SINBON Electronics — Annual Report 2019

Jun 6, 2019

Taiwan Stock Exchange Code: 3023

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SINBON Electronics Co., Ltd.

Annual Report 2018

Notice to readers

This English version annual report is a summary translation of the Chinese version and is not an official document of the shareholders’ meeting. If there is any discrepancy between the English version and the Chinese version, the Chinese version shall prevail.

SINBON annual report is available at website: http://mops.twse.com.tw

Printed on April 30, 2019

1. Spokesperson and acting spokesperson

(1) Spokesperson Name: Matthew Chang Title: Director Phone: (02) 2698-9999 E-mail: Matthew@sinbon.com

• (2) Acting spokesperson

Name: Anthea Yu Title: Section manager Phone: (02) 2698-9999 E-mail: AntheaYu@sinbon.com

1. Address and phone number of headquarters, branches, and factories Headquarters: No. 582 Guohua Road, Miaoli City Phone: (037) 330-099 Factory: No. 582 Guohua Road, Miaoli City Phone: (037) 330-099 Office: 4F.-13, No.79, Sec. 1, Xintai 5th Rd., Xizhi Dist., New Taipei City Phone: (02) 2698-9999

2. Stock transfer service

Name: Registrar Agency Department, Taishin Bank Address: B1, No. 96, Section 1, Jianguo North Road, Taipei City. Phone: (02) 2504-8125

1. Certifying CPA of last-year financial statements

CPA Firm: Ernst & Young Taiwan CPA: Tzu-Ping Huang and Hong-Kuang Lin Address: 7F, No. 239, Minquan Road, Taichung City. Phone: (04) 2305-5500 Website: http://www.ey.com/tw

1. Overseas listing: None

2. Corporate website: http://www.sinbon.com

Table of Contents

	Table of Contents
		Page
1.	Letter to Shareholders	1
	1.1. Business Performance in 2018	2
	1.2. Summary of Business Plan in 2019	2
	1.3. Effect of External Competitions, Legislation, and the Overall Business	3
	Environment
	1.4. Future Development Strategy	4
2.	Company Profile
	2.1. Establishment Date	5
	2.2. Milestones	5
3.	Corporate Governance
	3.1. Organization	6
	3.2. Information of Directors, Supervisors, President, Vice Presidents,
	Assistant Vice Presidents, and Department and Subsidiary Managers	8
	3.3. Remunerations Paid to Directors, President, and Vice Presidents Last	18
	Year
	3.4. Corporate Governance	22
	3.5. Accountant Service Fees	39
	3.6. CPA Change Information	40
	3.7. Disclose the Name, Title, and the Period of Service at the CPA firm or Its
	Affiliates if A Director, the President, Financial Officer or Accounting
	Officer of the Company Has Worked At the CPA firm or Its Affiliates in
	the Last Year.	41
	3.8. Share Transfer and Share Mortgage of Directors, Supervisors,
	Executives, and Shareholders Holding Over 10% of Shares in the Last
	Year and By the Report Publishing Date.	41
	3.9. Information of Top Ten Shareholders Who Are Interested Parties,
	Spouse, Relatives within Second Degree	43
	3.10. Consolidated Percentage of Shares Held of Re-Invested Enterprises by
	the Company, Directors, Supervisors, Executives, or Enterprises under
	Direct/Indirect Control of the Company	44
4.	Fundraising
	4.1. Capital and Shares	45
	4.2. Corporate Bonds	51
	4.3. Issue of Preferred Shares	52
	4.4. Issue of GDR	52
	4.5. Issue of Certificates of Employee Stock Subscription	52
	4.6. Issue of Employee Restricted Shares	52
	4.7. Acquisition (including mergers, buyouts, and spin-offs)	52
	4.8. Items to be Disclosed in Capital Utilization Plans	52
5.	Operational Highlights
	5.1. Business Activities	53
	5.2. Market and Production-Sales	66
	5.3. Number, Average Service Length, Average Age, and Education

		Distribution of Employees in Last Two Years and by Report Publishing
		Date	69
	5.4.	Environmental Expenses	69
	5.5.	Labour-Management Relations	70
	5.6.	Material Contracts	71
6.	Financial Highlights
	6.1.	Condensed Balance Sheet, Integrated Income Statement, CPA Name	73
		and Comments
	6.2.	Financial Analysis of the Last Five Years	77
	6.3.	Supervisor or Auditor Audit Report of Financial Statements in the Last
		Year	79
	6.4.	Financial Statements in the Last Year (including CPA audit reports, a
		cross-reference of balance sheets of two years, integrated income
		statements, equipment change list, case flows list, and remarks or
		tables)	80
	6.5.	The Company or Affiliates Has/Have Financial Difficulty in the Last Year
		and by Report Publishing Date, and Its Impact on Corporate Financial
		Status	208
7.	Review and Analysis of Financial Situation and Financial Performance and Risk
	Items
	7.1.	Financial Situation	209
	7.2.	Financial Performance	209
	7.3.	Cash Flows	210
	7.4.	Impact of Major Capital Expenses on Finance in Recent Years	210
	7.5.	Re-investment Policies and Major Causes of Profits or Losses in Recent
		Years, Improvement Plans, and Investment Plans in the Coming Year	211
	7.6.	Risk Items	211
	7.7.	Other Major Items	213
8.	Special Notes
	8.1.	Information of affiliates	214
	8.2.	Private placement of securities in the last year and by the report
		publishing date	223
	8.3.	Holding or settling corporate stocks in the last year and by the report
		publishing date	223
	8.4.	Other supplementations	223
9.	Incidents with significant impact on shareholder equities or market prices as
	specified in item 2 of paragraph 2 of Article 32 of the Securities and Exchange
	Act in the last year and by the report publishing date		223

1. Letter to Shareholders

1.1. Business Performance in 2018

1.1.1. Performance of business plan 2018

The business performance of SINBON Electronics in 2018 was as follows: consolidated revenue came in at NT$15,645,253 thousand, 20% up from 2017; consolidated gross profit rate was 25%, as remain constant with 2017; consolidated net profit after tax at NT$1,371,529 thousand, less the non-controlling interest (the interest of other shareholders of re-invested enterprises with non-controlling ownership) was -NT$41,948 thousand, the sum was NT$1,413,477 thousand, 15% up 2017; and consolidated EPS after tax was NT$6.26, NT$0.82 up from 2017.

1.1.2. Budget execution

Compared to the business plan of 2018, the revenue completion rate was 99.19%; the gross profit completion rate was 99.59%; the operating income completion rate was 91.26%; net profit after tax completion rate was 104.47%. The actual number is broadly in line with the Budget.

1.1.3. Revenue and profitability analysis

Revenue andprofitabilityanalysis
Item	2017	2018
Cash from operatingactivities(NT$1,000)	772,322	343,590
Cash from(used in)investingactivities(NT$1,000)	(338,220)	(134,716)
Cash used in financingactivities(NT$1,000)	(337,268)	(635,743)
Return on assets(%)	10.58	10.53
Return on equity (%)	20.27	20.95
Profit Before Tax to Capital Stock(%)	71.85	84.70
Profit Margin(%)	9.39	8.77
EPS(NT$)	5.44	6.26

• The cash provided by operating activities was 56% less than in 2017 because account receivable and inventories were increased in 2018, thus decreasing cash generated from operations.

• The cash flows provided by investing activities in 2018 were inflow because of an increase in the disposal of financial assets.

• Cash outflows in financing activities were increased by 88% in 2018 because paid cash dividends in 2018 and issued a convertible bond in 2017.

• 1 -

1.1.4. Research and development

Year	Results of R&D
2013~2014	SINBON won a gold prize from iF Design Award 2013 for our latest Brezze® Nebulizer, a portable drug nebulizer developed by DigiO2 International Co., Ltd. (our re-invested enterprise) in collaboration with the NTUH Telehealth Center under the Telecare Service Project.
2015~2016	1. Tablet PC for Shun Feng logistics development to DVT stage. 2. Solar monitoring system developed to the DVT stage. 3. Finished development EV charger、charging gun and AC charging pile.
2017~2018	1. Wisdom medicine cabinet control lines, and adjustable window light control lines. 2. Robotic arm control lines, electronic fireplace, and smart grid assembly.
2018~Now	1. The sensor in wearable airbag hip protector and smart water heater. 2. AIOT (Artificial Intelligence of Things) and IoT application system.

In 2018 we invested a total of NT$582,938 thousand for R&D, with 25% higher than the previous year. In the future, SINBON actively develops electronic parts and components for the Internet of Thing (IoT), automated Storage, robots, and smart home applications. We will spend at least NT$300 million each year or over 3% of revenue on R&D in the future.

1.2. Summary of Business Plan in 2019

• 1.2.1. The business policy of 2019

• (1) R&D, integration, and manufacture of electronic parts and components, such as cable assembly, manufacture of PCDA and wireless communication parts and components. In recent years, we have successfully entered the following fields: automotive components, electronic medical device parts and components, green energy cables, and industrial control components.

• (2) Distribution and trade of electronics-related parts and components, such as the connectors of HRS Japan, GPS modules, wireless antenna modules, driver ICs, and other strategic electronic parts and components.

• (3) Expansion of the scope of operations of electronic parts and components through strategic alliances and acquisitions.

Provision of one-stop-service for total solutions: Apart from actively developing

• 2 -

new products and providing total solutions, through organizational reform and IT system integration, we aim to integrate the resources of all re-invested enterprises to maximize their efficiency.

• 1.2.2. Major production-marketing policies:

• (1) Strategic alliance and acquisition

  • To deal with rapid industrial changes and achieve quick expansion through strategic alliances and acquisitions.

• (2) Continual performance improvement Establish a full-functional performance assessment department for the organization to directly supervise the operating performance of all business units within the organization.

• (3) Development of niche products Aiming to developing niche, high gross-profit products, we have successfully developed the oxygen sensor for car engines; aviation/ navigation/vehicular GPS parts and components; upper flammable limit (U.FL) cables for high-precision wireless communication; and high-end cables for electronic fetal movement counters, telecare platforms, portable physiological signal devices, X-ray machines, magnetic resonance imaging (MRI) machines, bone mineral density (BMD) testers, wind turbines, fuel dispenser, and CNC mills. We also actively engaged in the development of electronic parts and components for industrial controllers, industrial PCs, electronic medical devices, PV generators, wind power generators and aviation components.

• (4) Cultivation of the iMAGIC industries

  • To deal with industrial development trends, apart from reinforcing the development of cable and PCBA products for the M edical, A utomotive, G reen energy, I ndustrial application, and C ommunication (MAGIC) industries, we began developing electronic parts and components for automatic warehousing systems, robots, and smart grids for use on the IoT, so as to enter the special the electronic parts and components field.

• 1.3. Effect of external competitions, legislation, and the overall business environment

• Thanks to successful organizational transformation, we successfully entered MAGIC industries to gradually transform from consumer products toward industrial application products. While raising revenue in these years, our profits also grow continuously. SINBON has established 6 production sites around the world. To cope with the impact of the China-US trade war, it also expanded production investments in the United States and Europe, in addition to the expansion of the new plant in Miaoli in 2018. The US factory integrates the core technologies in customized production to cope with the local trends. European

• 3 -

locations are focusing on developing the business scope and a new factory in Hungary and a UK branch are established to take up more of the European market share.

1.4. Future Development Strategy

• 1.4.1. To continuously pursue high growth by extending the strategic matrix (old product new customer, new product current customer, new product new customer).

• 1.4.2. To establish a dedicated department—strategic planning & marketing division—under the group administration department to capture market movements and future development trends, so as to search for next-generation products.

• 1.4.3. Strategic alliance and acquisition: In recent years, we have been searching for strategic allies or partners through different channels.

SINBON will continue to commit to good corporate governance, sustainability, and good returns to our shareholders. SINBON thank you for your trust and commitment to us and look forward to a long and profitable future together.

To the Shareholders’ Meeting of SINBON Electronics Co., Ltd.

Joseph Wang Chairman

• 4 -

2. Company Profile

2.1. Establishment date: December 6[th] of 1989.

2.2. Milestones:

• 2.2.1. Acquisitions, re-investments, and restructure in recent years and by the end or reporting period.

Mar. 2017 The board resolved that cash investment US$1 million to SINBON USA.

• Apr. 2017 The board resolved that disposal of all SINBON Czech a.s shares, total amount 200,000 Krone, disposal of all SMART & DILIGENT CO., LTD. shares at amount US$ 273,186.64, and increase investment to 4 million Euro (upper limit) to SINBON Elcotronic.

• Jun. 2017 The board resolved total NT$200 million to invest Chending Venture Capital Co., Ltd.

• Mar. 2018 The board resolved that acquisition 10% shares of Ray Service AVA Co., Ltd., capital reduction and then increase of Ray Service AVA Co., Ltd, disposal shares of SINBON Japan, and capital increase US$ 8 million to SINBON Tongcheng.

• Apr. 2018 The board resolved that subsidiary company T-CONN Precision Corporation increases capital by surplus NT$14.4 million and SINBON Jiangyin increases capital by surplus US$6 million.

• July. 2018 The board approving set up a new branch in the UK, SINBON ELECTRONICS CO., LTD UK BRANCH, approving the subsidiary company, Enmagic Jiangsu Energy Co., Ltd. set up the new subsidiary company, Enmagic Kunshan Energy Technology Co., Ltd., approving the project of the subsidiary company Beijing SINBON Tongan change the company type, approving the Investment structure change of the subsidiary company between Beijing SINBON Tongan and Beijing SINBON

• Oct. 2018 The board approving the capital increase for the subsidiary company, T-conn Precision Co., Ltd. and the subsidiary company, Beijing SINBON Tongan’s Retained Earnings transferred to Capital.

• Nov. 2018 The board approving adjustment of the company's investment structure in Europe, approving dispose of Japan SINBON Electronics Co., Ltd. Shares, approving investment of the private placement of common shares of Nextronics Engineering Corp., approving surplus USD$1.1million to a capital increase for the subsidiary company, SINBON USA

• 2.2.2. Mass transfer or replacement of shares of directors, supervisors, or shareholders holding over 10% of shares: None.

• 2.2.3. Change of management power and business policy or significant change of the scope of business: None.

• 2.2.4. Other major events adequate to affect shareholders’ rights and benefits and their effect on the organization:

• On March 14, 2019, the board resolved that the distribution of cash dividends at NT$4.50/share. The proposal will be submitted to the shareholders’ meeting for recognition on June 6, 2019.

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3. Corporate Governance

3.1. Organization

3.1.1. The organizational structure of SINBON

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

Shareholders’ Meeting
Audit Committee
Board of Directors
Remuneration
Auditing
Committee
Office
Chairman &
Business Decision
CEO
Making Team
CEO Vice Chairman President
Finance Legal Operation
Management Business
Human Resource
Strategy
Global Sales
Marketing
Management
Operation Information Development
Performance System Management
Management Service
Site
Administration
----- End of picture text -----

3.1.2. Functions and duties of major departments

Department and Supervisor	Functions and Duties
Business Decision-Making Team Joseph Wang(Chairman & CEO), Xin-Chi Yeh(Vice Chairman), Wei-Ming Liang(President), Wen-Sen Huang(VP), Chen-Xing Chen(VP), Jun-Yu Chen(VP), Chi-Chou Chang(Director),	(1) Implement the instructions and material management issues from BOD. (2) Proposal for group business objectives and strategic directions. (3) Proposal of group major cooperation and investment cases, capital expenditures, dividend policy. (4) Proposal of internal control, audit-related, risk management issues. (5) Proposal of conflicts of interest, major employee complaints, fraud cases. (6) Proposal for appointment of important personnel. (7) Responsibility for performing corporate social responsibility and maintainingcorporate culture.
Chairman & CEO Joseph Wang	(1) Promote various policies and implement assignments assigned by the board and be accountable for the organization’s business performance. (2) Concurrent management of finance, strategy & marketing, and performance evaluation functions.

• 6 -

Department and Supervisor	Functions and Duties
Vice Chairman Xin-Chi Yeh	In charge of group HR, administration, MIS, and legal functions.
President Wei-MingLiang	In charge of product manufacture, sales, and R&D functions.
Auditing Office Hui-Jun Li (Associate Manager) (5 staffs)	(1) Audit the operation and implementation of all systems within the organization and submit a report periodically. (2) Audit re-invested enterprises of the organization.
Finance Management Chi-Chou Chang (Director)	(1) Take charge of accounting and cashier affairs. (2) Provide relevant units and higher management with relevant financial management information for the reference for decision making. (3) Direct organizational budgeting. (4) Operate and assess overseas re-invested enterprises. (5) Make financial planning for various projects. (6) Plan board meeting and shareholders’ meeting affairs, publish external information, and operate investor relations and serve as the investor contact window.
Strategy Marketing Li-Li Huang (Director)	(1) Industry research and analysis. (2) Assess and research new business and products. (3) Make overall marketingstrategies.
Operation Performance Management Pei-LingHuang (Director)	In charge of group operation performance evaluation issues.
Legal Yun-Ru Huang (Director)	(1) Plan and handle legal affairs. (2) Manage andprotect intellectualproperty.
Human Resource Cheng-Ling Li (Director)	(1) Make and implement human resources planning. (2) The survey, plan and implement organizational training needs. (3) Implement wage management.
Management Information System Yang Yu Wu (Senior Manager)	(1) Install, maintain, and manage IT equipment (hardware and software). (2) Promote computerization within the organization. (3) Provide IT management reports for individual departments.
Group Site Administration Kui-Zhen Feng (Associate Director)	In charge of group administration function.
Operation Business Wei-Ming Liang (Concurrently taking up by President)	In charge of domestic sales activities.
Global Sales Group Wen-Sen Huang (VP)	In charge of global sales activities.
DMIS Management Wei-Ming Liang (Concurrently taking up by President)	Administration of the Group’s R&D, manufacturing, and logistics activities.

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3.2. Information of Directors, Supervisors, President, Vice Presidents, Assistant Vice Presidents, and Department and Subsidiary Managers 3.2.1. Directors and Supervisors

Information on Directors and Supervisors (I)

							Information on Directors and Supervisors (I)	Information on Directors and Supervisors (I)	Information on Directors and Supervisors (I)	Information on Directors and Supervisors (I)	Information on Directors and Supervisors (I)	Information on Directors and Supervisors (I)	Information on Directors and Supervisors (I)	Information on Directors and Supervisors (I)
																	(April 08,2019)
Title1	Nationality or Residency	Name	Gender	Elected (Inauguration) Date	Term (yrs.)	Initially Elected Date2	Shares Held When Elected/Inaugurated		Shares Currently Held		Shares Currently Held by Spouse/Minor Children		Shares Held Under Other’s Name		Major Experience (Education)3	Position(s) Concurrently Held in this and other Organizations	Spouse/2ndDegree Relatives Holding Officer/Director/ Supervisor Post of this Organization.
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relatio nship
Chairman	ROC	Joseph Wang	M	Jun 08, 2018	3	Dec 6, 1989	4,508,062	2.00%	7,508,062	3.28%	2,131,236	0.93%	0	0%	EMBA, Fudan University. BA in Mathematics, Tamkang University. Sales Management, AMP of USA. Sales Manager, Kanagawa of Japan	4	Director	Wei-Chun Wang	Father and son
Director	ROC	Xin-Chi Yeh	M	Jun 08, 2018	3	Nov 4, 1997	1,707,373	0.76%	1,707,373	0.75%	500,000	0.22%	0	0%	EMBA, Fudan University. BS in Agricultural Machinery, National Taiwan University. President,T&B of USA.	5	N/A	N/A	N/A
Director	ROC	Cao-Liang Wang, rep of Argosy Research Inc.	M	Jun 08, 2018	3	May 16, 1998	3,806,421	1.69%	3,806,421	1.66%	311,388 (Shares held by Cao-liang Wang)	0.14%	0	0%	BA in Power Mechanical Engineering, National Tsing Hua University. Chairman, Argosy Research Inc.	6	N/A	N/A	N/A
Director	ROC	Wei-Ming Liang	M	Jun 08, 2018	3	May 6, 2005	1,015,523	0.45%	1,015,523	0.44%	0	0%	0	0%	IE & MBA, University of Iowa. BS in Industrial Engineering, Tunghai University. VP, Starconn Electronic Co.,Ltd.	7	N/A	N/A	N/A
Director	ROC	Wei-Chun Wang, rep of Tai-Yi Investment Co., Ltd.	M	Jun 08, 2018	3	May 6, 2005	4,130,572	1.83%	4,130,572	1.80%	1,159,158 (Shares held by Wei-Chun Wang)	0.51%	628,812 (Shares held by Wang’s wife and children)	0.12%	Chengchi University MBA Manager, Top Taiwan Investment & Development	Chairman, Tai-Yi Investment. Manager, Top Taiwan Investment & Development	Chairman	Joseph Wang	Father and son

• 8 -

Title1	Nationality or Residency	Name	Gender	Elected (Inauguration) Date	Term (yrs.)	Initially Elected Date2	Shares Held When Elected/Inaugurated	Shares Held When Elected/Inaugurated	Shares Currently Held	Shares Currently Held	Shares Currently Held by Spouse/Minor Children	Shares Currently Held by Spouse/Minor Children	Shares Held Under Other’s Name	Shares Held Under Other’s Name	Major Experience (Education)3	Position(s) Concurrently Held in this and other Organizations	Spouse/2ndDegree Relatives Holding Officer/Director/ Supervisor Post of this Organization.	Spouse/2ndDegree Relatives Holding Officer/Director/ Supervisor Post of this Organization.	Spouse/2ndDegree Relatives Holding Officer/Director/ Supervisor Post of this Organization.
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relatio nship
Director	ROC	Kuo-Hong Wang, rep of Kuo-Shian Investment Co., Ltd.	M	Jun 08, 2018	3	Jun 11, 2015	2,415,539	1.07%	2,415,539	1.05%	105,022 (Shares held by Kuo-Hong Wang)	0.05%	0	0%	William Rainey Harper College Chairman & CEO, Kuo-Shian Investment Co., Ltd.	Chairman, Global Aluminum LLC. Chairman, Zhen-Bon Industrial Co., Ltd. Supervisor, G-Tech Optoelectroni cs Corp. Supervisor, Tang-Juan Company	N/A	N/A	N/A
Independent director	ROC	Chi-Lin Wei	M	Jun 08, 2018	3	Jun 9, 2006	0	0%	0	0%	0	0%	0	0%	PhD in Economics, Paris University. Chairman, Graduate Institute of International business, National Taiwan University. Secretary General, Executive Yuan. Chairman, Lank Bank of Taiwan. Minister, Research, Development and Evaluation Commission	8	N/A	N/A	N/A
Independent director	ROC	Shi-Kuan Chen (Note 9)	F	Jun 08, 2018	3	Jun 11, 2015	0	0%	0	0%	0	0%	0	0%	PHD of Economics, Yale University, USA. Director, TSEC Director, Taiwan Tobacco and Liquor Company Associate Dean of Business school in Taiwan University	Professor, Taiwan University Independent Director, Chung Hwa Pulp Company Independent Director, momo.com Inc. Independent	N/A	N/A	N/A

• 9 -

Title1	Nationality or Residency	Name	Gender	Elected (Inauguration) Date	Term (yrs.)	Initially Elected Date2	Shares Held When Elected/Inaugurated	Shares Held When Elected/Inaugurated	Shares Currently Held	Shares Currently Held	Shares Currently Held by Spouse/Minor Children	Shares Currently Held by Spouse/Minor Children	Shares Held Under Other’s Name	Shares Held Under Other’s Name	Major Experience (Education)3	Position(s) Concurrently Held in this and other Organizations	Spouse/2ndDegree Relatives Holding Officer/Director/ Supervisor Post of this Organization.	Spouse/2ndDegree Relatives Holding Officer/Director/ Supervisor Post of this Organization.	Spouse/2ndDegree Relatives Holding Officer/Director/ Supervisor Post of this Organization.
							Shares	%	Shares	%	Shares	%	Shares	%			Title	Name	Relatio nship
																Director, DBS Taiwan Bank
Independent director	ROC	Zheng-Yan Chang	M	Jun 08, 2018	3	Jun 08, 2018	0	0%	0	0%	0	0%	0	0%	Clinical researcher of Paris Descartes University. National Defense Medical Center. Supervisor of Radiologicl Society of North America. Director of Radiology Department, Taipei Veterans General Hospital	Chief Consultant, Tzu Chi Medical Imaging Department	N/A	N/A	N/A

• 1The Companys must list their name and representative (representatives of the Companys must indicate the the Company they represent) and complete Table 1 below.

• 2Fill in the date of being a director or supervisor of the Company for the first time. Please also specify the interruption, if any.

• 3Please specify the title and duty for any past experiences related to the current position, such as working at the CPA firm auditing this report or an affiliate during the reporting period.

• 4Chairman of SINBON Beijing (representative of the Company), chairman of SINBON Hong Kong (representative of the Company), chairman of SINBON Shanghai (representative of the Company), chairman of SINBON Shenzhen

• (representative of the Company), chairman of SINBON Jiangyin (representative of the Company), chairman of Guanze, chairman of SINBON International (representative of the Company), chairman of Japan SINBON (representative of the Company), director of Argosy Technology (representative of the Company), chairman of Top Taiwan IV Venture Capital (representative of the Company), chairman of Top Taiwan III Venture Capital (representative of the Company), director of Top Taiwan II Venture Capital (representative of the Company), director of Top Taiwan VII Venture Capital (representative of the Company), director of Top Taiwan Venture Capital (representative of the Company), director of Chending Venture Capital (representative of the Company), director of T-CONN Precision (representative of the Company), director of T-CONN Precision Zhongshan (representative of the Company), director of Super Elite Ltd. (representative of the Company), director of Super Progressive Ltd. (representative of the Company), and director of Beijing SINBON Tongan Electronics (representative of the Company).

• 5Director of Guanze (representative of the Company), director of Argosy Beijing (representative of the Company), chairman of T-CONN Precision (representative of the Company), chairman of T-CONN Precision Zhongshan (representative of the Company), and chairman of Super Elite Ltd. (representative of the Company), chairman of Super Progressive Ltd. (representative of the Company).

• 6Chairman of Argosy Technology, chairman of Argosy Technology B.V., chairman of Argosy Technology, Inc., chairman of Global Saber Electronics Co., Ltd., chairman of Rotec Limited, supervisor of INPAQ Technology (representative of the Company), director of Top Taiwan III Venture Capital (representative of the Company), and director of Top Taiwan V Venture Capital (representative of the Company).

• 7Director of Worldwide Wire Harnesses Ltd. (representative of the Company), chairman of SINBON Tongcheng (representative of the Company), director of SINBON Jiangyin (representative of the Company), director of SINBON Hong Kong (representative of the Company), director of SINBON Beijing (representative of the Company), chairman of SINBON USA LLC (representative of the Company), director of Beijing SINBON Tongan (representative of the Company), director of SINBON Shenzhen (representative of the Company), director of SINBON Shanghai (representative of the Company), and chairman of Radbon Avionics Inc., chairman of Jiangsu Yingmai Energy Technology Co., Ltd. (representative of the Company) , chairman of Kunshan Yingmai Energy Technology Co., Ltd. (representative of the Company).

• 8Chairman of Top Taiwan VI Venture Investment, independent director of Inventec Besta, independent director of Formosa Plastics, director of AcBel Polytech Inc., director of ELAN Microelectronics, and chairman of Waterland Financial Holdings, supervisor of Radium Life Tech Company, supervisor of Aces Electronics, director of Nuvoton Technology Corporation, director of Taiwan Secom Co. , Ltd.

• 9Resigned on January 10, 2019.

• 10 -

Table 1: Major Shareholder of the Company

	Table 1: Major Shareholder of the Company
	(April 08,2019)
Name of The Company1	Major Shareholders of the Company2
Argosy Research Inc.	Guanze Co., Ltd. (17.81%), Cao-Liang Wang (7.01%), SINBON Electronics (3.59%), Shu-Zhen Chen (3.26%), Taiwan Business Bank custody account entrusted by Capital OTC (2.19%),、 Doublewin Co., Ltd. (2.11%), Yi-Ben Yuan (1.96%), Sheng-wen Wang (1.64%), HSBC (Taiwan) Commercial Bank Co., Ltd. custody account entrusted by Morgan Stanley International Co., Ltd.(1.38%), Yue-Ning Wang (1.19%).
Tai-Yi Investment Co., Ltd.	Zhen-Chun Wang (29.42%), Wei-Chun Wang (29.39%), Xin-Chi Yeh(8.80%), Wei-Ming Liang(8.19%), Jun-Qiang Wang(8.00%), Chao-Yeh Wang(6.65%), Mu-Xiao Liu(4.72%), Huang-Ji Lin (1.92%), Chi-Chou Chang (1.78%), Pei-Wen Hu(0.57%), Shu-Hui, Cheng (0.19%), Si-Yu Huang (0.19%), Li-Li Huang (0.09%)and Kui-Zhen Feng (0.09%)
Kuo-Shian Investment Co., Ltd.	Kuo-Hong Wang(33.33%), Xing-hui Liu(33.33%), Xiang Wang(33.33%)

1Directors and supervisors who are representatives of the companies must fill in the name of the companies they represent in the table.

2Fill in the major shareholders of that the Company (top ten shareholders) and their shares. If major shareholders are the company, continue with Table 2.

• 11 -

Table 2: Major Shareholders of Major the Company in Table 1

Table 2:	Major Shareholders of Major the Company in Table 1
	(April 08,2019)
Name of the Company in Table 11	Major Shareholders of the Company2
Guanze Co., Ltd.	SINBON Electronics (100%)
SINBON Electronics Co., Ltd.	Fubon Life Insurance Co., Ltd. (5.89%), US JP Morgan Chase Bank Taipei Branch entrusted custody of T. Luo Pai Si International Exploration Fund Investment Account (3.71%), Joseph Wang (3.28%), Deutsche Bank Deutsche Bank Taipei Branch entrusted with the Brei Global Fund - Berri Asia Japan Excluding Small Companies Equity Funds (2.89%), US JP Morgan Chase Bank Taipei Branch entrusted custody of Columbia Aiken Trust belong to Columbia Aiken international Fund Investment Account (2.51%)、HSBC Managed HSBCGIF Asia Small Business Except Japan (2.14%), American Merchants Morgan Chase Bank Taipei Branch Entrusted with the Investment Account of the Scottish Orient Small Business Trust Company (1.88%), HSBC Trustee First Domain Investment Company - First Land Greater China Growth Fund Investment Account (1.82%), Tai-Yi Investment Co., Ltd. (1.8%), Argosy Research (1.66%).
Taiwan Business Bank custody account entrusted by Capital OTC	N/A
HSBC (Taiwan) Commercial Bank Co., Ltd. custody account entrusted by Morgan Stanley International Co., Ltd.	N/A
Doublewin Co., Ltd.	Hsiu-Shih Chen (100%)

1Table 1: Fill in the corporation name for the company.

2Fill in the major shareholders of that the company name (top ten shareholders) and their shares.

• 12 -

Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)	Information of Directors and Supervisors(II)
Requirements Name1	Do independent directors have over 5 years of relevant experience and the following professional qualifications?			Compliance with independency2										Concurrently serving as an independent director of other public companies.
	A faculty member of the discipline of commerce, law, finance, accounting, or other academic disciplines of a higher education establishment relating to the business of the Company	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and has been awarded a certificate in a profession required by the business of the Company	Have work experience in commerce, law, finance, or accounting, or otherwise required by the business of the Company	1	2	3	4	5	6	7	8	9	10
Joseph Wang	No	No	Yes											0
Xin-Chi Yeh	No	No	Yes											0
Cao-Liang Wang, representative of ArgosyResearch	No	No	Yes											0
Wei-MingLiang	No	No	Yes											0
Wei-Chun Wang, rep of Tai-Yi Investment Co., Ltd.	No	No	Yes											0
Chi-Lin Wei	Yes	No	Yes											2
Shi-Kuan Chen (Note 3)	Yes	No	Yes											3
Zheng-Yan Chang	Yes	Yes	Yes											0
Kuo-Hong Wang, rep of Kuo-Shian Investment Co., Ltd.	No	No	Yes											0

• 1Number of columns is subject to change as necessary.

• 2Please tick the corresponding items when directors and supervisors comply with the following conditions two years before being elected and during their term.

• (1) Not an employee of the Company or any of its affiliates.

• (2) Not a director or supervisor of the Company or any of its affiliates (except as an independent director of the Company, or its parent company, or its subsidiary where the Company holds, either directly or indirectly, over 50% of the voting shares).

• (3) Not an individual shareholder holding shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of one percent or more of the total number of shares issued by the Company or ranks as one of its top ten shareholders.

• (4) Not a spouse, relative within the second degree by consanguinity, or lineal relative within the third degree by consanguinity, of any of the above persons in the above three items.

• (5) Not a director, or supervisor, or employee of a corporate/institutional shareholder that directly holds five percent or more of the total number of shares issued by the Company or ranks as one of its top five shareholders.

• (6) Not a director, supervisor, officer, or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business relationship with the Company;

• (7) Not a professional or an owner, partner, director, supervisor, officer, or spouse of a sole proprietorship, partnership, company, or institution providing commercial, legal, financial, and accounting services or consultation to the Company or its affiliates; except for a member of the wage and compensation committee exercising powers with reference to Article 7 of the “Regulations Governing the Establishment and Exercise of Powers of Compensation Committees of Companies whose Stock is Listed on the TWSE or Traded on the GTSM”.

• (8) Not a spouse or a relative within the second degree by affinity of a director of the Company.

• (9) No violation of any items specified in Article 30 of the Company Act.

• (10) Not a governmental, juridical person or its representative as specified in Article 27 of the Company Act.

• 3Resigned on January 10, 2019.

