income Acquisition of available-for-sale financial assets Proceeds from disposal of financial assets at fair value through other comprehensive income Proceeds from capital reduction of available-for-sale financial assets Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of investments accounted for using equity method Proceeds from disposal of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in investment property Increase in intangible assets Decrease in refundable deposits Increase in other non-current assets Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term borrowings Increase in guarantee deposits Employee stock options exercised Cash dividends paid Net cash flows used in financing activities Effects of changes in exchange rates Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

Notes 2018 2017 $ 912 $ - 24,089 ( 8,746 ) ( 500,439 ) - - ( 337,452 ) 206,068 - - 493 34,035 - ( 585,459 ) ( 89,749 ) 6(9) 1,716,328 - 6(10) ( 1,112,183 ) ( 1,271,080 ) 39,272 69,718 6(11)(31) ( 5,208 ) ( 11,474 ) 6(12)(31) ( 63,205 ) ( 137,453 ) 583 8,590 - ( 37,933 ) ( 245,207 ) ( 1,815,086 ) 6(32) ( 2,137,655 ) 987,565 4,752 10,333 64,056 58,295 6(20)(31) ( 1,039,039 ) ( 1,992,669 ) ( 3,107,886 ) ( 936,476 ) ( 28,015 ) ( 12,011 ) ( 2,331,775 ) 422,681 6(1) 8,056,991 7,634,310 6(1) $ 5,725,216 $ 8,056,991

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

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MiTAC HOLDINGS CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

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

1. HISTORY AND ORGANISATION

• (1) MiTAC Holdings Corporation (the “Company”) was established by MiTAC International Corp. (“MiTAC International”) through a share conversion on September 12, 2013, and on the same date, the competent authority has approved for the Company’s shares to be listed on the Taiwan Stock Exchange (TWSE). MiTAC International became the Company’s wholly-owned subsidiary after conversion. The main business of the Company and its subsidiaries (collectively referred herein as the “Group”) is to design, manufacture and sell products related to investments, computers and its peripherals and communications.

• (2) In order to promote specialization of work for transforming and improving overall competitiveness of the Group, the Board of Directors of its subsidiary, MiTAC International, has resolved to divest its cloud computing products group to the newly established company, MiTAC Computing Technology Corporation (collectively referred herein as the “MiTAC Computing Technology”), as the consideration for the acquisition of 220,000 thousand newly issued ordinary shares of MiTAC Technology on the spin-off day, September 1, 2014. In addition, in 2017, the Board of Directors of MiTAC International has resolved to divest its mobile communication products group to the newly established company, MiTAC Digital Technology Corporation (collectively referred herein as the “MiTAC Digital Technology”), as the consideration for the acquisition of 100,000 thousand newly issued ordinary shares of MiTAC Digital Technology on the spin-off day, January 1, 2018. As a result, MiTAC International, MiTAC Computing Technology and MiTAC Digital Technology are the wholly-owned subsidiaries of the Company after the spin-off.

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

These consolidated financial statements were authorised for issuance by the Board of Directors on February 26, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

• New standards, interpretations and amendments endorsed by the FSC effective from 2018 are as follows:

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New Standards,Interpretations and Amendments

Effective date by International Accounting Standards Board

Amendments to IFRS 2, ‘Classification and measurement of share-based payment transactions’ Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with IFRS 4, Insurance contracts’ IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from contracts with customers’ Amendments to IAS 7, ‘Disclosure initiative’ Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealized Amendments to IAS 40, ‘Transfers of investment property’ IFRIC 22, ‘Foreign currency transactions and advance consideration’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures’

January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2018

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

• A. IFRS 9, ‘Financial instruments’

• (a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset at amortized cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present subsequent changes in the fair value of an investment in an equity instrument that is not held for trading in other comprehensive income.

• (b) The Group has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018, please refer to Note 12(4).

• B. IFRS 15, ‘Revenue from contracts with customers’ and amendments

• (a) IFRS 15 requires that, when products are sold with a right of return, the entity will recognize revenue in the amount of consideration to which the entity expects to be entitled. Revenue would not be recognized for products that the entity expects to be returned. The entity raises a refund liability and an asset representing its right to recover the products from the customer. The asset is presented separately from the refund liability.

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• (b) The Group has elected not to restate prior period financial statements and recognized the cumulative effect of initial application as retained earnings at January 1, 2018, using the modified retrospective approach under IFRS 15. The significant effects of adopting the modified transition as of January 1, 2018 are summarised below:

  • i. Under IFRS 15, liabilities in relation to expected sales discounts are recognized as refund liabilities, along with the cost of products with a right of return and related inventory in relation to expected sales returns are recognized as ‘cost of products to be returned’, but were previously presented the net value as ‘accounts receivable – allowance for sales returns and discounts’ in the balance sheet. As of January 1, 2018, other current liabilities, accounts receivable and other current assets were increased by $279,765, $191,747 and $88,018, respectively.

  • ii. Under IFRS 15, liabilities in relation to product selling contracts are recognized as contract liabilities, but were previously presented as advance sales receipts (shown as ‘other current liabilities’) in the balance sheet. The balance was $184,895 as of January 1, 2018.

• C. Amendments to IAS 7, ‘Disclosure initiative’

This amendment requires that an entity shall provide more disclosures related to changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes.

The Group expects to provide additional disclosure to explain the changes in liabilities arising from financing activities, please refer to Note 6(32).

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

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

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

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact will be disclosed when the assessment is complete.

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IFRS 16, ‘Leases’

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

The Group expects to recognize the lease contract of lessees in line with IFRS 16. However, the Group does not intend to restate the financial statements of prior period. On January 1, 2019, it is expected that ‘right-of-use asset’ and lease liability will be increased by $455,606 and $233,433, and long-term prepaid rent (shown as ‘other non-current assets’) will be decreased by $222,173.

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

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

endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

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

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(2) Basis of preparation

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

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

  • (b) Financial assets and liabilities at fair value through other comprehensive income/Availablefor-sale financial assets measured at fair value.

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

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

• C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply modified retrospective approach whereby the cumulative impact of the adoption was recognized as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated.

• (3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements:

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

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

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

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

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(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained in the former subsidiary at its fair value. Any difference between fair value and carrying amount is recognized in profit or loss. All amounts previously recognized in other comprehensive income in relation to the subsidiary are reclassified to profit or loss on the same basis as would be required if the related assets or liabilities were disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously recognized in other comprehensive income in relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.

• B. Subsidiaries included in the consolidated financial statements:

Investor	Subsidiary	Main activities	Ownership (%)	Ownership (%)	Remarks
			December 31,2018	December 31,2017
MiTAC Holdings Corp. MiTAC Holdings Corp. MiTAC Holdings Corp. MiTAC International Corp. MiTAC International Corp. MiTAC International Corp. MiTAC International Corp. MiTAC Computing Technology Corp. MiTAC Computing Technology Corp. MiTAC Computing Technology Corp. MiTAC Digital Technology Corp.	MiTAC International Corp. MiTAC Computing Technology Corp. MiTAC Digital Technology Corp. Tsu Fung Investment Corp. Silver Star Developments Ltd. Mio Technology Corp. MiWell Technology Corp. MiTAC Technology UK Ltd. MiTAC Telematics Technology Corporation MiTAC Information Technology Czech s.r.o. Access Wisdom Holdings Ltd.	Computer and its peripherals: design, manufacture and sell communications products Computer and its peripherals: design, manufacture and sell communications products Sales and service of electronic telecommunication, communication and software, etc General investments General investments Sale of communication products and related after-sale services Information/software services and retail business General investments Sales of self-produced products and related after-sale services Assemble and sales of computer and peripheral equipment General investments	100% 100% 100% 100% 100% 100% - 100% 100% 100% 100%	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% -	Note 4 Note 1

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Investor	Subsidiary	Main activities	Ownership (%)	Ownership (%)	Remarks
			December 31,2018	December 31,2017
MiTAC Digital Technology Corp. Silver Star Developments Ltd. Silver Star Developments Ltd. Silver Star Developments Ltd. Silver Star Developments Ltd. Pacific China Corp. Pacific China Corp. Pacific China Corp. Pacific China Corp. Access Wisdom Holdings Ltd. MiTAC Technology UK Ltd. MiTAC Technology UK Ltd. MiTAC Technology UK Ltd. MiTAC Europe Ltd. MiTAC Europe Ltd. Silver Star Developments Ltd. Silver Star Developments Ltd.	Mio International Ltd. System Glory International Ltd. Pacific China Corp. Best Profit Ltd. Access Wisdom Holdings Ltd. MiTAC Star Service Ltd. Software Insights Ltd. Start Well Technology Ltd. Huge Extent Ltd. MiTAC Europe Ltd. Tyan Computer Corp. (USA) MiTAC Logistics Corp. MiTAC Information Systems Corp. MiTAC Digital Corp. MiTAC Australia Pty Ltd. MiTAC Japan Corp. MiTAC Benelux N.V.	Sale of communication and related products General investments General investments General investments General investments General investments General investments General investments General investments Sale of communication products and related after-sale services Sales of computer peripherals, hardware/ software and related products Sale of computer peripherals, hardware/software and related products Assembling and sale of computer peripherals, hardware/software and related products Sale of communication products and related after-sale services Sale of communication products and related after-sale services Sale of communication products, computer peripherals, hardware/software and related products and related after-sale services Sale of communication products and related after-sale services	100% 100% 100% - - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	- 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	Note 2 Note 3 Note 1

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Investor	Subsidiary	Main activities	Ownership (%)	Ownership (%)	Remarks
			December 31,2018	December 31,2017
Silver Star Developments Ltd. Silver Star Developments Ltd. Start Well Technology Ltd MiTAC Investment Holding Ltd. MiTAC Investment Holding Ltd. MiTAC Investment Holding Ltd. MiTAC Investment Holding Ltd. MiTAC Star Service Ltd. MiTAC Computer (Kunshan) Ltd	MiTAC Pacific (H.K.) Ltd. Mio International Ltd. MiTAC Investment Holding Ltd. MiTAC Computer (Kunshan) Ltd. MiTAC Technology (Kunshan) Co., Ltd. MiTAC Logistic Service (Kunshan) Ltd. MiTAC Information Technology Ltd. MiTAC Computer (Shunde) Corp. MiTAC Information Systems (Kunshan) Co., Ltd.	Sale of computer peripherals, hardware/software and related products Sale of communication and related products Investment holdings Manufacture of computers, computer peripherals, hardware/software and related products and sale of own- produced products Testing, maintenance and display of computer components and related technical advisory services and after-sale services Agency of freight transport, export and import trading and warehousing services. After-sale maintenance, testing and technical advisory services of computers, communication products and consumer electronic products; establishment of customer service centers; customer data processing, analysis and integrated services and business administration services Manufacture of computer frame, motherboard, interface card, display, power supply, keyboard, related metal stamping parts and plastic parts and maintenance of motherboard Sales and manufacturing of computer accessories, hardware, software and related services	100% - 100% 100% 100% 100% 100% 100% 100%	100% 100% 100% 100% 100% 100% 100% 100% 100%	Note 2

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Investor	Subsidiary	Main activities	Ownership (%)	Ownership (%)	Remarks
			December 31,2018	December 31,2017
Software Insights Ltd. Software Insights Ltd. Mio International Ltd.	MiTAC Research (Shanghai) Ltd. MiTAC Innovation (Kunshan) Ltd. Mio Technology (Suzhou) Ltd.	Research, development and manufacture of computer software, sale of own-produced products and related technical advisory services Research and development of calculator, server, mobile phone, PDA and GPS, and technical transfer, technical advisory and technical services of related R&D products Sale of communication products and related after-sale services	100% 100% 100%	100% 100% 100%

• Note 1: After the reorganization in the first quarter of 2018, MiTAC Digital Technology Corp. held 100% shares of Access Wisdom Holdings Ltd. which was originally held by Silver Star Development Ltd.

• Note 2: After the reorganization in the first quarter of 2018, MiTAC Digital Technology Corp. held 100% shares of Mio International Ltd. which was originally held by Silver Star Development Ltd.

• Note 3: Subsidiary was closed in the second quarter of 2018.

• Note 4: Subsidiary was closed on November 7, 2018.

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

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

• E. Nature and extent of the restrictions on fund remittance from subsidiaries to the parent company: None.

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

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in New Taiwan Dollars, which is the Company’s functional and the Group’s presentation currency.

• A. Foreign currency transactions and balances

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

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

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

• B. Translation of foreign operations

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

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

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

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

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

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

(5) Classification of current and non-current items

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

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

• (b) Assets held mainly for trading purposes;

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

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

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

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

• (b) Liabilities arising mainly from trading activities;

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

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

(6) Cash equivalents

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

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

Effective 2018

• A. Financial assets at amortized cost or fair value through other comprehensive income are designated as at fair value through profit or loss at initial recognition when they eliminate or significantly reduce a measurement or recognition inconsistency.

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

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

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

Prior to 2018

A. Classifications

The main purpose for holding financial assets or liabilities at fair value through profit or loss is for trading, and for selling or rebuying in a short time. Derivative financial instruments are used to hedge and also use the same classification.

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• B. Recognition and assessment

  • Trading of financial assets at fair value through profit or loss is accounted for using trade date accounting (the date that the Group promises to trade the assets). Financial assets are initially recognized at fair value, and related trading costs are recognized as expenses for the period. Financial assets are later measured at fair value, and the movement in fair value is recognized in profit or loss for the period.

• (8) Financial assets at fair value through other comprehensive income Effective 2018

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

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

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

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

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

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

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

(9) Available-for-sale financial assets

Prior to 2018

• A. Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories.

• B. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.

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• C. Available-for-sale financial assets are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets measured at cost’.

• (10) Accounts and notes receivable Effective 2018

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

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

Prior to 2018

Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. Accounts receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as effect of discounting is immaterial.

• (11) Impairment of financial assets

Effective 2018

For debt instruments measured at fair value through other comprehensive income and financial assets at amortized cost (including accounts receivable or contract assets that have a significant financing component, lease receivables, loan commitments and financial guarantee contracts), at each reporting date, the Group recognizes the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognizes the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognizes the impairment provision for lifetime ECLs.

Prior to 2018

• A. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

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• B. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:

• (a) Significant financial difficulty of the issuer or debtor;

• (b) A breach of contract, such as a default or delinquency in interest or principal payments;

• (c) The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;

• (d) It becomes probable that the borrower will enter bankruptcy or other financial reorganization;

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

• (f) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;

• (g) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;

• (h) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.

• C. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

• (a) Financial assets measured at amortized cost

  • The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

• (b) Financial assets measured at cost

  • The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at current market return rate of similar financial asset, and is recognized in profit or loss. Impairment loss recognized for this category shall not be reversed subsequently. Impairment loss is recognized by adjusting the carrying amount of the asset through the use of an impairment allowance

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account.

  - (c) Available-for-sale financial assets

     - The amount of the impairment loss is measured as the difference between the asset’s acquisition cost (less any principal repayment and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If, in a subsequent period, the fair value of an investment in a debt instrument increases, and the increase can be related objectively to an event occurring after the impairment loss was recognized, such impairment loss is reversed through profit or loss. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

• (12) Derecognition of financial assets

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

The Group derecognizes a financial asset when one of the following conditions is met:

• A. The contractual rights of the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

• C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.

• (13) Operating leases (lessor)

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

• (14) Inventories

• A. The perpetual inventory system is adopted for inventory recognition. Inventories are stated at standard cost, and adjusted at the end of reporting period to approximate them to the cost calculated on a weighted average method.

• B. At the end of period, inventories are evaluated at the lower of cost or net realizable value, and the individual item approach is used in the comparison of cost and net realizable value. The calculation of net realizable value should be based on the estimated selling price in the normal course of business, net of estimated costs of completion and estimated selling expenses.

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

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

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

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

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

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

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

• G. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss. If it retains significant influence over this associate, the amounts previously recognized as capital surplus in relation to the associate are transferred to profit or loss proportionately.

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(16) Property, plant and equipment

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

• B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of discarded assets is derecognized when critical repairs are incurred, and other repair expenses are charged to profit or loss for the period when they incur.