• 13 -

3.2.2. President, Vice Presidents, Assistant Vice Presidents, Department or Branch Officers

												(April 08,2019)	(April 08,2019)	(April 08,2019)
Title1	Nationality	Name	Inaugural (elected) Date	Shares Held		Shares Currently Held by Spouse/ Minor Children		Shares Held Under Other’s Name		Major Experience (Education)2	Position(s) Concurrently Held in Other Organizations	Spouse/2ndDegree Relatives Holding Manager Post of this Organization.
				Shares	%	Shares	%	Shares	%			Title	Name	Relations hip
President	ROC	Wei-Ming Liang	Jan 5, 1998	1,051,523	0.45%	0	0%	0	0%	IE & MBA, University of Iowa. BS in Industrial Engineering, Tunghai University. VP,Starconn Electronic Co.,Ltd.	3	N/A	N/A	N/A
Vice President	ROC	Zhen-Xing Chen (Note 7)	Aug 1, 2014	0	0.00%	0	0%	0	0%	BS in Electronic Engineering, Tatung Institute of Technology. R&D Officer, Tatung Company. R&D Officer, IISI. R&D Officer,Tongya.	N/A	N/A	N/A	N/A
Vice President	ROC	Wen-Sen Huang	Feb11, 1998	230,602	0.10%	0	0%	0	0%	Dip. in Industrial Design, National Taipei Institute of Science and Technology. Marketing Chief, AMP MarketingManager,IR-TEC International.	4	N/A	N/A	N/A
Vice President	ROC	Jun-Yu Chen	Apr 20, 2018	57,712	0.03%	0	0%	0	0%	LLM, Law School, Fudan University. HR and Sales Manager, Tsankuen Shanghai. Director, Administration Division, Want Want Holdings Limited	In charge of SINBON USA LLC Director of SINBON C&C (representative of the Company)	N/A	N/A	N/A
Director	ROC	Ping Li	Oct 1, 1996	101,220	0.04%	0	0%	0	0%	BA in Industrial Management, National Cheng Kung University. QC Manager,ChenfengMachinery	N/A	N/A	N/A	N/A
Director	ROC	Jia-Zhi Hsu	Nov 1, 2000	26,166	0.01%	457	0%	0	0%	BS in Industrial Engineering and Management, National United University Sales Manager,Rui Zun Electronics.	N/A	N/A	N/A	N/A
Director	ROC	Li-Li Huang	Apr 21, 1997	930	0.00%	0	0%	0	0%	BA in International Trade, Chung Yuan Christian University. Product Manager, Marketing Department, AMP PR & Consumer Relations Staff, Kimberly-Clark Taiwan.	N/A	N/A	N/A	N/A

• 14 -

Title1	Nationality	Name	Inaugural (elected) Date	Shares Held	Shares Held	Shares Currently Held by Spouse/ Minor Children	Shares Currently Held by Spouse/ Minor Children	Shares Held Under Other’s Name	Shares Held Under Other’s Name	Major Experience (Education)2	Position(s) Concurrently Held in Other Organizations	Spouse/2ndDegree Relatives Holding Manager Post of this Organization.	Spouse/2ndDegree Relatives Holding Manager Post of this Organization.	Spouse/2ndDegree Relatives Holding Manager Post of this Organization.
				Shares	%	Shares	%	Shares	%			Title	Name	Relations hip
Financial/ Accounting Officer	ROC	Chi-Chou Chang	Oct 1, 2000	225,389	0.10%	264,124	0.12%	0	0%	MBA, National Chung Hsing University BA in Accounting, Chung Yuan Christian University. Associate Manager,Diwan & Company	5	N/A	N/A	N/A
Director	ROC	Jun-Qiang Wang	Oct 1, 2014	160,000	0.07%	160,000	0.07%	0	0%	MBA, Rutgers University. BS in Industrial Engineering, Tunghai University. Capital Market Assistant Manager, Taiwan Securities	6	N/A	N/A	N/A
Director	ROC	Cheng-Ling Li	Sep 1, 2014	4,671	0.00%	0	0%	0	0%	BA in Business Administration & Sociology, Tunghai University HR Manager, HONDA Taiwan HR Manager, Infineon Group Senior HR Manager,Foxconn Group	N/A	N/A	N/A	N/A
Director	ROC	Xiu-Sui Lin	Sep 1, 2014	30,403	0.01%	0	0%	0	0%	Ging Chung Business College	Director of SZ SINBON (representative of the Company) Director of SINBON Shanghai (representative of the Company)	N/A	N/A	N/A
Director	ROC	Yun-Ru Huang	Sep 1, 2014	0	0.00%	62	0.00%	0	0%	LLM, University of Southern California. LLB, National Taiwan University. Legal Affairs, AcBel. Legal Affairs, Lin & Chang International Law Offices	N/A	N/A	N/A	N/A
Director	ROC	Xin-Chun Wu	Oct 1, 2014	2,864	0.00%	0	0%	0	0%	BA in Spanish, Tamkang University	Director of JY SINBON (representative of the Company)	N/A	N/A	N/A
Director	ROC	Hao-Min Hsu	Oct 1, 2014	78	0.00%	0	0%	0	0%	Department of Shipping and Transportation Management, National Taiwan Ocean University. Longwell Company FedEx Taiwan	N/A	N/A	N/A	N/A
Director	ROC	Pei-Ling Huang (Note 9)	July 3, 2017	0	0.00%	0	0%	0	0%	8	N/A	N/A	N/A	N/A

• 15 -

Title1	Nationality	Name	Inaugural (elected) Date	Shares Held	Shares Held	Shares Currently Held by Spouse/ Minor Children	Shares Currently Held by Spouse/ Minor Children	Shares Held Under Other’s Name	Shares Held Under Other’s Name	Major Experience (Education)2	Position(s) Concurrently Held in Other Organizations	Spouse/2ndDegree Relatives Holding Manager Post of this Organization.	Spouse/2ndDegree Relatives Holding Manager Post of this Organization.	Spouse/2ndDegree Relatives Holding Manager Post of this Organization.
				Shares	%	Shares	%	Shares	%			Title	Name	Relations hip
Director	ROC	Jin-Zong Huang	Sep 01, 2018	0	0.00%	0	0%	0	0%	Chief Operating Officer ofGolden Bridge Electech Inc.	N/A	N/A	N/A	N/A
Ass. Director	ROC	Jin-Ze Zheng	Sep 1, 2014	0	0.00%	0	0%	0	0%	BA in Political Science, Soochow University. VP,KeyMouse Electronic	N/A	N/A	N/A	N/A
Ass. Director	ROC	Bing-Chen Song	Oct 1, 2014	1,689	0.00%	0	0%	0	0%	Ping Tung College of Technology Sales Manager,Wieson Technologies	N/A	N/A	N/A	N/A
Ass. Director	ROC	Kong-De Yang	Oct 1, 2014	0	0%	0	0%	0	0%	College Plant Manager,Golden Bridge Electech	N/A	N/A	N/A	N/A
Ass. Director	ROC	Min-Zheng Lin	Jun 1, 2015	588	0.00%	0	0%	0	0%	Department of Electronic Engineering, National United University Section Chief of ECH-CAST MFG. CORP.	N/A	N/A	N/A	N/A
Ass. Director	ROC	Jia-Qing Lin	Apr 18, 2016	9,202	0.00%	0	0%	0	0%	Electronic Engineering, China University of Science and Technology	N/A	N/A	N/A	N/A
Ass. Director	ROC	Ya-Hui Guo	Apr 18, 2016	0	0.00%	0	0%	0	0%	National Taiwan University of Science and Technology / Department of Business Administration	N/A	N/A	N/A	N/A
Ass. Director	ROC	Kui-Zhen Feng	Apr 09, 2018	0	0.00%	4,000	0%	0	0%	Department of Slavic Languages and Literatures, National Chengchi University Operations manager of Holistic Music Culture Enterprise Co., Ltd. Administration Supervisor. of Ju Culture Enterprise Co.,Ltd.	N/A	N/A	N/A	N/A
Ass. Director	ROC	Pin-Jen Chen	Apr 09, 2018	7,000	0.00%	0	0%	0	0%	Dept. of Sport Management, Aletheia University Sales Supervisor of T-CONN Precision Corporation	N/A	N/A	N/A	N/A
Ass. Director	ROC	Chien-Ming Huang	Apr 09, 2018	0	0.00%	0	0%	0	0%	Department of Electronic Engineering, Fu-Hsin Trade & Arts School	N/A	N/A	N/A	N/A
Ass. Director	ROC	Hsing-Hsiu Kuo	Apr 10, 2018	6,262	0.00%	100	0%	0	0%	Master degree, Department of Applied Foreign Languages,National Yunlin Universityof Science and Technology	N/A	N/A	N/A	N/A
Ass. Director	ROC	Kuo-Hung Chen	Oct 29, 2018	0	0.00%	0	0%	0	0%	Department of Mechanical Engineering, National Taiwan University of Science and Technology Ass. Director of Consumer Products Division,Lorom Industrial Co. Ltd.	N/A	N/A	N/A	N/A

1The information of the president, vice presidents, assistant vice presidents, and department and branch officers and positions equivalent to a president, vice president, or assistant vice president, regardless of title, must be

disclosed.

• 16 -

2Experience related to the current position. If the person has worked at the accountant’s firm where this report is certified or an affiliate of the Company, his title and duty must be specified.

3 Director of Worldwide Wire Harnesses Ltd. (representative of the Company), chairman of SINBON Tongcheng (representative of the Company), director of SINBON Jiangyin (representative of the Company), director of SINBON Hong Kong (representative of the Company), director of SINBON Beijing (representative of the Company), chairman of SINBON USA LLC (representative of the Company), director of Beijing SINBON Tongan (representative of the Company), director of SINBON Shenzhen (representative of the Company), director of SINBON Shanghai (representative of the Company), and chairman of Radbon Avionics Inc., and chairman of Enmagic Kunshan Energy Technology Co., Ltd. (representative of the Company)..

4 Director of SINBON Europe GmbH(representative of the Company), Director of SINBON Hong Kong (representative of the Company), supervisor of SINBON Jiangyin (representative of the Company), and supervisor of SINBON Tongcheng (representative of the Company), Director of Radbon Avionics Inc.

5Director of SINBON Hong Kong (representative of the Company), supervisor of SINBON Shenzhen (representative of the Company), supervisor of SINBON Shanghai (representative of the Company), director of Guan Ze (representative of the Company), supervisor of T-CONN (representative of the Company), director of Super Elite Ltd. (representative of the Company), supervisor of SINBON Tongan Electronics Beijing (representative of the Company), director of SINBON Tongcheng (representative of the Company), director of SINBON Jiangyin (representative of the Company), supervisor of SINBON Electronics Beijing (representative of the Company), supervisor of Radbon Avionics Inc.

6Supervisor of Guanze, Supervisor of T-CONN Precision, Director of Super Elite Limited (representative of the Company), Director of T-CONN Precision Zhongshan (representative of the Company), and Director of Enmagic Jiangsu Energy Co., Ltd (representative of the Company).

7Retirement on Feb. 28, 2019.

8EMBA of Fudan University, Master of Tourism and Exhibition Management in Rochester Institute of Technology, Bachelor of Health and Nutrition in Taipei Medical University, Secretary General in Taipei City Journal Trade Association, Specialist to Chairman in Sinyi Realty Inc., Specialist to Chairman in flysheet.com, CEO in Taiwan International Federation of Associations of information integration.

9 Resigned on May 31, 2019.

• 17 -

3.3. Remunerations Paid to Directors, President, and Vice Presidents Last Year

3.3.1. Directors (including independent directors)

3.3.1. Directors	3.3.1. Directors	(including independent directors)	(including independent directors)	(including independent directors)	(including independent directors)	(including independent directors)	(including independent directors)	(including independent directors)	(including independent directors)	(including independent directors)	(including independent directors)
												(December 31,2018; Expressed in Thousands of NTD)
Title	Name	Remuneration paid to directors								The proportion of the sum of items A-D in net profit after tax10		Compensation earned by directors holding concurrent posts at SINBON or affiliates								The proportion of the sum of items A-G in net profit after tax11		Compensation Paid to Directors from Non-consolidated Affiliates11
		Base Compensation (A)2		Severance Pay and Pensions (B)		Compensation to Directors (C)3		Allowances (D)4				Base Compensation, Bonuses, and Allowances(E)5		Severance Pay and Pensions (F)		Employee Profit Sharing (G)6
		From SINBON	From All Consolidated Entities7	From SINBON	From All Consolidated Entities7	From SINBON	From All Consolidated Entities7	From SINBON	From All Consolidated Entities7	From SINBON	From All Consolidated Entities7	From SINBON	From All Consolidated Entities7	From SINBON	From All Consolidated Entities7	From SINBON		From All Consolidated Entities8		From SINBON	From All Consolidated Entities7
																Cash	Stock (Fair Market Value)	Cash	Stock (Fair Market Value)
Chairman	Joseph Wang	-	-	-	-	14,050	14,050	2,747	2,747	1.18	1.18	2,334	2,871	-	-	4,018	-	4,018	-	1.63	1.67	-
Director	Wei-Ming Liang
Director	Xin-Chi Yeh
Director	Cao-Liang Wang, rep of Argosy Research
Director	Wei-Chun Wang, rep of Tai-Yi Investment Co.,Ltd.
Director	Kuo-Hong Wang, rep of Kuo-Shian Investment Co.,Ltd.
Independent Director	Chi-Lin Wei
Independent Director	Shi-Kuan Chen
Independent Director	Zheng-Yan Chang
* In addition to the above table, the other payments to the directors of the Company in the last year from all companies in consolidated reports (such as to be a consultant, not an employee):None.

• 18 -

Remuneration Intervals

Intervals of Remuneration Paid to Directors (NT$)		Director	Director	Director
	Sum of	A,B,C,D	Sum of A,B,C,D,E,F,G
	From SINBON9	From All Consolidated Entities10 (I)	From SINBON9	From All Consolidated Entities10 (J)
Under 2,000,000	All members	All members	Xin-Chi Yeh, Cao-Liang Wang, rep of Argosy Research, Wei-Chun Wang, rep of Tai-Yi Investment Co., Ltd., Chi-Lin Wei, Shi-Kuan Chen, Zheng-Yan Chang	Xin-Chi Yeh, Cao-Liang Wang, rep of Argosy Research, Wei-Chun Wang, rep of Tai-Yi Investment Co., Ltd., Chi-Lin Wei, Shi-Kuan Chen, Zheng-Yan Chang
2,000,000(incl.)-5,000,000(excl.)			Wei-MingLiang	Wei-MingLiang
5,000,000(incl.)-10,000,000(excl.)			Joseph Wang	Joseph Wang
10,000,000(incl.)-15,000,000(excl.)
15,000,000(incl.)-30,000,000(excl.)
30,000,000(incl.)-50,000,000(excl.)
50,000,000(incl.)-100,000,000(excl.)
Over 100,000,000
Total	16,797,000	16,797,000	23,149,000	23,686,000

• 1The name of directors must be indicated individually (both the name of the Companys and their representatives must be indicated). The amount of remunerations must be expressed in sum. Directors concurrently taking the president or vice president posts must be specified in this table and the table below (3-1) or (3-2).

• 2This refers to the remuneration for directors in the last year (including base compensation, allowances, severance pay, bonuses, and rewards).

• 3This refers to the amount of compensations paid to directors approved by the board before the profit allocation plan is approved by the shareholders’ meeting in the last year.

• 4This includes all kinds of allowances for directors in the last year (including travel expense, special disbursement, allowances, housing, company car, etc.). When housing, company car and other transportation or personal expense are provided, the nature and cost of such assets, the actual rent or rent calculated based on fair market price, gasoline reimbursement, and other payments must be disclosed. If drivers are assigned, please specify the wage for these drivers without combining with the compensation for directors.

• 5This includes all kinds of compensations for directors who are also employees (including the president, vice presidents, and other managers and employees) in the last year, including salary, allowances, severance pay, bonuses, rewards, travel expense, special disbursement, subsidies, housing, company car, etc.). When housing, company car and other transportation or personal expense are provided, the nature and cost of such assets, the actual rent or rent calculated based on fair market price, gasoline reimbursement, and other payments must be disclosed. If drivers are assigned, please specify the wage for these drivers without combining with the compensation for directors. In addition, according to IFRS 2 "Fundamental basis for the payment", the remuneration recognized as salary costs should also be included, including the acquisition of employee stock vouchers, restrictions on employee rights and participation in new shares and other shares, etc.

• 6This refer to the employee profit sharing (including stock and cash) of directors who are also employees (including the president, vice presidents, and other managers and employees) in the last year. The amount of employee profit sharing approved by the board before the allocation plan is approved by the shareholders’ meeting in the last year must be disclosed. If the amount cannot be estimated, calculate the planned amount for this year based on the actual amount distributed last year and fill out Table 1-3.

• 7The total amount of all remunerations paid to directors by all consolidated entities (including SINBON).

• 8The name of directors must be disclosed in respective remuneration intervals based on the total amount of remunerations paid to each director by SINBON.

• 9The name of directors must be disclosed in respective remuneration intervals based on the total amount of remunerations paid to each director by all consolidated entities (including SINBON).

• 10This net profit after tax refers to the net profit after tax in the last year; or the net profit after tax of each entity or individual financial statements in the last year when IFRS is applied.

11

• a. This refers to the amount compensation paid to directors from non-consolidated affiliates.

• b. The amount of compensation paid to directors from non-consolidated affiliates must be included in the remuneration interval (I), and the column must be renamed as “all non-consolidated affiliates”.

• c. Compensation refers to the remuneration, wage, employee profit sharing, and allowances paid by non-consolidated affiliates to directors who are also their directors, supervisors, or managers.

*As the remuneration structure disclosed in this table is different from the concept specified in the Income Tax Act, information disclosed in this table is not intended for use in taxation.

• 19 -

3.3.2. Remunerations Paid to President and Vice Presidents

								(December 31,2018;Expressed in Thousands of NTD)	(December 31,2018;Expressed in Thousands of NTD)	(December 31,2018;Expressed in Thousands of NTD)	(December 31,2018;Expressed in Thousands of NTD)	(December 31,2018;Expressed in Thousands of NTD)	(December 31,2018;Expressed in Thousands of NTD)	(December 31,2018;Expressed in Thousands of NTD)
Title	Name	Base Compensation (A)2		Severance Pay and Pensions (B)		Bonuses, Special Disbursement, etc. (C)3		Employee Profit Sharing (D)4				The proportion of the sum of items A-D in net profit after tax8		Compensation Paid to Supervisors from Non-consolidated Affiliates9
		From SINBON	From All Consolidated Entities5	From SINBON	From All Consolidated Entities5	From SINBON	From All Consolidated Entities5	From SINBON		From All Consolidate d Entities5		From SINBON	From All Consolidated Entities5
								Cash	Stock (Fair Market Value)	Cash	Stock (Fair Market Value)
President	Wei-Ming Liang	6,073	8,608	-	-	2,967	2,967	1,400	-	1,400	-	0.74	0.92	-
Vice President	Zhen-Xing Chen (Note 1)
	Wen-Sen Huang
	Jun-Yu Chen
	Li-Hua Chang (Note 2)

*Regardless of titles, the remuneration for employees equivalent to a president or vice president (e.g. general manager, CEO, director, etc.) must be disclosed.

1Retirement on Feb. 28, 2019.

2Li-Hua Chang quitted since Feb. 12, 2018.

Remuneration Intervals

Intervals of Remuneration Paid to President and Vice Presidents (NT$)	Name of President and Vice Presidents	Name of President and Vice Presidents
	From SINBON6	From All Consolidated Entities7
Under 2,000,000	Li-Hua Chang	Li-Hua Chang
2,000,000 (incl.)-5,000,000 (excl.)	Wei-Ming Liang; Zhen-Xing Chen; Wen-Sen Huang; Jun-Yu Chen	Wei-Ming Liang; Zhen-Xing Chen; Wen-Sen Huang; Jun-Yu Chen
5,000,000(incl.)-10,000,000(excl.)	-	-
10,000,000(incl.)-15,000,000(excl.)	-	-
15,000,000(incl.)-30,000,000(excl.)	-	-
30,000,000(incl.)-50,000,000(excl.)	-	-
50,000,000(incl.)-100,000,000(excl.)	-	-
Over 100,000,000	-	-
Total	10,440,000	12,975,000

1The name of presidents and vice presidents must be indicated individually. The amount of remunerations must be expressed in sum. Directors concurrently taking the president or vice president posts must be specified in this table and the above table.

2Fill in the base compensation, allowances, and severance pay of presidents and vice presidents in the last year.

3This includes all kinds of bonuses, monetary rewards, travel expense, special disbursement, allowances, housing, company car, and amount of other remunerations for presidents and vice presidents in the last year. When housing, company car and other transportation or personal expense are provided, the nature and cost of such assets, the actual rent or rent calculated based on fair market price, gasoline reimbursement, and other payments must be disclosed. If drivers are assigned, please specify the wage for these drivers without combining with the compensation for presidents and vice presidents. In addition, according to IFRS 2 "Fundamental basis for the payment", the remuneration recognized as salary costs should also be included, including the acquisition of employee stock vouchers, restrictions on employee rights and participation in new shares and other shares, etc.

4This refer to the amount of employee profit sharing (including stock and cash) for presidents and vice presidents in the last year approved by the board before the allocation plan is approved by the shareholders’ meeting. Also complete Table 1-3. The net profit after tax refers to the net profit after tax in the last year; or the net profit after tax of each entity or individual financial statements in the last year when IFRS is applied.

5The total amount of all remunerations paid to presidents and vice presidents by all consolidated entities (including SINBON).

6The name of presidents and vice presidents must be disclosed in respective remuneration intervals based on the total amount of remunerations paid to each president and vice president by SINBON.

7The name of presidents and vice presidents must be disclosed in respective remuneration intervals based on the total amount of

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remunerations paid to each president and vice president by all consolidated entities (including SINBON).

8This net profit after tax refers to the net profit after tax in the last year, or the net profit after tax of each entity or individual financial statements in the last year when IFRS is applied.

9

• a. This refers to the amount of compensation paid to presidents and vice presidents from non-consolidated affiliates.

• b. The amount of compensation paid to presidents and vice presidents from non-consolidated affiliates must be included in the remuneration interval (E), and the column must be renamed as “all non-consolidated affiliates”.

• c. Compensation refers to the remuneration, wage, employee profit sharing, and allowances paid by non-consolidated affiliates to presidents and vice presidents who are also their directors, supervisors, or managers.

*As the remuneration structure disclosed in this table is different from the concept specified in the Income Tax Act, information disclosed in this table is not intended for use in taxation.

Name of Executives Receiving Employee Profit Sharing and Status of Profit Allocation

(December 31, 2018; Expressed in Thousands of NTD)

	Title1	Name1	Amount of Profit Sharing in Stock	Amount of Profit Sharing in Cash	Total	The proportion of Net Profit after Tax (%)
Executives	President	Wei-MingLiang	-	2,750	2,750	0.20
	Vice President	Wen-Sen Huang
	Vice President	Jun-Yu Chen
	Director	PingLi
	Director	Jia-Zhi Hsu
	Director	Li-Li Huang
	Director	Jun-QiangWang
	Director	Cheng-LingLi
	Director	Xiu-Sui Lin
	Director	Yun-Ru Huang
	Director	Xin-Chun Wu
	Director	Jin-ZongHuang
	Director	Pei-LingHuang 5
	Ass. Director	Hao-Min Hsu
	Ass. Director	Jin-Ze Zheng
	Ass. Director	Bing-Chen Song
	Ass. Director	Kong-De Yang
	Ass. Director	Min-ZhengLin
	Ass. Director	Jia-QingLin
	Ass. Director	Ya-Hui Guo
	Ass. Director	Kui-Zhen Feng
	Ass. Director	Pin-Jen Chen
	Ass. Director	Chien-MingHuang
	Ass. Director	Hsing-Hsiu Kuo
	Ass. Director	Kuo-HungChen
	CFO	Chi-Chou Chang

1The name and title of executives must be indicated individually. The amount of employee profit sharing must be expressed in sum.

2Fill in the amount of employee profit sharing (including stock and cash) for executives in the last year approved by the board before the allocation plan is approved by the shareholders’ meeting. If the amount cannot be estimated, calculate the planned amount for this year based on the actual amount distributed last year. The net profit after tax refers to the net profit after tax in the last year; or the net profit after tax of each entity or individual financial statements in the last year when IFRS is applied.

3Referring to order in Letter Tai-Cai-Zi 0920001301 issued on 27 March 2003, the scope of executives (or managerial personnel) must cover:

a. President and its equivalent.

• b. Vice president and its equivalent.

• c. Assistant vice president and its equivalent.

• d. Financial department head.

• e. Accounting department head.

• f. Other personnel entitled to administer organization affairs and make approvals with their signature.

4Directors, presidents and vice presidents receiving employee profit sharing (including stock and cash) must be disclosed in both Tale 1-2 and this table.

• 5 Resigned on May 31, 2019.

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• 3.3.3. Analysis of the proportion of the total amount of remunerations paid to directors, supervisors, presidents, and vice presidents by SINBON and all consolidated entities in last two years in net profit after tax; and the payment policy, standard, and combination of remunerations; procedure to remuneration determination; and their relevance to operational performance and future risk.

	(December 31,2018)	(December 31,2018)	(December 31,2018)	(December 31,2018)
Item	Theproportion of Total Remuneration Amount in Net Profit after Tax(%)
	2018		2017
	SINBON	All Consolidated Entities	SINBON	All Consolidated Entities
Directors	1.64	1.68	1.97	2.31
President and Vice Presidents	0.74	0.92	0.94	0.99
Note: Although the amount of remunerations in 2018 was lower than in 2017, the percentage of the increase is lower than 20%,so there is no explanation needed accordingto the rules.

• (1) The payment policy, standard, and combination of remunerations:

• A. Directors and Supervisors: There is no fixed salary but travelling expenses to attend the Board meeting is NT$ 10,000 every time. According to the Company's Articles of Incorporation, annual remuneration to directors and supervisors was no more than 3% of pre-tax net profit aside as an annual reward.

• B. Managers: Referring to other companies’ payment levels and regulations of the Company, managers shall be paid remunerations no less than 1% and no more than 15% of pre-tax net profit and the remunerations shall be paid in the first half year and second half year according to performance scores.

• (2) Procedure to remuneration determination; and their relevance to operational performance and future risk:

• A. Procedure steps: a. setup annual performance indexes b. grading c. remuneration amount proposes d. remuneration Committee review e. approved by the Board f. distribution.

• B. Relevance: the amount of remunerations was depended on personal performance and the profits of the Company.

3.4. Corporate Governance

3.4.1. Board Operation

Between June 2018 and April 2019, 7 (A) board meetings were held, and director attendances are as follows:

Title	Name1	Actual Participation (Attendance)B	Agent Attendance	Actual Participation (Attendance) Rate (%) (B/A)2	Remarks
Chairman	Joseph Wang	7	0	100%	-
Director	Wei-Ming Liang	7	0	100%	-
Director	Xin-Chi Yeh	7	0	100%	-
Director	Cao-Liang Wang, rep. of Argosy Research Inc.	6	1	85.71%	-
Director	Wei-Chun Wang, rep. of Tai-Yi Investment Co.,Ltd.	7	0	100%	-
Director	Kuo-Hong Wang, rep. of Kuo-Shian Investment Co.,Ltd.	6	1	85.71%	-
Independent Director	Chi-lin Wei	6	1	85.71%	-
Independent Director	Shi-Kuan Chen	5	0	100%	Resigned on January 10,2019.
Independent Director	Zheng-Yan Chang	6	1	85.71%	-

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Annotations

• (1) The board operation has one of below status should specify the date and term of the board meeting and proposal content of corresponding board meetings, the opinion of all independent directors, and the management of their opinion:

• A. Items listed in Article 14-3 of the Securities and Exchange Act.

• B. The other board resolutions with a dissenting opinion or qualified opinion expressed by independent directors and recorded in the minutes or in writing.

	independent directors and recorded in the minutes or in writing.
	Date June 08 June 19 July 27 Oct. 25 Nov. 26	Mar. 14	Apr. 19
	Name 2018 2018 2018 2018 2018	2019	2019
	No No Delegate to No No	No	No
	Chi-Lin Wei
	objections objections attend objections objections	objections	objections
	Shi-Kuan No No No No No	-	-
	Chen objections objections objections objections objections
	Zheng-Yan No No No No No	No	Delegate to
	Chang objections objections objections objections objections	objections	attend
(2)	For the recusal of proposals by directors for conflicts of interest, the name of directors, proposal
	content, the reason for recusal, and voting status must be specified:
	7thmeeting of BOD in 2018, the independent director, Shi-Kuan Chen, avoided being involved in
	discussions and resolutions because she is also an independent director in DBS Taiwan bank when
	the board discussed renew the line of credit from DBS Taiwan. It resolved by the other directors of
	the board and had no objections.
(3)	Assessment of performance in improving board function and achieving relevant goals in		this year and
	last year: The Board has established and implemented with the "Self-Evaluation or Peer Evaluation of
	the Board of Directors”. The Company shall take into consideration its condition and needs when
	establishing the criteria for evaluating the performance of the board of directors (functional
	committees), which should cover, at a minimum, the following five aspects:
	A. Participation in the operation of the company;
	B. Improvement of the quality of the board of directors' decision making;
	C. Composition and structure of the board of directors;
	D. Election and continuing education of the directors; and
	E. Internal control.
	The criteria for evaluating the performance of the board members (on themselves or peers), should
	cover, at a minimum, the following six aspects:

• A. Familiarity with the goals and missions of the company;

• B. Awareness of the duties of a director; C. Participation in the operation of the company;

• D. Management of internal relationship and communication;

• E. The director's professionalism and continuing education; and

• F. Internal control.

The indexes of board performance evaluation shall be determined based on the operation and needs of the Company and suitable and appropriate for evaluations by the company once a year. Scoring criteria may be modified and adjusted based on the company's needs. The weighted scoring method may be adopted based on the aspects of evaluation. The evaluation had done on January 2, 2019 and the results have been published on the website: https://www.sinbon.com/en/corporate-governance, the rating was 100%.

1If directors and supervisors are entities, the name of the Company and their representative must be disclosed.

2

(1) When directors or supervisors resign before the end of a fiscal year, the date of resignation must be specified in the Remarks, and their actual participation (attendance) rate (%) must be calculated with reference to their actual participation (attendance) frequency in the actual number of board meetings held during their term.

(2) When there is a director or supervisor re-election before the end of a fiscal year, the current and past directors and supervisors must be disclosed, and their status (past, current, or re-elected) must be specified in the Remarks. Their actual participation (attendance) rate (%) must be calculated with reference to their actual participation (attendance) frequency in the actual number of board meetings held during their term.

• 23 -

• 3.4.2. Audit Committee Operation or Supervisor Participation in Board Operation: SINBON adopted the supervisor system without establishing an audit committee. Between June 2018 and April 2019, 5 (A) board meetings were held, and supervisor attendances are as follows:

Title	Name	Actual Attendance (B)	Actual Attendance Rate (%) (B/A) (Notes)	Remarks
Independent Director	Chi-Lin Wei	5	100%	-
Independent Director	Shi-Kuan Chen	3	100%	Resigned on January 10, 2019.
Independent Director	Zheng-Yan Chang	4	80%	-
Annotations (1) Formation and duty of supervisors (the committee is composed of all independent directors) a. Internal control systems and including related policies and procedures; b. Assessment of the effectiveness of the internal control system; c. Correction procedure of acquire or dispose of assets、derivatives transactions、material lending funds, endorsements or guarantees; d. Related-party transactions and potential conflicts of interests involving executive officers and directors; e. Material asset or derivatives transactions; f. Material lending funds, endorsements or guarantees; g. Offering or issuance of any equity-type securities; h. Hiring or dismissal of an attesting CPA, or the compensation given thereto; i. Appointment or discharge of financial, accounting, or internal auditing officers; j. Financial reports; k. Other material issues imposed by other companies or authorities. (2) Communication between supervisors and chief auditor/CPA: Supervisors actively communicate organizational financial and sales situations with the chief auditor and CPA by phone, e-mail, or meeting. In addition, the chief auditor submits the audit reports to supervisors periodically and CPA will send a questionnaire to supervisors to implement two-way communication with supervisors. Since the 3rdmeeting of the board in 2016, CPA attended the meeting of the board quarterly to communicate with supervisors and chief auditor face to face. Our website also disclosure the communication status athttps://www.sinbon.com/en/corporate-governance. (3) If supervisors express an opinion at a board meeting, specify the date and term of the board meeting, theproposal content,board resolutions,and the handlingof opinion expressed bysupervisors: Date Name July 26 2018 Oct. 25 2018 Nov. 26 2018 Mar. 14 2019 Apr. 19 2019 Chi-Lin Wei No objections No objections No objections No objections No objections Shi-Kuan Chen No objections No objections No objections - - Zheng-Yan Chang No objections No objections No objections No objections Delegate to attend

Notes:

(1) When supervisors resign before the end of a fiscal year, the date of resignation must be specified in the Remarks, and their actual attendance rate (%) must be calculated with reference to their actual attendance frequency in the actual number of board meetings held during their term.

(2) When there is supervisor re-election before the end of a fiscal year, the current and past supervisors must be disclosed, and their status (past, current, or re-elected) must be specified in the Remarks. Their actual attendance rate (%) must be calculated with reference to their actual attendance frequency in the actual number of board meetings held during their term.

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3.4.3. Corporate Governance and Compliance with Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies (BPP)

Assessment Item			Status of Implementation1	Non-compliance with the BPP and reasons
	Yes	No.	Performance Summary
1. Does the Company establish and disclose a Corporate Governance Best-Practice Principles for TSEC/ GTSM Listed Companies with reference to the “BPP”?			The Company has established a Corporate Governance Best-Practice Principles for TSEC/ GTSM Listed Companies and disclosed it on the Market Observation Post System: http://mops.twse.com.tw/mops/web/t100sb04_1.	No
2. Shareholding structure & shareholders’ rights: (1) Does the Company establish and implement the internal operation procedures to handle shareholders’ suggestions, concern, disputes and litigation matters? (2) Does the Company maintain a list of major shareholders and their beneficial owners? (3) Has the Company established and implemented a risk management system and “firewall” between the Company and its affiliates? (4) Has the Company established internal rules prohibiting insider trading on undisclosed information?	   		(1) The company has a "Measures to Report Cases of Illegal and Unethical or Indecent Assassin Acts" and has established a "Stakeholder Area" webpage and spokesperson system in accordance with the regulations to handle related matters. Please visit our website: https://www.sinbon.com/tw/csr/stakeholder-contact (2) The Company maintains a list of major shareholders and their beneficial owners and has developed good investor relations with major shareholders. (3) The Company has established the “Group Enterprise Management Regulations”, “Investment Management Regulations”, “Internal Control System”, “Internal Audit System”, and relevant laws and regulations to handle affiliate issues. (4) The Company has established the “ Corporate Governance Best Practice Principles” and article 8 is prohibiting insider trading on undisclosed information.	No No No No
3. Formation and responsibility of the board of directors: (1) Does the Company establish and implement diversified policies with reference to board formation? (2) After establishing the wage and compensation committee and audit committee by the law, does the Company voluntarily establish other functional committees? (3) Does the Company establish board performance evaluation regulations and methods to evaluate board performance every year?	  		(1) The Company has established the “ Corporate Governance Best Practice Principles” and please refer the article18. Board members have been selected from qualified candidates by the chairman with board authorization. The status of the implement: (1) Diversify background: 3 directors of the board are executive director, 3 of them are business administrator, 2 of them are economics professor, 1 CPA, and 1 industry analysis. (2) 1 of the independent director is female and continuously to find suitable female directors. (3) Ages: 2 of the board members is older 70, 3 between 60 and 70, 2 between 50 and 60, and 1 below 50. (2) The Company established “General Management Team” at 1stBOD meeting in 2018. Please find the rules of procedure on our website. (3) The Company had established the “Evaluation of the Board of Directors Performance” since April 22, 2016 and finished the performance report and public it on Jan. 2, 2019 on the Company’s website. The Company will do the evaluation once a year via questionnaires then report to the board.	No. No. No.

• 25 -

Assessment Item			Status of Implementation1	Non-compliance with the BPP and reasons
	Yes	No.	Performance Summary
(4) Does the Company assess the independence of its CPAs?			(4) The Company assesses the independence of CPAs on a regular basis (once a year) with reference to Article 27 of the BPP and reports the results to the board, and the last report was presented on Mar. 14, 2019. The Company assesses the independence of CPA in terms of financial interests, financing and guaranty, business relations, family and individual relationship, employment relations, gift and special offers, CPA rotation and non-audit business. The Company has obtained the statement of independence issued by CPAs. So far, no incident or event affecting CPA independencyhas been detected.	No.
4. Does the company set up a corporate governance unit or personnel responsible for corporate governance-related matters including but not limited to providing the required information to directors and supervisors to carry out the business, handle the matters relating to the BOD and the shareholders 'meeting in accordance with the law, handle the registration issues of the Company, and make the meeting minutes for BOD and the shareholders' meeting?			The Company had assigned Finance Department to be the corporate governance unit and deputy spokesperson is responsible for corporate governance related matters.	No.
5. Does the Company establish mechanisms for communicating with stakeholders and a stakeholder site on the corporate website to appropriately respond to material CSR topics theyconcern about?			The Company has established a “Stakeholders Section” on the website and implemented the spokesperson system to handle relevant affairs. The implement results had reported to 7thBOD meeting in 2018 and published on our website: https://www.sinbon.com/en/csr/stakeholder-contact	No.
6. Does the Company assign professional registers to handle shareholder meetingaffairs?			The Company has assigned the Register Department of Taishin International Bank as our register.	No.
7. Information disclosure (1) Has the Company established a website to disclose own financial and corporate governance information? (2) Does the Company disclose such information with other methods (e.g. English website, assigning staff to gather and disclose relevant information, implementing the spokesperson system, and posting the conference call on the corporate website)?	 		(1) The Company discloses relevant financial information and business information regularly and as necessary over the corporate website (www.sinbon.com) and MOPS (http://newmops.twse.com.tw). (2) The Company has established the spokesperson system to handle relevant affairs and discloses material information over the Chinese and English versions and public the CSR report on the corporate website.	No. No.
8. Does the Company disclose other information for investors better			The Company has always been concerned about the rights and benefits of customers,suppliers,shareholders,and employees.	No.

• 26 -

Assessment Item	Status of Implementation1	Status of Implementation1	Status of Implementation1	Non-compliance with the BPP and reasons
	Yes	No.	Performance Summary
understand its corporate governance practices (including but not limited to employee rights and benefits, employee care, investor relations, supplier relations, stakeholder rights and benefits, training for directors and supervisors, implementation of risk management policies and risk assessment standards, implementation of customer relations policies, and insurance for directors and supervisors)?			Apart from implementing humanized management, we value work environment safety and health and has established the Employee Welfare Committee, arrange liability insurance for directors and supervisors, and establish the employee profit sharing system in our articles of incorporation. Apart from providing in-service corporate governance training for directors and supervisors at least three hours each year, we arrange 12 hours of corporate governance training for new directors and supervisors. The result of the implementation is posted on the MOPS. Risk management policies and risk assessment are established and implemented with reference to the “Asset Acquisition and Settlement Management Regulations”, “Endorsement and Guaranty SOP”, “Code of Business Ethics”, “Board Procedural Standards”, and “Internal Material Information Processing SOP”. Investments with an amount of NT$300 million or paid-in capital over 20% are submitted to the board for resolution. The QA policy and customer rights and benefits protection are included in our ISO. Every year we arrange liability insurance for directors and supervisors as prescribed in the articles of incorporation. Pease refer to the Company’s CSR report toget more information.
9. Please indicate the improvement results of the last corporate governance evaluation issued by Corporate Governance Center of the Taiwan Stock Exchange Co., Ltd. or how to improve: The result of the last corporate governance evaluation for the Company is top 6% ~ 20%. The Company had done some works on the improvement of the quality of the board of directors' decision making, for example, to hold at least 2 remuneration committee meetings in 1 year and at least 2 times attendance of each member; improving information transparency: issued material information bilingually; implement corporate social responsibility: The Company had assigned Performance Evaluation Department to be the corporate governance unit and deputy spokesperson is responsible for corporate governance-related matters and the results had reported to 7thBOD meeting in 2018 and published on our website. In 2018, SINBON establish audit committee, at least 2 independent directors on duty less 9 years term, at least 2 remuneration committee members are independent directors, to hold at least 6 BOD meetings, and amendment the articles of incorporation and disclosure specific dividendpolicy.

1Please describe the situation, either “yes” or “no” in the non-compliance column.

2The self-evaluation report must contain the results of evaluation items for corporate governance practices, including the current condition of operation and implementation.

• 27 -

3.4.4. Disclosure of the information, responsibility, and operation of the

Remuneration Committee, if any.

(1) Members of the remuneration committee

Status1	Requirements Name	Do committee directors have over 5 years of relevant experience and the following professionalqualifications?	Do committee directors have over 5 years of relevant experience and the following professionalqualifications?	Do committee directors have over 5 years of relevant experience and the following professionalqualifications?	Compliance with Independency2	Compliance with Independency2	Compliance with Independency2	Compliance with Independency2	Compliance with Independency2	Compliance with Independency2	Compliance with Independency2	Compliance with Independency2	Also a compensation committee member of other public companies concurrently	Remarks3
		A faculty member of the discipline of commerce, law, finance, accounting, or other academic disciplines of a higher education establishment relating to the business of the Company	A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and has been awarded a certificate in a profession required by the business of	Have work experience in commerce, law, finance, or accounting, or otherwise required by the business of the Company	1	2	3	4	5	6	7	8
Independent Director	Chi-Lin Wei	Yes	No	Yes									4	-
Independent Director	Zheng-Yan Chang	Yes	Yes	Yes									0
Others	Mu-Xiao Liu	No	No	Yes									0	-
Others	Pi-Hsia Hsu-Chung	No	No	Yes									0	Resigned on August 31, 2018.

• 1Please, specify member status: director, independent director, or others.

• 2Please tick the corresponding items when directors and supervisors comply with the following conditions two years before being elected and during their term.

• (1) Not an employee of the Company or any of its affiliates.

• (2) Not a director or supervisor of the Company or any of its affiliates (except as an independent director of the Company, or its parent

company, or its subsidiary where the Company holds, either directly or indirectly, over 50% of the voting shares).

• (3) Not an individual shareholder holding shares, together with those held by the person’s spouse, minor children, or held by the person

• under others’ names, in an aggregate amount of one per cent or more of the total number of shares issued by the Company or ranks as one of its top ten shareholders.

• (4) Not a spouse, relative within the second degree by consanguinity, or lineal relative within the third degree by consanguinity, of any of the above persons in the above three items.

• (5) Not a director, or supervisor, or employee of a corporate/institutional shareholder that directly holds five per cent or more of the total number of shares issued by the Company or ranks as one of its top five shareholders.

• (6) Not a director, supervisor, officer, or shareholder holding five per cent or more of the shares of a specified company or institution that has a financial or business relationship with the Company;

• (7) Not a professional or an owner, partner, director, supervisor, officer, or spouse of a sole proprietorship, partnership, company, or institution providing commercial, legal, financial, and accounting services or consultation to the Company or its affiliates.

• (8) No violation of any items specified in Article 30 of the Company Act.

• 28 -

• (2) Operation of the Remuneration Committee

• A. Committee members: 3.

B. Current term: June 19, 2018 to June 7, 2021. By April 11, 2019, 1 committee meetings (A) were held, and the qualification and attendance of committee members are as follows:

Title	Name	Actual Attendance(B)	Agent Attendance	Actual Attendance Rate(%) (B/A) (Note)	Remarks
Convener	Chi-Lin Wei	1	0	100%	Re-election
Committee Member	Zheng-Yan Chang	0	0	0%	Join on March 14, 2019.
Committee Member	Pi-Hsia Hsu-Chung	0	0	0%	Resigned on August 31, 2018.
Committee Member	Mu-Xiao Liu	1	0	100%	Re-election
Annotations (1) If the board refuses or modifies the recommendation made by the committee, specify the date and term of the board meeting and proposal content, board resolution and handling of committee opinion (if the compensation approved by the board is better than the compensation recommended by the committee, specify the difference and causes): N/A, if any will post it on MOPS material information. (2) When members disagree to or have reservations of a resolution made at the committee meeting with track records or written statements, specify the date and term of the committee meeting, proposal content, opinion of all members,and handlingof their opinion: N/A,if anywillpost it on MOPS material information.

Note

(1) When committee members resign before the end of a fiscal year, the date of resignation must be specified in the Remarks, and their actual attendance rate (%) must be calculated with reference to their actual attendance frequency in the actual number of committee meetings held during their term.

(2) When there is a committee member re-election before the end of a fiscal year, the current and past committee members must be disclosed, and their status (past, current, or re-elected) must be specified in the Remarks. Their actual attendance rate (%) must be calculated with reference to their actual attendance frequency in the actual number of committee meetings held during their term.

3.4.5. CSR Performance

Assessment Item			Implementation1	Non-compliance with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary2
1. Corporate governance promotion (1) Does the Company establish a CSR policy or system and review the effectiveness of implementation? (2) Does the Company arrange CSR training on a regular basis? (3) Does the Company establish a dedicated (concurrent) unit to promote CSR with authorization from top management and to report the effectiveness of implementation to the board? (4) Does the Company establish a fair wage and compensationpolicycombingwith	   		(1) The Company has established a Code of CSR Practice and has passed SA8000 social accountability certification and OHSAS18000 occupational safety and health certification. We also review the effectiveness of their implementation on a regular basis. (2) The company is regularly organized by the CSR Committee to conduct corporate social responsibility-related education and training by quarterly. (3) The Company reports the effectiveness and progress of CSR implementation to the board once a year. Please refer 2017 CSR report. (4) The wage and compensation policy of the Company: 1)wage resourceplanningbased	No No No No

• 29 -

Assessment Item			Implementation1	Non-compliance with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary2
the employee performance evaluation system and CSR policy and an effective and well-defined reward and punishment system?			on cost efficiency and risk control; 2) wage resource allocation through performance differentiation; and 3) attraction, retention, and encouragement of key talents. Our employee performance evaluation system includes: closely link employee work targets with overall organizational targets to fulfil both long- and short-term organizational goals and provide a performance communication channel for fair and objective assessment of employee work performance and enable employees to make continual improvement; to provide a reference for employee development and transfer, promotion, and raise. Therefore, employees are evaluated at the end of each year. The reward and punishment system includes: To optimize operational management and maintain internal order to maintain the decent rights and benefits of the Company and employees. When employees violate any rules, they will be punished by a warning, minor demerit, major demerit, suspension, or dismissal, depending on the severity of the offence. Employees with deeds will be rewarded by commendation, minor merit, and major merit to encourage them and make them an example for other employees.
2. Development of a sustainable environment: (1) Does the Company make efforts to enhance resource efficiency and use recycled materials with lower environmental impact? (2) Does the Company establish an appropriate environmental management system (EMS) according to the characteristics of its industry? (3) Has the Company noticed the effect of climate change on its business activities and does it implement GHG inventory and establish energy conservation and GHG reduction strategy?	  		(1) The Company sets RoHS, PFOA, PFOS as our production targets with reference to customer demand and international environmental trends. No product returns due to RoHS issues was reported. (2) The Company establishes and implements the green product management system to control environmental-concerned chemical substances in the supply chain to reduce environmental and health risks. (3) The Company selects and uses eco-friendly materials. (4) The Company adopts the design for life-cycle extension policy. (5) The Company adopts power-saving design and uses green packaging. (6) The Company establishes the Green Committee to supervise the effectiveness of environmentalpolicyimplementation and	No N No

• 30 -

Assessment Item			Implementation1	Non-compliance with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary2
			implement the ISO14001 EMS (passed certification in 2002). (7) In 2012, the Company passed the ISO 14064-1 GHG inventory for enterprise certification, and we implement GHG inventory every year since then. (8) The others, please refer page 45~65 of 2016 CSR report.
3. Implementation of philanthropy (1) Does the Company establish relevant management policies and procedures with reference to relevant international regulations and international human rights treaties? (2) Does the Company establish mechanisms and channels for and properly handle employee grievances? (3) Does the Company provide employees with a safe and healthy work environment and regularly arrange safety and health training/education for employees? (4) Does the Company establish mechanisms for periodic employee communication and reasonably notify employees of significant operational changes that could substantially affect them? (5) Does the Company establish effective training plans for employees to develop employability? (6) Does the Company establish policies and procedures to protect consumer rights and benefits in R&D, procurement, production, operation, and service processes? (7) Does the Company follow relevant regulations and international standards to market and label products and services? (8) Does the Company assess if suppliers have a record of causing impacts on the environment and society? (9) When signing contracts with major suppliers, does the Company include the following terms in the contract: when suppliers violate the Company’s CSR	        		(1) The Company passed SA8000 social accountability certification since 2013 and voluntarily establish our internal management policy and procedures with reference to the UN Global Compact. (2) The Company sets up the employee suggestion box and provide a hotline for general grievances and sexual harassment. (3) The Company passes GSV (Global Security Verification) and OHSAS 18000 occupational health and safety certification to implement organizational OHS management and ensure the security of employees and products. The Company also implements periodic inspection and maintenance of equipment and disaster prevention exercise, arranges health examinations for employees, and organizes ESH workshops. (4) The Company holds employee seminars regularly to discuss employee problems and make proper management afterwards. (5) In response to organizational strategic development goals and fulfil the work competency need of employees, the Company provides comprehensive learning methods and channels, such as internal training, external training, and annual learning subsidies. (6) The Company categorizes the problems reflected in customer complaints and take timely action to resolve them to regain customer satisfaction. (7) The Company markets and labels products with reference to relevant regulations and prohibits deception, misleading, fraud, and any conduct that can damage consumer trust and consumer rights and benefits. (8) &(9)The Companyhas added contents	No No No No. No No No No No

• 31 -

Assessment Item	Implementation1	Implementation1	Implementation1	Non-compliance with the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary2
policy and have a significant impact on the environment and society, the Company may terminate or rescind the contract at any time?			(SA8000 and EICC) for implementing CSR in our procurement contracts. Before any business transactions, we request suppliers to sign the CSR compliance agreement and complete the self-evaluation sheet. We also implement an on-site audit of suppliers to ensure CSR is implemented bysuppliers.
4. Reinforcement of disclosure of CSR information. (1) Does the Company disclose relevant and reliable CSR information on the corporate website and MOPS?			(1) The Company voluntarily discloses CSR information on the corporate website, and “environmental sustainability, green proclamation, and social commitment” are the three axes of implementation. (2) The Company published 2017 CSR report to disclose our performance in CSR implementation andpublished on the website.	No
5. If the Company has established own code of CSR practice with reference to the “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies,” specify its operation and non-compliance with the best practice principles: No difference.
6. Other material information enabling a better understanding of CSR implementation: (1) The Company implements CSR with reference to the four aspects: human rights, labour, environment, and anti-corruption prescribed in The Ten Principles of UN Global Compact. (2) The Company passed SA8000 social accountability certification at the end of 2013 and obtained the certificate in 2014. (3) In recent years, the Company has been devoted to green product design and development. The Company also establishes the green committee to supervise the effectiveness of environmental policy implementation and implement energy conservation and emission reduction through four aspects: green building, green procurement, green production, and green product. The Company has developed the Go Green employee green education platform and combined with the CSP employee creative idea activity to recognize green experts and reward green innovation proposals, so as to implement environmental sustainability throughplanningand real action.
7. If the organizational CSR report has passed the verification standards of relevant certification authorities, please specify: (1) The Company’s CSR report has been published since 2015. It was followed by the core options of GRI G4 Guidelines Version, published by Global Reporting Initiative, and following AA1000 (2008) standard. Furthermore, It also approved by SGS-Taiwan. (2) Quality management systems: ISO 9001, ISO 14001, ISO 13485, UL Wiring Harness, Medical Device Good Manufacture Practice (GMP), and TS16949. (3) Other systems: SA8000 social accountabilitysystem,GSV,OHSAS18000,and ISO 14064-1.

1Please describe the situation, either “yes” or “no” in the non-compliance column.

2If the Company has published a CSR report, please indicate the correspondence with the CSR report instead.

• 32 -

3.4.6. Performance in Fair and Ethical Business Operations and Measures

Fair and Ethical Business Operations

Assessment Item	Implementation1	Implementation1	Implementation1	Non-compliance with Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and Reasons
	Yes	No	Performance Summary
1. Policies and plans for fair and ethical business operations (1) Does the Company specify its policies and practices to maintain fair and ethical business operations in relevant regulations and external documents? Do the board and management actively implement the commitments made in relevant policies? (2) Does the Company draw up programs to prevent unethical conduct and set out in each program and implement SOPs, conduct guidelines, penalties for violation, and a grievance system? (3) Does the Company take precautionary action to prevent business activities specified in paragraph 2 of Article 7 of the Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies and other business activities within its scope of business with higher behavioural risk?	  		(1) The Company has established and implemented the “Code of Business Ethics” and “Fair and Ethical Operations SOP and Conduct Guidelines”. (2) The Company includes the above code, SOP, and conduct guidelines in annual training/education courses. (3) Internal audits are included in the annual audit program to audit the effectiveness of the implementation of relevant policies and practices regularly and irregularly.	No No No
2. Implementation of fair and ethical business operations (1) Does the Company assess if trading counterparts are involved in any unfair and unethical business operations and include the fair and ethical business operations clause in the transaction agreement signed with them? (2) Does the Company establish a dedicated (concurrent) unit directly under the board to promote fair and ethical business operations and report the effectiveness of implementation directly to the board? (3) Does the Company establish and implement policies to prevent conflicts of interest and provide appropriate channels for	  		(1) The fair and ethical business operations clause is included in our standard contracts. (2) The “Group Administration Division” is the responsible unit and will report to the board any violation once a year(7thBOD meeting in 2018). The internal audit unit also reports to the board regularly and where necessary. (3) The Company has established complaint channels and the suggestion box responsible by the “Administration Department”.	No No No

• 33 -

reporting such conflicts? (4) Has the Company established effective accounting and internal control systems to implement fair and ethical business operations? Does the Company have this system audited regularly by the internal audit unit or a CPA? (5) Does the Company arrange regular internal/external training/ education for fair and ethical business operations?	 		(4) These systems are established and audited with reference to theEthical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies, Code of Business Ethics and Fair and Ethical Operations SOP and Conduct Guidelines. (5) The board of the Company arranges the report on the Code of Business Ethics and includes it in the training/ education for new employees.	No No
3. Operation of the whistleblower system (1) Has the Company established a practical whistleblower and reward system and channels to facilitate reporting of unfair and unethical business operations and assign appropriate personnel to handle a reported case? (2) Does the Company establish an SOP and a non-disclosure mechanism of relevant investigations? (3) Does the Company establish and implement an informer protection policy to ensure no informer will receive indecent treatment?	  		(1) The Company establishes “Stakeholder Section” on the website to handle all relevant reports. (2) The Company has establishes the “procedures for dealing with Unlawful, Unethical or Dishonesty issues”. (3) This protection policy includes non-disclosure of information sources, an investigation by a third-party unit, and the signing of a non-disclosure agreement among allparties involved.	No No No
4. Reinforcement of information disclosure (1) Does the Company disclose the content and effectiveness of the implementation of the Code of Business Ethics on the corporate website and MOPS?			(1) Our corporate website: www.sinbon.com (2) MOPS website2. (3) In 2018 no punishment for violation of fair and ethical business operations was reported.	No
5. If the Company has established own code of business ethics with reference to the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM Listed Companies,” specify its operation and non-compliance with the best practice principles: No difference.
6. Other material information enabling a better understanding of fair and ethical business operations (such as review and revise the code of business ethics): The board arranges a report on the code of business ethics every year and included and includes it in the training/education for new employees andperiodic internal audit.

1Please describe the situation, either “yes” or “no” in the non-compliance column.

2http://mops.twse.com.tw/mops/web/t100sb04_1 (market type: listed, search by stock number “3023” or by company name “SINBON”).

• 3.4.7. Search for the code of corporate governance and relevant information: http://mops.twse.com.tw/mops/web/t100sb04_1 (market type: listed, search by stock number “3023” or by company name “SINBON”).

• 3.4.8. Other material information enabling a better understanding of corporate governance: See the corporate website of the Company.

• 34 -

• 3.4.9. Items to be disclosed to support the effectiveness of internal control:

• (1) Statement of Internal Control

Statement of Compliance of the Internal Control System

March 14, 2019

Based on the findings of a self-assessment, SINBON Electronics Co., Ltd. (SINBON) states the following with regard to its internal control system during the year 2018:

1. SINBON’s Board of Directors and management are responsible for establishing, implementing, and maintaining an adequate internal control system. Our internal control is a process designed to provide reasonable assurance over the effectiveness and efficiency of our operations (including profitability, performance and safeguarding of assets), reliability, timeliness, transparency of our reporting, and compliance with applicable rulings, laws and regulations.

2. An internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can provide only reasonable assurance of accomplishing its stated objectives. Moreover, the effectiveness of an internal control system may be subject to changes due to extenuating circumstances beyond our control. Nevertheless, our internal control system contains self-monitoring mechanisms, and SINBON takes immediate remedial actions in response to any identified deficiencies.

3. SINBON evaluates the design and operating effectiveness of its internal control system based on the criteria provided in the Regulations Governing the Establishment of Internal Control Systems by Public Companies (herein below, the “ Regulations”). The criteria adopted by the Regulations identify five key components of managerial internal control: (1)control environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities.

4. SINBON has evaluated the design and operating effectiveness of its internal control system according to the aforesaid Regulations.

5. Based on the findings of such evaluation, SINBON believes that, on December 31, 2018, it has maintained, in all material respects, an effective internal control system (that includes the supervision and management of our subsidiaries), to provide reasonable assurance over our operational effectiveness and efficiency, reliability, timeliness, transparency of reporting, and compliance with applicable rulings, laws and regulations.

6. This Statement is an integral part of SINBON’s annual report and prospectus, and will be made public. Any falsehood, concealment, or other illegality in the content made public will entail legal liability under Articles 20, 32, 171, and 174 of the Securities and Exchange Law .

7. This Statement was passed by the Board of Directors in their meeting held on March 14, 2019, with none of the eight attending directors expressing dissenting opinions, and the remainder all affirming the content of this Statement.

SINBON Electronics Co., Ltd.

Joseph Wang Chairman

Wei-Ming Liang President

• 35 -

• (2) The CPA audit review must be disclosed as the internal control system is audited by a CPA: N/A.

• 3.4.10. Punishment of the Company and employees by the law, punishment of employees by the Company for violation of internal control system regulations, and major defects and improvement in the last year and by the report publishing date: None.

• 3.4.11. Major resolutions made at the shareholders’ meeting and board meeting in the last year and by the report publishing date:

March 12, 2018 Board Meeting  Approving the assessment results of CPA independency: Complied

• Approving the consolidated financial statement and individual financial statements of 2017

• Approving the profit allocation plan of 2017

• Approving the Statement of Compliance of Internal Control System Compliance of 2017

• Approving the Business Plan 2018

• Approving the remuneration for members of the board

• Approving amendment to Remuneration Committee Charter  Approving to establish General Management Team Charter

				Compliance of 2017  Approving the Business Plan 2018  Approving the remuneration for members of the board  Approving amendment to Remuneration Committee Charter  Approving to establish General Management Team Charter
				 Approving the General Management Team member list
				 Approving amendment to the Company's Articles of Incorporation
				 Approving amendment to Procedures of Election of Directors and
				Supervisors
				 Approving to elect new members of the board
				 Approving to dismiss the Restrictions in Competition on New Directors
				and Their Representatives
				 Approving amendment to Rules of Procedure for Shareholder Meeting
				 Approving amendment to Procedures for the Acquisition and Disposal of
				Assets
				 Approving amendment to Procedures for Endorsement & Guarantee
				 Approving amendment to Procedures for Lending Funds to Others
				 Approving abolishing Rules Governing the Scope of Powers of Supervisors
				 Approving amendment to the Ethical Corporate Management Best
				Practice Principles, Procedures for Ethical Management and Guidelines for
				Conduct, and Guidelines for the Adoption of Codes of Ethical Conduct
				 Approving the agenda and relevant affairs of the annual shareholders’
				meeting of 2018
				 Approving renewal of the credit line from DBS (Taiwan) bank, ANZ bank
				(Taiwan) Limited, and CTBC bank
				 Approving acquisition of Raybon Avionics Inc. shares and decrease capital
				then increase capital
				 Approving disposal of SINBON Japan shares
				 Approving increase capital to TC SINBON
20	April,	2018	Board Meeting	 Approving the consolidated financial statement of Q1 2018
				 Convening the 2018 Annual Shareholders’ Meeting
				 Approving amendment to the Company's Articles of Incorporation
				 Approving the Souvenir Giving Rules for Shareholders’ Meeting
				 Approving the remuneration for new vice VP of the company
				 Approving the remuneration package for new marketing associate
				director
				 Approving surplus NT$14.40 million to capital increase for subsidiary
				company, T-conn Precision Co., Ltd.
				 Approving surplus US$6 million to capital increase for subsidiary
				company, JY SINBON Electronics Co., Ltd.

• 36 -

		 Approving renewal of the credit line from HSBC (China) bank
		 Approving renewal of the credit line from Bank SinoPac
08 June, 2018	Shareholder	Approving of the 2017 Business Report and Financial Statements
	Meeting	Result: Adopted and published meeting minutes on MOPS
		Approving of distribution on 2017 profits
		Result: Adopted and distributed on 23 July, 2018.
		Amendment to the Company's Corporate Charter (Articles of
		Incorporation)
		Result: Passed and published meeting minutes on MOPS
		Amendment to the Procedures for Election of Directors
		Result: Passed and published meeting minutes on MOPS
		Amendment to the Rules of Procedure for Shareholder Meetings
		Result: Passed and published meeting minutes on MOPS
		Amendment to the Operational procedures for Acquisition and Disposal
		of Assets
		Result: Passed and published meeting minutes on MOPS
		Amendment to the Operational Procedures for Endorsements and
		Guarantees
		Result: Passed and published meeting minutes on MOPS
		Amendment to the Operational Procedures for Loaning of Company
		Funds
		Result: Passed and published meeting minutes on MOPS
		Approving revocation Supervisor Terms of Reference
		Result: Passed and published meeting minutes on MOPS
		Approving of all Directors re-election
		Result: Passed and published meeting minutes on MOPS
		Proposal of Release the Prohibition on Directors from Participation in
		Competitive Business
		Result: Passed and published meeting minutes on MOPS
107.06.08	Board Meeting	Approving selection of Chairman and Vice Chairman
107.06.19	Board Meeting	Setting July 23, 2018 as the record date for common stock shareholders
		entitled to participate in distribution of 2017 profits in the form of cash
		dividend
		Approving appointment of members of the Audit Committee
		Approving amendment to Remuneration Committee Charter
		Approving appointment of members of Remuneration Committee
		Approving hire consultant for the Board of Directors
		Approving renewal of the credit line from Mizuho Bank, Ltd., HSBC
		(Taiwan), The Export-Import Bank of the Republic of China, Taipei Fubon
		Commercial Bank Co., Ltd.
107.07.27	Board Meeting	 Approving the consolidated financial statement of Q2 2018
		 Approving amendment to the Procedures of Internal major information
		processing
		 Approving amendment to the Procedures of Apply for suspension and
		resume the transaction
		 Approving amendment to the Rules and Procedures of Board of Directors
		Meetings
		 Approving amendment to the duty of Independent director
		 Amendment to the Company's Corporate Charter (Articles of
		Incorporation)
		 Approving renewal of the credit line from Far Eastern International Bank
		and Taishin International Bank Co., Ltd.
		 Approving renewal of the Financial Derivatives Taishin International Bank
		Co., Ltd.
		 Approving set up a new branch in the UK, SINBON ELECTRONICS CO., LTD
		UK BRANCH
		 Approving the subsidiary company, Enmagic Jiangsu Energy Co., Ltd. set
		up the new subsidiary company, Enmagic Kunshan Energy Technology Co.,

• 37 -

		Ltd.
		 Approving the project of the subsidiary company Beijing SINBON Tongan
		change the company type
		 Approving the Investment structure change of the subsidiary company
		between Beijing SINBON Tongan and Beijing SINBON
107.10.25	Board Meeting	 Approving the consolidated financial statement of Q3 2018
		 Approving 2019 Audit planning
		 Approving the renewal of new stock base date of Bondholders for the 6th
		Issued Domestic Secured Convertible Corporate Bonds
		 Approving renewal of the credit line Mizuho Bank, Ltd., United Bank
		Company Limited, Land Bank Of Taiwan Co., Ltd., Shin Kong Bank, CTCB
		and HSBC (China)
		 Approving the capital increase for the subsidiary company, T-conn
		Precision Co., Ltd.
		 Approving amendment to Remuneration Committee Charter
		 Approving the subsidiary company, Beijing SINBON Tongan’s Retained
		Earnings transferred to Capital
107.11.26	Board Meeting	 Approving renewal of the credit line from DBS (Taiwan), DBS (China), Far
		Eastern International Bank
		 Approving adjustment of the company's investment structure in Europe
		 Approving dispose of Japan SINBON Electronics Co., Ltd. Shares
		 Approving investment of the private placement of common shares of
		Nextronics Engineering Corp.
		 Approving surplus USD$1.1million to a capital increase for the subsidiary
		company, SINBON USA
108.03.14	Board Meeting	 Approving the Employee compensation and directors' compensation of
		2018
		 Approving the consolidated financial statement and individual financial
		statements of 2018
		 Approving the profit allocation plan of 2018
		 Approving the Statement of Compliance of Internal Control System
		Compliance of 2018
		 Approving the Business Plan 2019
		 Approving the assessment results of CPA independency: Complied
		 Approving amendment to Remuneration Committee Charter
		 Approving the remuneration for new vice VP of the company
		 Approving the remuneration package for new marketing director and
		associate director
		 Approving appointment of members of Remuneration Committee
		 Approving nomination and election director and Independent director
		 Approving the renewal of new stock base date of Bondholders for the 6th
		Issued Domestic Secured Convertible Corporate Bonds
		 Approving renewal of the credit line from HSBC (China)
		 Approving amendment to the Operational procedures for Acquisition and
		Disposal of Assets
		 Approving amendment to the Rules and Procedures of Board of Directors
		Meetings
		 Approving amendment to Procedures for Lending Funds to Others.
		 Approving amendment to the Operational Procedures for Endorsements
		and Guarantees
		 Approving amendment to the Company's Corporate Charter (Articles of
		Incorporation)
		 Proposal of Release the Prohibition on Directors from Participation in
		Competitive Business
		 Approving the agenda and relevant affairs of the annual shareholders’
		meeting of 2019
108.04.19	Board Meeting	 Approving the consolidated financial statement of Q1 2018
		 Review Director nominations and proposals of shareholders' meeting

• 38 -

• Formulating the principle of issuing souvenirs to shareholders of shareholders

• Approving renewal of the credit line from CTCB and Land Bank of Taiwan

• Approving the renewal of new stock base date of Bondholders for the 6th Issued Domestic Secured Convertible Corporate Bonds

• Approving t Beijing SINBON Tongan Capital Increased by Cash for employee stock purchase plan

• 3.4.12. Summary of opinion difference in major resolutions at the board meeting between directors or supervisors in the last year and by the report publishing date with written records or statements: None.

• 3.4.13. Resignation and relief of relevant roles (including the organization chairman, president, accounting officer, financial officer, chief internal auditor, and R&D officer) in the last year and by the report publishing date:

Summary of Resignation or Relief of Relevant Roles

				April 30,2019
Title	Name	Inaugural Date	Relief Date	Reasons for Resignation or Relief
Vice President	Zhen-Xing Chen	May 08, 2006	Feburary 28, 2019	Retirement

Note: Relevant roles refer to organization chairman, president, accounting officer, financial officer, chief internal auditor, and R&D officer.