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

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

Buildings and structures (included utility equipment)

Buildings and structures (included utility equipment) 5 ~ 55 years Machinery and equipment 2 ~ 10 years Transportation equipment 3 ~ 5 years Leasehold improvements 3 ~ 5 years Other equipment 2 ~ 7 years

• E. The Group has recognized title of assets with significant risks and compensation not yet transferred and leases to lessees as operating leases. Rental income and expenses of operating leases are recognized over the leasing period on a straight line basis.

(17) Operating leases (lessee)

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

• (18) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 20 ~ 55 years.

(19) Intangible assets

The use right of computer software was capitalised based on the acquisition cost and cost to prepare the specific software to become usable. Computer software was amortized based on the contract or on a straight-line basis over 5 years.

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(20) Impairment of non-financial assets

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

(21) Borrowings

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

(22) Notes and accounts payable

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

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

(23) Derecognition of financial liabilities

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

• (24) Offsetting financial instruments

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

• (25) Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date. Provisions are not recognized for future operating losses.

(26) Employee benefits

• A. Short-term employee benefits

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

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B. Pensions

• (a) Defined contribution plans

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

  - (b) Defined benefit plans

     - i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability; when there is no deep market in high-quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.

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

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

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

• (27) Employee share based payment

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

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(28) Income tax

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

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

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

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

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

• F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from research and development expenditures to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

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(29) Share capital

• A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

• B. Where the Company repurchases the Company’s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

• (30) Dividends

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

• (31) Revenue recognition

• Effective 2018

• A. Sales of goods

  • (a) The Group manufactures and sells cloud computing products and mobile communication products. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

  • (b) Revenue from sales is recognized based on the price specified in the contract, net of the sales returns and sales discounts. The Group provides to customers the sales return right and sales discounts and recognizes refund liability for expected sales discounts payable to customers in relation to sales by using the expected value method.

  • (c) The Group’s obligation to provide maintenance services for faulty products under the standard warranty terms is recognized as a provision.

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

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• B. Sales of services

• (a) The Group provides technology services and installment repairs and maintenance services. Revenue from providing services is recognized in the accounting period in which the services are rendered. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized.

• (b) Some contracts include multiple deliverables. Such services are accounted for as a single performance obligation as they are highly interrelated and indistinguishable.

• C. Incremental costs of obtaining a contract

• The Group recognizes an asset the incremental costs of obtaining a contract with a customer if the Group expects to recover those costs. The recognized asset is amortized on a systematic basis that is consistent with the transfers to the customer of the goods or services to which the asset relates.

Prior to 2018

• A. The Group designs, manufactures and sells computer and its peripherals, communication and related products. Revenue is measured at the fair value of the consideration received or receivable taking into account of value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognized when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

• B. The Group offers customers volume discounts and right of return for defective products. The Group estimates appropriate discounts and returns based on regular way purchases or sales. Provisions for such liabilities are recorded when the sales are recognized.

• (32) Business combinations and organization restructuring

• A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisitionrelated costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. There is a choice on an acquisition-by-acquisition basis to measure the noncontrolling interest in the acquiree either at fair value or at the non-controlling interest’s

~34~

proportionate share of the acquiree’s identifiable net assets.

• B. If the total of the fair values of the consideration of acquisition and any non-controlling interest in the acquiree as well as the previous equity interest in the acquiree is higher than the fair value of the Group’s identifiable assets acquired and obligations borne, goodwill is recognized at the acquisition-date. If the fair value of the Group’s identifiable assets acquired and obligations borne is higher than the total of the fair values of the consideration of acquisition, non-controlling interest in the acquiree, as well as previous equity interest in the acquire, the difference is recognized in profit or loss for the period at the acquisition date.

• C. The newly established investment holding company through share swap is jointly controlled under business combination. Under regulations of competent authority, the investment holding company is recorded at the carrying value and is included in the consolidated financial statements at the date of establishment.

• (33) Operating segments

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

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION

• UNCERTAINTY

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

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

• None.

(2) Critical accounting estimates and assumptions

• Evaluation of inventories

• As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Therefore, there might be material changes to the evaluation.

As of December 31, 2018, the carrying amount of inventories are described in Note 6 (7).

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6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash: Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents: Time deposits Structured deposits Repurchased bonds Total	December 31,2018 710 $ 2,763,332 2,759,934 201,240 - 5,725,216 $	December 31,2017
		618 $ 4,348,731 2,883,546 273,900 550,196
		8,056,991 $

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

• B. The Group has no cash and cash equivalents pledged to others.

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

Items Current items: Financial assets mandatorily measured at fair value through profit or loss Beneficiary certificates Derivatives Valuation adjustment - Beneficiary certificates Valuation adjustment - Derivatives Total Items Current items: Financial assets held for trading Valuation adjustment - Derivatives		December 31,2018
		108,648 $ - 108,648 850 4,926 114,424 $ December31,2017 9,313 $

• A. The Group recognized net loss of $3,537 and net loss of $30,018 on financial assets at fair value through profit or loss for the years ended December 31, 2018 and 2017, respectively.

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B. The non-hedging derivative instrument transactions and contract information are as follows：

Financial Instrument MiTAC Digital Technology Corp. Forward foreign exchange - Sell Forward foreign exchange - Sell Access Wisdom Holdings Ltd. Forward foreign exchange - Sell Swap - Sell Financial Instrument MiTAC International Corp. Forward foreign exchange - Buy Forward foreign exchange - Sell MiTAC Computing Technology Corp. Forward foreign exchange - Buy Forward foreign exchange - Sell	December 31,2018	December 31,2018	Fair Marked Value (in thousands) NTD 390 NTD 4,504 USD 1 USD 0
	Notional Amount Item (in thousands) Advance booking EUR to buy USD EUR 2,867 Advance booking AUD to buy USD AUD 5,999 Advance booking EUR to buy USD EUR 3,600 Advance booking EUR to buy USD EUR 800 December 31,2017
	Item Advance booking USD to sell NTD Advance booking EUR to buy USD Advance booking USD to sell NTD Advance booking USD to buy NTD	Notional Amount (in thousands) USD 10,000 EUR 610 USD 20,000 USD 10,000	Fair Marked Value (in thousands)
			NTD 2,570 NTD 8 NTD 5,140 NTD 1,595

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

• D. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

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

in Note 12(2). Financial assets at fair value through other comprehensive income
Items Current items: Equity instruments Listed stocks Valuation adjustment Total Non-current items: Equity instruments Listed stocks Emerging stocks Unlisted stocks Subtotal Valuation adjustment Total		December 31,2018
		715,534 $ 121,963 837,497 $ 1,025,545 $ 874,494 813,165 2,713,204 477,087 3,190,291 $

• A. The Group recognized ($451,947) in other comprehensive (loss) income for fair value change for the year ended December 31, 2018.

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• B. The Group has elected to designate the above investments, which were held mainly for medium to long-term trading purposes, as investments in equity instruments measured at fair value through other comprehensive income. As of December 31, 2018, the fair value of investments was $4,027,788.

• (4) Available-for-sale financial assets

$4,027,788. Available-for-sale financial assets
Items Current items: Listed stocks Beneficiary certificates Subtotal Adjustments of available-for-sale financial assets Total Non-current items: Listed stocks Unlisted stocks Subtotal Adjustments of available-for-sale financial assets Total	December 31,2017
	614,880 $ 108,648
	723,528 367,618
	1,091,146 $
	1,025,777 $ 144,753
	1,170,530 786,754
	1,957,284 $

The Group recognized $725,541 in other comprehensive income for fair value change and reclassified $0 from equity to profit or loss for the year ended December 31, 2017.

• (5) Financial assets carried at cost

Items		December	31,2017
Non-current items:
Unlisted stocks	$		1,188,870
Accumulated impairment - Financial assets
carried at cost	(		75,392)
Total	$		1,113,478

• A. According to the Group’s intention, its investment in unlisted stocks should be classified as available-for-sale financial assets. However, as the stocks are not traded in active market, and no sufficient industry information of companies similar to the unlisted stocks and related financial information on the investee can be obtained, the fair value of the investment cannot be measured reliably. The Group classified those stocks as “financial assets carried at cost”.

• B. As of December 31, 2017, no financial assets carried at cost held by the Group were pledged to others.

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(6) Accounts receivable

		December	31,2018		December	31,2017
Third parties	$		4,818,223	$		4,316,399
Less: Allowance for sales returns and discounts			-	(		191,747)
Allowance for bad debts	(		97,765)	(		82,137)
			4,720,458			4,042,515
Related parties			360,980			489,414
	$		5,081,438	$		4,531,929

A. The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Not past due Up to 90 days 91 to 180 days Over 181 days	4,451,745 $ 655,582 46,575 25,301 5,179,203 $ December 31,2018	4,307,554 $ 480,489 5,908 11,862 4,805,813 $ December 31,2017

The above ageing analysis was based on past due date.

B. Information relating to credit risk of accounts receivable is provided in Note 12(2).

(7) Inventories

Expense and loss incurred on inventories: Raw materials Work in process Finished goods Total Cost of goods sold Loss on decline in market value	December 31,2018 Book value 4,177,730 $ 462,748 1,847,624 6,488,102 $ For the year ended December 31,2018 25,933,401 $ 30,550 25,963,951 $	December 31,2017
		Book value
		3,948,745 $ 116,388 2,156,821
		6,221,954 $
		For the year ended December 31,2017
		43,036,442 $ 58,895
		43,095,337 $

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(8) Other financial assets

Current: Pledged deposits Non-current: Pledged deposits Total	December 31,2018 8,944 $ 9,924 $ 18,868 $	December 31,2017
		33,140 $
		9,820 $
		42,960 $

A. Information relating to credit risk of other financial assets is provided in Note 12(2).

• B. Information about other financial assets that were pledged to others as collateral are described in Note 8.

(9) Investments accounted for using the equity method

A.

Investee company Getac Technology Corp. 3 Probe Technology Co., Ltd. Lian Jie Investment Co., Ltd. Lian Jie II Investment Co., Ltd. Shen-Tong Construction & Development Co., Ltd. Green Share Corp. Harbinger II (BVI) Venture Capital Corp. Mainpower International Ltd. Synnex Corp. Suzhou MiTAC Preclusion Technology Co., Ltd. Loyal Fidelity Aerospace Corp. Harbinger Ruyi Venture Ltd. Harbinger Ruyi II Venture Ltd. Infopower Technologies Ltd.	December 31,2018 4,850,015 $ 12,391 109,208 37,060 86,590 4,032 16,996 211,991 10,802,228 311,572 132,371 28,350 25,771 85,462 16,714,037 $	December 31,2017
		4,562,535 $ 11,507 131,010 33,259 82,751 4,545 25,372 206,628 9,251,465 304,614 141,649 30,180 28,463 89,703
		14,903,681 $

B. The Group’s recognized share of profit from associates accounted for using the equity method for the years ended December 31, 2018 and 2017 were $1,822,768 and $1,910,193, respectively, and recognized share of other comprehensive (loss) income from associates accounted for using the equity method were ($226,681) and $21,989, respectively.

~40~

C. The basic information of the associates that are material to the Group is as follows:

Company name Getac Technology Corp. Synnex Corp.	Principal place of business Taiwan USA	December31,2018 December31,2017 32.87% 33.59% 10.23% 13.59% Shareholdingratio	Nature of Methods of relationship measurement
		December31,2018 32.87% 10.23%
			Owned over 20% ownership Equity method Significant influence Equity method

• D. The summarized financial information of the associates that are material to the Group is as follows:

Balance sheet

Balance sheet
			Getac TechnologyCorp.
		December 31,2018			December 31,2017
Current assets	$		16,956,255	$		15,862,621
Non-current assets			11,207,435			9,920,434
Current liabilities	(		9,034,525)	(		8,682,418)
Non-current liabilities	(		2,807,124)	(		2,075,909)
Non-controlling interest	(		1,568,865)	(		1,441,203)
Total net assets	$		14,753,176	$		13,583,525
Share in associate’s net assets	$		4,850,015	$		4,562,535
			Synnex		Corp.
		December 31,2018			December 31,2017
Current assets	$		218,068,912		$	170,815,793
Non-current assets			134,740,351			58,386,084
Current liabilities	(		150,332,755)	(		120,266,320)
Non-current liabilities	(		96,872,806)	(		40,879,050)
Total net assets	$		105,603,702		$	68,056,507
Share in associate’s net assets	$		10,802,228		$	9,251,465

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Statement of comprehensive income

Getac Technology Corp.

		For the year ended		For the year ended
	December 31,2018		December 31,2017
Revenue	$	24,693,836	$	22,197,033
Profit for the period from continuing
operations	$	2,418,377	$	2,046,213
Other comprehensive loss - net of tax	(	120,032)	(	455,295)
Total comprehensive income	$	2,298,345	$	1,590,918
Dividends received from associates	$	475,626	$	570,736
		Synnex Corp.
		For the year ended		For the year ended
	December 31,2018		December 31,2017
Revenue	$	604,603,137	$	518,703,208
Profit for the period from continuing
operations	$	9,007,963	$	9,089,806
Other comprehensive (loss) income - net of tax	(	1,953,723)		949,329
Total comprehensive income	$	7,054,240	$	10,039,135
Dividends received from associates	$	210,954	$	174,101

• E. The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below:

As of December 31, 2018 and 2017, the carrying amount of the Group’s individually immaterial associates amounted to $1,061,794 and $1,089,681, respectively.

associates amounted to $1,061,794 and $1,089,681, respectively.
The fair value of the Group’s material associates with quoted market prices For the year ended December 31,2018 Profit for the period from continuing operations 111,921 $ Other comprehensive (loss) income - net of tax 145,394) ( Total comprehensive (loss) income 33,473) ($ December 31,2018 Getac Technology Corp. 7,653,957 $ Synnex Corp. 13,010,873 20,664,830 $	For the year ended December 31,2017
	162,914 $ 89,458
	252,372 $
	is as follows: December 31,2017
	8,415,545 $ 22,045,463
	30,461,008 $

• F. The fair value of the Group’s material associates with quoted market prices is as follows:

• G. On January 17, 2018, the Group’s consolidated subsidiary, Silver Star Developments Ltd., disposed its investments accounted for using equity method, Synnex Corp., of 451,000 shares at a price of $1,716,328, and the gain on disposal was $962,416.

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• H. The Group acquired investments accounted for using equity method, Synnex Corp., amounting to 242,102 shares in the open market from October 19 to October 24, 2018. The transaction price was US$19,261 thousand.

• I. The Group holds 10.23% ownership in Synnex Corp. but has significant influence over Synnex Corp. as the Group is the major shareholder of Synnex Corp. and the Company’s chairman Feng Chiang Miau serves as this company’s honorary chairman.

• J. The Group holds 13.28% ownership in Mainpower International Ltd. but has significant influence over Mainpower International Ltd. as the Group serves as this company’s corporate director.

• K. Synnex Corp.’s fiscal year ends on November 30, thus the Group uses the financial information on November 30 as the basis for the preparation of annual consolidated financial statements; Infopower Technologies Ltd.’s fiscal year ends on March 31, thus the Group uses the financial information on December 31 as the basis for the preparation of annual consolidated financial statements; other associates’ fiscal year all end on December 31.