3.5. Accountant Service Fees:

• 3.5.1. Disclose the amount of the audit and non-audit service fees and content of non-audit services when the amount of non-audit service fees paid to CPAs, their firms and affiliates for is over a quarter of the audit service fees: The amount of the audit and non-audit service fees and content of non-audit services of the Company are disclosed as follows:

	Expressed in Thousands of NTD	Expressed in Thousands of NTD
CPA Firm	Ernst & YoungTaiwan
Name of CPA(1)	Tzu-PingHuang
Name of CPA(2)	Hong-KuangLin
Audit Service Fee	4,900
Non-audit Service Fee	System Design	0
	Registration	0
	Human Resources	0
	Others2	600
	Subtotal	600
Does the audit period cover an entire accounting year?	Coverage	Yes
	Auditperiod	2018

• 3.5.2. Disclose the amount and proportion reduced and reasons when there is a change of CPA firm that the audit service fee is lower than the year before the CPA change: None.

• 3.5.3. Disclose the amount and proportion reduced and reasons when the audit service fee is fifteen percent less than last year: None.

• 39 -

	CPA Service Fee Interval	CPA Service Fee Interval
CPA Firm	Name of CPAs		Audit Period	Remarks
Ernst & YoungTaiwan	Tzu-PingHuang	Hong-KuangLin	2018	-

Note: If there is a CPA or CPA firm change in this year, please specify their audit periods and remark the reasons for change.

Expressed in Thousands of NTD

	Audit Service Fee	Non-Audit Service Fee	Total
Under 2,000		600	600
2,000(incl.)-4,000
4,000(incl.)-6,000	4,900		4,900
6,000(incl.)-8,000
8,000(incl.)-10,000
10,000 and over

CPA Service Fee

			CPA	Service Fee	Service Fee	Service Fee	Service Fee
				Expressed in				Thousands of NTD
CPA Firm	CPAs	Audit Service		Non-Audit Service				Audit Period	Remarks
			System Design3	Official Registration	Human Resources	Others2	Subtotal
Ernst & Young Taiwan	Tzu-PingHuang	4,900	-	-	-	600	600	2018	Other is CSR report
	Hong-Kuang Lin							2018

1If there is a CPA or CPA firm change in this year, please specify their audit periods, remark the reasons for change, and disclose the amount of audit and non-audit service fees and the content of non-audit services in order.

2List all non-audit service items; if the amount of “others” shares 25% of all non-audit service fee, specify them in the Remarks.

3The system design service fee refers the non-audit service fee for changing to IFRSs.

3.6. CPA Change Information

3.6.1. Information of Previous CPAs

Date of change	N/A	N/A	N/A	N/A	N/A
Reasons for change	N/A
Reasons for termination or rejection of assignment of the client or CPA.	Partyinvolved			CPA	Client
	Voluntarytermination of assignment			N/A	N/A
	Rejection of assignment			N/A	N/A
Comments and reasons for issuing audit reports without comments in last twoyears.	N/A
Different opinion with report issuer.	Yes	N/A	Accounting principles orpractices
		N/A	Financial statement disclosures
		N/A	Audit range orprocedures
		N/A	Others
	No	N/A
	Reasons: N/A
Other disclosures	N/A

• 40 -

3.6.2. Information Succession CPAs

3.6.2. Information Succession CPAs
CPA Firm	N/A
CPA	N/A
Assignment date	N/A
Consultation of possible certification comments and outcomes of the accounting methods or accounting principles and financial statements for specific transactions before assignment	N/A
Written comments of opinion difference between the succession CPA andpast CPA.	N/A

• 3.6.3. Past CPA’s replies to item 1 and item 2-3 of paragraph 5 of Article 10 of this code: N/A.

• 3.7. Disclose the name, title, and the period of service at the CPA firm or its affiliates if a director, the president, financial officer or accounting officer of the Company has worked at the CPA firm or its affiliates in the last year: N/A.

• 3.8. Share transfer and share mortgage of directors, supervisors, executives, and shareholders holding over 10% of shares in the last year and by the report publishing date:

3.8.1. Share transfer of directors, supervisors, executives, and major shareholders:

Unit: shares

		2018	2018	Until April08	ofcurrent year
		Increase	Increase	Increase	Increase
Title	Name	(reduction) of shares held	(reduction) of shares mortgaged	(reduction) of shares held	(reduction) of shares mortgaged
Chairman	Joseph Wang	3,000,000	-	-	-
Director	Xin-chi Yeh	-	-	-	-
Director	ArgosyResearch	-	-	-	-
Representative of Director	Chao-Liang Wang	-	-	-	-
Director	Wei-MingLiang	-	(114,908)	-	-
Director	Tai-Yi Investment Co.,Ltd.	-	(1,000,000)	-	-
Representative of Director	Wei-Chun Wang	-	-	-	-
Director	Kuo-Shian Investment Co.,Ltd.	-	(200,000)	-	-
Representative of Director	Kuo-Hong Wang	-	-	-	-
Independent Director	Chi-Lin Wei	-	-	-	-
Independent Director	Zheng-Yan Chang	-	-	-	-
Vice President	Wen-Sen Huang	-	(60,000)	-	-
Vice President	Jun-Yu Chen	(440)	-	-	-
Director	PingLi	-	-	-	-
Director	Jia-Zhi Hsu	2,000	-	-	-
Director	Li-Li Huang	-	-	-	-
Director	Jun-QiangWang	-	-	-	-
Director	Cheng-LingLi	-	-	-	-
Director	Xiu-Sui Lin	-	-	-	-
Director	Yun-Ru Huang	-	-	-	-

• 41 -

		2018	2018	Until April08	ofcurrent year
		Increase	Increase	Increase	Increase
Title	Name	(reduction) of shares held	(reduction) of shares mortgaged	(reduction) of shares held	(reduction) of shares mortgaged
Director	Xin-Chun Wu	-	-	-	-
Director	Jin-ZongHuang	-	-	-	-
Director	Pei-LingHuang 3	-	-	-	-
Ass.Director	Hao-Min Hsu	-	-	-	-
Ass. Director	Jin-Ze Zheng	-	-	-	-
Ass. Director	Bing-ChenSong	-	-	-	-
Ass. Director	Kong-De Yang	-	-	-	-
Ass. Director	Min-ZhengLin	-	-	-	-
Ass. Director	Jia-QingLin	-	-	-	-
Ass. Director	Ya-Hui Guo	(2,000)	-	-	-
Ass. Director	Kui-Zhen Feng	-	-	-	-
Ass. Director	Pin-Jen Chen	-	-	-	-
Ass. Director	Chien-MingHuang	-	-	-	-
Ass. Director	Hsing-Hsiu Kuo	-	-	-	-
Ass. Director	Kuo-HungChen	-	-	-	-
CFO	Chi-Chou Chang	-	(64,000)	-	-

1Shareholders holding over 10% of shares are considered as major shareholders (no shareholders of the Company holds over 10% of shares of the Company.)

2List the counterparty of share transfer or share mortgage in the table below.

3 Resigned on May 31, 2019.

3.8.2. Share Transfer Information

Name	Reasons for Transfer	Transaction Date	Transaction Counterparty	Relationship between the transaction counterparty and the Company, directors, supervisors, and shareholders holdingover 10% of shares	Shares	Transaction Price
N/A

3.8.3. Share Mortgage Information

Name1	Reasons for Pledge2	Change Date	Transaction Counterparty	Relationship between the transaction counterparty and the Company, directors, supervisors, and shareholders holding over 10% ofshares	Shares	Shares Held (%)	Pledge Rate (%)	Pledge (redemption ) amount (NT$1,000)
Wei-Ming Liang	Redemption	May 31, 2018	CTBC Bank Co., Ltd.	No	114,908	0.44%	39.39%	N.A.
Wen-Sen Huang	Redemption	May 30, 2018	CTBC Bank Co., Ltd.	No	60,000	0.10%	43.36%	N.A.
Chi-Chou Chang	Redemption	May 30, 2018	CTBC Bank Co., Ltd.	No	64,000	0.10%	44.37%	N.A.
Tai-Yi Investment Co.,Ltd.	Redemption	June 05, 2018	CTBC Bank Co., Ltd.	No	1,000,000	1.80%	12.10%	N.A.
Kuo-Shian Investment Co.,Ltd.	Pledge	January 10, 2018	First Bank	No	1,000,000	1.05%	41.40%	N.A.

• 42 -

Pledge	February 22, 2018	Taishin Bank	No	1,000,000	1.05%	41.40%	N.A.
Redemption	June 26, 2018	First Bank	No	1,000,000	1.05%	41.40%	N.A.
Pledge	November 28, 2018	KGI Securities Co., Ltd.	No	800,000	1.05%	33.12%	N.A.

1Fill in the name of directors, supervisors, and executives of the Company.

2Fill in pledge or redemption.

3.9. Information of Top Ten Shareholders Who Are Interested Parties, Spouse, Relatives within Second Degree

Top Ten Shareholders Who Are Interested Parties

Name1	Shares held by own party	Shares held by own party	Shares held by spouse or minor children	Shares held by spouse or minor children	Shares held under the name of others	Shares held under the name of others	The name and relationship of top ten shareholders who are interested parties, spouse, relatives within second degree3	The name and relationship of top ten shareholders who are interested parties, spouse, relatives within second degree3	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relationship
Fubon Life Insurance Co.,Ltd.	13,500,167	5.89%	0	0.00%	0	0.00%	N/A	N/A
US JP Morgan Chase Bank Taipei Branch entrusted custody of T. Luo Pai Si International Exploration Fund Investment Account	8,498,387	3.71%	0	0.00%	0	0.00%	N/A	N/A
Joseph Wang	7,508,062	3.28%	2,131,236	0.93%	0	0.00%	Representative of Tai-Yi Investment Co.,Ltd.	Father and son
Deutsche Bank Deutsche Bank Taipei Branch entrusted with the Brei Global Fund - Berri Asia Japan Excluding Small Companies Equity Funds	6,624,000	2.89%	0	0.00%	0	0.00%	N/A	N/A
US JP Morgan Chase Bank Taipei Branch entrusted custody of Columbia Aiken Trust belong to Columbia Aiken international Fund Investment Account	5,740,000	2.51%	0	0.00%	0	00.0%	N/A	N/A
HSBC Managed HSBCGIF Asia Small Business Except Japan	4,893,547	2.14%	0	0.00%	0	0.00%	N/A	N/A
American Merchants Morgan Chase Bank Taipei Branch Entrusted with the Investment Account of the Scottish Orient Small Business Trust Company	4,303,000	1.88%	0	0.00%	0	0.00%	N/A	N/A

• 43 -

Name1	Shares held by own party	Shares held by own party	Shares held by spouse or minor children	Shares held by spouse or minor children	Shares held under the name of others	Shares held under the name of others	The name and relationship of top ten shareholders who are interested parties, spouse, relatives within second degree3	The name and relationship of top ten shareholders who are interested parties, spouse, relatives within second degree3	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relationship
HSBC Trustee First Domain Investment Company - First Land Greater China Growth Fund Investment Account	4,167,181	1.82%	0	0.00%	0	0.00%	N/A	N/A
Tai-Yi Investment Co., Ltd.	4,130,572	1.80%	0	0.00%	0	0.00%	Joseph Wang	Father and son
Wei-Chun Wang Representative of Tai-Yi Investment Co.,Ltd.	1,159,158	0.51%	628,812	0.27%	0	0.00%
Argosy Research	3,806,421	1.66%	0	0.00%	0	0.00%	N/A	N/A
Cao-Liang Wang Representative of ArgosyResearch	311,388	0.14%	0	0.00%	0	0.00%

1List all top ten shareholders, a legal person shareholder shall list the name of the legal person shareholder and the name of the representative separately.

2Share-holding percentage is calculated by the percentage of shares held by own persons, spouse, minor children, and under other’s name. 3The relationship with the said shareholders, including corporations and natural persons, must be disclosed with reference to the Regulations Governing the Preparation of Financial Reports by Securities Issuers

3.10. Consolidated Percentage of Shares Held of Re-Invested Enterprises by the Company, Directors, Supervisors, Executives, or Enterprises under Direct/Indirect Control of the Company

	December 31,2018	December 31,2018	December 31,2018	December 31,2018	December 31,2018	December 31,2018
Re-Invested Enterprise1	Company Investment		Investments by the Company, Directors, Supervisors, Executives, or Enterprises under Direct/ Indirect Control of the Company2		Consolidated Investments
	Shares	%	Shares	%	Shares	%
SINBON International Enterprise Co., Ltd	-	100.00%	-	-	-	100.00%
SINBON Beijing	-	100.00%	-	-	-	100.00%
SINBON Hong Kong	-	100.00%	-	-	-	100.00%
Guanze Co., Ltd.	23,560,000	100.00%	-	-	23,560,000	100.00%
Top Taiwan Venture Investment	2,240,000	20.00%	-	-	2,240,000	20.00%
Super Elite Ltd.	-	64.48%	-	-	-	64.48%
Argosy Research	2,945,034	3.59%	14,624,200	17.81%	17,569,234	21.40%
Beijing SINBON Tongan Electronics	-	100.00%	-	-	-	100%
SINBON USA L.L.C	-	100.00%	-	-	-	100.00%
Radbon Avionics Inc.	3,300,000	55.00%	-	-	3,300,000	55.00%
SINBON Europe GmbH	-	100.00%	-	-	-	100.00%
T-Conn Precision Co., Ltd.	-	62.52%	-	-	-	62.52%

1Investments by the equity method.

2Investments in Guanze.

3Items marked by “-”, “0”, N/A, or none; except for items with Remarks.

• 44 -

4. Fundraising

4.1. Capital and Shares

4.1.1. Capitalization

Month/Year	Issue Price	Authorized Shares/Capital	Authorized Shares/Capital	Capital Stock	Capital Stock	Remarks
		Shares (1K)	Amount (NT$1K)	Shares (1K)	Amount (NT$1K)	Sources of Capital (NT$1K)	Non-cash Capital Increase (NT$1K)	Others (NB)
Dec. 1989	10	500	5,000	500	5,000	Establishment with cash at 5,000.	None	N/A
Jun. 1991	10	1,300	13,000	1,300	13,000	Cash capital increase at 6,000.	Shareholder	N/A
							transactions
							at 2,000.
Dec. 1994	10	2,900	29,000	2,900	29,000	Cash capital increase at 5,000.	Liability	N/A
							11,000.
Sep. 1995	10	9,900	99,000	9,900	99,000	Cash capital increase at 70,000.	None	N/A
Dec.1997	10	19,800	198,000	19,800	198,000	－	Consolidated	N/A
							increase
							99,000.
Sep. 1998	10	50,000	500,000	30,000	300,000	Cash capital increase at 64,560. Amortization of premiums at 11,880. Capital surplus transferred to capital at 23,760. New share issue through capitalization of employee bonus at 1,800.		1
							None
Sep. 1999	10	50,000	500,000	40,000	400,000	Cash capital increase at 37,000. Amortization of premiums at 30,000. Capital surplus transferred to capital at 30,000. New share issue through capitalization of employee bonus at 3,000.		2
							None
Jul. 2000	10	50,000	500,000	46,800	468,000	Amortization of premiums at 44,000. Capital surplus transferred to capital at 16,000. New share issue through capitalization of employee bonus at 8,000.		3
							None
Nov. 2000	10	50,000	500,000	50,000	500,000	Cash capital increase at 32,000.	None	4
Jun. 2001	10	90,000	900,000	61,500	615,000	Amortization of premiums at 100,000. New share issue through capitalization of employee bonus at 15,000.		5
							None
Mar. 2002	10	150,000	1,500,000	70,798	707,981	Conversion with convertible bonds at 92,981.	None	6
Aug. 2002	10	150,000	1,500,000	88,213	882,132	Amortization of premiums at 141,596. New share issue through capitalization of employee bonus at 20,000. Conversion with convertible bonds at 12,555.		7
							None
Oct. 2002	10	150,000	1,500,000	89,849	898,489	Conversion with convertible bonds at 16,357.	None	6
Oct. 2002	10	150,000	1,500,000	90,028	900,279	Conversion with convertible bonds at 1,790.	None	8
Jan. 2003	10	150,000	1,500,000	90,455	904,554	Conversion with convertible bonds at 4,275.	None	6
Mar. 2003	10	150,000	1,500,000	90,578	905,780	Conversion with convertible bonds at 1,226.	None	6
Jun. 2003	10	190,000	1,900,000	100,336	1,003,358	Amortization of premiums at 17,516. New share issue through capitalization of employee bonus at 10,000. Capital surplus transferred to capital at 70,062.		9
							None
Aug. 2003	10	190,000	1,900,000	101,700	1,016,997	Conversion with convertible bonds at 13,638.	None	6
Sep. 2003	10	190,000	1,900,000	101,797	1,017,971	Conversion with convertible bonds at 974.	None	6
Jul. 2004	10	190,000	1,900,000	106,797	1,067,969	Amortization of premiums at 45,999. New share issue through capitalization of employee bonus at 4,000.		10
							None
Aug. 2004	10	190,000	1,900,000	107,010	1,070,103	Conversion with convertible bonds at 2,134.	None	6
Jul. 2005	10	240,000	2,400,000	131,970	1,319,695	Amortization of premiums at 230,016. Capital surplus transferred to capital at 19,576.		11
							None
Aug. 2005	10	240,000	2,400,000	146,281	1,462,811	Conversion with convertible bonds at 143,115.		6
							None
Nov. 2005	10	240,000	2,400,000	150,139	1,501,392	Conversion with convertible bonds at 38,581.	None	6

• 45 -

Month/Year	Issue Price	Authorized Shares/Capital	Authorized Shares/Capital	Capital Stock	Capital Stock	Remarks	Remarks
		Shares (1K)	Amount (NT$1K)	Shares (1K)	Amount (NT$1K)	Sources of Capital (NT$1K)	Non-cash Capital Increase (NT$1K)	Others (NB)
Jul. 2006	10	240,000	2,400,000	157,646	1,576,462	Capital surplus transferred to capital at 75,070.		12
							None
Jun. 2007	10	450,000	4,500,000	176,563	1,765,636	Amortization of premiums at 157,646. Capital surplus transferred to capital at 31,529.		13
							None
Jun. 2008	10	450,000	4,500,000	185,291	1,852,919	Amortization ofpremiums at 87,282.	None	14
Nov. 2010	10	450,000	4,500,000	185,796	1,857,962	Conversion with convertible bonds at 5,043.	None	15
Apr. 2011	10	450,000	4,500,000	183,796	1,837,962	Capital reduction by mature stock repurchases at 20,000, base date on 25 May 2011.		16
							None
Aug. 2011	10	450,000	4,500,000	182,666	1,826,662	Capital reduction by mature stock repurchases at 11,300, base date on 20 August 2011.		16
							None
Nov. 2011	10	450,000	4,500,000	179,516	1,795,162	Capital reduction by mature stock repurchases at 31,500, base date on 11 November 2011.		16
							None
May. 2012	10	450,000	4,500,000	180,887	1,808,865	Conversion with convertible bonds at 13,704.	None	17
Jul. 2012	10	450,000	4,500,000	180,928	1,809,282	Conversion with convertible bonds at 417.	None	17
Nov. 2012	10	450,000	4,500,000	200,015	2,000,155	Conversion with convertible bonds at 190,873.		17
							None
Apr. 2013	10	450,000	4,500,000	207,671	2,076,709	Conversion with convertible bonds at 76,554.	None	17
May. 2015	10	450,000	4,500,000	207,956	2,079,563	Conversion with convertible bonds at 2,854.	None	18
Aug. 2015	10	450,000	4,500,000	211,109	2,111,090	Conversion with convertible bonds at 31,528	None	18
Sep. 2015	10	450,000	4,500,000	215,262	2,152,625	Capital surplus transferred to capital at 41,534	None	19
Nov. 2015	10	450,000	4,500,000	215,830	2,158,298	Conversion with convertible bonds at 5,674	None	18
Mar. 2016	10	450,000	4,500,000	217,645	2,176,454	Conversion with convertible bonds at 18,155	None	18
May. 2016	10	450,000	4,500,000	217,934	2,179,342	Conversion with convertible bonds at 2,888	None	18
Aug. 2016	10	450,000	4,500,000	217,958	2,179,585	Conversion with convertible bonds at 243	None	18
Sep. 2016	10	450,000	4,500,000	224,495	2,244,949	Capital surplus transferred to capital at 65,364	None	20
Nov. 2016	10	450,000	4,500,000	224,607	2,246,068	Conversion with convertible bonds at 1,119	None	18
Mar. 2017	10	450,000	4,500,000	225,416	2,254,161	Conversion with convertible bonds at 8,093	None	18
Nov. 2018	10	450,000	4,500,000	225,727	2,257,273	Conversion with convertible bonds at 3,112	None	21
Mar. 2019	10	450,000	4,500,000	226,695	2,266,954	Conversion with convertible bonds at 9,681	None	21
Apr. 2019	10	450,000	4,500,000	229,075	2,290,745	Conversion with convertible bonds at 23,791	None	21

NB 1: Approved by Letter (87) FSC no.(1) 47522 issued by the Securities and Futures Commission, Ministry of Finance, on 6 June 1998.

NB 2: Approved by Letter (88) FSC no.(1) 56082 issued by the Securities and Futures Commission, Ministry of Finance, on 20 June 1999.

NB 3: Approved by Letter (89) FSC no.(1) 58816 issued by the Securities and Futures Commission, Ministry of Finance, on 7 July 2000. NB 4: Approved by Letter (89) FSC no.(1) 81883 issued by the Securities and Futures Commission, Ministry of Finance, on 2 October 2000.

• NB 5: Approved by Letter (90) FSC no.(1) 123711 issued by the Securities and Futures Commission, Ministry of Finance, on 7 May 2001. NB 6: Approved by Letter (90) FSC no.(1) 166362 issued by the Securities and Futures Commission, Ministry of Finance, on 9 November 2001.

NB 7: Approved by Letter (91) FSC no.(1) 0910139537 issued by the Securities and Futures Commission, Ministry of Finance, on 16 July 2002.

• NB 8: Approved by Letter (91) FSC no.(1) 0910133858 issued by the Securities and Futures Commission, Ministry of Finance, on 27 June 2002.

• NB 9: Approved by Letter (92) FSC no.(1) 0920126156 issued by the Securities and Futures Commission, Ministry of Finance, on 13 June 2003.

• NB 10: Approved by Letter (93) FSC no.(1) 0930121806 issued by the Securities and Futures Commission, Ministry of Finance, on 18 May 2004.

• NB 11: Approved by Letter FSC no.(1) 0940119716 issued by the Financial Supervisory Commission, Executive Yuan, on 18 May 2005.

• NB 12: Approved by Letter FSC no.(1) 0950130935 issued by the Financial Supervisory Commission, Executive Yuan, on 17 July 2006.

• NB 13: Approved by Letter FSC no.(1) 0960032589 issued by the Financial Supervisory Commission, Executive Yuan, on 28 June 2007.

• NB 14: Approved by Letter FSC no. (1) 0970033372 issued by the Financial Supervisory Commission, Executive Yuan, on 4 July 2008.

• NB 15: Approved by Letter FSC no. (1) 0990018240 issued by the Financial Supervisory Commission, Executive Yuan, on 4 May 2010.

• NB 16: Cancelled with reference to Article 28-2 of the Securities and Exchange Act.

• NB 17: Approved by Letter FSC no. 090018240 issued on 4 May 2010 and Letter FSC no. 1000060425 issued on 21 December 2011 by the Financial Supervisory Commission, Executive Yuan.

• NB 18: Approved by Letter FSC no. 1030017865 issued by the Financial Supervisory Commission, on 26 May 2014.

• NB 19: Approved by Letter FSC no. 104002851 issued by the Financial Supervisory Commission, on 28 July 2015.

• NB 20: Approved by the Financial Supervisory Commission, on 18 July 2016.

• NB 21: Approved by Letter FSC no. 1060014871 issued by the Financial Supervisory Commission, on 10 May 2017.

• 46 -

Unit: Shares

				Unit: Shares
Share Type	Authorized Shares/Capital			Remarks
	Externally circulated shares1	Unissued Shares	Total
Common Share	Listed shares 229,074,519	220,925,481	450,000,000	30,000,000 shares were reserved for subscription warrant, preferred shares with warrants, or exercise of subscription right conversion of equity warrant bonds.

1Please specify stock status: listed or OCT-listed (remark stocks restricted from public offering or OTC trade).

4.1.2. Shareholder structure

4.1.2. Shareholder structure
	08 April,201
Shareholder Structure	Amount	Shares Held	Percentage
Government Agencies	4	2,409,510	1.05 %
Financial Institutions	53	27,226,799	11.88 %
Other Corporations	180	14,399,362	6.29 %
Foreign Institutions and Individuals	243	110,390,706	48.19 %
Individuals	37,126	74,652,483	32.59 %
Others	0	0	0.00 %
Subtotal	37,606	229,078,860	100.00 %

4.1.3. Share distribution

1.3. Share distribution	1.3. Share distribution	1.3. Share distribution	1.3. Share distribution
08 April,2019 Shares Held Grading Number of Shareholders Shares Held Percentage 1 ~ 999 1,000 ~ 5,000 5,001 ~ 10,000 10,001 ~ 15,000 15,001 ~ 20,000 20,001 ~ 30,000 30,001 ~ 40,000 40,001 ~ 50,000 50,001 ~ 100,000 100,001 ~ 200,000 200,001 ~ 400,000 400,001 ~ 600,000 600,001 ~ 800,000 800,001 ~ 1,000,000 1,000,001 ~999,999,999 Above 1,000,000,000 28,979 6,433 908 414 161 199 97 66 116 85 56 20 19 8 45 0 1,052,121 11,800,122 6,394,987 4,896,411 2,820,918 4,807,933 3,358,187 2,917,328 8,201,335 11,874,842 16,163,120 10,323,791 13,075,699 6,944,036 124,448,030 0 0.46 % 5.15 % 2.79 % 2.14 % 1.23 % 2.10 % 1.47 % 1.27 % 3.58 % 5.18 % 7.06 % 4.51 % 5.70 % 3.03 % 54.33 % 0.00 % Total 37,606 229,078,860 100.00 %
	Number of Shareholders	Shares Held	Percentage
	28,979 6,433 908 414 161 199 97 66 116 85 56 20 19 8 45 0	1,052,121 11,800,122 6,394,987 4,896,411 2,820,918 4,807,933 3,358,187 2,917,328 8,201,335 11,874,842 16,163,120 10,323,791 13,075,699 6,944,036 124,448,030 0	0.46 % 5.15 % 2.79 % 2.14 % 1.23 % 2.10 % 1.47 % 1.27 % 3.58 % 5.18 % 7.06 % 4.51 % 5.70 % 3.03 % 54.33 % 0.00 %
	37,606	229,078,860	100.00 %

4.1.4. List of major shareholders

1.4. List of major shareholders
Shares Major Shareholder	Shares Held	Percentage
Fubon Life Insurance Co.,Ltd.	13,500,167	5.89%
US JP Morgan Chase Bank Taipei Branch entrusted custody of T. Luo Pai Si International Exploration Fund Investment Account	8,498,387	3.71%
Joseph Wang	7,508,062	3.28%

• 47 -

Shares Major Shareholder	Shares Held	Percentage
Deutsche Bank Deutsche Bank Taipei Branch entrusted with the Brei Global Fund - Berri Asia Japan Excluding Small Companies EquityFunds	6,624,000	2.89%
US JP Morgan Chase Bank Taipei Branch entrusted custody of Columbia Aiken Trust belong to Columbia Aiken international Fund Investment Account	5,740,000	2.51%
HSBC Managed HSBCGIF Asia Small Business Except Japan	4,893,547	2.14%
American Merchants Morgan Chase Bank Taipei Branch Entrusted with the Investment Account of the Scottish Orient Small Business Trust Company	4,303,000	1.88%
HSBC Trustee First Domain Investment Company - First Land Greater China Growth Fund Investment Account	4,167,181	1.82%
Tai-Yi Investment Co.,Ltd.	4,130,572	1.80%
ArgosyResearch	3,806,421	1.66%

4.1.5. Market price per share, net value per share, equity per share, dividends per share and relevant information in last two years

Item	Year	Year	Year	2017	2018	By 31 Mar. 20198
Market price per share1	Highest			92.20	92.40	113
	Lowest			67.20	74.80	79.70
	Average			75.83	82.73	96.35
Net value per share2	Before distribution			26.99	28.99	31.56
	After distribution			22.99	Undistributed	Undistributed
EPS	Weighted average(shares)			225,416,000	225,685,000	227,639,000
	EPS3		Adjusted	5.44	6.26	1.6
			Unadjusted	5.44	Undistributed	Undistributed
Dividends per share	Cash dividends			4.00	4.50	Undistributed
	Dividends for capital surplus			-	-	Undistributed
	Stock Grants	Stock dividends from retained earnings		-	-	Undistributed
		Stock dividends from capital surplus		-	-	Undistributed
	Accumulative undistributed dividends4			-	-	Undistributed
ROI	Price/Earnings Ratio5			13.94	13.22	57.00
	Price/Dividends Ratio6			18.96	18.38	Undistributed
	Cash Dividends Yield7			5.27%	5.44%	Undistributed

*When distributing dividends with earnings or capital surplus transferred to capital, disclose the information of market price and cash dividends adjusted with reference to the number of shares distributed.

1List the highest and lowest market prices each year and calculate the average market price based on the transaction value and transaction volume each year.

2Fill in the distribution resolved at the shareholders’ meeting in the following year based on the number of shares issued by the end of year.

3Where back adjustment was made for stock grants, list the adjusted and unadjusted EPS.

4Where “undistributed dividends of the year can be accumulated for distribution until the year with profit” is specified for the issue of equity securities, disclose the accumulative undistributed dividends by the end of the year.

5Price/Earnings Ratio=Average Market Price/ Diluted Earnings per Share

6Price/Dividends Ratio = Average Market Price/Cash Dividends per Share

7Cash Dividends Yield = Cash Dividends per Share/Average Market Price

• 48 -

8Disclose the information by the last quarter of report publishing date audited (reviewed) by a CPA for the net value per share and EPS, and fill in the information of the year by the report publishing date for other columns.

• 4.1.6. Dividends policy and implementation

• (1) Dividends policy:

  • The Company shall, when the general final accounting of the fiscal year shows a earning, after having paid all taxes and dues and made adjustments in accordance with the Financial Accounting Standards, first have its losses been covered. At the time of allocating surplus profits, first set aside ten percent of such profits as a legal reserve. However, when the legal reserve amounts to the authorized capital, this shall not apply. It shall set aside or reverse another sum as special reserve in accordance with the regulation. The remaining balance, if any, plus the accumulated retained earnings of prior years as accumulated distributable earnings, except for retaining part or all of the amount depending on business conditions, and resolved in the shareholders’ meeting for shareholders’ dividends.

For long-term capital planning, the Company currently is in growth stage, so shareholders’ cash dividends shall not be less than 10% of total dividends.

In 2018 shareholder’s meeting, it will be modified to: The Company shall…The remaining balance, if any, plus the accumulated retained earnings of prior years as accumulated distributable earnings, except for retaining part or all of the amount depending on business conditions, at least 50% of the current year’s net income should be distributed.

• (2) Implementation dividends distribution planned at the annual shareholders’ meeting 2018 is as follows:

Dividends Type	Amount per Share	Source	Status
Cash dividends	4.00	Retained earnings 4.00	Distributed on 13 Aug.,2018
Stock dividends	0.00	N/A	N/A
Total	4.00

• 4.1.7. Effect of stock grants planned at current shareholders’ meeting on business performance and EPS

• (1) Effect on business performance: None.

• (2) Effect on EPS: None.

• 4.1.8. Employee profit sharing and remunerations for directors and supervisors

• (1) Percentage or range of employee profit sharing and remunerations for directors and supervisors specified in the articles of incorporation:

  • 1) 1% to 15% as employee bonus; and

  • 2) ot more than 3% as remuneration to directors and supervisors;

• 49 -

Prior years’ operation losses shall be reserved first.

Employees’ compensation including subsidiaries’ employees may be distributed through issuance of new shares of the Company or cash.

• (2) Bases for estimating employee profit sharing and remunerations for directors and supervisors this period, calculating stock sharing, and accounting solution for differences between actually distributed amount and estimated amount: No difference and all paid by cash.

• (3) Employee profit and remunerations for directors and supervisors information

passed by the board in this year:

passed bythe board in thisyear:	passed bythe board in thisyear:
Employeeprofits		i f	The percentage of stock
Cash	Stock	Remuneratons or directors and suervisors	profit in total employee
(NT$)	(NT$)	p (NT$)	profits and the percentage in earningafter tax
24,000,000	0	15,300,000	-

There are no differences between plan and actual distribution.

• (4) Distribution of employee profit and remunerations for directors and supervisors in last year:

in lastyear:	in lastyear:
Employeeprofits		Remunerations for directors and supervisors (NT$)	The percentage of stock profit in total employee profits and the percentage in earningafter tax
Cash (NT$)	Stock (NT$)
16,000,000	-	11,000,000	-

The above actual distributions are the same as the distribution planned by the board.

4.1.9. Repurchase of corporate shares

Repurchase of corporate shares	Repurchase of corporate shares
30 April,2018
Repurchase session	N/A
Repurchase objective	N/A
Repurchaseperiod	N/A
Repurchaseprice range	N/A
Types andquantityof repurchased shares	N/A
Amount of repurchased shares	N/A
Qualityof cancelled and transferred shares	N/A
Accumulativequantityof own corporate shares	N/A
Percentage of accumulativequantityof own corporate shares in totallyissued shares(%)	N/A

• 50 -

4.2. Corporate bonds

4.2.1. Corporate bonds

rporate bonds 1. Corporate bonds	rporate bonds 1. Corporate bonds
Corporate Bond Type2		Domestic Unsecured Convertible Bonds VI5
Issue date		June 8,2017
Face value		NT$100,000
Place of issue and transaction3		N/A
Issue Price		NT$100
Total amount		NT$500,000,000
Interest rate		0%
Expiry		3years,until June 8,2020
Guarantee organization		No.
Trustee		Taishin Bank
Underwritingagency		Taishin Securities
Certified lawyer		Kang-De Lu
CPA		Tzu-PingHuangand Hong-KuangLin
Reimbursement method		Principal in one time on expiry
Outstandingamount		NT$246,900,000
Redemption or advance reimbursement terms		As specified in Articles 18-19 of the issue and conversion regulations.
Restrictions4		N/A
Name of credit rating agency, rating date, and rating results		None
Other additional rights	Amount of converted (conversion or subscription) common stocks, GDRs, and other marketable securities by the report publishingdate	None
	Issue and conversion (exchange) regulations	None
Potential dilution of shares and effect on current shareholder equity of the issue, conversion, exchange, or subscription regulations,and issue conditions.		Current conversion price is NT$69.10. If all bonds transferred to stocks, EPS should be diluted by2.24%.
Name of depositoryorganization of exchanged stocks		N/A

1Corporate bonds are currently issued through public offering and private placement. Public offering means corporate bonds approved for issue by the FSC, while private placement means corporate bonds approved for issue by a board resolution. 2Adjust the number of columns according to the frequency of corporate bond issues. 3List out corporate bonds issued overseas.