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(10) Property, plant and equipment

At January 1, 2018 Cost Accumulated depreciation and impairment 2018 At January 1 Additions Disposal Reclassifications Depreciation Effects of foreign exchange At December 31 At December 31, 2018 Cost Accumulated depreciation and impairment	Construction Computer and in progress Buildings commumication Transportation Office Leasehold Molding Other and equipment Land and structures Machinery equipment equipment equipment improvements equipment equiupment for inspection Total 1,093,541 $ 6,599,605 $ 1,615,586 $ 208,086 $ 63,167 $ 781,911 $ 59,078 $ 78,366 $ 844,457 $ 171,166 $ 11,514,963 $ - 2,259,513) ( 1,207,243) ( 163,741) ( 42,072) ( 594,033) ( 13,182) ( 37,135) ( 500,333) ( - 4,817,252) ( 1,093,541 $ 4,340,092 $ 408,343 $ 44,345 $ 21,095 $ 187,878 $ 45,896 $ 41,231 $ 344,124 $ 171,166 $ 6,697,711 $ 1,093,541 $ 4,340,092 $ 408,343 $ 44,345 $ 21,095 $ 187,878 $ 45,896 $ 41,231 $ 344,124 $ 171,166 $ 6,697,711 $ - 24,268 429,145 32,206 17,290 7,426 14,187 51,092 181,912 354,657 1,112,183 - 898) ( - 124) ( 1,755) ( 646) ( 1,062) ( - 889) ( - 5,374) ( - 46,292 129,483 350 - 124,119) ( 6,104 - 4,578 63,752) ( 1,064) ( - 227,440) ( 162,480) ( 29,909) ( 11,058) ( 18,698) ( 11,864) ( 34,116) ( 116,787) ( - 612,352) ( 6,087 12,908) ( 15,446) ( 252) ( 219) ( 1 104) ( - 5,197) ( 8,455) ( 36,493) ( 1,099,628 $ 4,169,406 $ 789,045 $ 46,616 $ 25,353 $ 51,842 $ 53,157 $ 58,207 $ 407,741 $ 453,616 $ 7,154,611 $ 1,099,628 $ 6,617,508 $ 2,134,328 $ 214,103 $ 68,235 $ 195,983 $ 78,337 $ 100,873 $ 965,207 $ 453,616 $ 11,927,818 $ - 2,448,102) ( 1,345,283) ( 167,487) ( 42,882) ( 144,141) ( 25,180) ( 42,666) ( 557,466) ( - 4,773,207) ( 1,099,628 $ 4,169,406 $ 789,045 $ 46,616 $ 25,353 $ 51,842 $ 53,157 $ 58,207 $ 407,741 $ 453,616 $ 7,154,611 $	Total
		11,514,963 $ 4,817,252) (
		6,697,711 $
		7,154,611 $
		11,927,818 $ 4,773,207) (
		7,154,611 $

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At January 1, 2017 Cost Accumulated depreciation and impairment 2017 At January 1 Additions Disposals Reclassifications Depreciation Effects of foreign exchange At December 31 At December 31, 2017 Cost Accumulated depreciation and impairment	Construction Computer and in progress Buildings commumication Transportation Office Leasehold Molding Other and equipment Land and structures Machinery equipment equipment equipment improvements equipment equiupment for inspection Total 1,109,411 $ 4,820,781 $ 1,880,346 $ 215,527 $ 58,809 $ 736,374 $ 18,852 $ 144,796 $ 686,388 $ 1,455,246 $ 11,126,530 $ - 2,069,488) ( 1,663,860) ( 166,323) ( 35,478) ( 602,306) ( 9,611) ( 56,807) ( 492,127) ( - 5,096,000) ( 1,109,411 $ 2,751,293 $ 216,486 $ 49,204 $ 23,331 $ 134,068 $ 9,241 $ 87,989 $ 194,261 $ 1,455,246 $ 6,030,530 $ 1,109,411 $ 2,751,293 $ 216,486 $ 49,204 $ 23,331 $ 134,068 $ 9,241 $ 87,989 $ 194,261 $ 1,455,246 $ 6,030,530 $ - 428,314 270,822 26,952 8,991 109,050 33,442 22,182 180,661 190,666 1,271,080 - - 639) ( 37) ( 300) ( 1,825) ( 1,460) ( - 3,754) ( - 8,015) ( - 1,440,065 275) ( 643 - 10,651 9,544 - 54,118 1,475,485) ( 39,261 - 216,045) ( 77,194) ( 32,094) ( 10,834) ( 62,145) ( 4,815) ( 68,940) ( 81,352) ( - 553,419) ( 15,870) ( 63,535) ( 857) ( 323) ( 93) ( 1,921) ( 56) ( - 190 739 81,726) ( 1,093,541 $ 4,340,092 $ 408,343 $ 44,345 $ 21,095 $ 187,878 $ 45,896 $ 41,231 $ 344,124 $ 171,166 $ 6,697,711 $ 1,093,541 $ 6,599,605 $ 1,615,586 $ 208,086 $ 63,167 $ 781,911 $ 59,078 $ 78,366 $ 844,457 $ 171,166 $ 11,514,963 $ - 2,259,513) ( 1,207,243) ( 163,741) ( 42,072) ( 594,033) ( 13,182) ( 37,135) ( 500,333) ( - 4,817,252) ( 1,093,541 $ 4,340,092 $ 408,343 $ 44,345 $ 21,095 $ 187,878 $ 45,896 $ 41,231 $ 344,124 $ 171,166 $ 6,697,711 $	Total
		11,126,530 $ 5,096,000) (
		6,030,530 $
		6,697,711 $
		11,514,963 $ 4,817,252) (
		6,697,711 $

~45~

(11) Investment property

Investment property
				Buildings
		Land		and structures		Total
At January 1, 2018
Cost	$	824,084	$	620,926	$	1,445,010
Accumulated depreciation and
impairment		-	(	298,180)	(	298,180)
	$	824,084	$	322,746	$	1,146,830
2018
At January 1	$	824,084	$	322,746	$	1,146,830
Additions		5,208		-		5,208
Depreciation		-	(	20,263)	(	20,263)
Effects of foreign exchange	(	161)	(	3,322)	(	3,483)
At December 31	$	829,131	$	299,161	$	1,128,292
At December 31, 2018
Cost	$	829,131	$	613,313	$	1,442,444
Accumulated depreciation and
impairment		-	(	314,152)	(	314,152)
	$	829,131	$	299,161	$	1,128,292
				Buildings
		Land		and structures		Total
At January 1, 2017
Cost	$	823,358	$	617,157	$	1,440,515
Accumulated depreciation and
impairment		-	(	278,116)	(	278,116)
	$	823,358	$	339,041	$	1,162,399
2017
At January 1	$	823,358	$	339,041	$	1,162,399
Depreciation		-	(	19,944)	(	19,944)
Effects of foreign exchange		726		3,649		4,375
At December 31	$	824,084	$	322,746	$	1,146,830
At December 31, 2017
Cost	$	824,084	$	620,926	$	1,445,010
Accumulated depreciation and
impairment		-	(	298,180)	(	298,180)
	$	824,084	$	322,746	$	1,146,830

~46~

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

Rental income from the lease of the investment property Direct operating expenses arising from the investment property that generated rental income in the period Direct operating expenses arising from the investment property that did not generate rental income in the period	For the year ended December 31,2018 43,596 $ 22,288 $ 7,812 $	For the year ended December 31,2017
		42,274 $
		21,716 $
		8,136 $

• B. The fair value of the investment property held by the Group on December 31, 2018 and 2017 were $3,414,425 and $3,239,838, respectively, which were revalued by independent appraisers and with reference to market transaction prices. Valuations were made using the market approach and cost approach which is categorised within Level 3 in the fair value hierarchy.

• (12) Intangible assets

Intangible assets
	December	31,2018	December	31,2017
At January 1
Cost	$	356,904	$	319,502
Accumulated amortization and impairment	(	221,917)	(	222,522)
	$	134,987	$	96,980
At January 1	$	134,987	$	96,980
Additions		63,205		134,043
Amortization	(	95,402)	(	95,933)
Effects of foreign exchange	(	2)	(	103)
At December 31	$	102,788	$	134,987
At December 31
Cost	$	353,188	$	356,904
Accumulated amortization and impairment	(	250,400)	(	221,917)
	$	102,788	$	134,987

Details of amortization of intangible assets are as follows:

~47~

Operating costs Selling expenses Administrative expenses Research and development expenses	For the year ended December 31,2018 1,317 $ 24,312 28,118 41,655 95,402 $	For the year ended December 31,2017
		- $ 28,549 25,243 42,141
		95,933 $

(13) Short-term borrowings

Short-term borrowings
Financial liabilities at fair value through profit or loss December 31,2018 Unsecured bank borrowings - $ Interest rates - Items December31,2018 Current items: Financial liabilities held for trading Valuation adjustment - Derivatives 1,295 $	December 31,2017
	2,137,655 $
	0.88%~2.38%
	December31,2017
Items Current items: Financial liabilities held for trading Valuation adjustment - Derivatives
	10,312 $

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

A.The Group recognized net gain of $9,017 and net loss of $3,819 for the years ended December 31, 2018 and 2017, respectively. B. The non-hedging derivative instrument transactions and contract information are as follows:

31, 2018 and 2017, respectively. The non-hedging derivative instrument transactions and contract information are	y. trument transactions and contract information are	y. trument transactions and contract information are	as follows:
Notional Amount Financial Instrument Item (in thousands) MiTAC Digital Technology Corp. Forward foreign exchange - Sell Advance booking EUR to buy USD EUR 3,556 Silver Star Developments Ltd. Swap - Sell Advance booking EUR to buy USD EUR 2,300 December 31,2018 Notional Amount Financial Instrument Item (in thousands) MiTAC International Corp. Forward foreign exchange - Sell Advance booking USD to buy NTD USD 10,000 Forward foreign exchange - Sell Advance booking EUR to buy USD EUR 6,698 Forward foreign exchange - Sell Advance booking AUD to buy USD AUD 6,914 MiTAC Computing Technology Corp. Forward foreign exchange - Buy Advance booking USD to sell NTD USD 10,000 Forward foreign exchange - Sell Advance booking USD to buy NTD USD 20,000 MiTAC Digital Corp. Forward foreign exchange - Sell Advance booking CAD to buy USD CAD 400 MiTAC Europe Ltd. Swap - Sell Advance booking EUR to buy USD EUR 4,000 December 31,2017	December 31,2018
			Fair Market Value (in thousands)
			(NTD 771) (USD 17) Fair Market Value (in thousands) (NTD 265) (NTD 2,388) (NTD 3,841) (NTD 88) (NTD 529) (USD 5) (USD 103)
		Notional Amount (in thousands) USD 10,000 EUR 6,698 AUD 6,914 USD 10,000 USD 20,000 CAD 400 EUR 4,000

~48~

(15) Pensions

• A.(a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by the end of December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method, to the employees expected to be qualified for retirement next year, the Company will make contributions to cover the deficit by next March.

(b) The amounts recognized in the balance sheet are determined as follows ：

	December	31,2018	December	31,2017
Present value of defined benefit	($	542,954)	($	539,827)
obligations
Fair value of plan assets		266,521		206,515
Net defined benefit liability	($	276,433)	($	333,312)

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

~49~

		Present value of
		defined benefit		Fair value of		Net defined
		obligations		plan assets		benefit liability
2018
Balance at January 1	($	539,827)	$	206,515	($	333,312)
Current service cost	(	4,296)		-	(	4,296)
Interest (expense) income	(	6,584)		2,550	(	4,034)
	(	550,707)		209,065	(	341,642)
Remeasurements:
Return on plan assets		-		6,187		6,187
(excluding amounts
included in interest
income or expense)
Change in demographic	(	7,471)		-	(	7,471)
assumptions
Change in financial	(	8,606)		-	(	8,606)
assumptions
Experience adjustments		10,538		-		10,538
	(	5,539)		6,187		648
Pension fund contribution		-		62,599		62,599
Paid pension		13,292	(	11,330)		1,962
Balance at December 31	($	542,954)	$	266,521	($	276,433)

~50~

		Present value of
		defined benefit		Fair value of		Net defined
		obligations		plan assets		benefit liability
2017
Balance at January 1	($	536,658)	$	225,270	($	311,388)
Current service cost	(	4,039)		-	(	4,039)
Interest (expense) income	(	6,964)		2,983	(	3,981)
	(	547,661)		228,253	(	319,408)
Remeasurements:
Return on plan assets		-	(	839)	(	839)
(excluding amounts
included in interest
income or expense)
Change in demographic	(	14,172)		-	(	14,172)
assumptions
Change in financial	(	3,113)		-	(	3,113)
assumptions
Experience adjustments	(	8,408)		-	(	8,408)
	(	25,693)	(	839)	(	26,532)
Pension fund contribution		-		8,641		8,641
Paid pension		33,527	(	29,540)		3,987
Balance at December 31	($	539,827)	$	206,515	($	333,312)

(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s and domestic subsidiaries’ defined benefit pension plan in accordance with the Fund’s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings is less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company has no right to participate in managing and operating that fund and hence the Company is unable to disclose the classification of plan asset fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

~51~

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

A. MiTAC International Corp. ：

A. MiTAC International Corp.：
B. MiTAC Computing Technology Corp.： C. MiTAC Digital Technology Corp.： Discount rate Future salary increase Discount rate Future salary increase Discount rate Future salary increase	For the year ended December 31,2018 1.000% 2.000% For the year ended December 31,2018 1.125% 2.000%	For the year ended December 31,2017
		1.250%
		2.000%
		For the year ended December 31,2017
		1.250%
		2.000%
		For the year ended December 31,2018 1.125% 2.000%

For the year ended December 31, 2017 ： None.

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory. Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

A. MiTAC International Corp. ：

alysis was as follows: . MiTAC International	Corp.：
		Discount rate				Future salaryincreases
	Increase 0.25%		Decrease	0.25%	Increase 0.25%		Decrease	0.25%
December 31, 2018
Effect on present value of
defined benefit
obligation	$	3,094	($	3,202)	($	3,117)	$	3,028
December 31, 2017
Effect on present value of
defined benefit
obligation	$	7,164	($	7,446)	($	7,267)	$	7,028
MiTAC Computing Technology Corp：
		Discount rate				Future salaryincreases
	Increase0.25%		Decrease	0.25%	Increase0.25%		Decrease	0.25%
December 31, 2018
Effect on present value of
defined benefit
obligation	$	7,615	($	7,918)	($	7,715)	$	7,459

B. MiTAC Computing Technology Corp ：

~52~

		Discount rate	Discount rate			Future salaryincreases	Future salaryincreases
	Increase 0.25%		Decrease	0.25%	Increase 0.25%		Decrease	0.25%
December 31, 2017
Effect on present value of
defined benefit
obligation	$	7,608	($	7,919)	($	7,727)	$	7,463
C. MiTAC Digital Technology Corp.：
		Discount rate				Future salaryincreases
	Increase 0.25%		Decrease	0.25%	Increase 0.25%		Decrease	0.25%
December 31, 2018
Effect on present value of
defined benefit
obligation	$	3,483	($	3,625)	($	3,532)	$	3,412
December 31, 2017：None.

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

• (f) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2019 amounts to $9,187.

• (g)As of December 31, 2018, the weighted average duration of that retirement plan is 9.1~11.7 years.

• B.(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b)The Company’s Mainland China subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentages of employees’ monthly salaries and wages. Other than the monthly contributions, the Group has no further obligations.

• (c) The pension costs under the defined contribution pension plans of the Group for the years ended December 31, 2018 and 2017 were $100,101 and $91,903, respectively.

~53~

(16) Share-based payment

• A. As of December 31, 2018 and 2017, the Company’s share-based payment arrangements were as follows

follows
Type of arrangement	Grant date	Quantity granted (shares in thousands)	Contract period	Vestingconditions
Eleventh stock option incentive plan	2012.10.11	19,375 (Note 1)	6 years	50% can be exercised after 2 years of grant 75% can be exercised after 3 years of grant 100% can be exercised after 4 years of grant

Note : According to the resolution on share conversion, the Company had the performance obligation of stock option certificates issued by MiTAC International Corp. under the authorisation of competent authority from the effective date, and adjusted the conversion price and quantity.

B. A summary of the movements of the Company’s stock option plans is set forth below ：

		For theyear ended December 31,2018	For theyear ended December 31,2018	For theyear ended December 31,2018		For theyear ended December 31,2017	For theyear ended December 31,2017	For theyear ended December 31,2017
			Weighted avarage				Weighted avarage
		No of options		exercise price		No of options		exercise price
		(shares in thousands)		(in dollars)		(shares in thousands)		(in dollars)
Options outstanding at
beginning of the period		6,261	$	16.30		9,956	$	17.40
Options forfeited	(	1,941)		13.71	(	298)		17.40
Options exercised	(	4,320)		14.83	(	3,397)		17.16
Options outstanding at
end of the period		-				6,261		16.30
Options exercisable at
end of the period		-				6,261
Options approved and
not yet issued at the
end of the period		-				-

• C. The weighted-average stock price of stock options at exercise dates for the years ended December 31, 2018 and 2017 were $33.05 (in dollars) and $33.52 (in dollars), respectively.

• D. As of December 31, 2018 and 2017, outstanding compensatory employee stock option plan is as follows:

As of December 31, 2018 ： None.

~54~

As of December 31, 2017

Number of options outstanding at the end of the year

Range of exercise price (in dollars) $16.30	In thousands of shares 6,261	Expected weighted average residual year 0.75	Weighted average exercise price (in dollars)
			16.30 $

E. Information about the fair value of the Company’s shared-based payment transactions ：

• (a) The fair values of stock options are measured using the Black-Scholes option-pricing model:

Type of arrangement	Grant date	Stock price (in dollars)	Exercise price (in dollars)	Expected price volatility (Note 1)	Expected option life (year)	Expected dividends	Risk-free interest rate	Fair value per unit (in dollars) (Note 2)
Eleventh employee stock options	2012.10.11	10.15	10.15	36.14%	3.47	0%	0.88%	2.79

Note 1: Expected price volatility rate was estimated by using the stock prices of the most recent period with length of this period equal as the length of the stock options’ expected life, excluding obvious irregularities of changes in stock prices for the observation amount while considering the effect of the appropriation of retained earnings on the transaction price of stocks to calculate expected price volatility rate.

Note 2: Information of fair value from the original issuance by MiTAC International Corp.

F. Expenses incurred on share-based payment transactions for the years ended December 31, 2018 and 2017 ： None.

(17) Provisions

and 2017：None. Provisions
Warranty			For the year ended			For the year ended
		December 31,2018			December 31,2017
Beginning balance	$		291,630	$		333,393
Additional provisions			143,888			143,941
Used during the period	(		178,046)	(		184,302)
Effects of foreign exchange	(		175)	(		1,402)
Ending balance	$		257,297	$		291,630
Analysis of total provisions:
		December 31,2018			December 31,2017
Current	$		133,202	$		182,337
Non-current	$		124,095	$		109,293

~55~

(18) Share capital

• A. As of December 31, 2018, the Company’s authorized capital was $11,000,000, consisting of 1.1 billion shares, and the paid-in capital was $9,367,677 with a par value of $10 per share.

Movements in the number of the Company’s ordinary shares outstanding are as follows:

Unit: in thousands of shares

Movements in the number of the Company’s ordinary shares outstanding Unit:	are as follows: in thousands of shares
2018 Outstanding shares as of January 1 798,732 Capital increase of earnings 121,690 Capital increase of treasury stock acquired by the subsidiaries 1,801) ( Employee stock options exercised 4,320 Changes in outstanding shares during the year 124,209 Outstanding shares as of December 31 922,941	2017
	795,335
	- - 3,397
	3,397
	798,732

• B. Treasury shares

• (a) Reason for share reacquisition and movements in the number of the Company’s treasury shares are as follows:

shares are as follows:
Name of company holdingthe shares Subsidiary - Tsu Fung Investment Corp. Subsidiary - SSDL Name of company holdingthe shares MiTAC Holdings Corp. Subsidiary - Tsu Fung Investment Corp. Subsidiary - SSDL	Reason for reacquisition Stock conversion " Reason for reacquisition Transferred to employees Stock conversion "	December	31,2018
		Number of shares (shares in thousands) 12,174 1,652 December	Carrying amount
			276,085 $ 77,002 31,2017
		Number of shares (shares in thousands) 8,244 10,589 1,437	Carrying amount
			169,362 $ 276,085 77,002

• (b) Pursuant to the R.O.C. Securities and Exchange Act, the number of shares bought back as treasury shares should not exceed 10% of the number of the Company’s issued and outstanding shares and the amount bought back should not exceed the sum of retained earnings, paid-in capital in excess of par value and realized capital surplus.

• (c) Pursuant to the R.O.C. Securities and Exchange Act, treasury stock should not be pledged as collateral and is not entitled to dividends before it is reissued to the employees.

~56~

• (d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition. The number of treasury stocks to be reissued to employees that were retired during the year ended December 31, 2018, was 8,244 thousand shares.

• (e) In accordance with the Financial Supervisory Commission, Securities and Futures Bureau, No.1010047490, the Company shall not appropriate special reserve proportionately to the shareholding ratio for the difference of ending market price below the carrying amount of the parent’s stock held by the subsidiaries. If the market price reverses subsequently, the reversal amount shall be appropriated as special reserve proportionately to the shareholding ratio.

(19) Capital surplus

Share premium At January 1, 2018 21,716,203 $ Employee stock options exercised 44,964 Changes from associates and joint ventures accounted for using the equity method - Subsidiaries received cash dividends paid by the parent company - Proceeds form disposal of investments accounted for using equity method - Write-down of treasury shares 189,838) ( At December 31, 2018 21,571,329 $	Net equity of associates and joint Treasury ventures accounted stock for under the Employee trnsactions equitymethod stock options Total 223,734 $ 226,836 $ 370,918 $ 22,537,691 $ - - 24,104) ( 20,860 - 898,481 - 898,481 15,607 - - 15,607 - 14,818) ( - 14,818) ( 102,916 - - 86,922) ( 342,257 $ 1,110,499 $ 346,814 $ 23,370,899 $

~57~

At January 1, 2017 Employee stock options exercised Changes from associates and joint ventures accounted for using the equity method Subsidiaries received cash dividends paid by the parent company At December 31, 2017	Share premium 21,672,925 $ 43,278 - - 21,716,203 $	Treasury stock trnsactions 193,705 $ - - 30,029 223,734 $	Net equity of associates and joint ventures accounted for under the Employee equitymethod stock options 189,931 $ 389,875 $ - 18,957) ( 36,905 - - - 226,836 $ 370,918 $	Total
				22,446,436 $ 24,321 36,905 30,029
				22,537,691 $

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

(20) Retained earnings

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. Special reserve shall also be set aside pursuant to the regulations. Appropriation of the remainder plus prior year’s accumulated unappropriated retained earnings shall be proposed by the Board of Directors and resolved by the stockholders.

• B. Earnings appropriation ratio and cash dividends ratio are decided by the Board of Directors, taking into account the Company’s financial structure, future capital requirements and profitability, and cash dividends shall account for at least 10% of the total dividends appropriated. Earnings appropriation ratio and cash dividends ratio are subject to adjustments once approved by the stockholders.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

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

~58~

in the distributable earnings.

• E. On June 22, 2018, the appropriation of earnings for the year ended December 31, 2017 resolved by the shareholders is as follows:

by the shareholders is as follows:
Legal reserve Cash dividend Stock dividend Total	For theyear ended December 31,2017
	Account 258,101 $ 1,054,646 1,216,899 2,529,646 $	Dividend per share (in dollars)
		1.3 $ 1.5
		2.8 $

• F. On February 26, 2019, the appropriation of earnings for the year ended December 31, 2018 proposed by the Board of Directors and to be approved by the shareholders is as follows:

Legal reserve Special reserve Cash dividend Stock dividend Total	For theyear ended December 31,2018	For theyear ended December 31,2018
	Account 329,625 $ 12,264 1,405,152 1,405,152 3,152,193 $	Dividend per share (in dollars)
		1.5 $ 1.5
		3.0 $

• (21) Other equity items

Other equity items
Unrealized gains (losses) Currency on valuation translation Total At January 1 after adjustments 1,067,345 $ 275,630) ($ 791,715 $ Reclassified to retained earnings upon disposal - Group 49,852) ( - 49,852) ( - Associates 15,584 - 15,584 Reclassified to profit or loss upon disposal - Associates - 112,032 112,032 Revaluation - Group 451,947) ( - 451,947) ( - Associates 69,242) ( - 69,242) ( Currency translation differences: - Group - 369,024 369,024 - Associates - 268,402) ( 268,402) ( At December 31 511,888 $ 62,976) ($ 448,912 $ 2018		2018
			Total
			448,912 $

~59~

2017

At January 1 Reclassified to profit or loss upon disposal - Associates Revaluation - Group - Associates Currency translation differences: - Group - Associates At December 31	Available-for-sale Currency investments translation Total 383,020 $ 894,221 $ 1,277,241 $ 172 1,593 1,765 725,541 - 725,541 19,136 - 19,136 - 1,176,850) ( 1,176,850) ( - 5,406 5,406 1,127,869 $ 275,630) ($ 852,239 $

(22) Operating revenue

Operating revenue
A. Disaggregation of revenue from contracts with customers Revenue from contracts with customers Cloud computing product Mobile communication product Others			For the year ended December31,2018 30,751,819 $ For the year ended December 31,2018
			$ 22,004,923 5,394,210 3,352,686 30,751,819 $

B. Contract liabilities

The Group has recognized the following revenue-related contract liabilities:

Operating revenue for 2017 Contract liabilities: Contract liabilities – sales of goods Contract liabilities – others Sales Other revenue Total		December 31,2018
		161,374 $ 4,068 165,442 $ For the year ended December 31,2017
		48,658,506 $ 102,008 48,760,514 $

C. Operating revenue for 2017

~60~

(23) Other income

(23)	Other income
				For the year ended			For the year ended
			December 31,2018			December 31,2017
	Interest income:
	Interest income from bank deposits	$		90,939	$		56,677
	Rental revenue			114,335			103,913
	Dividend income			189,020			127,379
	Other income			84,739			89,577
	Total	$		479,033	$		377,546
(24)	Other gains and losses
				For the year ended			For the year ended
			December 31,2018			December 31,2017
	Gains on disposals of property, plant and	$		33,898	$		61,703
	equipment
	Gains (losses) on disposal of investments			872,181	(		1,266)
	Net currency exchange gains (losses)			7,404	(		80,408)
	Gains(losses) on financial assets liabilities at fair
	value through profit or loss			5,480	(		33,837)
	Other losses	(		68,868)	(		37,698)
	Total	$		850,095	($		91,506)
(25)	Finance costs
				For the year ended			For the year ended
			December31,2018			December31,2017
	Interest expense	$		13,078	$		33,826
(26)	Expenses by nature
				For the year ended			For the year ended
			December 31,2018			December 31,2017
	Employee benefit expense	$		4,954,721	$		5,028,346
	Depreciation on property, plant and equipment
	and investment property			632,615			573,363
	Amortization charges			95,402			95,933
	Total	$		5,682,738	$		5,697,642

~61~

(27) Employee benefit expense

Employee benefit expense
Wages and salaries Labor and health insurance fees Pension costs Other personnel expenses	For the year ended December 31,2018 4,356,524 $ 320,580 108,431 169,186 4,954,721 $	For the year ended December 31,2017
		4,444,354 $ 322,838 99,923 161,231
		5,028,346 $

• A. According to the amended articles, the profit (pre-tax profit before deduction of employees’ compensation and directors’ and supervisors’ remuneration) of the current year shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration, which will be resolved by the Board of Directors. The ratio shall not be lower than 0.1% for employees and not be higher than 1% for directors and supervisors. If a company has accumulated deficit, earnings should be reserved to cover losses. Employees’ compensation can be distributed in cash or shares and shall be distributed to the employees of subsidiaries of the Company who meet certain specific requirements. The Chairman of the Board is authorized to set the qualification requirements.

• B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at 0.1% of gain on pre-tax profit before deduction of employees’ compensation and directors’ and supervisors’ remuneration. Directors’ and supervisors’ remuneration were accrued under 1% of gain on pre-tax profit before deduction of employees’ compensation and directors’ and supervisors’ remuneration.

• C. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at $3,313 and $2,639, respectively; and directors’ and supervisors’ remuneration was accrued at $3,600 and $5,400, respectively. The aforementioned amounts were recognized in salary expenses. Employees’ cash bonus and directors’ and supervisors’ remuneration of 2018 and 2017 as resolved at the Board of Directors of the Company were in agreement with those amounts recognized in the 2018 and 2017 consolidated financial statements.

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

~62~

(28) Income tax

A. Income tax expense

(a) Components of income tax expense:

ome tax Income tax expense (a) Components of income tax expense:
			For the year ended			For the year ended
		December 31,2018			December 31,2017
Current tax:
Current tax on profits for the period	$		116,013	$		384,228
Tax on undistributed surplus earnings			2,503			45,209
Adjustments in respect of prior years	(		1,775)	(		501)
Total current tax			116,741			428,936
Deferred tax:
Origination and reversal of temporary
differences			56,432	(		144,834)
Impact of change in tax rate			3,292			37,172
Total deferred tax			59,724	(		107,662)
Income tax expense	$		176,465	$		321,274
(b) The income tax (charge)/credit relating to components of other comprehensive income is as
follows:
			For the year ended			For the year ended
		December 31,2018			December 31,2017
Actuarial gain (losses) on defined benefit
obligations	$		130	($		4,510)
Impact of change in tax rate	(		4,689)			-
Total	($		4,559)	($		4,510)
Reconciliation between income tax expense and accounting profit
			For the year ended			For the year ended
		December 31,2018			December 31,2017
Tax calculated based on profit before
tax and statutory tax rate		$	733,711		$	1,021,398
Tax on undistributed earnings			2,503			45,209
Unrecognized deferred income tax liabilities	(		421,447)	(		218,892)
Tax exempt income by tax regulation	(		184,013)	(		607,910)
Income that should adjust in line with tax law			-			67,512
Change in assessment of realisation of
deferred tax assets	(		20,425)	(		64,557)
Effects from foreign income			64,619			41,843
Impact of change in tax rate			3,292			37,172
Over estimation of prior year’s income tax	(		1,775)	(		501)
Income tax expense		$	176,465		$	321,274

• (b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

B. Reconciliation between income tax expense and accounting profit

~63~

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

Beginning balance Deferred tax assets: Temporary differences: Warranty provision 43,580 $ Loss from decline in inventory price to market value 54,720 Unrealized estimate payable 176,229 Others 162,233 Subtotal 436,762 $ Deferred tax liabilities: Temporary differences: Equity investments 320,474) ( Others 480) ( Subtotal 320,954) ( Total 115,808 $ Beginning balance Deferred tax assets: Temporary differences: Warranty provision 50,051 $ Loss from decline in inventory price to market value 23,248 Unrealized estimate payable 161,813 Others 101,921 Subtotal 337,033 $ Deferred tax liabilities: Temporary differences: Equity investments 320,474) ( Others 9,389) ( Subtotal 329,863) ( Total 7,170 $	Recognized in profit or loss For theyear	Recognized in profit or loss For theyear	Recognized in other comprehensive income - $ - - 4,559 4,559 $ - - - 4,559 $ ended December ended December	Recognized in other comprehensive income - $ - - 4,559 4,559 $ - - - 4,559 $ ended December ended December	Effects of exchange Ending rate changes balance - $ 43,608 $ 1,640 59,568 - 154,203 177 182,675 1,817 $ 440,054 $ - 377,028) ( - 1,236) ( - 378,264) ( 1,817 $ 61,790 $ 31,2018 31,2017	Ending balance
	28 $ 3,208 22,026) ( 15,706 3,084) ($ 56,554) ( 756) ( 57,310) ( 60,394) ($ For theyear					43,608 $ 59,568 154,203 182,675
						61,790 $
	Recognized in profit or loss		Recognized in other comprehensive income			Ending balance
	6,471) ($ 33,293 14,416 57,515 98,753 $ - 8,909 8,909 107,662 $		- $ - - 4,510 4,510 $ - - - 4,510 $			43,580 $ 54,720 176,229 162,233
						436,762 $

~64~

• D. Expiration dates of unused net operating tax losses of the Company and its subsidiaries and amounts of unrecognized deferred tax assets are as follows ：

December 31, 2018

E.	Year incurred 2011 2012 2014	Amount filed / assessed Assessed Assessed Assessed	Unrecognized deferred tax Unused amount assets 172,967 $ 172,967 $ 297,134 297,134 36,392 36,392 December 31,2017

• F. The Company has not recognized taxable temporary differences associated with investment in subsidiaries as deferred tax liabilities. As of December 31, 2018 and 2017, the amounts of temporary difference unrecognized as deferred tax liabilities were $13,260,881 and $10,299,940, respectively.

• G. The Company’s income tax returns through 2014 have been assessed and approved by the Tax Authority.