4Such as restrictions on cash dividends distributions, external investments, and request of maintaining assets at a specific percentage.

5Highlight corporate bonds issued through private placement.

6Disclose the information of bonds by nature according to the format in the list. These bonds include convertible bonds, exchangeable bonds, self-registration bonds, and equity warrant bonds.

• 51 -

• 4.2.2. Convertible corporate bonds: Unissued convertible corporate bonds by the report publishing date:

Bond Type1		Fifth-time Domestic Unsecured Convertible Corporate Bonds	Fifth-time Domestic Unsecured Convertible Corporate Bonds
Item	Year	2018	Until 31 Mar. 20194
Market price of bonds2(NT$)	Highest	132.40	162.00
	Lowest	110.00	117.00
	Average	122.41	133.13
Conversionprice(NT$)		69.10	69.10
Issue date		8 June 2017
Conversion Price at issue (NT$)		76.60
Conversion obligation3		New issued shares

• 1Adjust the number of columns according to the frequency of corporate bond issues.

• 2List all overseas transaction places, if any.

• 3Delivered issued shares or new issued shares.

• 4Disclose the information of the year by the report publishing date.

4.3. Issue of preferred shares: N/A

4.4. Issue of GDR: N/A

4.5. Issue of certificates of employee stock subscription: N/A

4.6. Issue of employee restricted shares: N/A

4.7. Acquisition (including mergers, buyouts, and spin-offs): N/A

4.8. Items to be disclosed in capital utilization plans: N/A

• 52 -

5. Operation Overview

5.1. Business operations:

5.1.1. Scope of operations:

1. CC01080 Electronic parts and components manufacturing.

2. F119010 Wholesale of electronic materials.

3. CC01110 Computers and computing peripheral equipment manufacturing.

4. F113050 Wholesale of computing and business machinery equipment.

5. CC01030 Electric appliance and audiovisual electric products manufacturing.

6. F113020 Wholesale of household appliances.

7. CC01101 Restrained telecom radio frequency equipment and materials manufacturing.

8. F401021 Restrained telecom radio frequency equipment and materials import.

9. CC01060 Wired communication equipment and apparatus manufacturing.

10. CC01070 Wireless communication equipment and apparatus manufacturing.

11. F113070 Wholesale of telecom instruments.

12. CC01090 Batteries manufacturing.

13. F113110 Wholesale of batteries.

14. I501010 Product designing.

15. CF01011 Medical materials and equipment manufacturing.

16. F108031 Wholesale of drugs, medical goods.

17. CE01021 Metrological instruments manufacturing

18. F113060 Wholesale of metrological instruments.

19. IG03010 Energy Technical services

20. F401010 International Trade

21. ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.

5.1.2. Industry overview

Our Company specializes in the processing and manufacturing of cable assemblies as well as the distribution of connectors in Taiwan. Apart from the provision of integration, design and manufacturing services for electronic components, we are also the largest distributor in Asia for Hirose connector products. Hirose is one of the top 10 connector manufacturers in the world. Our products have a wide range of applications ranging from Medical Health, Automotive, Green Energy, Industrial Application and Communication, or "MAGIC" for short.

• a. Current state and developments of the industry:

• According to IEK Research, which provides a review on the export of Taiwan's connectors in 2017, we find from the export value of NT$15.8 billion that it has grown by 4.4% compared to 2016. This reflects the domestic companies gradually moving out of the rough period of transition and developing their businesses toward the field of high-end connectors. It is expected that the overall export value for connectors in the future will grow from NT$15.8 billion in 2017 to NT$17.2 billion in 2020.

• 53 -

With the simultaneous expansion of applications, technologies, regions, and products, the connectors industry is expected to reach NT$183.9 billion in output for the whole of 2018, which shows an expected growth of 2.5% compared to that of 2017, while continuing to demonstrate a steady market momentum. A foreseeable development under a steady growth rate may drive the output of the domestic connectors industry toward the NT$200 billion standards in the next two to three years, setting a new milestone for the next market development trend.

The future trends for AIoT technology will bring more opportunities and new technologies for the application of connectors. Among them, the major areas of application include 3C, automotive, and IoT.

In 3C application, the driving factor is the current demand for high-speed transmission in the communications industry. In automotive application, new technologies such as IoV, advanced automotive driver-assistance systems, and new energy vehicles are driving business opportunities for vehicle connectors, wiring harnesses, and electronic modules, with the terminal products including vehicle communication, power, and safety control systems. IoT application includes smart home appliances, smart healthcare, drones, smart warehousing, transport robots, and other new applications in industrial, medical, and warehousing sectors. All of the above are potential market demands for connectors.

b. Supply chain relationship:

SINBON not only a connector distributor but also provide cable assembly and PCBA design and processing services. We provide vertical integration service to our customers and able to supply bare cooper wires, plastics, electroplating materials, etc. Our company manufactures, sells, and distributes electronic component products with a wide range of applications. They can be separated into five major industries with the abbreviation of MAGIC.

Connector Supply Chain

==> picture [358 x 68] intentionally omitted <==

• c. Product development trends:

The electronic parts and components produced, sold and distributed by our Company are divided into the five main industries listed below and is known as MAGIC for short:

• 54 -

(1) Medical Health

Medical Health Global Medical Device Market

The global medical device market has shown steady growth in recent years, due to factors like population increases, ageing societies, emerging market expansion, and medical technology advancements. A report from BMI Research indicates that the global medical device market was valued at about US$359.8 billion in 2017. It is projected to grow to US$425.3 billion in 2020, with a compounded annual growth rate of 5.7% between 2017 and 2020. Amid these trends, market demand is primarily driven by a focus on basic healthcare facilities in developing countries as well as cross-interaction between ageing societies and new medical technology in developed countries.

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Looking at the overall global medical device market, regionally the greatest demand is seen in the United States, Western Europe, Japan, and China. Based on analysis by the Science and Technology Industry Information Office, smart healthcare technology will be the future focus of development in the medical device industry. Grand View Research estimates that the global smart healthcare market will grow at a compounded annual growth rate of more than 20% between 2016 and 2025.

Telemedicine

Coupled with growing healthcare awareness, the increasing number of elderly patients, as well as those with chronic diseases, has led to the rise of telemedicine. Telemedicine applications include smartphone apps and telemedicine robots, and cover services such as remote consulting and remote monitoring. The global telemedicine market is expected to grow at a compounded annual growth rate of 14.8% between 2018 and 2023.

Artificial Intelligence

The artificial intelligence medical market is growing rapidly, combining the advantages of precision medicine and cost reduction. Its compounded annual growth rate should exceed 40% between 2018 and 2025. Artificial intelligence can be used for diagnosis, health management, new drug research, and other purposes. Increasing computing power and falling equipment costs will be the key to the future development of artificial intelligence in the medical market.

• 55 -

Robotics

Using robots for medical treatment. Unlike humans, robots do not get tired over time and they also bring increased precision. The medical robotics market should have a compounded annual growth rate of 21.1% between 2016 and 2021. Applications include exoskeleton robots, surgical robots, and rehabilitation robots; among these, surgical robots account for the largest proportion.

Wearables

With growing public awareness of healthcare, more and more people use wearable devices to monitor their daily health. Wearable include smartwatches, wearable pain relief device, wearable cardiovascular disease management devices, and so on. The global average market growth rate of medical wearable devices between 2017 and 2022 should be 18.3%.

(2) Automotive & Aviation

Global Electric vehicle market

The global electric vehicle market reached US$118.8 billion in 2017, in response to the global energy conservation and carbon reduction trend. This also reflected an increasing number of countries pushing for the implementation of automobile emission reduction policies. This growth is expected to continue and hit US$567.2 billion by 2025, with a compounded annual growth rate of 22.3%.

Despite issues such as high manufacturing costs, low fuel efficiency, and maintenance difficulty, all of which cause relatively slow market development for electric vehicles, demand nonetheless continues to grow with encouragement from government policies. Total global electric vehicle sales exceeded 1.1 million units in 2017, which showed 54% growth compared to 2016. Looking at the numbers from different countries, China sold 570,000 electric vehicles in 2017. This accounted for 50.4% of the world’s total sales and half of the global electric vehicle market. The United States ranked second with 17%.

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• 56 -

Civil Aircraft Market in Taiwan and Worldwide

Airbus predicts that global commercial air traffic will grow at a compounded annual growth rate of 4.4% in the 20 years from 2008 to 2037, which means that at least 37,400 passengers and cargo aircraft are necessary in order to meet the traffic demand. The Asia-Pacific market has the highest aircraft shipments in the world, accounting for 42% of the global total. Out of this, mainland China holds the highest demand for passenger traffic. North America and Europe together account for 35%.

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The International Air Transport Association (IATA) predicts that global passenger and cargo demand will increase by 6% and 4.5% respectively this year, but passenger traffic supply will only increase by 5.7%, showing a shortage in supply. With the rapid growth of aviation demand in the Asia-Pacific region and the rise of the short-haul low-cost aviation market, such airlines typically order narrow-body aircraft from aircraft manufacturers. This trend will drive manufacturers to upgrade their supply growth rate in the overall demand market by more than a third. On the other hand, India, China, Latin America, and Africa are seen as emerging markets for Maintenance, Repair, and Operations (MRO). Statista predicts that aviation maintenance (MRO) demand from 2018 to 2028 will drive the relevant supply chain and create up to US$56 billion in value. Cargo aircraft have benefited from the rise of emerging markets and the boom of global e-commerce, and this segment is expected to grow by 4.2% in the next 20 years.

Based on statistics from the Taiwan Aerospace Industry Association (TAIA), the average growth rate of Taiwan’s aviation industry has reached 7.6% in the past three years. Under the guidance of the Ministry of Economic Affairs, the construction of a complete civil aviation component supply chain is additionally underway. This features partnerships with Boeing, Airbus, Bombardier, Singular, Pratt & Whitney, Snecma and other well-known aviation names. Taiwan has

• 57 -

also become the largest supply base for the world’s best-selling CFM56 engine fan blades.

(3) Green Energy

Global Renewable Energy Market

REN21 published the “RENEWABLES 2018 GLOBAL STATUS REPORT” in June 2018. The Report reviewed the development of renewable energy in 2017, with continuous growth in the amount of renewable energy as well as a significant drop in costs due to the policies and bidding mechanisms of different countries. In terms of global power generation, 26.5% originated from renewable energy sources. Together with exceeding 1/4, hydropower accounted for 16.4%, wind power 5.6%, bio-power 2.2%, and solar power for 1.9%.

==> picture [333 x 150] intentionally omitted <==

Wind Power Market

Based on information gathered in the first three quarters of 2018, it is expected that the newly installed capacity of wind power in 2018 will be close to 58 GW. Countries with the greatest newly installed capacities include China, the US, Germany, and India; the UK also ranks among them thanks to its rapid development of offshore wind power. By the end of 2017, 90 countries had constructed wind power projects, and 30 countries had an installed capacity of more than 1 GW.

==> picture [353 x 178] intentionally omitted <==

In 2017, China’s total wind power and newly installed wind power capacity ranked first, but the penetration of wind power was only 4.8% due to a high base; this was far lower than other leading countries. As for global wind power penetration, Denmark ranked first with 44%; Portugal, Ireland, and Germany

• 58 -

exceeded 20%; while Spain, Sweden, and Cyprus reached 12%. China aims to increase the current penetration of wind power to 15% without taking power rationing for improvements or increasing power demand into account. This goal implies a shortage of 320 GW in installed capacity, twice the current installed capacity. Installed capacity will thus keep growing in the short term. It is expected that an installed capacity increase of about 90 GW will be seen from 2018 to 2020, with an annual growth of 20 to 30 GW.

In addition to the traditional regions with wind power advantages including China, Europe, and North America, new regions such as India, Latin America, and the Middle East and Africa (MEA) have constantly growing wind power markets. They have become the major driving force for the future global wind power market. Based on contracted projects signed by governments and major wind power generation suppliers, it is expected that the installed capacities of India and Latin America will respectively attain 7.0 GW and 7.1 GW in 2019, marking new highs in these regions.

Offshore Wind Power

Offshore wind power has been developing rapidly in recent years and is still growing constantly. The newly installed capacity of offshore wind power is expected to be 4 GW in 2018. In the decade following 2020, the average annual increase in installed capacity is expected to double to 9.5 GW. By 2030, the total global installed capacity of wind power is expected to be 129 GW. The growth is mainly driven by new markets including India, China, the US and Taiwan, and by reviving demand in already strong wind power markets like Denmark, Belgium, and the Netherlands. Due to the promising development of wind power in new markets, the annual market share of newly installed capacity in the European market may drop from 75% to below 50%.

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Solar Photovoltaic Market

Climate change is a common challenge faced by the international community today. Many governments have pushed hard to promote the green energy industry; among them is the solar energy industry. However, various global policy changes in 2018 brought a lot of uncertainty to the market and cast a shadow over solar energy industry development.

• 59 -

China, the world’s largest installation market for solar photovoltaics, dropped a bombshell on May 31, 2018. In its newly released policy, not only was the subsidy cancelled for large power stations; Front-Runner projects and Poverty-Alleviation projects were also put under scrutiny. It created a panic within the industry. Research institutions estimate that China’s domestic market share will fall from 50% to about 40%.

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The industry as a whole also got caught in several trade disputes. In the US solar energy trade war with China, anti-dumping and anti-subsidy probes were launched in 2012 and 2015, and in 2018 there was the section 201 targeting batteries and modules and the section 301 targeting solar inverters. India also increased import tariffs to protect its own domestic industries.

In summary, even as the global wind power market is gearing up for a big year of development, global solar energy supply and market development has reached a plateau. Some countries have even begun to move towards “no subsidies” in solar energy policies. The days of 20% yearly growth seen between 2013 and 2017 are long gone. Regardless, both the wind power and solar energy supply chains are both facing the same challenges such as cost reduction and technical barriers. The global supply chain should take on a more cautious tone in capacity planning, as continuous expansion will likely result in operational troubles.

(4) Industrial Application

Semiconductor Equipment Market

Although semiconductor market shipments for electronic products have slowed down in recent years, this did not affect the current year’s (2018) semiconductor market growth. With a series of demand driven by applications such as the Internet of Things (IoT), artificial intelligence (AI) and the Internet of Vehicles (IoV), the semiconductor market has shown steady growth in 2017 and 2018. The International Semiconductor Industry Association (SEMI) estimates 10% growth, bringing the value to a record high $62.1 billion in 2018.

China’s semiconductor industry has strong government backing and has officially overtaken Taiwan in its 2019 semiconductor equipment purchase budget, now making it the second largest market only after South Korea. Taiwan has fallen to third place. However, amidst predictions of an economic

• 60 -

slump in 2019, SEMI predicts that three regions will show positive growth: Taiwan, Japan, and North America. Taiwan’s annual sales estimate for 2018 is US$10.1 billion and is expected to grow to US$11.8 billion in 2019. A global economic growth slowdown, a China-US trade war, oversupply of RAM

==> picture [355 x 256] intentionally omitted <==

modules, and emerging market growth pains for the semiconductor industry are all having an impact. For these reasons, semiconductor industry demand over the next five to 10 years is expected mainly to come from the following eight areas: AI, IoT, 5G wireless communications, industry 4.0/Smart Machinery, Internet of Vehicles/Self-driving Vehicles, VR/AR, High-Performance Computing (HPC), Software and Internet Services. Among these, AI is an important field for future development. AI computing is highly dependent on semiconductors, and chip manufacturers should actively develop AI related chips and application platforms. In the future, 5G technology will also be a key in driving industry demand as it provides high-bandwidth, low-latency communication quality needed for device processing. SEMI estimates that the global semiconductor equipment market will grow by 20.7% in 2020 to reach yet another record of $71.9 billion.

Factory Automation Solutions and Robotics Market

The global industrial automation solutions market continues to grow as machines become highly automated. This is foreseen especially in light of increased industrial productivity, a strong global economy, and increased machinery production and labour costs. The market should grow from $155.26 billion in 2017 to an estimated $23.91 billion in 2023, for a compounded annual growth rate of 7.4%.

The five-year market forecast shows that the Asia-Pacific region will account for the largest proportion of the market. An ITIF survey shows that the use of robots in South Korea and Singapore ranks first in the world in 2018, followed by Thailand, China, and Taiwan. Driven by strong government subsidies, China’s robot adoption rate has been steadily increasing. It is estimated that in 2026,

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the industrial robot versus labour ratio will surpass all other countries globally. Specifically, China’s automobile industry plans the large-scale implementation of automated technology within the next five years. The top ten industrial robot users in China include companies such as Foxconn, Siasun, and Efort. Meanwhile, the adoption rate of robots in most countries of Europe and the Americas is slower than expected. Industrial robot usage in the United States and the United Kingdom is 49% and 68% lower than expected. In terms of usage, Asian markets still remain automation power users.

Among the factory automation solutions, industrial robots account for the majority and collabourative robots stand as the most developed type. Collabourative robots enjoy price advantages over traditional robots, take up less space, and are more agile. Combined with widespread of IoT applications and Smart Factories with A.I., Loup Ventures thus predicts that collabourative robots will account for 34% of total industrial robot sales by 2025, or about one-third of the industrial robot market.

(5) Communication

Smartphones

Markets for smartphones are now reaching a saturation point, both in developed countries and in China, which once supported rapid market expansion. In 2018, approximately 1.4 billion units shipped. After 2019, demand will gradually increase in the Southeast Asian, India, and African, driving the overall market. However, demand is not expected to grow significantly and the overall market size is expected to be around 1.41 billion units. As 5G is introduced in 2020, demand to change phones can drive the overall market size to approximately 1.44 billion units. This growth is expected to continue for several years until 2023, marking a growth rate of 20 to 30 million units annually. By 2023, the global smartphone shipment is expected to reach 1.52 billion units.

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• 62 -

Smart Wearable Devices

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An overview of smart wearable devices shows that smartwatches and smart bracelets are the most mature in development. In recent years, development of smartwatch functions has gradually extended the product positioning to smartphone and health bracelet applications. This not only allows smartwatches to replace mobile phones in certain scenarios but also increases the practicality of their applications. Furthermore, the specifications and applications of smartwatches and bracelets are becoming closer, and the boundary between the two product positions is becoming gradually blurred.

An introduction of independent networking and medical/health functions in new products is beneficial to drive growth in overall shipments. In 2018, shipments of smart wearable devices worldwide was approximately 134 million, which showed 12% growth compared to 2017. Out of this, smartwatch shipments accounted for 54% and was the biggest segment of wearable devices shipped. By 2022, the annual global shipments of smart wearable devices are expected to reach 220 million units.

VR/AR HMD Devices

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Since the first VR consumer products came out in 2014, these devices have gained the attention of major ICT companies. Because many major companies launched commercialized VR HMD devices in 2016, that year was named the Year of VR. Currently, global VR/AR HMD market demand is still primarily based on VR, and AR HMD is expected to start showing significant growth in 2021 and

• 63 -

achieve a market size of thousands of units. The main influencing factor is the increased investments in economical VR HMD by large companies, which lowers the overall VR HMD price. Integration of wireless transmission accessories eliminated the two major VR HMD obstacles, cable connections and high prices. However, AR HMD is still limited by incomplete hardware technology development and high prices (over US$700) and is not easily promoted in the consumer market. In 2018, total VR HMD and AR HMD shipment are expected to reach 12 million units, for 48% growth over 2017. By 2022, the market size could reach 69 million units.

d. Competition among main products

Our Company’s main products are connectors and cable assemblies used in electronic peripheral parts, opto-electronic parts, wireless communications parts, energy products, automotive industry and medical electronic parts. Listed or OTC companies that have a business portfolio similar to our Company include Foxlink, JPC, and BizLink. Our competitors' product portfolios are listed below:

Company Name	Main Products
Foxlink (2392)	Manufacture, sale and support of connectors, cables, batteries and power supply products for the information, communication, automation equipment, precision machinery and consumer electronics industries.
JPC (6197)	Manufacture, sale and support of connectors, cable assemblies and antennae
BizLink (3665)	The R&D, production and sale of parts, cable assemblies, connectors, wiring and opto-electronic component products for the computer, automotive, medical health, communication and solar power equipment industries.

Source: Fubon Securities.

5.1.3. Technology & R&D:

Year	Results of R&D
2009~2010	1. Deeply created more related products and engineering capacities in data capture field including Single & four slot Ethernet Cradle、Vehicle cradle、and Vehicle charger, which is used in industrial terminal devices.
2009~2010	2. For the development and application of GPS module & Zigbee module, using the development of embedded system, from hardware platform design, OS porting to implement software application, and had developed the technology of embedded system for commercial PDA and industrial terminal engineering prototype products.

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Year	Results of R&D
2011~2012	Successfully developed HDMI, DDR3, DDR4, and USB connectors and deepened photovoltaic (PV) product development, and our junction box, PV connector, and PV cable have passed TÜV and UL certification.
2013~2014	SINBON won a gold prize from iF Design Award 2013 for our latest Brezze® Nebulizer, a portable drug nebulizer developed by DigiO2 International Co., Ltd. (our re-invested enterprise) in collabouration with the NTUH Telehealth Center under the Telecare Service Project.
2015~2016	1. Tablet PC for Shun Feng logistics development to DVT stage. 2. Solar monitoring system developed to DVT stage. 3. Finished development EV charger、charging gun and AC charging pile.
2017~ 2018	1. Wisdom medicine cabinet control lines and adjustable window light control lines. 2. Robotic arm control lines, electronic fireplace, and smart grid assembly.
2018~Now	1. AIOT (Artificial Intelligence of Things) 2. Smart Heat pump water heater, display system of parking.

5.1.4. Long and short-term business development plan:

1. Short-term business development plan:

2. (1) Short-term business direction:

   • A. R&D, integration and manufacture of various electronic parts: These include the manufacture of various cable assemblies, PCBA, LED backlight modules, wireless communication parts and integrated electronics parts. We have also successfully entered the automotive electronic parts, electronic medical device parts, green energy and industrial control instrumentation fields in recent years.

   • B. Distribution of electronic parts: These include distributing connectors from HRS of Japan, GPS modules, wireless antenna modules, and driver IC as well as the distribution and trading of other strategic electronic parts.

   • C. Expand electronic parts business through strategic alliances and acquisitions.

   • D. Our Company hopes to provide customers with a one-stop shop for total solutions. In addition to aggressive development of new products and providing total solutions, we are also consolidating the resources of the group's investments through organizational reform and IT system integration in order to maximum their returns.

3. (2) Important production and sales policies:

4. 65 -

   • A. Strategic alliances, mergers and acquisitions: Use strategic alliances, mergers or acquisitions to adapt to a fast changing industry and achieve rapid expansion.

   • B. Continued performance improvements: Establish a functioning group performance evaluation department that will provide direct oversight over the operating performance of each business unit.

   • C. Development of niche products: Our Company’s production and sales have always attached high importance to the development of high-margin niche products. We have so far successfully developed electronic parts for automotive O2 sensors, aviation/ maritime/ automotive navigation systems, high-precision wireless communications U.FL wiring, electronic fetal movement counter, telecare platform, portable physiological signal device; high-end cable assemblies for X-ray machines, MRI machines, bone density testing machines, wind turbines, petrol pumps and CNC machines. We are also actively developing electronic parts for industrial control, industrial computers, electronic medical devices, solar power and wind power.

   • D. Cultivation of iMAGIC industries: To keep up with industry trends, we are not only developing cabling and PCBA products for the Medical, Auto, Green, Industrial and Communication industries but also incorporating requirements from Internet-of-Things (IoT) to develop electronic parts for automated warehouse storage systems, robotics and smart grid systems. Our aim is to become a specialist supplier of electronic parts.

5. Long-term business development plan:

6. (1) Expand the strategic matrix (new customers for old products, new products for old customers, new products and new customers) to continue the pursuit of high growth.

7. (2) Establish Strategy & Marketing as a dedicated unit under the Group's general administration division that will actively track market developments and future trends in order to identify the company's next-generation product.

8. (3) Strategic alliance, mergers and acquisitions: SINBON has been searching for strategic alliances or partners through various channels in recent years.

5.2. Market, Production and Sales:

• 5.2.1. Market analysis:

Expressed in Thousands of NTD

Sales Region	Sales Region	FY 2017	FY 2017	FY 2018	FY 2018
		Amount	%	Amount	%
Domestic Sales		698,608	5.35	780,945	4.99
Export Sales	U.S.	1,915,252	14.66	2,414,415	15.43
	Europe	580,090	4.44	1,197,833	7.66
	China	7,251,594	55.52	9,269,754	59.25
	Other	2,615,895	20.03	1,982,306	12.67
Total		13,061,439	100.00	15,645,253	100.00

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5.2.2. Key product applications and production process:

Key Products	Key applications or functions	Production process
Electronic peripheral parts	Cables: PCMIA signal cable, computers & peripherals I/O cable, USB link cable, flat cable, barcode scanner I/O interface module, LCD flex board, LCD ultra-thin co-axial signal cable. Connectors: Various types of connectors used in network communications, computer peripherals and consumer electronic products. System products: Sweep receiver, USB pen drive, R&D and manufacture of service and consumer electronicproducts.	1. Cable trimming and stripping 2. Crimping 3. Assembly, stamping 4. Inspection 5. Packaging
Energy products	Manufacture and sale ofpower rectifier.
Wireless communications	Mobile phone link cable, mobile phone connector, wireless antenna, RFID.
Fiber communications parts	Fiber optic connectors, LED, LCM, and high-frequency co-axial cable.
Other	Parts of automotive, medical health and industrial products.	1. SMT 2. Assembly 3. Inspection 4. Packaging

5.2.3. Supply of key raw materials:

Material Name	Supplier	SupplyStatus
Connector	Hirose, NDK	Good, stable
Cable	HONDA, HWATEK, CABLEPLUS	Good, stable

• 5.2.4. Names of customers that accounted for over 10% of total purchases or sales in any year within the last two years, their proportion of purchases and sales, and explanation for any changes:

1. Customers:

Expressed in Thousands of NTD

		FY 2017	FY 2017	FY 2017		FY 2018	FY 2018	FY 2018		FY 2019 Q1	FY 2019 Q1	FY 2019 Q1
Item	Name	Amount	Proportion of Net Sales for the Year (%)	Relationship to Publisher	Name	Amount	Proportion of Net Sales for Year (%)	Relationship to Publisher	Name	Amount	Proportion of Net Sales as of Preceding Quarter this Year	Relatio nship to Publish er
1	Customer A	619,455	4.74	None	Customer C	694,236	4.44	None	Customer A	288,086	7.19	None
2	Customer B	600,375	4.60	None	Customer A	606,200	3.88	None	Customer C	178,683	4.46	None
3	Customer C	485,568	3.72	None	Customer B	438,671	2.80	None	Customer D	156,026	3.89	None
4	Others	11,356,041	86.94	-	Others	13,906,146	88.88	-	Others	3,386,248	84.46	-
	Net Sales	13,061,439	100.00	-	Net Sales	15,645,253	100.00	-	Net Sales	4,009,043	100.00	-

Reason for Change: Increase in Customer C sales was due to increase in customer demand.

• 67 -

2. Suppliers:

Expressed in Thousands of NTD

										Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD
		FY 2017				FY 2018				FY 2019 Q1
Item	Name	Amount	Proportio n of Net Purchases for the Year(%)	Relations hip to Publisher	Name	Amount	Proportio n of Net Purchases for the Year(%)	Relations hip to Publisher	Name	Amount	Proportion of Net Purchases as of Preceding Quarter this Year	Relations hip to Publisher
1	Supplier A	1,336,784	15.20	None	Supplier A	1,321,315	12.63	None	Supplier A	251,852	9.38	None
2	Supplier B	1,001,832	11.39	None	Supplier B	1,179,175	11.27	None	Supplier B	248,221	9.25	None
3	Others	6,457,256	73.41	-	Other	7,962,857	76.10	-	Other	2,183,577	81.37	-
	Net Purchases	8,795,872	100.00	-	Net Purchases	10,463,347	100.00	-	Net Purchases	2,683,650	100.00	-

Reason for Change: Amount of purchases increased from HRS in 2016 due to increase in sales.

5.2.5. Production output and value in the last two years:

Unit: 1000 pcs; Expressed in Thousands of NTD

Year By major product (or by department) Production Quality		2017	2017		2018	2018
	Production Capacity	Production Output	Production Value	Production Capacity	Production Output	Production Value
Cable Assembly	-	148,640	8,108,676	-	125,475	9,616,698
Connector	-	116,353	502,861	-	149,817	700,840
Other	-	-	-	-
Total	-	264,993	8,611,537	-	275,292	10,317,538

Note 1: Production capacity refers to the quantity that can be produced using existing production operation under normal conditions after factoring in essential stoppages and days off.

Note 2: If production lines for different products are inter-changeable then production capacity can be consolidated and noted accordingly.

Note 3: Our Company is a distributor for connector products and they are manufactured in-house.

5.2.6. Production and sales in the last two years:

Unit: 1,000 pcs; Expressed in Thousands of NTD

					Unit: 1,000pcs;Expressed in Thousands of NTD	Unit: 1,000pcs;Expressed in Thousands of NTD	Unit: 1,000pcs;Expressed in Thousands of NTD	Unit: 1,000pcs;Expressed in Thousands of NTD
Year By major product (or by department) Production Quality	2017				2018
	Domestic Sales		Export Sales		Domestic Sales		Export Sales
	Quantity	Value	Quantity	Value	Quantity	Value	Quantity	Value
Cable	6,157	456,260	108,933	8,074,162	5,346	566,614	101,755	10,784,793
Connector	66,317	234,893	1,173,259	4,156,734	65,697	205,567	1,250,466	3,912,713
Others	981	7,455	17,358	131,935	406	8,764	7,732	166,802
Total	73,455	698,608	1,299,550	12,362,831	71,449	780,945	1,359,953	14,864,308

• 68 -

5.3. The number of employees as well as their average seniority, average age and education distribution in the past two years and as of the date of publication:

	Year	2017	2018	As of March 31,2019
No. of Employees	Direct employee	3,033	3,075	3,109
	Indirect employee	1,779	2,038	2,051
	Total	4,812	5,113	5,160
Average Age		30.12	28.99	30.84
Average Seniority		3.52	3.22	3.16
Distribution of Academic Background	Post-Graduate	0.04%	0.02%	0.02%
	Graduate	2.06%	1.86%	1.78%
	College/University	23.32%	24.88%	24.90%
	High School	32.23%	32.62%	28.10%
	Below High School	42.35%	40.62%	45.20%
	Total	100.00%	100.00%	100.00%

5.4. Environmental expenditure:

(1) The total amount of losses or punitive damages due to environmental pollution in the most recent year and as of this annual report’s date of publication: None.

(2) Future response strategies and potential costs:

1. Our Company does not produce wastewater or air pollution during production.

2. The cooling water used in chillers used by the factory during production is recycled. The cooling water is channelled to dedicated water towers and cooled before being recycled again.

3. Waste generated by our Company includes waste paper or stationery products from office workers as well as small amounts of wire ends from trimming processes on the production line. Our Company enforces waste recycling and sorting. General trash is disposed of by the Miaoli City Government while industrial waste is disposed of by licensed contractors in accordance with the law.

4. Most raw materials are pre-processed by contractors before being shipped to our Company for assembly into the final product. The amount of industrial waste produced is therefore extremely limited and does not cause environmental pollution.

5. 69 -

5.5. Labour relations:

• (1) The benefits, in-service education, training and retirement scheme for our employees as well as their actual implementation:

• All employees are enrolled in Labour Insurance and National Health Insurance: All employees are enrolled by the company in Labour Insurance and National Health Insurance by the company from the day they start to protect their rights.

• Group insurance:

• Employees are enrolled in group insurance in accordance with our Company's insurance regulations. This encompasses life insurance, accident insurance, hospital cover and cancer insurance. The amount of insurance coverage varies according to position and nature of work. The insurance costs are fully funded by the company and employees incur no costs.

• Regular employee health exams:

• Employees are important assets to the company and their health has a direct impact on productivity and family life. All personnel above the grade of manager at our Company can therefore undergo one health exam each year. For other employees, health exams are organized in accordance with the labour safety and health regulations.

• Employee training:

To meet the Group targets for strategic development and equip employees with the skills they need for work, our Company offers a variety of learning methods and channels including: in-house training, domestic/foreign training, overseas study and book clubs.

1. Employee dividends:

Employees share in the profits from company growth to cultivate a high level of employee rapport and team spirit.

1. Employee Welfare Committee:

2. A. Cash gifts and subsidies for weddings, funerals and celebrations.

3. B. Regular employee holidays.

4. C. Organization of various club activities to promote labour communications and harmony.

5. D. Gifts of cash or goods for holidays, celebrations and birthdays.

6. E. Discount programs with many merchants to provide employees with discounts and promotions.

7. F. Hospitalization, treatment and disaster assistance.

8. G. Employee in-service education scholarships.

9. H. Hosting of professional workshops at different times.

10. Employee retirement scheme:

The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with the Labour Pension Act of the R.O.C. Under the Labour Pension Act, the Company and its domestic subsidiaries will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. Pension expenses under the defined contribution plan for the years ended 31 December 2018 and 2017 were NT$28,514 thousand and NT$32,395 thousand, respectively.

• 70 -

The Ministry of Labour is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labour Retirement Fund. The pension fund is invested in-house or under discretionary accounts, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labour establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19.The Group expects to contribute NT$4,560 thousand to its defined benefit plan during the 12 months beginning after 31 December 2018.

1. Free parking:

2. Parking is difficult for the Taipei office. The company has paid for the rental of parking spaces for the free use of designated employees.

3. Some leave regulations that better than the Labour Standards Act:

4. A. Employee maternity/paternity leave: the company offers 61 days off for maternity leave where the legal requirement is 56 days.

5. B. "Caregiver leave for seriously ill/injured parents or spouse" added that is superior to the Labour Standards. This leave is not required by law but to take care of employees, our Company allows employees to take up to 10 days off in both the first and second half of the year in the first year for "Caregiver leaver for seriously ill/injured parents or spouse". This gives them the time they need to make arrangements or look after their parents or their spouse in the event of a serious illness or injury.

6. C. Paid leaves: there are extra 7-day paid leaves for employees.

(2) Losses due to labour disputes in the past year and as of the date of this annual report’s publication: None.

5.6. Important contracts:

Type of Contract	Party	StartingDate	Summary	Restrictions
Supplier Contract	G	2018.1.1~ 2020.12.31	To be customer G’s medical & green energy products supplier.	None
Confidentiality Agreement	N	2017.3.13~ 2020.3.13	Our Company is an OEM contractor for Company N, a large foreign medical company. A confidentiality agreement was signed to protect Company N's R&D info and our production know-how.	None

• 71 -

Type of Contract	Party	StartingDate	Summary	Restrictions
Supplier Contract	P	2017.08.22~ Contract end date	Co-developing moulds with company P, signed the contract to ensure that our intellectual property rights and the right to use.	None
Agency Agreement	C	2015.7.15 ~	To be an agent for selling products of companyC.	None
MOU	E	2016.11.18~	We help company E to create more production and E shall promise purchasequantity.	None
Supplier Contract	A	2018.1.25	Supplycontract with companyA.	None
Commission Contract	P	2017.12.26	Commission contract with companyP.	None
Design Contract	M	2017.8.18	Co-developing products with companyM.	None
Supplier Contract	Q	2015.3	Products supplyto company Q.	None
Manufacture Contract	R	2018.03.22	Manufacturing products for companyR.	None

• 72 -

6. Financial Status

6.1. Condensed Balance Sheet, Integrated Income Statement, CPA Name and Comments:

6.1.1. IFRS Condensed Balance Sheet and Statement of Comprehensive Income:

Condensed Balance Sheet (IFRS and Consolidated)

		Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD
Year Item		Five-Years Financial Information					Financial data of ending date in the current year on 31 Mar. 2019 （Reviewed Only）
		2014 （Audited）	2015 （Audited）	2016 （Audited）	2017 （Audited）	2018 （Audited）
Current assets		7,949,062	8,530,755	8,807,101	9,716,118	11,361,548	11,575,568
Fixed assets		1,539,336	1,507,537	1,339,108	1,486,310	1,854,001	2,070,154
Intangible assets		9,150	9,551	10,156	59,529	94,820	97,825
Other assets		158,299	135,100	160,654	310,123	177,400	190,710
Total assets		10,486,831	11,113,671	11,082,844	12,519,477	14,201,536	14,756,190
Current liabilities	Before distribution	4,795,863	5,115,795	5,045,793	5,473,028	6,981,572	6,772,571
	After distribution	5,377,342	5,791,225	5,834,749	6,374,692	Not yet	Not yet
Non-Current liabilities		606,852	359,820	257,620	750,193	423,332	481,777
Total liabilities	Before distribution	5,402,715	5,475,615	5,303,413	6,223,221	7,404,904	7,254,348
	After distribution	5,984,194	6,151,045	6,092,369	7,124,885	Not yet	Not yet
Equity Attributable to theparent company		5,019,057	5,583,341	5,732,732	6,084,637	6,572,643	7,230,481
Capital stock		2,076,709	2,176,454	2,254,162	2,254,162	2,266,954	2,290,745
Capital surplus		746,795	890,644	858,462	830,265	904,086	1,042,110
Retained earnings	Before distribution	1,936,291	2,325,815	2,801,132	3,233,651	3,743,536	4,108,405
	After distribution	1,354,812	1,650,385	2,012,176	2,331,987	Not yet	Not yet
Other Equities		259,262	190,428	(181,024)	(233,441)	(341,933)	(210,779)
TreasuryStocks		-	-	-	-	-	-
Non-controlling interests		65,059	54,715	46,699	211,619	223,989	271,361
Total equity	Before distribution	5,084,116	5,638,056	5,779,431	6,296,256	6,796,632	7,501,842
	After distribution	4,502,637	5,056,577	4,990,475	5,394,592	Not yet	Not yet

• 73 -

Condensed Balance Sheet (IFRS and Parent only)

		Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD
Year Item		Five-Years Financial Information					Financial data of ending date in the current year on 31 Mar. 20191
		2014 （Audited）	2015 （Audited）	2016 （Audited）	2017 （Audited）	2018 （Audited）
Current assets		2,157,908	2,388,388	2,864,101	3,137,049	2,840,557	N.A.
Fixed assets		283,533	291,858	288,352	277,238	518,658	N.A.
Intangible assets		-	-	-	-	-	N.A.
Other assets		22,754	14,420	14,748	155,386	24,773	N.A.
Total assets		7,963,782	8,785,123	8,871,822	9,807,235	10,126,114	N.A.
Current liabilities	Before distribution	2,369,698	2,865,831	2,916,389	3,014,416	3,276,402	N.A.
	After distribution	2,951,177	3,541,261	3,705,345	3,916,080	Not yet	N.A.
Non-Current liabilities		575,027	335,951	222,701	708,182	277,069	N.A.
Total liabilities	Before distribution	2,944,725	3,201,782	3,139,090	3,722,598	3,553,471	N.A.
	After distribution	3,526,204	3,877,212	3,928,046	4,624,262	Not yet	N.A.
Equity Attributable to the parent company		5,019,057	5,583,341	5,732,732	6,084,637	6,572,643	N.A.
Capital stock		2,076,709	2,176,454	2,254,162	2,254,162	2,266,954	N.A.
Capital surplus		746,795	890,644	858,462	830,265	904,086	N.A.
Retained earnings	Before distribution	1,936,291	2,325,815	2,801,132	3,233,651	3,743,536	N.A.
	After distribution	1,354,812	1,650,385	2,012,176	2,331,987	Not yet	N.A.
Other Equities		259,262	190,428	(181,024)	(233,441)	(341,933)	N.A.
Treasury Stocks		-	-	-	-	-	N.A.
Non-controlling interests		-	-	-	-	-	N.A.
Total equity	Before distribution	5,019,057	5,583,341	5,732,732	6,084,637	6,572,643	N.A.
	After distribution	4,437,578	4,907,911	4,943,776	5,182,973	Not yet	N.A.
~~1~~	Parent Company’s Reports by yearly.

• 74 -

Condensed Statement of Comprehensive Income (IFRS and Consolidated)

Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD
Year Item	Five-Years Financial Information					Financial data of ending date in the current year on 31 Mar. 2019 （Reviewed Only）
	2014 （Audited）	2015 （Audited）	2016 （Audited）	2017 （Audited）	2018 （Audited）
Operating revenue	11,642,719	12,111,258	12,925,843	13,061,439	15,645,253	4,009,043
Gross profit	2,530,400	2,722,157	3,209,102	3,280,351	3,919,945	1,031,046
Income from operations	950,590	1,066,789	1,418,204	1,393,146	1,631,689	435,040
Non-operating income and expenses	92,932	303,220	178,840	226,398	288,379	45,614
Net income before tax	1,043,522	1,370,009	1,597,044	1,619,544	1,920,068	480,654
Income from operations of continued segments-after tax	774,947	954,103	1,161,735	1,224,088	1,371,529	349,967
Income or Loss from discontinued departments	-	-	-	-	-	-
Net income(loss)	774,947	954,103	1,161,735	1,224,088	1,371,529	349,967
Other comprehensive income/loss (Net of tax)	163,618	(65,277)	(378,233)	(64,127)	25,083	130,028
Total other comprehensive income (loss), net of tax	938,565	888,826	783,502	1,159,961	1,396,612	479,995
Net income attributable to stockholders of the parent	793,752	970,195	1,157,386	1,226,471	1,413,477	364,869
Net income attributable to non-controlling interests	(18,805)	(16,092)	4,349	(2,383)	(41,948)	(14,902)
Comprehensive income (loss) attributable to stockholders of the parent	954,303	902,169	779,295	1,169,058	1,441,241	496,023
Comprehensive income (loss) attributable to non-controlling interests	(15,738)	(13,343)	4,207	(9,097)	(44,629)	(16,028)
Earningsper share	3.82	4.39	5.15	5.44	6.26	1.60

• 75 -

Condensed Statement of Comprehensive Income (IFRS and Parent)

Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD	Expressed in Thousands of NTD
Year Item	Five-Year Financial Information					Financial data of ending date in the current year on 31 Mar. 20191
	2014 （Audited）	2015 （Audited）	2016 （Audited）	2017 （Audited）	2018 （Audited）
Operating revenue	3,946,131	4,363,053	4,640,558	4,812,279	5,035,927	N.A.
Gross profit	814,569	929,588	1,131,605	1,217,761	1,285,215	N.A.
Income from operations	272,749	277,470	415,424	530,700	471,163	N.A.
Non-operating income and expenses	667,406	867,947	894,290	837,031	1,174,503	N.A.
Net income before tax	940,155	1,145,417	1,309,714	1,367,731	1,645,666	N.A.
Income from operations of continued segments-after tax	793,752	970,195	1,157,386	1,226,471	1,413,477	N.A.
Income or Loss from discontinued departments	-	-	-	-	-	N.A.
Net income(loss)	793,752	970,195	1,157,386	1,226,471	1,413,477	N.A.
Other comprehensive income/loss (Net of tax)	160,551	(68,026)	(378,091)	(57,413)	27,764	N.A.
Total other comprehensive income (loss), net of tax	954,303	902,169	779,295	1,169,058	1,441,241	N.A.
Net income attributable to stockholders of the parent	-	-	-	-	-	N.A.
Net income attributable to non-controlling interests	-	-	-	-	-	N.A.
Comprehensive income (loss) attributable to stockholders of the parent	-	-	-	-	-	N.A.
Comprehensive income (loss) attributable to non-controlling interests	-	-	-	-	-	N.A.
Earningsper share	3.82	4.39	5.15	5.44	6.26	N.A.

1 Parent Company’s Reports by yearly.

• 76 -

6.1.2. Last 5 years Auditors’ Opinions:

Year	CPA Firm	CPA's Name	AuditingOpinion
2014	Ernst & Young	Yan, Wen-Pi Lin,Hong-Kuang	Modified Unqualified
2015	Ernst & Young	Yan, Wen-Pi Lin,Hong-Kuang	Modified Unqualified
2016	Ernst & Young	Lin, Hong-Kuang Huang,Tzu-Ping	Unqualified
2017	Ernst & Young	Huang, Tzu-Ping Lin,Hong-Kuang	Unqualified
2018	Ernst & Young	Huang, Tzu-Ping Lin,Hong-Kuang	Unqualified

6.2. Financial Analysis of the Last Five Years:

6.2.1. Financial Analysis:

	Year Item	Financial analysis in the past five years (IFRS and Consolidated)	Financial analysis in the past five years (IFRS and Consolidated)	Financial analysis in the past five years (IFRS and Consolidated)	Financial analysis in the past five years (IFRS and Consolidated)	Financial analysis in the past five years (IFRS and Consolidated)	Financial data of ending date in the current year on 31 Mar. 2019 （Reviewed Only）
		2014 （Audited）	2015 （Audited）	2016 （Audited）	2017 （Audited）	2018 （Audited）
Financial structure (%)	Ratio of liabilities to assets	51.52	49.27	47.85	49.71	52.14	49.16
	The ratio of long-term capital to fixed assets	349.93	374.29	432.88	456.18	367.01	362.80
Solvency (%)	Current ratio	165.75	166.75	174.54	177.53	162.74	170.92
	Quick ratio	121.24	122.32	130.9	125.04	108.69	112.95
	Times interest earned ratio	26.71	36.81	57.74	55.41	45.27	42.14
Operating ability	Accounts receivable turnover(turns)	3.76	3.93	4.14	3.81	3.83	3.48
	Average collection period	97	92	88	95	95	105
	Inventory turnover (turns)	4.93	4.39	4.38	3.94	3.64	3.18
	Accounts payable turnover(turns)	4.78	4.62	4.57	4.01	4.01	4.09
	Average days in sales	74	83	83	92	100	115
	Fixed assets turnover (turns)	7.53	7.95	9.08	9.25	9.37	8.17
	Total assets turnover (turns)	1.17	1.12	1.16	1.11	1.17	1.11

• 77 -

	Year Item	Financial analysis in the past five years (IFRS and Consolidated)	Financial analysis in the past five years (IFRS and Consolidated)	Financial analysis in the past five years (IFRS and Consolidated)	Financial analysis in the past five years (IFRS and Consolidated)	Financial analysis in the past five years (IFRS and Consolidated)	Financial data of ending date in the current year on 31 Mar. 2019 （Reviewed Only）
		2014 （Audited）	2015 （Audited）	2016 （Audited）	2017 （Audited）	2018 （Audited）
Profitabili- ty	Return on total assets (%)	8.14	9.13	10.68	10.58	10.53	2.48
	Return on stockholders' equity (%)	15.92	17.80	20.35	20.27	20.95	4.90
	Pre-tax income to issued capital(%)	50.25	62.95	70.85	71.85	84.7	20.98
	Profit ratio (%)	6.66	7.88	8.99	9.37	8.77	8.73
	Earnings per share ($)	3.82	4.39	5.15	5.44	6.26	1.6
Cash flow	Cash flow ratio (%)	12.84	28.40	24.12	14.11	4.92	(3.31)
	Cash flow adequacy ratio (%)	95.85	118.46	148.43	114.45	78.45	56.64
	Cash reinvestment ratio (%)	1.40	12.12	7.49	(0.74)	(6.54)	(2.41)
	Operating leverage	2.69	2.53	2.21	2.28	2.31	2.29
Leverage	Financial leverage	1.04	1.04	1.02	1.02	1.03	1.03

	Year Item	Financial analysis in the past five years (IFRS and Parent)	Financial analysis in the past five years (IFRS and Parent)	Financial analysis in the past five years (IFRS and Parent)	Financial analysis in the past five years (IFRS and Parent)	Financial analysis in the past five years (IFRS and Parent)	Financial data of ending date in the current year on 31 Mar. 20191
		2014 （Audited）	2015 （Audited）	2016 （Audited）	2017 （Audited）	2018 （Audited）
Financial structure (%)	Ratio of liabilities to assets	36.98	36.45	35.38	37.96	35.09	N.A.
	Ratio of long-term capital to fixed assets	1,770.18	1,913.03	1,988.1	2,369.28	1,267.24	N.A.
Solvency (%)	Current ratio	91.06	83.34	98.21	104.07	86.7	N.A.
	Quick ratio	75.60	71.74	86.34	85.38	67.2	N.A.
	Times interest earned ratio	45.73	74.89	101.23	87.31	91.84	N.A.
Operating ability	Accounts receivable turnover (turns)	3.72	3.84	4.2	4.4	4.65	N.A.
	Average collection period	98	95	87	83	78	N.A.
	Inventory turnover (turns)	9.48	9.83	10.34	7.76	6.16	N.A.
	Accounts payable turnover (turns)	3.82	3.81	3.95	3.9	4.06	N.A.
	Average days in sales	39	37	35	47	59	N.A.
	Fixed assets turnover (turns)	14.35	15.17	16.00	17.02	12.65	N.A.
	Total assets turnover (turns)	0.53	0.52	0.53	0.52	0.51	N.A.

• 78 -

	Year Item	Financial analysis in the past five years (IFRS and Parent)	Financial analysis in the past five years (IFRS and Parent)	Financial analysis in the past five years (IFRS and Parent)	Financial analysis in the past five years (IFRS and Parent)	Financial analysis in the past five years (IFRS and Parent)	Financial data of ending date in the current year on 31 Mar. 20191
		2014 （Audited）	2015 （Audited）	2016 （Audited）	2017 （Audited）	2018 （Audited）
Profitabili-ty	Return on total assets (%)	10.81	11.74	13.23	13.27	14.33	N.A.
	Return on stockholders' equity (%)	16.55	18.30	20.46	20.76	22.33	N.A.
	Pre-tax income to issued capital (%)	45.27	52.63	58.1	60.68	72.59	N.A.
	Profit ratio (%)	20.11	22.24	24.94	25.49	28.07	N.A.
	Earnings per share ($)	3.82	4.39	5.15	5.44	6.26	N.A.
Cash flow	Cash flow ratio (%)	6.90	15.52	14.83	6.06	5.53	N.A.
	Cash flow adequacy ratio (%)	35.17	43.11	40.04	39.76	30.32	N.A.
	Cash reinvestment ratio (%)	(6.17)	(2.24)	(3.95)	(9.30)	(10.18)	N.A.
	Operating leverage	2.85	2.86	2.41	2.09	2.45	N.A.
Leverage	Financial leverage	1.08	1.06	1.03	1.03	1.04	N.A.

1 Parent Company’s Reports by yearly.

6.3. Supervisor or Auditor Audit Report of Financial Statements in the Last Year:

AUDIT COMMITTEE REVIEW REPORT

The Board of Directors has prepared the Company’s 2018 Financial Statements. The CPA firm of Ernst & Young, by CPA Huang, Tzu-Ping and Lin, Hong-Kuang, was retained to audit the Company’s Financial Statements and has issued an audited report relating to the Financial Statements. The Financial Statements have been reviewed and determined to be correct and accurate by the Audit Committee members of SINBON. According to relevant requirements of the Securities and Exchange Act and the Company Law, we hereby submit this report.

Chairman of the Audit Committee:

Chi-Lin Wei 19 April 2018

• 79 -

6.4. Financial Statements in the Last Year (including CPA audit reports, a cross-reference of balance sheets of two years, integrated income statements, equipment change list, case flows list, and remarks or tables):

Independent Auditors’ Report

To SINBON Electronics Co., Ltd.

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

In our opinion, based on our audits and the reports of other auditors (please refer to the Other Metter – Making Reference to the Audits of Component Auditors section of our report), the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Group as of 31 December 2018 and 2017, and its consolidated financial performance and cash flows for the years ended 31 December 2018 and 2017, in conformity with the requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of 2018 consolidated financial statements. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

• 80 -

1. Valuation for inventories

As of 31 December 2018, the Group’s net inventories amounted to NT$3,527,954 thousand. The amount of inventories was significant to the Group’s financial statements. As the fluctuation in market demand and the fast-changing technology could cause losses of obsolete and slow-moving inventories, the assessment of the inventory write-downs require significant management judgement. We therefore determined this a key audit mater.

Our audit procedures included, but not limited to, understanding and testing the adequacy of accounting policy around obsolete and slow-moving inventories, including historical analysis of loss ratio of scrapped inventories; evaluating stocktaking plan and selecting important storage locations to observe inventory counts to ensure inventory quantities and status; obtaining inventory aging schedule to test whether inbound and outbound records are accurate; re-calculating the unit cost of inventories; and evaluating and testing net realized value adopted by management. We also assessed the adequacy of disclosures of financial assets. Please refer to Notes 5 and 6 to the Group’s consolidate financial statements.

2. Impairment of accounts receivable

As of 31 December 2018, gross accounts receivable and loss allowance by the Group amounted to NT$4,152,916 thousand and NT$27,655 thousand, respectively. Net accounts receivable accounted for 29% of consolidated total assets, which was considered material in the consolidated statements. Since the loss allowance of account receivables is measured by the expected credit loss for the duration of the account receivables, it is necessary to divide account receivables into groups in the process of measurement and analyze the application of related assumptions, including appropriate aging intervals, their respective loss rate, and consideration of the forward-looking information. As the measurement of expected credit loss involves making judgment, analysis and estimates, and the result will affect the net account receivable, we therefore determined this a key audit mater.

Our audit procedures included, but not limited to, analyzing the appropriateness of the grouping of account receivables and confirming whether customers with significantly different credit loss types are grouped by similar risk characteristics. Sinbon Electronics Co., Ltd. and its subsidiaries are tested by provision matrix, including evaluating the appropriateness of the aging intervals and the accuracy of the basic data by reviewing the original certificates; testing the related statistics information of loss rate based on the rolling rate within one year, including the average loss rate and standard deviation; considering the reasonableness of the forward-looking information which takes into account loss rate, such as economic growth rate and unemployment rate; assessing whether such forward-looking information affected the loss rate. We also assessed the adequacy of disclosures of financial assets. Please refer to Notes 5 and 6 to the Group’s consolidate financial statements.

• 81 -

Other Matter– Making Reference to the Audits of Component Auditors

We did not audit the financial statements of certain consolidated subsidiaries, which statements reflected total assets of NT$1,991,440 thousand and NT$1,924,399 thousand, constituting 14% and 15% of consolidated total assets as of 31 December 2018 and 2017, respectively, and total operating revenues of NT$2,721,718 thousand and NT$2,624,634 thousand, constituting 17% and 20% of consolidated operating revenues for the years ended 31 December 2018 and 2017, respectively. Those financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions expressed herein are based solely on the audit reports of the other auditors. We did not audit the financial statements of certain associates and joint ventures accounted for under the equity method whose statements are based solely on the reports of other auditors. These associates and joint ventures under equity method amounted to NT$321,922 thousand and NT$326,568 thousand, representing 2% and 3% of consolidated total assets as of 31 December 2018 and 2017, respectively. The related shares of profits from the associates and joint ventures under the equity method amounted to NT$63,268 thousand and NT$52,286 thousand, both representing 3% of the consolidated net income before tax for the years ended 31 December 2018 and 2017, respectively, and the related shares of other comprehensive income from the associates and joint ventures under the equity method amounted to NT$(2,107) thousand and NT$13,964 thousand, representing (8)% and (22)% of the consolidated other comprehensive income for the years ended 31 December 2018 and 2017, respectively.

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 requirements of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, Interpretations developed by the International Financial Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed by Financial Supervisory Commission of the Republic of China and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance, including audit committee or supervisors, are responsible for overseeing the financial reporting process of the Group.

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• 82 -

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 auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment 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 internal control of the Group.

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 ability to continue as a going concern of the Group. 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 Group to cease to continue as a going concern.

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

6. 83 -

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of 2018 consolidated financial statements 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.

We have also audited and expressed an unqualified opinion on the parent company only financial statements of the Company as of and for the years ended 31 December 2018 and 2017.

/s/Huang, Tzu Ping

/s/Lin, Hung Kang

Ernst & Young, Taiwan

14 March 2019

Notice to Readers

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

• 84 -

English Translation of Consolidated Financial Statements Originally Issued in Chinese SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

31 December 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Assets Current assets Cash and cash equivalents Financial assets at fair value through profit or loss, current Available-for-sale financial assets, current Notes receivable, net Accounts receivable, net Other receivables Inventories Prepayments Other current assets Total current assets Non-current assets Available-for-sale financial assets, noncurrent Financial assets measured at cost, noncurrent Investments accounted for under the equity method Property, plant and equipment Other intangible assets Deferred tax assets Other non-current assets Total non-current assets Financial assets at fair value through other comprehensive income, noncurrent	Notes	As of31 December	As of31 December
		$2,625,021 171,099 - 468,086 4,125,261 182,290 3,527,954 245,042 16,795 11,361,548 276,727 - - 354,103 1,854,001 94,820 82,937 177,400 2,839,988 2018	2017
	4,6(1) 4,6(2) 12 4,6(3) 4,6(4),7 7 4,6(5) 4,6(6) 4,6(7) 4,6(8) 4,6(9) 4,6(10) 4,6(23) 4,6(11)		$3,125,187 61,630 5,730 389,800 3,085,120 168,627 2,692,294 180,179 7,551
			9,716,118
			- 132,170 369,608 373,871 1,486,310 59,529 71,748 310,123
			2,803,359

Total assets

$14,201,536 $12,519,477

(Continued)

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English Translation of Consolidated Financial Statements Originally Issued in Chinese SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS(Continued)

31 December 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Liabilities and Equity	Notes	As of31 December	As of31 December
		$1,804,995 - 328,405 210,226 3,127,462 875,407 192,591 404,554 2,395 35,537 6,981,572 - - 7,646 298,241 15,505 88,510 13,430 423,332 7,404,904 2,257,273 9,681 2,266,954 904,086 966,802 233,441 2,543,293 3,743,536 (333,087) (8,846) - (341,933) 223,989 6,796,632 $14,201,536 2018	2017
Current liabilities Short-term loans Financial liabilities at fair value through profit or loss, current Contract liabilities, current Notes payable Accounts payable Other payables Current tax liabilities Current portion of bonds payable Current portion of long-term loans Other current liabilities Total current liabilities Non-current liabilities Financial liabilities at fair value through profit or loss, noncurrent Bonds payable Long-term loans Deferred tax liabilities Long-term deferred revenue Net defined benefit obligation, noncurrent Other non-current liabilities-others Total non-current liabilities Total liabilities Equity attributable to the parent company Capital Common stock Certificates of bond-to-stock conversion Subtotal Additional Paid-in Capital Retained earnings Legal reserve Special reserve Unappropriated earnings Subtotal Other components of equity Exchange differences on translation of foreign operations Unrealized gains or losses on available-for-sale financial assets Subtotal Non-controlling interests Total equity Total liabilities and equity Unrealized gains or losses measured at fair value through other comprehensive income	4,6(12) 4,6(13) 4,6(18) 7 4,6(14) 4,6(14) 4 4,6(23) 4,6(15) 4,6(16) 6(17) 6(17) 4 4,6(17)		$1,594,624 44,427 - 110,111 2,610,847 783,172 149,796 - - 180,051
			5,473,028
			300 483,621 - 160,718 16,256 89,296 2
			750,193
			6,223,221
			2,254,162 -
			2,254,162
			830,265
			844,155 181,024 2,208,472
			3,233,651
			(251,893) - 18,452
			(233,441)
			211,619
			6,296,256
			$12,519,477

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

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English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended 31 December 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars, Except Earnings Per Share)

Operating revenues Operating costs Gross profit-net Operating expenses Sales and marketing expenses General and administrative expenses Research and development expenses Expected credit loss Subtotal Operating income Non-operating income and expenses Other income Other gains and losses Finance costs Share of profit or loss of associates and joint ventures Subtotal Income from continuing operations before income tax Income tax expense Net income Other comprehensive income Remeasurements of defined benefit plans Unrealized gains on equity instruments measured at fair value through other comprehensive income Unrealized gains on equity instruments method at fair value through other comprehensive income of associates and joint ventures Income tax related to items that may not be reclassified subsequently Exchange differences on translation of foreign operations Unrealized gains on available-for-sale financial assets Share of other comprehensive income of associates and joint ventures Income tax related to items that may be reclassified subsequently Total other comprehensive loss, net of tax Total comprehensive income Net income attributable to: Stockholders of the parent Non-controlling interests Comprehensive income (loss) attributable to: Stockholders of the parent Non-controlling interests Earnings per share (NTD) Earnings per share-basic Earnings per share-diluted Items that may not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss	Notes	For theyears ended 31 December	For theyears ended 31 December
		$15,645,253 (11,725,308) 3,919,945 (850,762) (853,495) (582,938) (1,061) (2,288,256) 1,631,689 126,093 159,837 (43,371) 45,820 288,379 1,920,068 (548,539) 1,371,529 (1,170) 110,611 (2,107) 1,624 (106,632) - - 22,757 25,083 $1,396,612 $1,413,477 (41,948) $1,371,529 $1,441,241 (44,629) $1,396,612 $6.26 $6.10 2018	2017
	4,6(18) 6(5,20),7 6(20),7 6(19) 6(21) 4,6(9) 4,6(23) 6(22) 4,6(24) 4,6(24)		$13,061,439 (9,781,088)
			3,280,351
			(717,699) (702,769) (466,737) -
			(1,887,205)
			1,393,146
			227,467 (17,025) (29,768) 45,724
			226,398
			1,619,544 (395,456)
			1,224,088
			(6,019) - - 1,023 (120,217) 28,973 13,964 18,149
			(64,127)
			$1,159,961
			$1,226,471 (2,383)
			$1,224,088
			$1,169,058 (9,097)
			$1,159,961
			$5.44
			$5.36

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

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English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the years ended 31 December 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Appropriation and distribution of 2016 retained earnings Legal reserve Special reserve Cash dividends Change in Other additional paid-in capital Embedded conversion options derrived from convertible bonds Share of changes in net assets of associates and joint ventures accounted for using the equity method Additional paid-in capital at cash dividends Net income in 2017 Other comprehensive income (loss), net of tax in 2017 Total comprehensive income (loss) Increase in non-controlling interests Bonds converted to stock Impact of retroactive applications Adjusted balance as of 1 Janurary 2018 Appropriation and distribution of 2017 retained earnings Legal reserve Special reserve Cash dividends Other changes in additional paid-in capital From differences between equity purchase price and carrying amount arising from actual acquisition or disposal of subsidiaries Net income in 2018 Other comprehensive income (loss), net of tax in 2018 Total comprehensive income (loss) Increase in non-controlling interests Disposal of financial assets at fair value through other comprehensive Bonds converted to stock Balance as of 1 January 2017 Balance as of 31 December 2017 Balance as of 1 January 2018 Balance as of 31 December 2018					Equity Attribu	table to the paren	t company				Non- Controlling Interests	Total Equity
	Cap	ital	Additional Paid-in Capital		Retained earni	ngs	O	ther components of equ	ity	Total
	Common stock	Certificates of Bond-to- Stock Conversion		Legal Reserve	Special Reserve	Unappropriate d Earnings	Exchange Differences on Translation of Foreign Operations	Unrealized gains (losses) on equity instruments measured at fair value through other comprehensive income Gain(losses)	Unrealized Gains or Losses on Available-For- Sale Financial Assets
	$2,246,068	$8,094	$858,462 14,652 2,235 (45,084)	$728,416 115,739	$134,446 46,578	$1,938,270 (115,739) (46,578) (788,956) 1,226,471 (4,996)	$(156,539) (95,354)	$ -	$(24,485) 42,937	$5,732,732 - - (788,956) 14,652 2,235 (45,084) 1,226,471 (57,413)	$46,699 1,231 (2,383) (6,714)	$5,779,431 - - (788,956) 14,652 3,466 (45,084) 1,224,088 (64,127)
	-	-	-	-	-	1,221,475	(95,354)	-	42,937	1,169,058	(9,097)	1,159,961
	8,094	(8,094)								-	172,786	172,786 -
	$2,254,162	$ -	$830,265	$844,155	$181,024	$2,208,472	$(251,893)	$ -	$18,452	$6,084,637	$211,619	$6,296,256
	$2,254,162	$ -	$830,265	$844,155	$181,024	$2,208,472 825	$(251,893)	$ - (120,557)	$18,452 (18,452)	$6,084,637 (138,184)	$211,619	$6,296,256 (138,184)
	2,254,162	-	830,265 (87)	844,155 122,647	181,024 52,417	2,209,297 (122,647) (52,417) (901,664) 1,413,477 454	(251,893) (81,194)	(120,557) 108,504	- -	5,946,453 - - (901,664) (87) 1,413,477 27,764	211,619 (41,948) (2,681)	6,158,072 - - (901,664) (87) 1,371,529 25,083
	-	-	-	-	-	1,413,931	(81,194)	108,504	-	1,441,241	(44,629)	1,396,612
	income 3,111	9,681	73,908			(3,207)		3,207		- 86,700	56,999	56,999 - 86,700
	$2,257,273	$9,681	$904,086	$966,802	$233,441	$2,543,293	$(333,087)	$(8,846)	$ -	$6,572,643	$223,989	$6,796,632

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

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English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended 31 December 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

	For theyears ended 31 December	For theyears ended 31 December
	2018	2017
Cash flows from operating activities:
Net income before tax	$1,920,068	$1,619,544
Adjustments to reconcile net income before tax to net cash provided by operating activities:
Income and expense adjustments:
Depreciation	160,428	147,453
Amortization	45,134	38,459
Interest expense	43,371	29,768
Interest income	(11,454)	(11,801)
Dividends income	(18,117)	(17,270)
Share of profit of associates and joint ventures	(45,820)	(45,724)
Loss on disposal of property, plant and equipment	4,626	6,450
Expected credit losses	1,061	-
Bad debt expenses	-	23,225
Loss on disposal of investments	-	4,110
Gain of financial assets/ liabilities at fair value through profit or loss	(83,677)	(21,502)
Changes in operating assets and liabilities:
Proceeds from disposal of financial asset for trading	-	7,496
Acquisition of for trading financial asset	-	(10,836)
(Increase) Decrease in notes receivable	(78,286)	62,751
Increase in accounts receivable	(1,041,908)	(210,486)
Increase in other receivables	(14,743)	(35,743)
Increase in inventories, net	(835,660)	(547,133)
Increase in prepayments	(64,863)	(83,463)
(Increase) Decrease in other current assets	(9,244)	27,650
Increase in other noncurrent assets	(157,011)	(193,092)
Increase in notes payable	100,115	69,718
Increase in accounts payable	516,615	313,965
Increase in contract liability	328,405	-
Increase (Decrease) in other payables	92,187	(27,439)
(Decrease) Increase in other current liabilities	(144,514)	70,208
Decrease in accrued pension liabilities	(1,956)	(77)
Cash generated from operations	704,757	1,216,231
Interest received	11,414	11,874
Dividend received	18,117	17,270
Interest paid	(35,669)	(23,128)
Income tax paid	(355,029)	(449,925)
Net cash provided by operating activities	343,590	772,322

(Continued)

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English Translation of Consolidated Financial Statements Originally Issued in Chinese

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)

For the years ended 31 December 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

	For theyears ended 31 December	For theyears ended 31 December
	2018	2017
Cash flows from investing activities:
Net cash outflow from disposal of subsidiaries (Note 6.(26))	$ -	$(11,956)
Net cash outflow from acquisition of subsidiaries (Note 6(25))	-	(84,469)
Acquisition of property, plant and equipment	(327,317)	(124,921)
Proceeds from disposal of property, plant and equipment	9,599	1,985
Increase in other intangible assets	(8,291)	(3,325)
Dividends received from investee company	45,602	43,298
Acquisition of financial assets at fair value through other comprehensive income	(646)	-
Proceeds from disposal of financial assets at fair value through other comprehensive inc	189,004	-
Decrease in financial assets at fair value through other comprehensive income	7,199	-
Proceeds from disposal of financial assets at fair value through profit or loss	10,762	-
Acquisition of financial assets at fair value through profit or loss	(75,572)	-
Decrease in financial assets measured at cost	-	12,713
Disposal of financial assets measured at cost	-	59,202
Acqusition of financial assets measured at cost	-	(240,443)
Acquisition of investments accounted for under the equity method	(1,230)	(25,004)
Decrease in investments accounted for under the equity method	17,600	40,000
Acquisition of available-for-sale financial assets	-	(5,730)
Proceeds from disposal of available-for-sale financial assets	-	430
Acquisition of non-controlling interests	(1,426)	-
Net cash used in investing activities	(134,716)	(338,220)
Cash flows from financing activities:
Increase in short-term loans	210,371	2,307
Increase (Decrease) in long-term loans (include current portion)	10,041	(5,162)
Cash dividends	(901,664)	(834,040)
Proceeds from bonds issued	-	500,000
Decrease in long-term deferred revenue	(377)	(373)
Increase in deposits received	13,428	-
Iecrease in non-controlling interests	32,458	-
Net cash used in financing activities	(635,743)	(337,268)
Effect of exchange rate changes on cash and cash equivalents	(73,297)	(101,947)
Net decrease in cash and cash equivalents	(500,166)	(5,113)
Cash and cash equivalents at beginning of period	3,125,187	3,130,300
Cash and cash equivalents at end of period	$2,625,021	$3,125,187

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

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the Years Ended 31 December 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

1. History and organization

SINBON Electronics Co., Ltd. (the Company) was incorporated in Republic of China (R.O.C) in December 1989. The main activities of the Company include manufacturing and selling computer peripherals, connectors, wires and other parts. The shares of the Company commenced trading on Taiwan’s Over-the-Counter Market in May 2001 and were listed on the Taiwan Stock Exchange in August 2002.