• H. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

~65~

(29) Earnings per share

Earnings per share
Weighted average number of ordinary Amount shares outstanding Earnings per share Basic earnings per share after tax (shares in thousands) (in dollars) Profit attributable to ordinary shareholders of the parent 3,296,249 $ 920,166 3.58 $ Diluted earnings per share Profit attributable to ordinary shareholders of the parent 3,296,249 $ Less: Effect of dilutive potential common stocks issued by investee companies 20,246) ( Assumed conversion of all dilutive potential ordinary shares Employee stock options - 1,524 Employees’ bonus - 155 Net income attributable to common stockholders plus dilutive effect of common stock equivalents 3,276,003 $ 921,845 3.55 $ For theyear ended December 31,2018 Weighted average number of ordinary Amount shares outstanding Earnings per share Basic earnings per share after tax (shares in thousands) (in dollars) Profit attributable to ordinary shareholders of the parent 2,581,014 $ 917,000 2.81 $ Diluted earnings per share Profit attributable to ordinary shareholders of the parent 2,581,014 $ Less: Effect of dilutive potential common stocks issued by investee companies 12,555) ( Assumed conversion of all dilutive potential ordinary shares Employee stock options - 3,812 Employees’ bonus - 95 Net income attributable to common stockholders plus dilutive effect of common stock equivalents 2,568,459 $ 920,907 2.79 $ For theyear ended December 31,2017	For theyear ended December 31,2018
			Earnings per share (in dollars)
			3.58 $
			3.55 $
		Weighted average number of ordinary shares outstanding (shares in thousands) 917,000 3,812 95 920,907	Earnings per share (in dollars)
			2.81 $
			2.79 $

• A. Basic earnings per share is calculated with the gain or loss attributable to the shareholders of the ordinary shares issued by the Company, divided with outstanding weighted average ordinary shares during the period, and deducted with weighted average treasury shares.

• B. For the year ended December 31, 2017, the outstanding weighted average shares was retrospectively adjusted based on retained earnings capitalization ratio in 2018.

~66~

(30) Operating leases

The Group leases building assets to others under non-cancellable operating lease agreements. These leases have terms expiring between 1 and 5 years, and all these lease agreements are not renewable at the end of the lease period. Rental revenue of $114,335 and $103,913 were recognized for the years ended December 31, 2018 and 2017, respectively. The future aggregate minimum lease receivable under non-cancellable operating leases are as follows:

Not later than one year Later than one year but not later than five years	December 31,2018 85,900 $ 116,660 202,560 $	December 31,2017
		66,267 $ 66,186
		132,453 $

(31) Supplemental cash flow information

A. Investing activities with partial cash payments ：

Supplemental cash flow information A. Investing activities with partial cash payments：	Supplemental cash flow information A. Investing activities with partial cash payments：	Supplemental cash flow information A. Investing activities with partial cash payments：	Supplemental cash flow information A. Investing activities with partial cash payments：	Supplemental cash flow information A. Investing activities with partial cash payments：
B. Financing activities with partial cash payments： Changes in liabilities from financing activities For the year ended For the year ended December 31,2018 December 31,2017 Purchase of intangible assets 63,205 $ 134,043 $ Add: Opening balance of other payables - 3,410 Cash paid during the period 63,205 $ 137,453 $ Increase of investment property 5,208 $ - $ Add: Opening balance of other payables - 11,474 Cash paid during the period 5,208 $ 11,474 $ For the year ended For the year ended December 31,2018 December 31,2017 Declaration of cash dividend 1,054,646 $ 2,022,698 $ Less: subsidiaries received cash dividends paid from parent company 15,607) ( 30,029) ( Cash paid during the period 1,039,039 $ 1,992,669 $ Short-term borrowings Guarantee deposit received Liabilities from financing activities- gross At January 1, 2018 2,137,655 $ 21,971 $ 2,159,626 $ Changes in cash flow from financing activities 2,137,655) ( 4,752 2,132,903) ( Impact of changes in foreign exchange rate - 472 472 At December 31, 2018 - $ 27,195 $ 27,195 $
	Short-term borrowings 2,137,655 $ 2,137,655) ( - - $
At January 1, 2018 Changes in cash flow from financing activities Impact of changes in foreign exchange rate At December 31, 2018
			21,971 $ 4,752 472 27,195 $	2,159,626 $ 2,132,903) ( 472 27,195 $

(32) Changes in liabilities from financing activities

~67~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties

Getac Technology Corp. and subsidiaries

Synnex Corp. and subsidiaries

Shen-Tong Construction & Developments Co., Ltd. and subsidiaries

Infopower Technologies Ltd.

Loyal Fidelity Aerospace Co., Ltd.

Synnex Technology International Corp. and subsidiaries Harbinger Venture Management Company Ltd. Lien Hwa Industrial Corp. and subsidiaries

UPC Technology Corp.

MITAC Incorporated Co., Ltd.

ShenTong Information Co., Ltd. and subsidiaries

Relationship with the Group

Associates

Associates

Associates

Associates Associates

Common Chairman

Common Chairman Common Chairman Common Chairman Common Chairman

The Group’s Chairman was this company’s director

(2) Significant related party transactions and balances

A. Operating revenue:

(a)

Sales of goods: -Associates-Synnex Corp. and subsidiaries -Associates-Others -Other related parties Total	For the year ended December 31,2018 2,696,117 $ 173,081 2,117 2,871,315 $	For the year ended December 31,2017
		4,044,627 $ 140,905 654
		4,186,186 $

(b) The selling price to related parties is based on market value in the region of the related party.

(c) The Group’s term of credit for related parties is the same with general clients. The payment is generally due around 3 months after delivery.

~68~

B. Purchases:

(a)

Purchases of goods: -Associates -Other related parties Total	For the year ended December 31,2018 150,454 $ 220,991 371,445 $	For the year ended December 31,2017
		81,569 $ 377,244
		458,813 $

• (b) The purchase prices from related parties are based on the international market value and the market price in the region of the related party.

• (c) The Group’s term of payment for related parties is generally due around 4 months after counterparty’s delivery.

• C. Receivables from related parties:

counterparty’s delivery. Receivables from related parties:
Payables to related parties: Accounts receivable: -Associates-Synnex Corp. and subsidiaries -Associates-Others -Other related parties Subtotal Other receivables: -Associates-Getac Technology Corp. and subsidiaries -Associates-Synnex Corp. and subsidiaries -Associates-Others -Other related parties Subtotal Total Accounts payable: -Associates -Other related parties Subtotal Other payables: -Associates -Other related parties Subtotal Total	December 31,2018 360,968 $ 12 - 360,980 36,868 24,189 - 1,897 62,954 423,934 $ December 31,2018 9,564 $ 48,253 57,817 1,155 713 1,868 59,685 $	December 31,2017
		489,240 $ 47 127
		489,414
		22,047 1,039 835 1,983
		25,904
		515,318 $
		December 31,2017
		5,468 $ 65,794
		71,262
		2,832 908
		3,740
		75,002 $

D. Payables to related parties:

~69~

E. Property transactions:

• (a)Acquisition of property, plant and equipment:

Other related parties

For the year ended December31,2018 691 $	For the year ended December31,2017
	2,738 $

• (b) Disposal of property, plant and equipment:

For the year ended December 31, 2018 ： None.

Associates

.	.
For theyear ended December31,2017
Proceeds 450 $	Gain/(loss) 342) ($

• (c)Acquisition of financial assets:

Account Associates Investments accounted for using equity method	Transaction share (Shares in thousands) Item 476 Shen-Tong Construction & Developments Co., Ltd.	for the year ended December 31,2018 Acquisition amount
		4,755 $

For the year ended December 31, 2017 ： None.

• F. Rent revenue

For the years ended December 31, 2018 and 2017, the rental revenue collected from leasing offices and factories to associates amounted to $19,849 and $19,405, respectively.

• G. Expenses

Expenses
Associates Other related parties Total	For the year ended December 31,2018 14,801 $ 3,314 18,115 $	For the year ended December 31,2017
		16,829 $ 7,241
		24,070 $

Expenses mainly pertain to rental expenditures for the lease of offices and other miscellaneous expenses.

(3) Key management compensation

expenses. Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Total	For the year ended December 31,2018 44,826 $ 546 45,372 $	For the year ended December 31,2017
		47,161 $ 534
		47,695 $

~70~

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset Time deposits (shown as "other non-current assets") Demand deposits and Time deposits (shown as "other current assets") Time deposits (shown as "other current assets")	December 31,2018 December 31,2017 $ 9,924 $ 9,820 8,944 18,260 - 14,880 18,868 $ 42,960 $ Book Value	Purpose
	December 31,2018 $ 9,924 8,944 - 18,868 $
		Guarantee deposit Customs guarantee Guarantees from derivative financial instrument transactions

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

A. Operating lease arrangement

The minimum amount payable under the Group’s future non-cancellable operating lease is as follows:

follows:
Capital expenditure contracted but not provided are as follows: December 31,2018 Not more than 1 year 179,998 $ More than 1 year but not more than 5 years 136,738 Over 5 years 99,346 Total 416,082 $ December31,2018 Property, plant and equipment 465,038 $	December 31,2017
	65,635 $ 95,283 49,644
	210,562 $
	December31,2017
	674,184 $

B. Capital expenditure contracted but not provided are as follows:

10. SIGNIFICANT DISASTER LOSS:

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE:

None.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital

~71~

structure to reduce the cost of capital.

(2) Financial instruments

A. Financial instruments by category

ucture to reduce the cost of capital. nancial instruments Financial instruments by category
Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets held for trading Financial assets at fair value through other comprehensive income Designation of equity instrument Available-for-sale financial assets Available-for-sale financial assets Financial assets at cost Financial assets at amortised cost Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Notes receivable Accounts receivable Accounts receivable - related parties Other receivables Guarantee deposits paid Other financial assets Financial liabilities Financial liabilities at fair value through profit or Financial liabilities held for trading Financial liabilities at amortised cost Short-term borrowings Accounts payable Accounts payable - related parties Other accounts payable Guarantee deposits received	December 31,2018		December 31,2017
		114,424 $ - 114,424 $ 4,027,788 $ - $ - - $ 5,725,216 $ 92,212 4,720,458 360,980 76,621 18,788 18,868 11,013,143 $ 1,295 $ - $ 5,281,232 57,817 3,326,748 27,195 8,692,992 $		- $ 9,313 9,313 $ - $ 3,048,430 $ 1,113,478 4,161,908 $ 8,056,991 $ 85,441 4,042,515 489,414 59,453 19,371 42,960 12,796,145 $ 10,312 $ 2,137,655 $ 5,194,178 71,262 3,467,054 21,971 10,892,120 $

~72~

B. Financial risk management policies

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance. The Group uses derivative financial instruments to hedge certain risk exposures (see Notes 6(2), 6(14)).

• C. Significant financial risks and degrees of financial risks

• (a)Market risk

Foreign exchange risk

• i. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD, EUR, AUD and CNY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD EUR:NTD AUD:NTD USD:CNY EUR:USD Non-monetary items CNY:USD Financial liabilities Monetary items USD:NTD EUR:NTD AUD:NTD USD:CNY	December 31,2018	December 31,2018
	Foreign curency amount (In thousands) 327,637 $ 6,986 6,245 87,914 6,700 69,672 307,660 6,582 5,999 140,804	Exchange rate 30.715 35.200 21.665 6.868 1.146 0.146 30.715 35.200 21.665 6.868	Book value (NTD)
			10,063,386 $ 245,907 135,288 2,700,264 235,840 311,572 9,448,768 231,674 129,968 4,324,782

~73~

December 31, 2017

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD EUR:NTD AUD:NTD USD:CNY Non-monetary items CNY:USD Financial liabilities Monetary items USD:NTD EUR:NTD AUD:NTD USD:CNY	Foreign curency amount (In thousands) 330,855 $ 9,029 7,370 86,654 66,728 291,173 7,679 7,089 122,429	Exchange rate 29.760 35.570 23.185 6.519 0.153 29.760 35.570 23.185 6.519	Book value (NTD)
			9,846,234 $ 321,147 170,868 2,578,831 304,614 8,665,299 273,126 164,364 3,643,492

• iv. Total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2018 and 2017, amounted to $7,404 and ($80,408), respectively.

• v. When the exchange rates for USD, AUD, EUR and CNY to NTD, EUR to USD, and USD to CNY increased or decreased by 1%, with all other factors the same at December 31, 2018 and 2017, net profit before tax would increase or decrease by ($7,555) and $1,708 for the years ended December 31, 2018 and 2017, respectively.

Price risk

• i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.

~74~

• ii. The Group’s investments in equity securities comprise domestic listed and unlisted stocks. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, other comprehensive income (loss) would have increased/decreased by $40,278 and $30,484 for the years ended December 31, 2018 and 2017, respectively, as a result of gains/losses on equity securities classified as financial assets at fair value through other comprehensive income and available-for-sale financial assets.

Cash flow and fair value Interest rate risk

The Group’s interest rate risk arises from borrowings. However, the Group’s borrowings are all at a fixed rate, thus interest rate risk has no significant impact on the Group.

• (b)Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of financial instruments settled based on the agreement.

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

• iii. Individual risk limits are set based on internal or external factors in accordance with limits set by credit control manager. The utilisation of credit limits is regularly monitored.

• iv. For banks and financial institutions, only the institutions with good credit quality are accepted as counterparties.

• v. The default occurs when it expects that the contact payments cannot be recovered and are transferred to overdue receivables.

• vi. The Group classifies customers’ accounts receivable, contract assets and rents receivable in accordance with customer types. The Group applies the simplified approach to estimate expected credit loss under individual basis.

• vii. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights.

~75~

• viii. Movements in relation to the Group applying the modified approach to provide loss allowance for accounts receivable is as follows:

allowance for accounts receivable is as follows:
		2018
At January 1_IAS 39	$		82,137
Adjustments under new standards			-
At January 1_IFRS 9			82,137
Provision for impairment			17,794
Write-offs	(		1,838)
Effect of foreign exchange	(		328)
At December 31	$		97,765

• ix. Credit risk information of 2017 is listed below:

• (i) Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board of directors. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables.

• (ii) No credit limits were exceeded during the year ended December 31, 2017, and management does not expect any significant losses from non-performance by these counterparties.

• (iii)The ageing analysis of accounts receivable that were past due but not impaired is as follows:

follows:
1 to 90 days 91 to 180 days Over 181 days	December 31,2017
	480,489 $ 5,908 11,862
	498,259 $

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(iv)Movements on the provision for impairment of accounts receivable are as follows ：

At January 1 Provision for impairment Write-offs during the period Effect of foreign exchange At December 31	Group provision 2017 75,982 $ 8,041 1,168) ( 718) (
	82,137 $

• (v) The credit quality of accounts receivable that were neither past due nor impaired was in the following categories based on the Group’s Credit Quality Control Policy:

Group 1 Group 2	December31,2017
	2,663,735 $ 1,643,819
	4,307,554 $

• Group 1 -Medium-low credit risk accounts receivable: enterprises with ideal operations, high financial transparency, and approved by the headquarters’ credit control manager.

• Group 2 - Ordinary credit risk accounts receivable: customers other than medium-low credit risk accounts receivable.

(c)Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs.

• ii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

Non-derivative financial liabilities:

December 31,2018 Accounts payable Other payables Guarantee deposits	Less than 1year 5,339,049 $ 3,326,748 9,677	Between 1 and 2year - $ - 5,997	Between 2 and 3years - $ - 3,458	Over 3years
				- $ - 8,063

~77~

December 31,2017 Short-term borrowings Accounts payable Other payables Guarantee deposits	Less than 1year 2,137,655 $ 5,265,440 3,467,054 4,097	Between 1 and 2year - $ - - 7,407	Between 2 and 3years - $ - - 5,819	Over 3years
				- $ - - 4,648

Derivative financial liabilities

As of December 31, 2018 and 2017, the Group’s derivative financial liabilities mature within one year.

• iii.The Group does not expect the timing of occurrence of the cash flows estimated through the maturity date analysis will be significantly earlier, nor expect the actual cash flow amount will be significantly different.

(3) Fair value information

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

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

• Level 3: Inputs for the asset or liability that are not based on observable market data.

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

• C. Financial instruments not measured at fair value

• Including the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, refundable deposits, short-term borrowings, notes payable, accounts payable other payables and guarantee deposits received are approximate to their fair values.