2. Date and procedures of authorization of financial statements for issue

The consolidated financial statements of the Company and its subsidiaries (the Group) were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on 14 March 2019.

3. Newly issued or revised standards and interpretations

• (1) Changes in accounting policies resulting from applying for the first time certain standards and amendments

The Group applied for the first time International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are endorsed by Financial Supervisory Commission (“FSC”) and become effective for annual periods beginning on or after 1 January 2018. The nature and the impact of each new standard and amendment that has a material effect on the Group is described below:

• (a) IFRS 15“Revenue from Contracts with Customers” (including Amendments to IFRS 15 “Clarifications to IFRS 15 Revenue from Contracts with Customers”)

IFRS 15 replaces IAS 11 Construction Contracts , IAS 18 Revenue and related interpretations. In accordance with the transition provision in IFRS 15, the Group elected to recognize the cumulative effect of initially applying IFRS 15 at the date of initial application (1 January 2018). The Group also elected to apply this standard retrospectively only to contracts that are not completed contracts at the date of initial application.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group’s principal activities consist of the sale of goods and rendering of services. The impacts arising from the adoption of IFRS 15 on the Group are summarized as follows:

• A. Please refer to Note 4 for the accounting policies before or after 1 January 2018.

• B. Before 1 January 2018, revenue from sale of goods was recognized when goods have been delivered to the buyer. Starting from 1 January 2018, in accordance with IFRS 15, the Group recognized revenue when (or as) the Group satisfies a performance obligation by transferring a promised good to a customer. IFRS 15 has no impact on the Group’s revenue recognition from sale of goods. However, for some contracts, if the Group has the right to transfer the goods to customers but does not has a right to an amount of consideration that is unconditional, these contracts should be presented as contract assets, which is different from the accounting treatment of recognizing trade receivables before the date of initial application. In addition, loss allowance for contract assets was assessed in accordance with IFRS 9. To compare with the requirements of IAS 18, the abovementioned differences have no impact on the Group as at 31 December 2018.

• C. Before 1 January 2018, revenue from rendering of services was recognized by reference to the stage of completion which was measured by reference to the proportion that contract cost incurred for work performed to date bear to the estimated total contract costs. Starting from 1 January 2018, in accordance with IFRS 15, the Group recognized revenue when (or as) the Group satisfies a performance obligation by transferring a promised service to a customer and also by reference to the stage of completion. IFRS 15 has no significant impact on the Group’s revenue recognition from rendering of services.

• D. For some rendering of services contracts, part of the consideration was received from customers upon signing the contract, then the Group has the obligation to provide the services subsequently. Before 1 January 2018, the Group recognized the consideration received in advance from customers under other current liabilities (Advanced Receipts). Starting from 1 January 2018, in accordance with IFRS 15, it should be recognized as contract liabilities. The amount reclassified from other current liabilities to contracts liabilities of the Group as at the date of initial application was NT$153,313 thousand. In addition, compared with the requirements of IAS 18, other current liabilities decreased by NT$328,405 thousand and the contract liabilities increased by NT$328,405 thousand as at 31 December 2018.

• E. Please refer to Notes 4, 5 and 6 for additional disclosure notes required by IFRS 15.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) IFRS 9“Financial Instruments”

IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement . In accordance with the transition provision in IFRS 9, the Group elected not to restate prior periods at the date of initial application (1 January 2018). The adoption of IFRS 9 has the following impacts on the Group:

• A. The Group adopted IFRS 9 on 1 January 2018 and it adopted IAS 39 before 1 January 2018. Please refer to Note 4 for more details on accounting policies.

• B. In accordance with the transition provision in IFRS 9, the assessment of the business model and classification of financial assets into the appropriate categories are based on the facts and circumstances that existed as at 1 January 2018. The classifications of financial assets and its carrying amounts as at 1 January 2018 are as follows:

IAS 39		IFRS 9
	Carrying amounts	Measurement categories	Carrying amounts
Measurement categories
Fair value through profit or loss	$61,630	Fair value through profit or loss	$67,360
Fair value through other	5,730 501,778	Fair value through other comprehensive income	363,594
comprehensive income
Available-for-sale financial
assets - current
Available-for-sale financial
assets - noncurrent (including
NT$369,608 thousand
measured at cost)
Subtotal	507,508	Subtotal	363,594
At amortized cost	6,697,725	At amortized cost (including cash and cash equivalents, notes receivables, trade receivables and other receivables)	6,697,725
Loans and receivables
(including cash and cash
equivalents, notes receivables,
trade receivables and other
receivables)
Total	$7,266,863	Total	$7,128,679

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• C. The transition adjustments from IAS 39 to IFRS 9 for the classifications of financial assets and financial liabilities as at 1 January 2018 are as follows:

						Other
IAS 39		IFRS 9			Retained earnings Adjustment	components
Class of financial	Carrying amounts	Class of financial instruments	Carrying amounts	Difference		of equity
instruments						Adjustment
Financial assets at fair
value through profit or
loss (Note 1)
Held-for-trading	$61,630	Measured at fair value through profit or loss	$61,630	$ -	$ -	$ -
Fair value through other
comprehensive income
Available-for-sale financial assets - current	5,730	Measured at fair value through profit or loss	5,730	-	-	-
Available-for-sale	501,778	Measured at fair value through other comprehensive income (equity instruments)	363,594	138,184	(825)	139,009
financial assets -
noncurrent
(including
investments
measured at cost
with initial
investment cost of
NT$369,608
thousand, reported
as a separate line
item) (Note 2)
Subtotal	507,508	Subtotal	369,324	138,184	(825)	139,009
Loans and receivables		Financial assets measured at amortized costs
(Note 3)
Cash and cash	3,054,178	Cash and cash equivalents (exclude cash on hand)	3,054,178	-	-	-
equivalents (exclude
cash on hand)
Notes receivables	389,800	Notes receivables	389,800	-	-	-
Trade receivables	3,085,120	Trade receivables	3,085,120	-	-	-

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

						Other
IAS 39		IFRS 9			Retained earnings Adjustment	components
Class of financial	Carrying amounts	Class of financial instruments	Carrying amounts	Difference		of equity
instruments						Adjustment
Other receivables	168,627	Other receivables	168,627	-	-	-
Subtotal Total	6,697,725 $7,266,863	Subtotal Total	6,697,725 $7,128,697	- $138,184	- $(825)	-
						$139,009

Notes:

• (1)In accordance with IAS 39, financial assets classified as held for trading which are measured at fair value through profit or loss might include investments in funds and stocks of listed companies. In accordance with IFRS 9, as the cash flow characteristics for funds are not solely payments of principal and interest on the principal amounts outstanding and the Group assessed the facts and circumstances existed as at 1 January 2018, and determined they were held-for-trading; therefore, they were classified as financial assets mandatorily measured at fair value through profit or loss.

• (2)In accordance with of IAS 39, the Group’s available-for-sale financial assets include investments in funds, stocks of listed companies and stocks of unlisted companies. Adjustment details are described as follows:

a.Funds

As the cash flow characteristics for funds are not solely payments of principal and interest on the principal amount outstanding, so funds are classified as financial assets mandatorily measured at fair value through profit or loss in accordance with IFRS 9. As at 1 January 2018, the Group reclassified available-for-sale financial assets of NT$5,730 thousand to financial assets mandatorily measured at fair value through profit or loss.

b. Stocks (including listed and unlisted companies)

The Group assessed the facts and circumstances existed as at 1 January 2018, and determined these stocks were not held-for-trading; therefore, the Group elected to designate them as financial assets measured at fair value through other comprehensive income. As at 1 January 2018, the Group reclassified available-for-sale financial assets (including measured at cost) to financial assets measured at fair value through other comprehensive income in the amount of NT$363,594 thousand. Other related adjustments are described as follows:

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (a) The stocks of unlisted companies previously measured at cost in accordance with IAS 39 had an original cost of NT$825 thousand, which was fully impaired. However, in accordance with IFRS 9, stocks of unlisted companies must be measured at fair value and shall not recognize impairment. The fair value of the stocks of unlisted companies was NT$231,424 thousand as at 1 January 2018. Accordingly, the Group adjusted the carrying amount of financial assets measured at fair value through other comprehensive income of NT$231,424 thousand and also adjusted the retained earnings and other equity by NT$825 thousand and NT$139,009 thousand, respectively.

• (b)As at 1 January 2018, the Group reclassified the stocks of listed companies of NT$132,170 thousand measured at fair value from available-for-sale financial assets to financial assets measured at fair value through other comprehensive income. This adjustment did not result in any differences in the carrying amounts of assets, but reclassified within equity accounts.

• (3)In accordance with IAS 39, the cash flow characteristics for held-to-maturity investments and loans and receivables are solely payments of principal and interest on the principal amount outstanding. The assessment of the business model is based on the facts and circumstances that existed as at 1 January 2018. These financial assets were measured at amortized cost as they were held within a business model whose objective was to hold financial assets in order to collect contractual cash flows. Besides, in accordance with IFRS 9, there was no adjustment arising from the assessment of impairment losses for the aforementioned assets as at 1 January 2018. Therefore, there is no impact on the carrying amount as at 1 January 2018.

  • D. Please refer to Notes 4, 5, 6 and 12 for the related disclosures required by IFRS 7 and IFRS 9.

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

The interpretation clarifies that when applying paragraphs 21 and 22 of IAS 21 “The Effects of Changes in Foreign Exchange Rates”, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which the entity initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration.

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Group originally recorded their foreign currency sales transactions based on the exchange rate on the date of revenue recognition and converted into its functional currency. The exchange difference was recognized when the foreign currency advance payment was written off. The Group elected to apply this interpretation prospectively on 1 January 2018. This change in accounting principle did not significantly impact the Group's recognition and measurement.

(2)Standards or interpretations issued, revised or amended, by International Accounting Standards Board (“IASB”) which are endorsed by FSC, but not yet adopted by the Group as at the end of the reporting period are listed below:

Items	New, Revised or Amended Standards and Interpretations IFRS 16 “Leases” IFRIC 23 “Uncertainty Over Income Tax Treatments” IAS 28 “Investments in Associates and Joint Ventures” —Amendments to IAS28 Prepayment Features with Negative Compensation (Amendments to IFRS9) Improvements to International Financial Reporting Standards (2015 – 2017 cycle) Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)	Effective Date Issued byIASB
a b c d e f		1 January 2019 1 January 2019 1 January 2019 1 January 2019 1 January 2019 1 January 2019

(a) IFRS 16“Leases”

The new standard requires lessees to account for all leases under one single accounting model (except for short-term or low-value asset lease exemptions), which is for lessees to recognize right-of-use assets and lease liabilities on the balance sheet and the depreciation expense and interest expense associated with those leases in the consolidated statements of comprehensive income. Besides, lessors’ classification remains unchanged as operating or finance leases, but additional disclosure information is required.

• (b) IFRIC 23 “Uncertainty Over Income Tax Treatments”

The interpretation clarifies application of recognition and measurement requirements in IAS 12 “Income Taxes” when there is uncertainty over income tax treatments.

• (c) IAS 28“Investment in Associates and Joint Ventures” — Amendments to IAS 28

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The amendments clarify that an entity applies IFRS 9 to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture before it applies IAS 28, and in applying IFRS 9, does not take account of any adjustments that arise from applying IAS 28.

• (d) Prepayment Features with Negative Compensation (Amendments to IFRS 9)

The amendment allows financial assets with prepayment features that permit or require a party to a contract either to pay or receive reasonable compensation for the early termination of the contract, to be measured at amortized cost or at fair value through other comprehensive income.

• (e) Improvements to International Financial Reporting Standards (2015-2017 cycle):

IFRS 3 “Business Combinations”

The amendments clarify that an entity that has joint control of a joint operation shall remeasure its previously held interest in a joint operation when it obtains control of the business.

IFRS 11 “Joint Arrangements”

The amendments clarify that an entity that participates in, but does not have joint control of, a joint operation does not remeasure its previously held interest in a joint operation when it obtains joint control of the business.

IAS 12 “Income Taxes”

The amendments clarify that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events.

IAS 23 “Borrowing Costs”

The amendments clarify that an entity should treats as part of general borrowings any borrowing made specifically to obtain an asset when the asset is ready for its intended use or sale.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (f) Plan Amendment, Curtailment or Settlement (Amendments to IAS 19)

The amendments clarify that when a change in a defined benefit plan is made (such as amendment, curtailment or settlement, etc.), the entity should use the updated assumptions to remeasure its net defined benefit liability or asset.

The abovementioned standards and interpretations issued by IASB and endorsed by FSC so that they are applicable for annual periods beginning on or after January 2019. Apart from item (a) explained below, the remaining standards and interpretations have no material impact on the Group.

• (1) IFRS 16 “Leases”

IFRS 16 “Leases” replaces IAS 17 “Leases”, IFRIC 4 “Determining whether an Arrangement contains a Lease”, SIC-15 “Operating Leases - Incentives” and SIC-27 “Evaluating the Substance of Transactions Involving the Legal Form of a Lease”. The impact arising from the adoption of IFRS 16 on the Group are summarized as follows:

• A. For the definition of a lease, the Group elects not to reassess whether a contract is, or contains, a lease at the date of initial application (1 January 2019) in accordance with the transition provision in IFRS 16. Instead, the Group is permitted to apply IFRS 16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 but not to apply IFRS 16 to contracts that were not previously identified as containing a lease applying IAS 17 and IFRIC 4.

The Group is a lessee and elects not to restate comparative information in accordance with the transition provision in IFRS 16. Instead, the Group recognizes the cumulative effect of initially applying IFRS 16 as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at the date of initial application.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (a) Leases classified as operating leases

For leases that were classified as operating leases applying IAS 17, the Group expects to measure and recognize those leases as lease liability on 1 January 2019 at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on 1 January 2019 and; the Group chooses, on a lease-by-lease basis, to measure the right-of-use asset at either:

• i. its carrying amount as if IFRS 16 had been applied since the commencement date, but discounted using the lessee’s incremental borrowing rate on 1 January 2019; or

• ii. an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognized in the balance sheet immediately before 1 January 2019.

The Group expects the right-of-use asset will increase by NT$86,580 and the lease liability will increase by NT$86,580 on 1 January 2019.

(b) Leases classified as finance leases

None.

B.The additional disclosures of lessee and lessor required by IFRS 16 will be disclosed in the relevant notes.

• (3)Standards or interpretations issued, revised or amended, by IASB but not yet endorsed by FSC are listed below:

Items	New, Revised or Amended Standards and Interpretations IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures IFRS 17 “Insurance Contracts” Definition of a Business (Amendments to IFRS 3) Definition of Materiality (Amendments to IAS 1 and 8)	Effective Date Issued byIASB
a b c d		To be determined by IASB 1 January 2021 1 January 2020 1 January 2020

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (a) IFRS 10“Consolidated Financial Statements” and IAS 28“Investments in Associates and Joint Ventures” — Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures

The amendments address the inconsistency between the requirements in IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” , in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint ventures. IFRS 10 requires full profit or loss recognition on the loss of control of the subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized in full.

IFRS 10 was also amended so that the gains or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

(b) IFRS 17 “Insurance Contracts”

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model. Under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The fulfilment cash flows comprise of the following:

(1)estimates of future cash flows

• (2)discount rate: an adjustment to reflect the time value of money and the financial risks related to the future cash flows, to the extent that the financial risks are not included in the estimates of the future cash flows

• (3)a risk adjustment for non-financial risk

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims. Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

(c) Definition of a Business (Amendments to IFRS 3)

The amendments clarify the definition of a business in IFRS 3 Business Combinations. The amendments are intended to assist entities to determine whether a transaction should be accounted for as a business combination or as an asset acquisition.

IFRS 3 continues to adopt a market participant’s perspective to determine whether an acquired set of activities and assets is a business. The amendments clarify the minimum requirements for a business; add guidance to help entities assess whether an acquired process is substantive; and narrow the definitions of a business and of outputs; etc.

(d) Definition of a Material (Amendments to IAS 1 and 8)

The main amendment is to clarify new definition of material. It states that “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments clarify that materiality will depend on the nature or magnitude of information. An entity will need to assess whether the information, either individually or in combination with other information, is material in the context of the financial statements. A misstatement of information is material if it could reasonably be expected to influence decisions made by the primary users.

The abovementioned standards and interpretations issued by IASB have not yet endorsed by FSC at the date when the Group’s financial statements were authorized for issue, the local effective dates are to be determined by FSC. As the Group is evaluating the impact of the standards and interpretations have no material impact on the Group.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

4. Summary of significant accounting policies

• (1) Statement of Compliance

The consolidated financial statements of the Group for the years ended 31 December 2018 and 2017 have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (“the Regulations”) and International Financial Reporting Standards, International Accounting Standards, and Interpretations developed by the International Financial Reporting Interpretations Committee, which are endorsed by FSC (TIFRSs).

• (2) Basis of Preparation

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments that have been measured at fair value. The consolidated financial statements are expressed in thousands of New Taiwan Dollars (“$”) unless otherwise stated.

• (3) Basis of Consolidation

Preparation principle of consolidated financial statement

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:

• (a)power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

• (b)exposure, or rights, to variable returns from its involvement with the investee, and

• (c)the ability to use its power over the investee to affect its returns

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(a)the contractual arrangement with the other vote holders of the investee

(b)rights arising from other contractual arrangements

(c)the Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control.

Subsidiaries are fully consolidated from the acquisition date, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using uniform accounting policies. All intra-group balances, income and expenses, unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction.

Total comprehensive income of the subsidiaries is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

If the Group loses control of a subsidiary, it:

• (a)derecognizes the assets (including goodwill) and liabilities of the subsidiary;

(b)derecognizes the carrying amount of any non-controlling interest;

• (c)recognizes the fair value of the consideration received;

• (d)recognizes the fair value of any investment retained;

• (e)recognizes any surplus or deficit in profit or loss; and

• (f)reclassifies the parent’s share of components previously recognized in other comprehensive income to profit or loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The consolidated entities are listed as follows:

Investor	Subsidiary	Main businesses	Percentage of ownership (%)	Percentage of ownership (%)	Note
			31 December 2018	31 December 2017
The Company	SINBON International Enterprise Co.,Ltd.(SB(BVI))	Holding company	100.00%	100.00%
The Company	Hong Kong SINBON Electronics Co., Ltd. (HKSB)	Selling a wide variety of connectors, wires and cables	100.00%	100.00%
The Company	Super Elite Ltd.(SEL)	General investment	64.48%	64.48%
The Company	Beijing SINBON Electronics Co., Ltd. (BJSB)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%	Note 5
The Company	Kwan-Ze Corporation Ltd. (Kwan-Ze)	Selling a wide variety of electronic materials and holdingcompany	100.00%	100.00%
The Company	SINBON USA L.L.C. (SINBON USA)	Logistic center	100.00%	100.00%
The Company	Beijing SINBON Tongan Electronics Co., Ltd.(BJSB Tongan)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%
The Company	SINBON Europe GmbH (EuropeSB)	Logistic center	100.00%	100.00%
The Company	Radbon Avionics Inc. (Radbon)	Selling signal cables and cabin wiring.	55.00%	90.00%	Note 1
The Company	T-CONN Precision Co., Ltd.(T-CONN)	Manufacturing and selling a wide variety of connectors, wires and cables	62.52%	64.48%	Note 2
SINBON USA	Worldwide Wire Harnesses Co., Ltd. (SST)	Holding company	50.00%	50.00%	Note 3
BVI	Jiangyin SINBON Electronics Co., Ltd. (JYSB)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%
BVI	Shenzhen SINBON Electronics Co., Ltd. (SZSB)	Selling a wide variety of connectors, wires and cables	100.00%	100.00%
BVI	Shanghai SINBON Electronics Co., Ltd. (SHSB)	Selling a wide variety of connectors and cables	100.00%	100.00%

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Investor	Subsidiary	Main businesses	Percentage of ownership (%)	Percentage of ownership (%)	Note
			31 December 2018	31 December 2017
BVI	Tong Cheng SINBON Electronics Co., Ltd . (TCSB)	Manufacturing and selling a wide variety of connectors, wires and cables	100.00%	100.00%
T-CONN	T-CONN Precision (Zhongshan) Co., Ltd.(T-CONN Zhongshan)	Manufacturing and selling a wide variety of connectors, wires and cables	62.52%	64.48%	Note 2
T-CONN	Super Progressive Ltd. (SPL)	Logistic center	62.52%	64.48%	Note 2
Worldwide Wire Harnesses Co.,Ltd.	SINBON Technologies Tennessee L.L.C. (STT)	Logistic Center	50.00%	50.00%
Kwan-Ze	Digi O2 International Co., Ltd. (Digi O2)	Selling a wide variety of connectors and cables	-	98.83%	Note 4
SINBON Europe	SINBON Holding GmbH (SINBON Elcotronic)	Holding company	51.00%	51.00%
SINBON Elcotronic	SINBON Hungary Kft (ET Hungary)	Manufacturing and selling a wide variety of connectors, wires and cables	51.00%	51.00%
SINBON Elcotronic	SINBON Germany GmbH (ET Germany)	Logistic center	51.00%	51.00%
BJSB Tongan	Jiangsu EnMai Energy and Technology Co., Ltd. (EM)	Selling a wide variety of connectors, wires and cables	100.00%	100.00%

• Note 1: On 18 January 2018, the Company acquired additional 300 thousand shares of Radbon hence raising its ownership to 100%. On 27 June 2018, Radbon raised cash capital with 3,000 shares and raised share capital by technology contribution to increase 2,700 shares; however, the Company did not acquire shares according to the shareholding percentage. Therefore, its ownership dropped from 100% to 55%. Refer to Note 6 (27) for the changes.

• Note 2: In 2018, T-CONN raised capital; however, the Company did not acquire shares according to the shareholding percentage. Therefore, its ownership dropped from 64% to 62.25%.

• Note 3: SST and STT were originally held by the Company. They are now held by SINBON USA due to the transfer of equity structure this period.

• Note 4: On 5 January 2018, the Ministry of Economic Affairs approved the dissolution of the case. The Company will not incorporate Digi O2’s gain or loss in its consolidated financial statement from the day the Company ceased to have control over Digi O2.

• Note 5: Since 5 September 2018, after signing the transfer agreement, the shareholders’ rights and obligations of BJSB have been transferred to BJSB Tongan. On 2 January 2019, the change of registration was completed and approved by SAIC, BJSB has been invested by BJSB Tongan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The subsidiaries included in the consolidated financial statements listed above, some of which financial statements are recorded as the basis of the verification by other accountants. As of 31 December 2018 and 2017, the related assets amounted to NT$1,991,440 thousand and NT$1,924,399 thousand. The net sales of these subsidiaries amounted to NT$2,721,718 thousand and NT$2,624,634 thousand.

(4) Foreign Currency Transactions

The Group’s consolidated financial statements are presented in New Taiwan Dollars (NT$), which is also the Company’s functional currency. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency rates prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date. Non-monetary items measured at fair value in foreign currencies are translated using the exchange rates at the date when the fair value is determined. Non-monetary items that are measured at historical cost in foreign currencies are translated using the exchange rates as at the dates of the initial transactions.

All exchange differences arising on the settlement of monetary items or on translating monetary items are taken to profit or loss in the period in which they arise except for the following:

• (a) Exchange differences arising from foreign currency borrowings for an acquisition of a qualifying asset to the extent that they are regarded as an adjustment to interest costs are included in the borrowing costs that are eligible for capitalization.

• (b) Foreign currency items within the scope of IFRS 9 Financial Instruments (Before 1 January 2018: IAS 39 Financial Instruments: Recognition and Measurement) are accounted for based on the accounting policy for financial instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (c)Exchange differences arising on a monetary item that forms part of a reporting entity’s net investment in a foreign operation is recognized initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the net investment.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is recognized in profit or loss.

(5) Translation of Foreign Currency Financial Statements

The assets and liabilities of foreign operations are translated into NT$ at the closing rate of exchange prevailing at the reporting date and their income and expenses are translated at an average rate for the period. The exchange differences arising on the translation are recognized in other comprehensive income. On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognized in other comprehensive income and accumulated in the separate component of equity, is reclassified from equity to profit or loss when the gain or loss on disposal is recognized. The following partial disposals are accounted for as disposals:

• (a) when the partial disposal involves the loss of control of a subsidiary that includes a foreign operation; and

• (b) when the retained interest after the partial disposal of an interest in a joint arrangement or a partial disposal of an interest in an associate that includes a foreign operation is a financial asset that includes a foreign operation.

On the partial disposal of a subsidiary that includes a foreign operation that does not result in a loss of control, the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is re-attributed to the non-controlling interests in that foreign operation. In partial disposal of an associate or joint arrangement that includes a foreign operation that does not result in a loss of significant influence or joint control, only the proportionate share of the cumulative amount of the exchange differences recognized in other comprehensive income is reclassified to profit or loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Any goodwill and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and expressed in its functional currency.

• (6) Current and non-current distinction

An asset is classified as current when:

• (a) The Group expects to realize the asset, or intends to sell or consume it, in its normal operating cycle

• (b) The Group holds the asset primarily for the purpose of trading

• (c) The Group expects to realize the asset within twelve months after the reporting period

• (d) The asset is cash or cash equivalent unless the asset is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is classified as current when:

• (a) The Group expects to settle the liability in its normal operating cycle

• (b) The Group holds the liability primarily for the purpose of trading

• (c) The liability is due to be settled within twelve months after the reporting period

• (d) The Group does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

All other liabilities are classified as non-current.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (7) Cash Equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term, highly liquid time deposits (including ones that have maturity within 3 months) or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

• (8) Financial Instruments

Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities within the scope of IFRS 9 Financial Instruments (Before 1 January 2018: IAS 39 Financial Instruments: Recognition and Measurement) are recognized initially at fair value plus or minus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs.

• (1)Financial instruments: Recognition and Measurement

The accounting policy from 1 January 2018 is as follows:

The Group accounts for regular way purchase or sales of financial assets on the trade date.

The Group classified financial assets as subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss considering both factors below:

• A. the Group’s business model for managing the financial assets

• B. the contractual cash flow characteristics of the financial asset

Financial assets measured at amortized cost

A financial asset is measured at amortized cost if both of the following conditions are met and presented as note receivables, trade receivables financial assets measured at amortized cost and other receivables etc., on balance sheet as at the reporting date:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• A. the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and

• B. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are subsequently measured at amortized cost (the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount and the maturity amount and adjusted for any loss allowance) and is not part of a hedging relationship. A gain or loss is recognized in profit or loss when the financial asset is derecognized, through the amortization process or in order to recognize the impairment gains or losses.

Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• A. purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition

• B. financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods

Financial asset measured at fair value through other comprehensive income

A financial asset is measured at fair value through other comprehensive income if both of the following conditions are met:

• A. the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and

• B. the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Recognition of gain or loss on a financial asset measured at fair value through other comprehensive income is described as below:

• (a) A gain or loss on a financial asset measured at fair value through other comprehensive income recognized in other comprehensive income, except for impairment gains or losses and foreign exchange gains and losses, until the financial asset is derecognized or reclassified.

• (b) 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 as a reclassification adjustment.

• (c) Interest revenue is calculated by using the effective interest method. This is calculated by applying the effective interest rate to the gross carrying amount of a financial asset except for:

• i. Purchased or originated credit-impaired financial assets. For those financial assets, the Group applies the credit-adjusted effective interest rate to the amortized cost of the financial asset from initial recognition.

• ii. Financial assets that are not purchased or originated credit-impaired financial assets but subsequently have become credit-impaired financial assets. For those financial assets, the Group applies the effective interest rate to the amortized cost of the financial asset in subsequent reporting periods.

In addition, for certain equity investments within the scope of IFRS 9 that is neither held for trading nor contingent consideration recognized by an acquirer in a business combination to which IFRS 3 applies, the Group made an irrevocable election to present the changes of the fair value in other comprehensive income at initial recognition. Amounts presented in other comprehensive income shall not be subsequently transferred to profit or loss (when disposal of such equity instrument, its cumulated amount included in other components of equity is transferred directly to the retained earnings) and these investments should be presented as financial assets measured at fair value through other comprehensive income on the balance sheet. Dividends on such investment are recognized in profit or loss unless the dividends clearly represents a recovery of part of the cost of investment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financial asset measured at fair value through profit or loss

Financial assets were classified as measured at amortized cost or measured at fair value through other comprehensive income based on aforementioned criteria. All other financial assets were measured at fair value through profit or loss and presented on the balance sheet as financial assets measured at fair value through profit or loss.

Such financial assets are measured at fair value, the gains or losses resulting from remeasurement is recognized in profit or loss which includes any dividend or interest received on such financial assets.

The accounting policy before 1 January 2018 is as follows:

The Group accounts for regular way purchase or sales of financial assets on the trade date.

Financial assets of the Group are classified as financial assets at fair value through profit or loss, held-to-maturity investments, available-for-sale financial assets and loans and receivables. The Group determines the classification of its financial assets at initial recognition.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets as at fair value through profit or loss. A financial asset is classified as held for trading if:

• i. It is acquired or incurred principally for the purpose of selling or repurchasing it in the near term.

• ii. On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking.

• iii. It is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial asset at fair value through profit or loss; or a financial asset may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

• i. it eliminates or significantly reduces a measurement or recognition inconsistency; or

• ii. a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Financial assets at fair value through profit or loss are measured at fair value with changes in fair value recognized in profit or loss. Dividends or interests on financial assets at fair value through profit or loss are recognized in profit or loss (including those received during the period of initial investment).

If financial assets do not have quoted prices in an active market and their fair value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date.

Available-for-sale financial assets

Available-for-sale investments are non-derivative financial assets that are designated as available-for-sale or those not classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, or loans and receivables.

Foreign exchange gains and losses and interest calculated using the effective interest method relating to monetary available-for-sale financial assets, or dividends on an available-for-sale equity instrument, are recognized in profit or loss. Subsequent measurement of available-for-sale financial assets at fair value is recognized in equity until the investment is derecognized, at which time the cumulative gain or loss is recognized in profit or loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

If equity instrument investments do not have quoted prices in an active market and their fair value cannot be reliably measured, then they are classified as financial assets measured at cost on balance sheet and carried at cost net of accumulated impairment losses, if any, as at the reporting date.

Held-to-maturity financial assets

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the Group has the positive intention and ability to hold it to maturity, other than those that are designated as available-for-sale, classified as financial assets at fair value through profit or loss, or meet the definition of loans and receivables.

After initial measurement held-to-maturity financial assets are measured at amortized cost using the effective interest method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or transaction costs. The effective interest method amortization is recognized in profit or loss.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market other than those that the Group upon initial recognition designates as available for sale, classified as at fair value through profit or loss, or those for which the holder may not recover substantially all of its initial investment.

Loans and receivables are separately presented on the balance sheet as receivables or debt instrument investments for which no active market exists. After initial measurement, such financial assets are subsequently measured at amortized cost using the effective interest rate method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or transaction costs. The effective interest method amortization is recognized in profit or loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (2) Impairment of financial assets

The accounting policy from 1 January 2018 is as follows:

The Group recognizes a loss allowance for expected credit losses on debt instrument investments measured at fair value through other comprehensive income and financial asset measured at amortized cost. The loss allowance on debt instrument investments measured at fair value through other comprehensive income is recognized in other comprehensive income and not reduce the carrying amount in the statement of financial position.

The Group measures expected credit losses of a financial instrument in a way that reflects:

• (a) an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes

• (b) the time value of money

• (c) reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions

The loss allowance is measured as follows:

• A. At an amount equal to 12-month expected credit losses: the credit risk on a financial asset has not increased significantly since initial recognition or the financial asset is determined to have low credit risk at the reporting date. In addition, the Group measures the loss allowance at an amount equal to lifetime expected credit losses in the previous reporting period, but determines at the current reporting date that the credit risk on a financial asset has increased significantly since initial recognition is no longer met.