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

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

December 31, 2018 Level 1 Recurring fair value measurements Financial assets: Forward exchange contracts - $ Equity securities 3,115,417 Total 3,115,417 $ Recurring fair value measurements Financial liabilities: Forward exchange contracts - $	Level 2 4,926 $ 563,844 568,770 $ 1,295 $	Level 3 - $ 458,025 458,025 $ - $	Total
			4,926 $ 4,137,286
			4,142,212 $
			1,295 $
Financial liabilities: Forward exchange contracts

~78~

December 31, 2017 Level 1 Recurring fair value measurements Financial assets: Forward exchange contracts - $ Equity securities 2,467,124 Total 2,467,124 $ Recurring fair value measurements Financial liabilities: Forward exchange contracts - $	Level 2 9,313 $ 469,575 478,888 $ 10,312 $	Level 3 - $ 111,731 111,731 $ - $	Total
			9,313 $ 3,048,430
			3,057,743 $
			10,312 $
Financial liabilities: Forward exchange contracts

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

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

Listed shares Open-end fund Market quoted price Closing price Net worth

• ii. Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes.

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

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

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

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

~79~

• E. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and Level 2.

• F. The following table presents the changes in level 3 instruments as at December 31, 2018 and 2017:

2017:
			Equitysecurities
		2018			2017
January 1	$		111,731	$		72,845
Acquired in the year			50,322			-
(Losses) gains recognized in other comprehensive income	(		67,941)			38,186
Adjustment of IFRS 9 transition			362,291			-
Effects of foreign exchange			1,622			700
December 31	$		458,025	$		111,731

• G. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level 3 except financial assets at fair value through other comprehensive income transferred from certain equity investments on January 1, 2018 on application of IFRS 9.

• H. Investment department is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, and reviewing the information periodically.

• I. The following is the qualitative information of significant unobservable inputs and sensitivity analysis of changes significant unobservable inputs to valuation model used in Level 3 fair value measurements:

Non-derivative equityinstrument: Unlisted shares Non-derivative equityinstrument: Unlisted shares	Fair value at December31,2018 $ 458,025 Fair value at December31,2017 $ 111,731	Valuation technique Net asset value Valuation technique Net asset value	Significant unobservable input Net asset value Significant unobservable input Net asset value	Range (weighted average)	Relationship of inputs to fairvalue
				- Range (weighted average)	The higher the net asset value, the higher the fair value. Relationship of inputs to fairvalue
				-	The higher the net asset value, the higher the fair value.

• J. The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in difference measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed:

~80~

Financial assets Input Equity instrument Net asset value Financial assets Input Equity instrument Net asset value	Change ±1% Change ±1%		December	31,2018	31,2018
		Recognized in	Unfavourable change - $ profit or loss December	comprehensive income Recognized in other
		Favourable change - $		Favourable change 4,580 $ 31,2017	Unfavourable change
					4,580 $
		Recognized in	Unfavourable change - $ profit or loss	Recognized in other comprehensive income
		Favourable change - $		Favourable change 1,117 $	Unfavourable change
					1,117 $

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017

The reconciliations of carrying amount of financial assets transfered from December 31, 2017, IAS 39, to January 1, IFRS 9, were as follows:

IAS 39 Transferred into and measured at fair value through profit or loss Transferred into and measured at fair value through other comprehensive income-equity Fair value adjustment Impairment loss adjustment IFRS 9 Investments accounted for using equity method		Measured at fair value through profit or loss	Available-for- sale-equity	Available-for- sale-equity	Held-to- maturity	Effects	Effects	Effects
			Measured at fair value through other comprehensive income-equity		Measured at amortised cost	Retained earnings		Others equity
		$ 9,313 108,648 - - -	$ 3,048,430 ( 108,648) 1,113,478 154,179 -		$ 1,113,478 - ( 1,113,478) - -	($207,928) - - - 207,928 $-		$ 1,127,869 - - 154,179 (207,928) $1,074,120 6,775) ( 1,067,345 $
		$117,961		$4,207,439	$-
							6,775 6,775 $

~81~

• A. Under IAS 39, because the equity instruments, which were classified as: available-for-sale financial assets and financial assets at cost, amounting to $2,939,782 and $1,113,478, respectively, were not held for the purpose of trading, they were reclassified as "financial assets at fair value through other comprehensive income" amounting to $4,207,439, increased retained earnings and decreased other equity interest in the amounts of $207,928 and $53,749, respectively on initial application of IFRS 9.

• B. The Group reclassified financial assets at fair value through profit or loss, which were initially classified as available-for-sale financial assets under IAS 39, amounting to $108,648 under IFRS 9.

• C. The Group recognized investments accounted for using equity method to increase retained earnings and decrease other equity interest by $6,775 under effect on initial application of IFRS 9.

(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in

• 2017

• A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017 are set out below.

• Sales of goods

• (a)The Group designs, manufactures and sells computer and its peripherals, communication and related products. Revenue is measured at the fair value of the consideration received or receivable taking into account of value-added tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognized when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

• (b) The Group offers customers volume discounts and right of return for defective products. The Group estimates appropriate discounts and returns based on regular way purchases or sales. Provisions for such liabilities are recorded when the sales are recognized.

~82~

• B. The effects and description of current balance sheets and comprehensive income statements if the Group continues adopting above accounting policies are as follow

Balance sheet items		December 31,2018	December 31,2018
	Balance by using IFRS 15	Balance by using previous accounting policies	Effects from changes in accounting policy
Accounts receivable Other current assets Contract liabilities Other current liabilities	$ 4,720,458 41,214 ( 165,442) ( 238,831)	$ 4,565,874 8,945 - ( 217,420)	$ 154,584 32,269 ( 165,442) ( 21,411)

There was no effect on items in the comprehensive income statement. Description:

• (a) Under IFRS 15, the net amounts in relation to expected sales return and discounts as well as return costs of related products refunds to customers, which were previously presented as ‘accounts receivable - allowance for sales returns and discounts’ in the balance sheet, are recognized as other current liabilities and other current assets, respectively.

• (b) Advance sales receipts (shown as ‘other current liabilities’ in the balance sheet) in relation to the contract were previously presented. Under IFRS 15, the advance sales receipts are recognized as contract liabilities.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

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

• B. Provision of endorsements and guarantees to others: Please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.

• D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company’s paid-in capital: Please refer to table 4.

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

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

• G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paidin capital or more: Please refer to table 5.

• H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more: Please refer to table 6.

• I. Trading in derivative instruments undertaken during the reporting periods: Please refer to Notes 6(2) and (14).

• J. Significant inter-company transactions during the reporting periods: Please refer to table 7.

~83~

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 8.

• (3) Information on investments in Mainland China

• A. Basic information: Please refer to table 9.

• B. Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area: Please refer to table 9.

14. SEGMENT INFORMATION

• (1) General information

• Management has determined the reportable operating segments based on the reports reviewed by the Chief Operating Decision-Maker that are used to make strategic decisions. The Group’s Chief Operating Decision-Maker manages business from the perspectives of cloud computing product business group and mobile communication product business group.

The Group’s company organization, basis of department segmentation and principles for measuring segment information for the period were not significantly changed.

(2) Information about segment profit or loss, assets and liabilities

The segment information provided to the Chief Operating Decision-Maker for the reportable segments and reconciliations are as follows:

Item Revenue Segment gain (loss) Item Revenue Segment gain (loss)	For theyear ended December 31,2018
	Mobile Cloud computing communications businessgroup businessgroup Others 22,004,923 $ 5,394,210 $ 3,352,686 $ 341,780 155,078 162,962) ( For theyear ended December 31,2017	Total
		30,751,819 $ 333,896
	Mobile Cloud computing communications businessgroup businessgroup Others 40,613,816 $ 6,512,046 $ 1,634,652 $ 1,053,912 203,939) ( 110,092) (	Total
		48,760,514 $ 739,881

(3) Reconciliation for segment income (loss)

The revenue from external customers reported to the Chief Operating Decision-Maker is measured in a manner consistent with that in the statement of comprehensive income.

~84~

A reconciliation of reportable segment income or loss to the income/(loss) before tax from continuing operations for the years ended December 31, 2018 and 2017 is provided as follows:

Information on products and services Item Profit for reportable segments Unallocated: Share of profits and losses from affiliates and joint ventures accounted for using the equity method Dividend revenue Interest revenue Net currency exchange gain (loss) Gain (loss) on disposal of investments Other income Income before tax from operations Sales Other revenue Total	For the year ended For the year ended December 31,2018 December 31,2017 333,896 $ 739,881 $ 1,822,768 1,910,193 189,020 127,379 90,939 56,677 7,404 80,408) ( 872,181 1,266) ( 156,506 149,832 3,472,714 $ 2,902,288 $ For the year ended For the year ended December 31,2018 December 31,2017 30,425,495 $ 48,658,506 $ 326,324 102,008 30,751,819 $ 48,760,514 $	For the year ended December 31,2017
		2,902,288 $
		For the year ended December 31,2017
		48,658,506 $ 102,008
		48,760,514 $

(4) Information on products and services

(5) Geographical information

For the years ended December 31, 2018 and 2017, revenues and noncurrent assets from certain regions are listed below:

sted below:
For theyear ended	Assets - non-current 4,566,718 $ 725,518 123,514 3,225,931 8,641,681 $ December 31,2018	For theyear ended	December 31,2017
Revenue 815,400 $ 12,402,240 5,507,737 12,026,442 30,751,819 $		Revenue 677,982 $ 30,112,859 8,019,823 9,949,850 48,760,514 $	Assets - non-current
			4,580,195 $ 743,125 136,282 2,814,995
			8,274,597 $

~85~

(6) Major customer information

For the years ended December 31, 2018 and 2017, the major customer information of the Group are listed below:

listed below:
	For theyear	ended December 31,2018
Customer Customer E	Revenue 9,258,013 $ For theyear	Percentage of total revenue Segment 30% Cloud computing business group ended December 31,2017	Segment
Customer Customer E	Revenue 25,922,630 $	Percentage of total revenue Segment 53% Cloud computing business group	Segment

~86~

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES Loans to others

For the year ended December 31, 2018

Table 1

Expressed in thousands of NTD

(Except as otherwise indicated)

No. （Note1）	Creditor	Borrower	Is a related party	General ledger account	Maximum outstanding balance during the year ended December 31, 2018	Balance at December 31, 2018	Actual amount drawn down	Interest rate	Nature of loan （Note 2）	Amount of transactions with the borrower	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit on loans granted to a single party （Note 3）	Ceiling on total loans granted （Note 3）	Footnote
													Item	Value
0	MiTAC Holdings Corp.	MiTAC International Corp.	Y	Other receivables- relatedparties	2,500,000 $	2,000,000 $	- $	0.880%-1.800%	2	- $	Operations	- $	None	- $	3,651,453 $	7,302,905 $
0	MiTAC Holdings Corp.	MiTAC Computing Technology Corp.	Y	Other receivables- relatedparties	3,000,000	3,000,000	-	0.880%-2.250%	2	-	Operations	-	None	-	3,651,453	7,302,905
0	MiTAC Holdings Corp.	MiTAC Digital Technology Corp.	Y	Other receivables- relatedparties	1,000,000	1,000,000	399,295	0.880%-2.400%	2	-	Operations	-	None	-	3,651,453	7,302,905
1	MiTAC Computing Technology Corp.	MiTAC International Corp.	Y	Other receivables- relatedparties	1,700,000	1,490,000	1,490,000	0.907%	2	-	Operations	-	None	-	1,573,086	1,573,086
1	MiTAC Computing Technology Corp.	MiTAC Information Technology Czech s.r.o.	Y	Other receivables- relatedparties	11,005	10,809	10,809	2.00%	2	-	Operations	-	None	-	1,573,086	1,573,086
2	Silver Star Developments Ltd.	MiTAC International Corp.	Y	Other receivables- relatedparties	3,497,915	3,470,795	2,457,200	0.00%	2	-	Operations	-	None	-	7,259,364	7,259,364
2	Silver Star Developments Ltd.	MiTAC Holdings Corp.	Y	Other receivables- relatedparties	3,347,935	1,935,045	399,295	0.00%	2	-	Operations	-	None	-	7,259,364	7,259,364
2	Silver Star Developments Ltd.	Software Insights Ltd.	Y	Other receivables- relatedparties	30,955	30,715	30,715	0.00%	2	-	Operations	-	None	-	11,401,172	11,401,172
2	Silver Star Developments Ltd.	Best Profit Ltd.	Y	Other receivables- relatedparties	762,763	-	-	0.00%	2	-	Operations	-	None	-	11,401,172	11,401,172
2	Silver Star Developments Ltd.	Start Well Technology Ltd.	Y	Other receivables- relatedparties	947,223	939,879	939,879	0.00%	2	-	Operations	-	None	-	11,401,172	11,401,172
2	Silver Star Developments Ltd.	MiTAC Benelux N.V.	Y	Other receivables- relatedparties	90,600	80,960	80,960	0.00%	2	-	Operations	-	None	-	11,401,172	11,401,172
3	Tyan Computer Corp.(USA)	Mitac Information Systems Corp.	Y	Other receivables- relatedparties	232,163	230,363	230,363	2.83%	2	-	Operations	-	None	-	242,668	242,668
4	Access Wisdom Holdings Ltd.	MiTAC Digital Corp.	Y	Other receivables- relatedparties	2,039,935	1,071,954	1,071,954	0.00%	2	-	Operations	-	None	-	2,979,355	2,979,355
4	Access Wisdom Holdings Ltd.	MiTAC Europe Ltd.	Y	Other receivables- relatedparties	172,272	154,880	154,880	0.00%	2	-	Operations	-	None	-	2,979,355	2,979,355
4	Access Wisdom Holdings Ltd.	Mio Technology (Suzhou) Ltd.	Y	Other receivables- relatedparties	93,720	-	-	0.00%	2	-	Operations	-	None	-	2,979,355	2,979,355
4	Access Wisdom Holdings Ltd.	Silver Star Developments Ltd.	Y	Other receivables- relatedparties	464,325	460,725	245,720	0.00%	2	-	Operations	-	None	-	2,979,355	2,979,355
5	MiTAC Digital Technology Corp.	MiTAC International Corp.	Y	Other receivables- relatedparties	500,000	500,000	400,000	0.907%-0.912%	2	-	Operations	-	None	-	623,112	623,112
6	MiTAC International Corp.	MiTAC Computing Technology Corp.	Y	Other receivables- relatedparties	2,900,000	2,900,000	1,858,258	2.09%-3.10%	2	-	Operations	-	None	-	3,075,339	6,150,677
6	MiTAC International Corp.	MiTAC Digital Technology Corp.	Y	Other receivables- relatedparties	2,000,000	2,000,000	337,865	2.06%-3.10%	2	-	Operations	-	None	-	3,075,339	6,150,677
7	MiTAC Investment Holding Ltd.	MiTAC Technology (KunShan) Co., Ltd.	Y	Other receivables- relatedparties	31,395	13,416	-	4.35%	2	-	Operations	-	None	-	1,193,006	1,193,006

• Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

• (1)The Company is ‘0’.

• (2)The subsidiaries are numbered in order starting from ‘1’.

• Note 2: The nature of loan are as follows:

• (1) Ongoing business

• (2) Short-term financing

• Note 3: (1) MiTAC Holdings Corp. (the Company)'s total borrowing amount of short-term financing should not exceed 20% of the net worth on the latest financial statements audited or reviewed by independent accountants. The borrowing amount for each borrowing company should not exceed 10% of the net worth of the Company.

• (2) MiTAC Computing Technology Corp.’s short-term financing limit should not exceed 20% of the net worth on the latest financial statements audited or reviews by independent accountants. Each financing should not exceed 10% of the net worth mentioned above.

• (3) If Silver Star Developments Ltd. was lending to foreign subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing amount should not be higher than 200% of the paid-in capital on the latest financial statements audited by independent accountants.

• (4) Silver Star Development Ltd.'s borrowing amount to each borrowing company and total borrowing amount of the parent company should not exceed 40% of the net worth on the latest financial statements audited by independent accountants.

• (5) The borrowing amount and the total borrowing amount of Tyan Computer Corp. (USA) lending to the ultimate parent company's direct and indirect wholly-owned foreign subsidiaries should not exceed 200% of the paid-in capital on the

• (6) If Access Wisdom Holdings Ltd. was lending to foreign subsidiaries owned 100% directly and indirectly by the ultimate parent company, the borrowing amount to each borrowing company and the total borrowing amount should not be higher than 200% of the paid-in capital on the latest financial statements audited by independent accountants.

• (7) MiTAC Digital Technology Corp.’s short-term financing limit should not exceed 20% of the net worth on the latest financial statements audited or reviews by independent accountants. Each financing should not exceed 10% of the net worth mentioned above.

• (8) MiTAC International Corp.'s total borrowing amount of short-term financing should not exceed 20% of the net worth on the latest financial statements audited or reviewed by independent accountants. The borrowing amount for each borrowing company should not exceed 10% of the net worth of the Company.

• (9) MiTAC Investment Holding Ltd.’s short-term financing limit should not exceed 20% of the net worth on the latest financial statements audited or reviews by independent accountants. Each financing should not exceed 10% of the net worth mentioned above.

Table 1-1

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Table 2

Expressed in thousands of NTD

Provision of endorsements and guarantees to others

For the year ended December 31, 2018

(Except as otherwise indicated)

Number （Note 1）	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party ( Note 3 )	Maximum outstanding endorsement/ guarantee amount as of December 31, 2018	Outstanding endorsement/ guarantee amount at December 31, 2018	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/guarantee amount to net asset value of the endorser/guarantor company	Ceiling on total amount of endorsements/ guarantees provided （Note 3）	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/ guarantor （Note 2）
0	MiTAC Holdings Corp.	Tyan Computer Corp.(USA)	3	18,257,263 $	299,228 $	299,228 $	299,228 $	- $	0.82%	18,257,263 $	Y	N	N
0	MiTAC Holdings Corp.	MiTAC Computing Technology Corp.	2	18,257,263	516,495	516,495	516,495	-	1.41%	18,257,263	Y	N	N
0	MiTAC Holdings Corp.	MiTAC Information Systems Corp.	3	18,257,263	452,850	-	-	-	0.00%	18,257,263	Y	N	N
0	MiTAC Holdings Corp.	MiTAC International Corp.	2	18,257,263	24,091	230	230	-	0.00%	18,257,263	Y	N	N
0	MiTAC Holdings Corp.	Mio Technology (Suzhou) Ltd.	3	18,257,263	6,203	-	-	-	0.00%	18,257,263	Y	N	Y
0	MiTAC Holdings Corp.	MiTAC Digital Technology Corp.	2	18,257,263	18,894	18,894	18,894	-	0.05%	18,257,263	Y	N	N
0	MiTAC Holdings Corp.	MiTAC Digital Corp.	3	18,257,263	91,575	91,575	-	-	0.25%	18,257,263	Y	N	N
1	MiTAC International Corp.	MiTAC Digital Corp.	3	15,376,693	136,620	-	-	-	0.00%	15,376,693	N	N	N
1	MiTAC International Corp.	MiTAC Digital Technology Corp.	3	15,376,693	300,000	-	-	-	0.00%	15,376,693	N	N	N

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

• (1) The Company is ‘0’.

• (2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories; fill in the number of category each case belongs to:

• (1) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

• (2) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

• Note 3: (1) The endorsement and guarantees amount provided by MiTAC Holdings Corp. to each entity which is directly or indirectly held 50% or more of the voting power by the company should not exceed 50% of the net worth on the latest financial statements audited or reviewed by independent accountants.

• (2) MiTAC Holding Corp's total endorsements and guarantees should not exceed 50% of the net worth on the latest financial statements audited or reviewed by independent accountants.

• (3) The endorsement and guarantees amount provided by MiTAC International Corp. to each entity which is directly or indirectly held 100% of the voting power should not exceed 50% of its net worth on

• (4) MiTAC Internatioal Corp.'s total endorsements and guarantees should not exceed 50% of the net worth on the latest financial statmeents audited or reviewed by independent accountants.

Table 2-1

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Holding of marketable securities at the end of period (not including subsidiaries, associates and joint ventures) December 31, 2018 Table 3

Expressed in thousands of NTD (Except as otherwise indicated)

Securities held by	Marketable securities	Relationship with the securities issuer	General ledger account	As of December 31, 2018	As of December 31, 2018	As of December 31, 2018	As of December 31, 2018	Footnote
				Number of shares	Book value	Ownership (%)	Fair value
MiTAC Holdings Corp.	Synnex Technology International Corp.	Same board chairman	Financial assets at fair value through other comprehensive income-non current	3,103,717	112,975 $	0.19	112,975 $
MiTAC Holdings Corp.	The. Note. Co. Ltd.	None	Financial assets at fair value through other comprehensive income-non current	243,746	5,317	5.63	5,317
MiTAC Holdings Corp.	JVP VIII, L.P.	None	Financial assets at fair value through other comprehensive income-non current	425,000	11,903	1.46	11,903
MiTAC Holdings Corp.	WHETRON ELECTRONICS CO., LTD.	None	Financial assets at fair value through other comprehensive income-non current	6,550,000	262,000	9.05	262,000
MiTAC Holdings Corp.	Harbinger VIII Venture Capital Corp.	None	Financial assets at fair value through other comprehensive income-non current	3,750,000	37,500	19.05	37,500
MiTAC International Corp.	Lien Hwa Industrial Corp.	Same board chairman	Financial assets at fair value through other comprehensive income-non current	29,351,945	870,285	2.79	870,285
MiTAC International Corp.	UPC Technology Corp.	Same board chairman	Financial assets at fair value through other comprehensive income-non current	15,711,849	182,257	1.21	182,257
MiTAC International Corp.	COMPUCASE ENTERPRISE CO., LTD.	None	Financial assets at fair value through other comprehensive income-non current	10,000,000	234,200	8.83	234,200
MiTAC International Corp.	MiTAC INC.	Same board chairman	Financial assets at fair value through other comprehensive income-non current	28,196,998	658,964	8.69	658,964
MiTAC International Corp.	MiTAC Information Technology Corp.	The Company's chairman was this company's director.	Financial assets at fair value through other comprehensive income-non current	3,912,334	38,752	4.35	38,752
MiTAC International Corp.	Overseas Investment & Development Corp.	MiTAC Inc.'s director.	Financial assets at fair value through other comprehensive income-non current	1,000,000	11,144	1.11	11,144
MiTAC International Corp.	Harbinger Venture Capital Corp.	Same board chairman	Financial assets at fair value through other comprehensive income-non current	1,447,098	14,284	14.05	14,284
MiTAC International Corp.	Harbinger VI Venture Capital Corp.	Same board chairman	Financial assets at fair value through other comprehensive income-non current	4,648,075	56,740	13.28	56,740
MiTAC International Corp.	Harbinger VII Venture Capital Corp.	Same board chairman	Financial assets at fair value through other comprehensive income-non current	10,000,000	100,327	9.39	100,327
Tsu Fung Investment Corp.	MiTAC Holdings Corp.	Ultimate parent company	Financial assets at fair value through other comprehensive income-current	12,174,313	300,097	1.30	300,097	Note 1
Tsu Fung Investment Corp.	Getac Technology Corp.	None	Financial assets at fair value through other comprehensive income-current	7,783,741	312,906	1.34	312,906
Tsu Fung Investment Corp.	UPC Technology Corp.	None	Financial assets at fair value through other comprehensive income-current	15,887,296	184,293	1.23	184,293
Tsu Fung Investment Corp.	Synnex Technology International Corp.	None	Financial assets at fair value through other comprehensive income-current	4,586,974	166,966	0.28	166,966
Tsu Fung Investment Corp.	Lien Hwa Industrial Corp.	None	Financial assets at fair value through other comprehensive income-current	3,532,157	104,728	0.34	104,728
Tsu Fung Investment Corp.	National Aerospace Fasteners Corporation	None	Financial assets at fair value through other comprehensive income-current	474,188	28,404	0.90	28,404
Tsu Fung Investment Corp.	PROMISE Technology Inc.	None	Financial assets at fair value through other comprehensive income-current	5,000,000	40,200	3.10	40,200
Tsu Fung Investment Corp.	MiTAC INC.	None	Financial assets at fair value through other comprehensive income-non current	14,717,192	343,941	4.54	343,941
Tsu Fung Investment Corp.	MiTAC Information Technology Corp.	None	Financial assets at fair value through other comprehensive income-non current	2,380,122	23,575	2.64	23,575
Tsu Fung Investment Corp.	Tung Da Investment Co., Ltd.	None	Financial assets at fair value through other comprehensive income-non current	4,848,125	87,178	19.99	87,178	Note 2
Tsu Fung Investment Corp.	Harbinger Venture Management Co., Ltd.	None	Financial assets at fair value through other comprehensive income-non current	862,922	11,918	19.99	11,918
Tsu Fung Investment Corp.	Lien Yung Investment Corp.	None	Financial assets at fair value through other comprehensive income-non current	9,217,196	90,992	19.99	90,992
Tsu Fung Investment Corp.	Uni-President Assets Management Corp.	None	Financial assets at fair value through profit or loss-current	4,554,531	75,994	-	75,994
Tsu Fung Investment Corp.	Prudential Financial Money Market Fund	None	Financial assets at fair value through profit or loss-current	2,121,345	33,504	-	33,504
Silver Star Developments Ltd. and its ~~subsidiaries~~	MiTAC Holdings Corp.	Ultimate parent company	Financial assets at fair value through other comprehensive income-non current	1,652,139	40,725	0.18	40,725	Note 1
Silver Star Developments Ltd. and its ~~subsidiaries~~	Global Strategic Investment Inc.(SAMOA)	None	Financial assets at fair value through other comprehensive income-non current	434,946	5,631	1.23	5,631
Silver Star Developments Ltd. and its ~~subsidiaries~~	Global Strategic Investment Inc.	None	Financial assets at fair value through other comprehensive income-non current	245,000	7,954	1.26	7,954
Silver Star Developments Ltd. and its ~~subsidiaries~~	Budworth Investments Ltd.	None	Financial assets at fair value through other comprehensive income-non current	853,920	22,454	14.83	22,454
Silver Star Developments Ltd. and its ~~subsidiaries~~	Panasas Inc.	None	Financial assets at fair value through profit or loss-non current	13,913	-	0.04	-
Silver Star Developments Ltd. and its ~~subsidiaries~~	Physi-Cal Enterprises	None	Financial assets at fair value through profit or loss-non current	354,080	-	3.54	-

Note 1: The Company's shares held by Tsu Fung Investment Corp. and Silver Star Developments Ltd. are accounted for as treasury stocks. Note 2: MiTAC International Corp. sold its shares of Tung Da Investment Co., Ltd. to Tsu Fung Investment Corp.,and such disposal gain has not yet been realised.

Table 3-1

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital

For the year ended December 31, 2018

					For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018	For the year ended December 31, 2018
Table 4					Expressed in thousands of NTD (Except as otherwise indicated)
Investor	Marketable securities	General ledger account	Counterparty	Relationship with the investor	Balance as at Januart 1, 2018		Addition		Disposal				Balance as at December 31, 2018
					Number of shares	Amount	Number of shares	Amount	Number of shares	Selling price	Book value	Gain(loss)on disposal	Number of shares	Amount
Silver Star Developments Ltd.	Synnex Corp.	Investments accounted for under equity method	-	-	5,448,878	$ 9,251,465	242,102	$ 580,703	451,000	$ 1,716,328	$ 753,912	$ 962,416	5,239,980	$ 10,802,228

Note 1: Including cost of sales, capital surplus and transfers of other equity interest preciously recognized.

Note 2: Including recognition for share of profit (loss) of and other comprehensive income of associates accounted for using equity method and adjustments of changes in net equity.

Table 4-1

Table 5

Expressed in thousands of NTD (Except as otherwise indicated)

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

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

For the year ended December 31, 2018

Purchaser/seller	Counterparty	Relationship with the counterparty	Transaction	Transaction	Transaction	Transaction	Differences in transaction terms	Differences in transaction terms	Notes/accounts receivable (payable)	Notes/accounts receivable (payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
MiTAC Computing Technology Corp.	MiTAC Information Systems Corp.	Subsidary	Sales	3,564,787	24.50%	Note1	Note3	Note1	1,813,079	55.06%
MiTAC Computing Technology Corp.	MiTAC Computer (Shunde) Ltd.	Affiliate	Purchases	5,548,403	46.12%	Note2	Note3	Note2	1,539,424) (	44.66%
MiTAC Computing Technology Corp.	Tyan Computer Corp.(USA)	Subsidary	Sales	639,602	4.40%	Note1	Note3	Note1	-	-
MiTAC Computing Technology Corp.	MiTAC Logistics Corp.	Subsidary	Sales	1,939,064	13.33%	Note1	Note3	Note1	350,627	10.65%
MiTAC Computing Technology Corp.	Synnex Corp. and its subsidiaries	Associate of affiliate	Sales	615,334	4.23%	Note1	Note3	Note1	80,710	2.45%
MiTAC Computing Technology Corp.	MiTAC Computer (Kunshan) Ltd.	Affiliate	Purchases	164,584	1.37%	Note2	Note3	Note2	95,190) (	2.76%	Note4
MiTAC Digital Technology Corp.	MiTAC Europe Ltd.	Subsidary	Sales	322,222	7.95%	Note1	Note3	Note1	244,744	23.07%
MiTAC Digital Technology Corp.	MiTAC Australia Pty Ltd.	Subsidary	Sales	240,993	5.95%	Note1	Note3	Note1	135,286	12.75%
MiTAC Digital Technology Corp.	MiTAC Computer (Kunshan) Ltd.	Affiliate	Purchases	1,249,360	38.50%	Note2	Note3	Note2	598,726) (	56.55%	Note4
Silver Star Developments Ltd. and its subsidiaries	MiTAC Computing Technology Corp.	Affiliate	Sales	5,713,023	36.66%	Note1	Note3	Note1	1,634,614	23.72%
Silver Star Developments Ltd. and its subsidiaries	MiTAC Digital Technology Corp.	Affiliate	Sales	1,311,476	8.42%	Note1	Note3	Note1	620,224	9.00%	Note4
MiTAC Technology UK Ltd. and its subsidiaries	MiTAC Computing Technology Corp.	Parent Company	Purchases	6,143,453	46.19%	Note2	Note3	Note2	2,163,706) (	60.72%
MiTAC Technology UK Ltd. and its subsidiaries	Synnex Corp. and its subsidiaries	Associate of affiliate	Sales	2,027,564	14.85%	Note1	Note3	Note1	280,225	15.49%
Access Wisdom Holdings Ltd and its subsidiaries	MiTAC Digital Technology Corp.	Parent Company	Purchases	604,814	71.31%	Note2	Note3	Note2	400,772) (	93.34%

• Note 1: The Group's credit term for foreign related parties is to collect within 5 months based on the net amount of receivables after offseting against payables, which takes into consideration the reasonable amount of time for the Company to ship products to each company and for the companies to sell the products and collect the sales. The Group's credit term for domestic related parties is 3 months from the date of

shiipment for the collection of the net amount of receivables after offsetting against payables; the credit term for third parties is an average of 3 months after the date of shipment.

• Note 2: The Group's payment term for foreign related parties is within 5 months for the collection of the net amount of receivables after offsetting against payables, which is in accordance with the Group's credit

policies of accounts receivable with foreign related parties, the Grouup's payment term for domestic related parties is 3 months from the date of shipment from the counterparty for the net amount of receivables

after offsetting against payables; the payment term for third parties is an average of 3 months after the date of shipment from the counterparty. Note 3: The selling price to related parties is based on market value.

• Note 4: There were certain transaction made through MiTAC Digital Technology Corp.’s subsidiary, Mio International Ltd.

Table 5-1

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

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

December 31, 2018

Table 6	Table 6	Table 6				Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)
Creditor	Counterparty	Relationship with the counterparty	Balance as at December 31, 2018		Turnover rate	Overdue receivables		Amount collected subsequent to the balance sheet date	Allowance for doubtful accounts
			Amount receivables	Other receivables		Amount	Action taken
MiTAC Computing Technology Corp.	MiTAC Information Systems Corp.	Subsidary	1,813,079 $	1,338 $	1.36	- $	Not Applicable	154,629 $	- $
MiTAC Computing Technology Corp.	MiTAC Logistics Corp.	Subsidary	350,627	-	4.23	-	Not Applicable	152,840	-
MiTAC Digital Technology Corp.	MiTAC Europe Ltd.	Subsidary	244,744	38	1.15	89,077	Not Applicable	31,571	-
MiTAC Digital Technology Corp.	MiTAC Australia Pty Ltd.	Subsidary	135,286	69	1.57	5,693	Not Applicable	38,526	-
Silver Star Developments Ltd. and its subsidiaries	MiTAC Computing Technology Corp.	Affiliate	1,634,614	27,960	2.24	-	Not Applicable	-	-
Silver Star Developments Ltd. and its subsidiaries	MiTAC Digital Technology Corp.	Affiliate	620,224	4,506	1.54	-	Not Applicable	-	Note1
MiTAC Technology UK Ltd. and its subsidiaries	Synnex Corp. and its subsidiaries	Associate of affiliate	280,225	-	7.49	-	Not Applicable	-	-

Note 1: There were certain transaction made through MiTAC Digital Technology Corp.’s subsidiary, Mio International Ltd.

Table 6-1

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES Significant inter-company transactions during the reporting periods For the year ended December 31, 2018

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	Transaction	Transaction	Transaction	Transaction	Footnote
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note 3)
0	MiTAC Holdings Corp.	MiTAC Digital Technology Corp.	1	Other receivables	438,606 $		0.91%
1	MiTAC International Corp.	MiTAC Computing Technology Corp.	3	Other income	141,758		0.46%
1	MiTAC International Corp.	MiTAC Computing Technology Corp.	3	Other receivables	1,889,273		3.93%
2	MiTAC Computing Technology Corp.	MiTAC Technology UK Ltd. and its subsidiaries	3	Sales	6,143,453	Note4	19.98%
2	MiTAC Computing Technology Corp.	MiTAC Technology UK Ltd. and its subsidiaries	3	Accounts receivable	2,163,706	Note4	4.50%
2	MiTAC Computing Technology Corp.	MiTAC International Corp.	3	Other receivables	1,490,000	Note4	3.10%
2	MiTAC Computing Technology Corp.	Silver Star Develpoments Ltd. and its subsidiaries	3	Purchases	5,713,023	Note5	18.58%
2	MiTAC Computing Technology Corp.	Silver Star Develpoments Ltd. and its subsidiaries	3	Accounts payable	1,634,614	Note5	3.40%
3	MiTAC Digital Technology Corp.	MiTAC International Corp.	3	Other receivables	400,000		0.83%
3	MiTAC Digital Technology Corp.	Access Wisdom Holdings Ltd and its subsidiaries	3	Sales	604,814		1.97%
3	MiTAC Digital Technology Corp.	Access Wisdom Holdings Ltd and its subsidiaries	3	Accounts receivable	400,772		0.83%
3	MiTAC Digital Technology Corp.	Silver Star Develpoments Ltd. and its subsidiaries	3	Purchases	1,311,476		4.26%	Note7
3	MiTAC Digital Technology Corp.	Silver Star Develpoments Ltd. and its subsidiaries	3	Accounts payable	620,224		1.29%	Note7
4	Silver Star Develpoments Ltd. and its subsidiaries	MiTAC Holdings Corp.	2	Other receivables	399,295		0.83%
4	Silver Star Develpoments Ltd. and its subsidiaries	MiTAC International Corp.	3	Other receivables	2,458,036		5.12%
5	Access Wisdom Holdings Ltd.	Silver Star Developments Ltd.	3	Other receivables	245,720		0.51%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is "0".

(2) The subsidiaries are numbered in order starting from "1".

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on Note 4: The Group's credit term for foreign related parties is 5 months for the collection of the net amount of receivables after offsetting against payables, which takes into consideration the reasonable amount of time for the Company Note 5: The Group's payment term for foreign related parties is 5 months for the collection of the net amount of receivables after offsetting against payables after checking and the transaction price is based on the international market Note 6: The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.

Note 7: There were certain transaction made through MiTAC Digital Technology Corp.’s subsidiary, Mio International Ltd.

Table 7-1

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Information on investees (Does not include Mainland China invested companies)

For the year ended December 31, 2018

Table 8

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2018	Shares held as at December 31,2018	Shares held as at December 31,2018	Net profit (loss) of the investee for the year ended December 31, 2018	Investment income (loss) recognized by the Company for the year ended December 31, 2018	Footnote
				Balance as at December 31, 2018	Balance as at December 31, 2017	Number of shares （Note）	Ownership (%)	Book value
MiTAC Holding Corp.	MiTAC International Corp.	Taiwan	Development, design and manufacturing and sale of computers and its peripherals, telecommunication related products	24,739,187 $	26,239,187 $	1,695,026,630	100.00	31,508,825 $	2,884,461 $	2,868,854 $	Subsidiary
MiTAC Holding Corp.	MiTAC Computing Technology Corp.	Taiwan	Development, design and manufacturing and sale of computers and its peripherals, telecommunication related products	3,419,621	3,419,621	232,757,102	100.00	4,011,066	305,461	305,461	Subsidiary
MiTAC Holding Corp.	MiTAC Digital Technology Corp.	Taiwan	Sales and service of electronic telecommunication, communication and software, etc.	1,501,000	1,000	100,100,000	100.00	1,636,397	122,038	122,038	Subsidiary
MiTAC Holding Corp.	Infopower Technologies Ltd.	India	Manufacture and sale of electronic product.	84,500	84,500	6,774,199	33.33	85,462	4,007) (	1,336) (	Associate
MiTAC International Corp.	Getac Technology Corp.	Taiwan	Manufacturing and sale of notebook computers, military and industrial computer systems, etc.	1,391,549	1,391,549	190,396,939	32.87	4,850,015	2,212,459	-	Associate
MiTAC International Corp.	Tsu Fung Investment Corp.	Taiwan	Investment	625,000	625,000	132,184,651	100.00	1,906,088	91,936	-	Subsidiary
MiTAC International Corp.	3Probe Technologies Corp.	Taiwan	Information process service, sales of software and international trading.	16,839	16,839	1,086,000	23.25	12,391	3,805	-	Associate
MiTAC International Corp.	Lian Jie Investment Co., Ltd.	Taiwan	Investment	113,057	113,057	11,305,650	49.98	109,208	3,435	-	Associate
MiTAC International Corp.	Lian Jie II Investment Co., Ltd.	Taiwan	Investment	32,500	32,500	3,250,000	32.50	37,060	2,988) (	-	Associate
MiTAC International Corp.	Silver Star Developments Ltd.and its subsidiary	British Virgin Islands	Investment	5,650,607	5,700,586	183,968,961	100.00	20,599,422	1,143,061	-	Subsidiary
MiTAC International Corp.	Shen-Tong Construction & Development Co., ltd.	Taiwan	Building and factory construction, leasing and sales	90,349	85,594	9,034,922	47.55	86,590	1,926) (	-	Associate
MiTAC International Corp.	Mio Technology Corp.	Taiwan	Sale of communication products and related after-sale services	13,204	13,204	250,000	100.00	3,695	44) (	-	Subsidiary
MiTAC International Corp.	Green Share Corp.	Taiwan	Sale of computers and its peripherals, and hardware, software and related products	7,839	7,839	783,900	48.99	4,032	1,048) (	-	Associate

Table 8-1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at December 31,2018	Shares held as at December 31,2018	Shares held as at December 31,2018	Net profit (loss) of the investee for the year ended December 31, 2018	Investment income (loss) recognized by the Company for the year ended December 31, 2018	Footnote
				Balance as at December 31, 2018	Balance as at December 31, 2017	Number of shares （Note）	Ownership (%)	Book value
MiTAC International Corp.	LFE AEROSPACE INDUSTRY CORP.	Taiwan	Electronic components manufacturing, aircraft and its parts manufacturing and wholesale industry.	121,475	121,475	11,233,750	17.85	118,267	32,926) (	-	Associate
MiTAC Computing Technology Corp.	MiTAC Technology UK Ltd. and its subsidiary	UK	Investment	1,815,642	1,815,642	62,909,737	100.00	2,012,849	4,774	-	Subsidiary
MiTAC Computing Technology Corp.	Mitac Information Technology Czech s.r.o.	Czech Republic	Assemble and sales of computer and peripheral equipment.	11,054	11,054	-	100.00	2,278	4,738) (	-	Subsidiary
MiTAC Digital Technology Corp.	Mio International Ltd. and its subsidiary	British Virgin Islands	Investment	69,959	-	1,275,001	100.00	77,052	8,407	-	Subsidiary
MiTAC Digital Technology Corp.	Access Wisdom Holdings Limited. and its subsidiary	British Virgin Islands	Investment	-	-	48,500,000	100.00	11,829	125	-	Subsidiary
Silver Star Developments Ltd. and its subsidiaries	Harbinger II(BVI) Venture Capital Corp.	British Virgin Islands	Investment	27,898	27,898	908,284	49.96	16,996	183	-	Associate
Silver Star Developments Ltd. and its subsidiaries	Mainpower International Ltd.	British Virgin Islands	Investment	168,933	168,933	5,500,001	13.28	211,991	71,100	-	Associate
Silver Star Developments Ltd. and its subsidiaries	Synnex Corp.	USA	Information process services, sales of computer peripheral, system and network products	1,041,924	490,958	5,239,980	10.23	10,802,228	9,007,963	-	Associate
Silver Star Developments Ltd. and its subsidiaries	Harbinger Ruyi Venture Ltd.	British Virgin Islands	Investment	30,715	30,715	1,000,000	28.57	28,350	2,146) (	-	Associate
Silver Star Developments Ltd. and its subsidiaries	Harbinger Ruyi II Venture Ltd.	British Virgin Islands	Investment	30,715	30,715	10,000	32.26	25,771	1,869) (	-	Associate
Tsu Fung Investment Corp.	LFE AEROSPACE INDUSTRY CORP.	Taiwan	Electronic components manufacturing, aircraft and its parts manufacturing and wholesale industry.	15,504	15,504	1,433,740	2.28	14,104	32,926) (	-	Associate

Table 8-2

Table 9

MITAC HOLDINGS CORPORATION AND SUBSIDIARIES

Information on investments in Mainland China

For the year ended December 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Table 9	Table 9	Table 9	Table 9	Table 9	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)	Expressed in thousands of NTD (Except as otherwise indicated)
					~~Amount remitted from~~
Investee in Mainland China	Main business activities	Paid-in capital	Investment method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Taiwan to Mainland China/		Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2018	Net income of investee as of December 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2018 (Note 2)	Book value of investments in Mainland China as of December 31, 2018	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2018	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
MiTAC Computer (Shunde) Corp.	Manufacturing of computer cases and monitors. Etc.	1,863,507 $	2	1,225,551 $	- $	- $	1,225,551 $	92,480 $	100.00	92,480 $	2,617,403 $	- $
MiTAC Computer (Kunshan) Co., Ltd.	Sales and manufacturing of computer accessories, hardware, software and related services	2,282,978	2	1,799,899	-	-	1,799,899	41,474	100.00	41,474	2,878,350	-	Note3
MiTAC Technology (Kunshan) Co., Ltd.	Testing, repair and display of computer components and related products, and related technical advisory services and after-sale services	37,015	2	30,715	-	-	30,715	2,338	100.00	2,338	34,904	-
MiTAC Research (ShangHai) Ltd.	Research, development and production of computer software, sales of own- produced products and related technical advisory services	192,475	2	159,718	-	-	159,718	22,973	100.00	22,973	456,730	-
Shzhou MiTAC Precision Technology Co., Ltd.	Design and manufacturing of computer chassis and its components, percision plastic injection mould, molding parts and molding equipment processing and maintenance and repair services.	1,578,516	2	414,653	-	-	414,653	82,214	27.44	22,566	523,641	-
Mio Technology (Suzhou) Ltd.	Sales of communication products and related after-sale services	8,397	2	7,679	22,883	-	30,561	8,407	100.00	8,407	29,738	-
MiTAC Logistic Service (Kunshan) Ltd.	Agency of freight transport, export and import trading and warehousing services	30,502	2	30,715	-	-	30,715	2,733	100.00	2,733	36,635	-
MiTAC Information Technology Ltd.	After-sales maintenance, testing, consulting services and related support technology services	9,161	2	9,215	-	-	9,215	4,385	100.00	4,385	48,872	-
MiTAC Innovation (Kunshan) Ltd.	Research and development of computer, server, mobile phone, PDA, GNSS and GPS, and related technology transfer, technical services	29,384	2	30,715	-	-	30,715	7,435	100.00	7,435	69,540	-
CGK Zhong Shan Co., Ltd.	Manufacture and sales of optical glass, in-touch display system components and touch display mode Organizations.	225,909	2	1,710	-	-	1,710	197	0.70	-	1,710	-

Table 9-1

Investee in Mainland China	Main business activities	Paid-in capital	Investment method (Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Taiwan to Mainland China/	Taiwan to Mainland China/	Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2018	Net income of investee as of December 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognized by the Company for the year ended December 31, 2018 (Note 2)	Book value of investments in Mainland China as of December 31, 2018	Accumulated amount of investment income remitted back to Taiwan as of December 31, 2018	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Orient Optical Crystal Mfg. CO.	Manufacturing of protective cover glass	18,190	2	138	-	-	138	25,571) (	0.70	-	138	-
MiTAC Telematics Technology Corporation	Sales of self-produced products and related after-sale services	8,944	1	2,241	-	-	2,241	1,722	100.00	1,722	4,940	-
Vango Technologies Inc.	Research and development and manufacture and sales of integrated circuit and modular software, and related technology transfer, technical services	134,160	2	12,756	-	-	12,756	32,384	4.51	-	12,756	-
MiTAC Investment Holding Ltd.	Investment Holdings	2,098,674	2	921,450	-	-	921,450	63,099	100.00	63,099	3,044,394	-	Note3
MiTAC Information Systems (Kunshan) Co., Ltd.	Sales and manufacturing of computer accessories, hardware, software and related services	670,800	3	-	-	-	-	1,269) (	100.00	1,269) (	667,290	-

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

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

• (2) Invest in the investees in Mainland China through the company which are located in the third area.

• (3) Others:Invest in Mainland China through investees in Mainland Chian.

Note 2: In the 'Investment income (loss)recognised by the Company for the year ended December 31, 2018 column:

• (1) It should be indicated if the investee was still in the incorporation arrangements and had not yet generated any profit during this period.

• (2) Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

• A. The financial statements were audited and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C..

• B. The financial statements were audited and attested by R.O.C. parent company's CPA.

• C. The financial statements were not audited and attested by independent accountants.

• (3) The basis for investment income (loss) recognition for MiTAC computer (Shunde) Corp., MiTAC Computer (Kunshan) Co., Ltd., MiTAC Research (ShangHai) Ltd., and Shzhou MiTAC Precision Technology Co., Ltd. is category B, the others are category C.

Note 3:Among the accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2018 of MiTAC Computer (Kunshan) Co., Ltd., MiTAC Investment Holding Ltd remitted out USD 29,900 thousand.

Table 9-2

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of December 31,2017	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
MiTAC International Corp.	4,125,095 $	5,008,151 $	Note 4
MiTAC Computing Technology Corp.	2,241	2,241	Note 5
MiTAC Digital Technology Corp.	22,883	22,883	981,838

Note 4: In accordance with the "Regulations Governing the Permission of Investment or Techical Cooperation in Mainland Area", MiTAC International Corp. has acquired the Business Operation Headquarter Certificate

(Jing-Shou-Gong-Zi Ltetter. No. 10520407530) issued by the Industrial Development Bureau of the Ministry of Economic Affairs, which exempts the Company form the limitation on the amount of investment in Mainland China..

Note 5: In accordance with the "Regulations Governing the Permission of Investment or Techical Cooperation in Mainland Area", MiTAC Computing Technology Corp. has acquired the Business Operation Headquarter Certificate (Jing-Shou-Gong-Zi Ltetter. No. 10520407530) issued by the Industrial Development Bureau of the Ministry of Economic Affairs, which exempts the Company form the limitation on the amount of investment in Mainland China..

B. Significant transactions conducted with investees in Mainland China:

MiTAC Digital Technology Corp. and MiTAC Computing Technology Corp's delivery service expenses with investees in Mainland China for the year ended December 31, 2018 amounted to $37,512, for details of other significanttransactions, please refer to table 1, table 2, table 5 and table 7.

Table 9-3