• B.At an amount equal to the lifetime expected credit losses: the credit risk on a financial asset has increased significantly since initial recognition or financial asset that is purchased or originated credit-impaired financial asset.

• C.For trade receivables or contract assets arising from transactions within the scope of IFRS 15, the Group measures the loss allowance at an amount equal to lifetime expected credit losses.

At each reporting date, the Group needs to assess whether the credit risk on a financial asset has increased significantly since initial recognition by comparing the risk of a default occurring at the reporting date and the risk of default occurring at initial recognition. Please refer to Note 12 for further details on credit risk.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The accounting policy before 1 January 2018 is as follows:

The Group assesses at each reporting date whether there is any objective evidence that a financial asset other than the financial assets at fair value through profit or loss is impaired. A financial asset is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more loss events that has occurred after the initial recognition of the asset and that loss event has an impact on the estimated future cash flows of the financial asset. The carrying amount of the financial asset impaired, other than receivables impaired which are reduced through the use of an allowance account, is reduced directly and the amount of the loss is recognized in profit or loss.

A significant or prolonged decline in the fair value of an available-for-sale equity instrument below its cost is considered a loss event.

Other loss events include:

• i. significant financial difficulty of the issuer or obligor

• ii. a breach of contract, such as a default or delinquency in interest or principal payments

• iii. it becoming probable that the borrower will enter bankruptcy or other financial reorganization

• iv. the disappearance of an active market for that financial asset because of financial difficulties

For held-to-maturity financial assets and loans and receivables measured at amortized cost, the Group first assesses individually whether objective evidence of impairment exists individually for financial asset that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exits for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows. The present value of the estimated future cash flows is discounted at the financial assets original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate. Interest income is accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Receivables together with the associated allowance are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If a future write-off is later recovered, the recovery is credited to profit or loss.

In the case of equity investments classified as available-for-sale, where there is evidence of impairment, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss – is removed from other comprehensive income and recognized in profit or loss. Impairment losses on equity investments are not reversed through profit or loss; increases in their fair value after impairment are recognized directly in other comprehensive income.

In the case of debt instruments classified as available-for-sale, the amount recorded for impairment is the cumulative loss measured as the difference between the amortized cost and the current fair value, less any impairment loss on that investment previously recognized in profit or loss. Future interest income continues to be accrued based on the reduced carrying amount of the asset, using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recognized in profit or loss. If, in a subsequent year, the fair value of a debt instrument increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through profit or loss.

(3)Derecognition of financial assets

A financial asset is derecognized when:

• i. The rights to receive cash flows from the asset have expired

• ii. The Group has transferred the asset and substantially all the risks and rewards of the asset have been transferred

• iii. The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the consideration received or receivable including any cumulative gain or loss that had been recognized in other comprehensive income, is recognized in profit or loss.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(4)Financial liabilities and equity

Classification between liabilities or equity

The Group classifies the instrument issued as a financial liability or an equity instrument in accordance with the substance of the contractual arrangement and the definitions of a financial liability, and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. The transaction costs of an equity transaction are accounted for as a deduction from equity (net of any related income tax benefit) to the extent they are incremental costs directly attributable to the equity transaction that otherwise would have been avoided.

Compound instruments

The Group evaluates the terms of the convertible bonds issued to determine whether it contains both a liability and an equity component. Furthermore, the Group assesses if the economic characteristics and risks of the put and call options contained in the convertible bonds are closely related to the economic characteristics and risk of the host contract before separating the equity element.

For the liability component excluding the derivatives, its fair value is determined based on the rate of interest applied at that time by the market to instruments of comparable credit status. The liability component is classified as a financial liability measured at amortized cost before the instrument is converted or settled. For the embedded derivative that is not closely related to the host contract (for example, if the exercise price of the embedded call or put option is not approximately equal on each exercise date to the amortized cost of the host debt instrument), it is classified as a liability component and subsequently measured at fair value through profit or loss unless it qualifies for an equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. Its carrying amount is not remeasured in the subsequent accounting periods. If the convertible bond issued does not have an equity component, it is accounted for as a hybrid instrument in accordance with the requirements under IFRS 9 Financial Instruments (before 1 January 2018: IAS 39 Financial Instruments: Recognition and Measurement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Transaction costs are apportioned between the liability and equity components of the convertible bond based on the allocation of proceeds to the liability and equity components when the instruments are initially recognized.

On conversion of a convertible bond before maturity, the carrying amount of the liability component being the amortized cost at the date of conversion is transferred to equity.

Financial liabilities

Financial liabilities within the scope of IFRS 9 Financial Instruments (before 1 January 2018: IAS 39 Financial Instruments: Recognition and Measurement) are classified as financial liabilities at fair value through profit or loss or financial liabilities measured at amortized cost upon initial recognition.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated as at fair value through profit or loss. A financial liability is classified as held for trading if:

• i. it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term

• ii. on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking

• iii. it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument)

If a contract contains one or more embedded derivatives, the entire hybrid (combined) contract may be designated as a financial liability at fair value through profit or loss; or a financial liability may be designated as at fair value through profit or loss when doing so results in more relevant information, because either:

• i. it eliminates or significantly reduces a measurement or recognition inconsistency; or

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• ii. a group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information about the group is provided internally on that basis to the key management personnel.

Gains or losses on the subsequent measurement of liabilities at fair value through profit or loss including interest paid are recognized in profit or loss.

Before 1 January 2018, if the financial liabilities at fair value through profit or loss do not have quoted prices in an active market and their fair value cannot be reliably measured, then they are classified as financial liabilities measured at cost on balance sheet and carried at cost as at the reporting date.

Financial liabilities at amortized cost

Financial liabilities measured at amortized cost include interest bearing loans and borrowings that are subsequently measured using the effective interest rate method after initial recognition. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate method amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or transaction costs.

Derecognition of financial liabilities

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

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified (whether or not attributable to the financial difficulty of the debtor), such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(5)Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

(9) Derivative financial instruments

The Group uses derivative financial instruments to hedge its foreign currency risks and interest rate risks. A derivative is classified in the balance sheet as assets or liabilities at fair value through profit or loss except for derivatives that are designated effective hedging instruments which are classified as derivative financial assets or liabilities for hedging.

Derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognized in equity.

Before 1 January 2018, derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognized in profit or loss. These embedded derivatives are separated from the host contract and accounted for as a derivative. The aforementioned policy are applicable to host contracts as financial liabilities or non-financial assets since 1 January 2018.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(10) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• (a) In the principal market for the asset or liability, or

• (b) In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible to by the Group.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

(11) Inventories

Inventories are valued at lower of cost and net realizable value item by item.

Costs incurred in bringing each inventory to its present location and condition are accounted for as follows:

Raw materials - Purchase cost on a first in, first out basis

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Finished goods and work in progress - Cost of direct materials and labor and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Starting from 1 January 2018, rendering of services is accounted in accordance with IFRS 15 and not within the scope of inventories.

(12) Investments accounted for under the equity method

The Group’s investment in its associate is accounted for using the equity method other than those that meet the criteria to be classified as held for sale. An associate is an entity over which the Group has significant influence. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture.

Under the equity method, the investment in the associate or an investment in a joint venture is carried in the balance sheet at cost and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate or joint venture. After the interest in the associate or joint venture is reduced to zero, additional losses are provided for, and a liability is recognized, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture. Unrealized gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the Group’s related interest in the associate or joint venture.

When changes in the net assets of an associate or a joint venture occur and not those that are recognized in profit or loss or other comprehensive income and do not affects the Group’s percentage of ownership interests in the associate or joint venture, the Group recognizes such changes in equity based on its percentage of ownership interests. The resulting capital surplus recognized will be reclassified to profit or loss at the time of disposing the associate or joint venture on a pro-rata basis.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

When the associate or joint venture issues new stock, and the Group’s interest in an associate or a joint venture is reduced or increased as the Group fails to acquire shares newly issued in the associate or joint venture proportionately to its original ownership interest, the increase or decrease in the interest in the associate or joint venture is recognized in additional paid-in capital and investment accounted for using the equity method. When the interest in the associate or joint venture is reduced, the cumulative amounts previously recognized in other comprehensive income are reclassified to profit or loss or other appropriate items. The aforementioned capital surplus recognized is reclassified to profit or loss on a pro rata basis when the Group disposes the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate or an investment in a joint venture is impaired in accordance with IAS 28 Investments in Associates and Joint Ventures (before 1 January 2018: IAS 39 Financial Instruments: Recognition and Measurement ). If this is the case the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value and recognizes the amount in the ‘share of profit or loss of an associate’ in the statement of comprehensive income in accordance with IAS 36 Impairment of Assets . In determining the value in use of the investment, the Group estimates:

• (a) Its share of the present value of the estimated future cash flows expected to be generated by the associate or joint venture, including the cash flows from the operations of the associate and the proceeds on the ultimate disposal of the investment; or

• (b) The present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Because goodwill that forms part of the carrying amount of an investment in an associate or an investment in a joint venture is not separately recognized, it is not tested for impairment separately by applying the requirements for impairment testing goodwill in IAS 36 Impairment of Assets .

Upon loss of significant influence over the associate or joint venture, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate or joint venture upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in profit or loss. Furthermore, if an investment in an associate becomes an investment in a joint venture or an investment in a joint venture becomes an investment in an associate, the entity continues to apply the equity method and does not remeasure the retained interest.

(13) Property, plant and equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of dismantling and removing the item and restoring the site on which it is located and borrowing costs for construction in progress if the recognition criteria are met. 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 is depreciated separately. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognized such parts as individual assets with specific useful lives and depreciation, respectively. The carrying amount of those parts that are replaced is derecognized in accordance with the derecognition provisions of IAS 16 Property, plant and equipment. When a major inspection is performed, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognized in profit or loss as incurred.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Depreciation is calculated on a straight-line basis over the estimated economic lives of the following assets:

Items Buildings Machinery and equipment Transportation equipment Office equipment Other equipment Leasehold improvements	Useful Lives
	5～50 years 3～15 years 5～10 years 3～10 years 2～15 years Lower of leasehold years or useful lives

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset is recognized in profit or loss.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted prospectively, if appropriate, and are treated as changes in accounting estimates.

(14) Leases

Group as a lessee

Finance leases which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the commencement of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized in profit or loss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an expense on a straight-line basis over the lease term.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(15) Intangible Assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected in profit or loss for the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each financial year. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset is derecognized.

A summary of the policies applied to the Group’s intangible assets is as follows:

follows:
Useful lives Amortization method used Internally generated or acquired	Computer software
	1~15 years Amortized on a straight- line basis over the estimated useful life Acquired

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(16) Impairment of non-financial assets

The Group assesses at the end of each reporting period whether there is any indication that an asset in the scope of IAS 36 Impairment of Assets may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset’s or cash-generating unit’s recoverable amount. A previously recognized impairment loss is reversed only if there has been an increase in the estimated service potential of an asset which in turn increases the recoverable amount. However, the reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years.

A cash generating unit, or groups of cash-generating units, to which goodwill has been allocated is tested for impairment annually at the same time, irrespective of whether there is any indication of impairment. If an impairment loss is to be recognized, it is first allocated to reduce the carrying amount of any goodwill allocated to the cash generating unit (group of units), then to the other assets of the unit (group of units) pro rata on the basis of the carrying amount of each asset in the unit (group of units). Impairment losses relating to goodwill cannot be reversed in future periods for any reason.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

An impairment loss of continuing operations or a reversal of such impairment loss is recognized in profit or loss.

(17) Provisions

Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probably that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

Provision for decommissioning, restoration and rehabilitation costs

The provision for decommissioning, restoration and rehabilitation costs arose on construction of a property, plant and equipment. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognized as part of the cost of that particular asset. The cash flows are discounted at a current pre-tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and recognized as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Sales returns and allowances

Starting from 1 January 2018, sales returns and allowances are accounted in accordance with IFRS 15. Before 1 January 2018, a provision has been recognized for sales returns and allowances based on past experience and other known factors.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(18) Revenue recognition

The accounting policy from 1 January 2018 is as follows:

The Group’s revenue arising from contracts with customers are primarily related to sale of goods and rendering of services. The accounting policies are explained as follows:

Sale of goods

The Group manufactures and sells machinery. Sales are recognized when control of the goods is transferred to the customer and the goods are delivered to the customers. The main product of the Group are computer peripherals, connectors, wires and other parts and revenue is recognized based on the consideration stated in the contract.

The credit period of the Group’s sale of goods is from 60 to 120 days. For most of the contracts, when the Group transfers the goods to customers and has a right to an amount of consideration that is unconditional, these contracts are recognized as trade receivables. The Group usually collects the payments shortly after transfer of goods to customers; therefore, there is no significant financing component to the contract. For some of the contracts, the Group has transferred the goods to customers but does not has a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. Besides, in accordance with IFRS 9, the Group measures the loss allowance for a contract asset at an amount equal to the lifetime expected credit losses.

Rendering of services

The Group provides maintenance services for the sale of construction for solar photovoltaic power generation system. Such services are separately priced or negotiated, and provided based on contract periods.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Most of the contractual considerations of the Group are collected evenly throughout the contract periods. When the Group has performed the services to customers but does not has a right to an amount of consideration that is unconditional, these contacts should be presented as contract assets. However, for some rendering of services contracts, part of the consideration was received from customers upon signing the contract, and the Group has the obligation to provide the services subsequently; accordingly, these amounts are recognized as contract liabilities.

The period between the transfers of contract liabilities to revenue is usually within one year, thus, no significant financing component has arisen.

The accounting policy before 1 January 2018 is as follows:

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods

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

• (a) the significant risks and rewards of ownership of the goods have passed to the buyer

• (b) neither continuing managerial involvement nor effective control over the goods sold have been retained

• (c) the amount of revenue can be measured reliably

• (d) it is probable that the economic benefits associated with the transaction will flow to the entity

• (e) the costs incurred in respect of the transaction can be measured reliably

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Rendering of services

Revenue from construction for solar photovoltaic power generation system is recognized by reference to the stage of completion. Stage of completion is measured by reference to the proportion that contract cost incurred for work performed to date bear to the estimated total contract costs. Where the contract outcome cannot be measured reliably, revenue is recognized only to the extent that the expenses incurred are eligible to be recovered.

Interest income

For all financial assets measured at amortized cost (including loans and receivables and held-to-maturity financial assets) and available-for-sale financial assets, interest income is recorded using the effective interest rate method and recognized in profit or loss.

Dividends

Revenue is recognized when the Group’s right to receive the payment is established.

(19) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

(20) Government grants

Government grants are recognized where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Where the grant relates to an asset, it is recognized as deferred income and released to income in equal amounts over the expected useful life of the related asset. When the grant relates to an expense item, it is recognized as income over the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Where the Group receives non-monetary grants, the asset and the grant are recorded gross at nominal amounts and released to the statement of comprehensive income over the expected useful life and pattern of consumption of the benefit of the underlying asset by equal annual installments. Where loans or similar assistance are provided by governments or related institutions with an interest rate below the current applicable market rate, the effect of this favorable interest is regarded as additional government grant.

(21) Post-employment benefits

All regular employees of the Company and its domestic subsidiaries are entitled to a pension plan that is managed by an independently administered pension fund committee. Fund assets are deposited under the committee’s name in the specific bank account and hence, not associated with the Company and its domestic subsidiaries. Therefore fund assets are not included in the Group’s consolidated financial statements. Pension benefits for employees of the overseas subsidiaries and the branches are provided in accordance with the respective local regulations.

For the defined contribution plan, the Company and its domestic subsidiaries will make a monthly contribution of no less than 6% of the monthly wages of the employees subject to the plan. The Company recognizes expenses for the defined contribution plan in the period in which the contribution becomes due. Overseas subsidiaries and branches make contribution to the plan based on the requirements of local regulations.

Post-employment benefit plan that is classified as a defined benefit plan uses the Projected Unit Credit Method to measure its obligations and costs based on actuarial assumptions. Re-measurements, comprising of the effect of the actuarial gains and losses, the effect of the asset ceiling (excluding net interest) and the return on plan assets, excluding net interest, are recognized as other comprehensive income with a corresponding debit or credit to retained earnings in the period in which they occur. Past service costs are recognized in profit or loss on the earlier of:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (a) the date of the plan amendment or curtailment, and

• (b) the date that the Group recognizes restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset, both as determined at the start of the annual reporting period, taking account of any changes in the net defined benefit liability (asset) during the period as a result of contribution and benefit payment.

(22) Income taxes

Income tax expense (income) is the aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Current income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or equity and not in profit or loss.

The surtax on undistributed retained earnings is recognized as income tax expense in the subsequent year when the distribution proposal is approved by the shareholders’ meeting.

Deferred tax

Deferred tax is provided on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• i. Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss

• ii. In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

• i. Where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

• ii. In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

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

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets are reassessed at each reporting date and are recognized accordingly.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current income tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(23) Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. The consideration transferred, the identifiable assets acquired and liabilities assumed are measured at acquisition date fair value. For each business combination, the acquirer measures any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are accounted for as expenses in the periods in which the costs are incurred and are classified under administrative expenses.

When the Group acquires a business, it assesses the assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognized at the acquisition-date fair value. Subsequent changes to the fair value of the contingent consideration which is deemed to be an asset or liability, will be recognized in accordance with IFRS 9 Financial Instruments (before 1 January 2018: IAS 39 “Financial Instruments: Recognition and Measurement” either in profit or loss or as a change to other comprehensive income. However, if the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Goodwill is initially measured as the amount of the excess of the aggregate of the consideration transferred and the non-controlling interest over the net fair value of the identifiable assets acquired and the liabilities assumed. If this aggregate is lower than the fair value of the net assets acquired, the difference is recognized in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purpose and is not larger than an operating segment before aggregation.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation. Goodwill disposed of in this circumstance is measured based on the relative recoverable amounts of the operation disposed of and the portion of the cash-generating unit retained.

5. Significant accounting judgments, estimates and assumptions

The preparation of the Group’s consolidated financial statements require management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumption and estimate could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(1)Fair value of financial instruments

Where the fair value of financial assets and financial liabilities recorded in the balance sheet cannot be derived from active markets, they are determined using valuation techniques including the income approach (for example the discounted cash flow model) or market approach. Changes in assumptions about these factors could affect the reported fair value of the financial instruments. Please refer to Note 12 for more details.

(2)Pension benefits

The cost of post-employment benefit and the present value of the pension obligation under defined benefit pension plans are determined using actuarial valuations. An actuarial valuation involves making various assumptions. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Please refer to Note 6 for more details.

(3)Income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the wide range of international business relationships and the long-term nature and complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities of the respective counties in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Group company's domicile.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax assets are recognized for all carry forward of unused tax losses and unused tax credits and deductible temporary differences to the extent that it is probable that taxable profit will be available or there are sufficient taxable temporary differences against which the unused tax losses, unused tax credits or deductible temporary differences can be utilized. The amount of deferred tax assets determined to be recognized is based upon the likely timing and the level of future taxable profits and taxable temporary differences together with future tax planning strategies.

(4)Accounts receivables–estimation of impairment loss

Starting from 1 January 2018:

The Group estimates the impairment loss of accounts receivables at an amount equal to lifetime expected credit losses. The credit loss is the present value of the difference between the contractual cash flows that are due under the contract (carrying amount) and the cash flows that expects to receive (evaluate forward looking information). However, as the impact from the discounting of short-term receivables is not material, the credit loss is measured by the undiscounted cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

Before1 January 2018:

The Group considers the estimation of future cash flows when there is objective evidence showing indications of impairment. The amount of the loss is measured as the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset's original effective interest rate. However, as the impact from the discounting of short-term receivables is not material, the impairment of short-term receivables is measured as the difference between the asset's carrying amount and the estimated undiscounted future cash flows. Where the actual future cash flows are lower than expected, a material impairment loss may arise. Please refer to Note 6 for more details.

(5)Inventories

Estimates of net realisable value of inventories take into consideration that inventories may be damaged, become wholly or partially obsolete, or their selling prices have declined. The estimates are based on the most reliable evidence available at the time the estimates are made. Please refer to Note 6 for more details.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

6. Contents of significant accounts

• (1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand Demand deposits Time deposits Total	As of 31 December
	2018	2017
	$22,194 2,501,389 101,438	$71,009 2,884,382 169,796
	$2,625,021	$3,125,187

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

Financial assets mandatorily at fair value through profit or loss: Funds Cross currency swap Stocks Embedded derivative-bond Total Held for trading: Non-derivative financial assets Fund Stocks Total	As of 31 December	As of 31 December
	2018	2017(note)
	$158,548 9,873 2,596 82
	$171,099
	2018(note)	2017
		$57,849 3,781
		$61,630

Note: The Group adopted IFRS 9 on 1 January 2018. The Group elected not to restate prior periods in accordance with the transition provision in IFRS 9.

Financial assets at fair value through profit or loss were not pledged.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(3) Notes receivables

Notes receivables
Notes receivables arising from operating activities Notes receivables arising from non-operating activities Less: loss allowance Total	As of 31 December
	2018(note)	2017
	$468,086 - -	$389,800 - -
	$468,086	$389,800

Please refer to Note 12 for more details on pledged of notes receivable.

The Group adopted IFRS 9 for impairment assessment on 1 January 2018. Please refer to Note 6(19) for more details on loss allowance. Please refer to Note 12 for more details on credit risk.

• (4) Accounts receivables

Accounts receivables
Trade receivables Less: loss allowance subtotal Accounts receivable – related parties Total	As of 31 December
	2018	2017
	$4,150,889 (27,655)	$3,125,907 (51,620)
	4,123,234 2,027	3,074,287 10,833
	$4,125,261	$3,085,120

Trade receivables were not pledged.

Trade receivables are generally on 60-120 day terms. The Group adopted IFRS 9 for impairment assessment on 1 January 2018. Please refer to Note 6(19) for more details on impairment of trade receivables. The Group adopted IAS 39 for impairment assessment before 1 January 2018. The movements in the provision for impairment of trade receivables and trade receivables-related parties for the year ended 31 December 2017 are as follows: (Please refer to Note 12 for more details on credit risk management.)

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As of 1 January 2017 Write-off for uncollectable accounts Charge (reversal) for the current period Exchange differences As of 31 December 2017	Individually impaired	Collectively impaired	Total
	$ - - - -	$31,041 (1,932) 23,225 (714)	$31,041 (1,932) 23,225 (714)
	$ -	$51,620	$51,620

There was no impairment loss of individually accounts receivable for the years ended 31 December 2017.

Ageing analysis of trade receivables as follows:

As of 31 December	Neither past due nor impaired		Past	due but not impaired	due but not impaired		Total $3,085,120
		<=30 days	31~60 days	61~90 days	91~120 days	>=121 days
2017	$2,925,718	$138,080	$12,609	$63	$1,499	$7,151

(5) Inventories

Inventories
Raw materials Supplies & parts Work in progress Finished goods Merchandise Total	As of 31 December 2018 2017 $1,178,724 $961,404 40,602 1,455 186,773 168,215 1,244,919 865,793 876,936 695,427 $3,527,954 $2,692,294
	2018 $1,178,724 40,602 186,773 1,244,919 876,936 $3,527,954

The inventory cost recognized as expenses for the years ended 31 December 2018 and 2017 were NT$11,725,308 thousand and NT$9,781,088 thousand, respectively. The price reduction of inventories related to cost of goods sold were NT$22,238 thousand and NT$34,454 thousand.

Inventories were not pledged.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

Equity instrument investments measured at fair value through other comprehensive income – Non-current Emerging companies stocks Unlisted companies stocks Total	As of 31 December	As of 31 December
	2018	2017(Note)
	$15,698 261,029
	$276,727

Note: The Group adopted IFRS 9 on 1 January 2018. The Group elected not to restate period periods in accordance with the transition provision in IFRS 9.

The Group disposed of the unlisted stocks of General Research of Electronics Inc. which were reported under equity instrument investments measured at fair value through other comprehensive income on 29 June 2018. Upon derecognition, the fair value of the investments was NT$0 thousand, and the cumulative disposal loss of NT$23,184 thousand was transferred from other components of equity to retained earnings.

The Group disposed of the listed stocks of INPAQ Technology Co., Ltd. which were reported under equity instrument investments measured at fair value through other comprehensive income on 18 April 2018 and 2 May 2018. Upon derecognition, the fair values of the investments were NT$913 thousand and NT$187,300 thousand and the cumulative disposal gain of NT$107 thousand and NT$19,725 thousand was transferred from other components of equity to retained earnings.

On 23 April 2018, the Group invested NT$646 thousand in Gongwin Biopharm Holdings Co., Ltd. In consideration of the Group’s investment strategy, the Group disposed of the emerging stocks of Gongwin Biopharm Holdings Co., Ltd., which were reported under equity instrument investments measured at fair value through other comprehensive income during the period. Upon derecognition, the fair value of the investments was NT$791 thousand, and the cumulative disposal gain of NT$145 thousand was transferred from other components of equity to retained earnings.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The return of paid-in capital for capital reduction from Top Taiwan II Venture Capital Co., Ltd. and Top Taiwan III Venture Capital Co., Ltd. for the years ended 31 December 2018 were NT$775 thousand, NT$1,220 thousand and NT$5,204 thousand.

Financial assets at fair value through other comprehensive income were not pledged.

(7) Available-for-sale financial assets - noncurrent

Available-for-sale financial assets - noncurrent
INPAQ Technology Co., Ltd. Gongwin Biopharm Holdings Co., Ltd. Less: unrealized loss on available -for-sale financial assets Less: accumulated impairment- available-for-sale financial assets Total	As of 31 December
	2018(Note)	2017
		$168,381 18,296 (46,516) (7,991)
		$132,170

Note: The Group adopted IFRS 9 on 1 January 2018. The Group elected not to restate prior periods in accordance with the transition provision in IFRS 9.

On 8 February 2017, Gongwin Biopharm Holdings Co., Ltd. was listed on the TPEx Emerging Stock Market. The Group investment was previously measured at cost but later changed to fair value while the investment was recognized as available-for-sale financial assets-noncurrent in accordance with IAS 39 adopted before 1 January 2018. The Group disposed of 5,000 shares on 23 February 2017. A cash consideration of NT$430 thousand was received and the Group has recognized gain on disposal of investment amounting to NT$41 thousand.

The Group adopted IAS 39 before 1 January 2018 and classified certain financial assets as available-for-sale financial assets. Available-for-sale financial assets were not pledged.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(8) Financial assets measured at cost – noncurrent

Financial assets measured at cost – noncurrent
Financial assets at fair value through profit or loss Chengding Venture Capital Co., Ltd. Top Taiwan Venture Capital Co., Ltd. HOTWIRE Development LLC Top Taiwan VII Venture Capital Co., Ltd. General Research of Electronics Inc. Top Taiwan III Venture Capital Co., Ltd. Top Taiwan II Venture Capital Co., Ltd. Dynahz Technologies Co., Ltd. Bandrich, Inc. Japan SINBON Electronics Co., Ltd. Actmax Technologies Inc. Subtotal Less: accumulated impairment Total	As of 31 December
	2018(Note)	2017
		$200,000 60,000 32,653 24,934 23,184 8,130 7,750 6,150 4,125 2,066 1,441
		370,433 (825)
		$369,608

Note: The Group adopted IFRS 9 on 1 January 2018. The Group elected not to restate prior periods in accordance with the transition provision in IFRS 9.

The Group adopted IAS 39 before 1 January 2018. The above investments in the equity instruments of unlisted entities are measured at cost as the fair value of these investments are not reliably measurable due to the fact that the variability in the range of reasonable fair value measurements is significant for that investment and that the probabilities of the various estimates within the range cannot be reasonably assessed and used when measuring fair value.

The return of paid-in capital for capital reduction from Top Taiwan II Venture Capital Co., Ltd., Top Taiwan III Venture Capital Co., Ltd. and Top Taiwan VII Venture Capital Co., Ltd. for the year ended 31 December 2018 were NT$1,000 thousand, NT$5,285 thousand and NT$6,428 thousand, respectively.

On 24 May 2017, the Group disposed of the shares of SINBON Czech a.s. and a cash consideration of NT$279 thousand was received.

Please refer to Note 6. (26) for the group’s shareholding percentage in Japen SINBON Electronics Co., Ltd.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

On 20 July 2017, the Group disposed of the shares of SINBON Electronic Holding GmbH in the amount of NT$58,923 thousand.

The Group invested NT$200,000 thousand in Chengding Venture Capital Co., Ltd. on 30 October 2017.

On 31 March 2017, the Group invested NT$40,443 thousand in Cayman Lan-Chen Fund. Considering its investment strategy, the Group decided to reclassify the fund adopting IAS 39 prior to 1 July 2018 to financial assets held for trading on 31 December 2017.

Financial assets measured at cost were not pledged.

• (9) Investments accounted for using the equity method

The following table lists the investments accounted for using the equity method of the Group:

Investees Investments in associates: Listed company Argocy Research Inc. Non listed company Circuits & Cables LLC Top Taiwan IV Venture Capital Co., Ltd. Sardines Wisdom Technology Co., Ltd. Total	As of 31 December	As of 31 December	As of 31 December
	2018 Carrying amount Percentage of ownership (%) $297,861 21.40% 32,181 40.00% 24,061 20.00% - 26.64% $354,103	2017
	Carrying amount $297,861 32,181 24,061 - $354,103	Carrying amount $284,652 47,303 41,916 - $373,871	Percentage of ownership (%)
			21.40% 40.00% 20.00% 24.59%

In the fourth quarter, the Group invested in Sardines Wisdom Technology Co., Ltd. (Sardines Wisdom) in the amount of NT$1,230 thousand, resulting in a rise in the shareholding ratio to 26.64%. Because Sardines Wisdom suffered losses and the Group didn’t intend to support Sardines Wisdom, the Group reduced the book value of the investment in Sardines Wisdom to zero through recognizing loss.

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

On 13 March 2017, the Group invested NT$25,004 thousand in Circuits & Cables LLC. The Group’s ownership in the company rose to 40%. The Group originally used cost method as measurement but later changed to equity method while the investments were accounted for using the equity method.

The return of paid-in capital for capital reduction from Top Taiwan IV Venture Capital Co., Ltd. for the years ended 31 December 2018 and 2017 were NT$17,600 thousand and NT$40,000 thousand.

Fair value of the investment in the associate when there is a quoted market price for the investment: Argocy Research Inc. is a listed entity on the Taiwan Stock Exchange (TWSE). The fair value of the investment in Argocy Research Inc. was NT$526,199 thousand, NT$561,337 thousand as of 31 December 2018 and 2017.

The Group’s investments in Argocy Research Inc., Top Taiwan IV Venture Capital Co., Ltd., Circuits & Cables LLC and Sardines Wisdom Technology Co., Ltd. are not individually material. The aggregate financial information of the Group’s share of its associates is as follows:

oup’s share of its associates is as follows:
Profit from continuing operations Other comprehensive income (post-tax) Total comprehensive income	For the years ended 31 December
	2018 $45,820 (2,107) $43,713	2017
		$45,724 13,964
		$59,688

The associates had no contingent liabilities or capital commitments as of 31 December 2017 and 2018.

Our audit, insofar as it related to the investments accounted for under the equity method amounting to NT$321,922 thousand and NT$326,568 thousand as of 31 December 2018 and 2017; the related shares of investment income from the associates and joint ventures amounted to NT$63,268 thousand and NT$52,286 thousand for the years ended 31 December 2018 and 2019, respectively; and the related shares of other comprehensive income from the associates and joint ventures amounted to NT$(2,107) thousand and NT$13,964 thousand for the years ended 31 December 2018 and 2017, respectively; are based solely on the reports of other independent accountants.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(10) Property, plant and equipment

								Construction in
								progress and
								equipment
			Machinery	Office	Transportation	Other	Leasehold	pending
	Land	Buildings	equipment	equipment	equipment	equipment	improvements	inspection	Total
Cost:
As of 1 January 2018	$150,429	$1,495,173	$760,073	$127,138	$32,603	$206,706	$11,249	$33,349	$2,816,720
Additions	-	7,092	138,950	18,295	4,632	44,197	524	113,627	327,317
Disposals	-	(4,987)	(37,865)	(7,011)	(2,653)	(11,931)	-	-	(64,447)
Exchange differences	-	(28,974)	(15,691)	(2,155)	(628)	(4,598)	137	(1,570)	(53,479)
Other changes	-	194,868	39,390	415	1,085	7,849	-	(2,980)	240,627
As of 31 December 2018	$150,429	$1,663,172	$884,857	$136,682	$35,039	$242,223	$11,910	$142,426	$3,266,738
As of 1 January 2017	$156,669	$1,324,362	$743,947	$94,174	$35,356	$180,575	$5,394	$345	$2,540,822
Additions	-	2,650	40,386	13,804	431	27,424	5,375	34,851	124,921
Acquisitions through business combinations	-	189,353	30,398	24,839	-	-	-	7,110	251,700
Disposals	-	(26)	(45,751)	(4,665)	(1,528)	(5,689)	-	-	(57,659)
Exchange differences	(93)	(13,809)	(8,818)	(1,003)	(548)	(2,206)	-	63	(26,414)
Other changes	(6,147)	(7,357)	(89)	(11)	(1,108)	6,602	480	(9,020)	(16,650)
As of 31 December 2017	$150,429	$1,495,173	$760,073	$127,138	$32,603	$206,706	$11,249	$33,349	$2,816,720
Depreciation and impairment:
As of 1 January 2018	$ -	$572,938	$509,381	$96,297	$26,424	$118,488	$6,882	$ -	$1,330,410
Depreciation	-	65,133	50,630	13,001	2,206	27,436	2,022	-	160,428
Disposals	-	(4,979)	(27,710)	(6,100)	(2,388)	(9,045)	-	-	(50,222)
Exchange differences	-	(12,005)	(10,612)	(1,809)	(544)	(2,976)	67	-	(27,879)
Other changes	-	-	-	-	-	-	-	-	-
As of 31 December 2018	$ -	$621,087	$521,689	$101,389	$25,698	$133,903	$8,971	$ -	$1,412,737
As of 1 January 2017	$ -	$514,716	$479,257	$66,087	$26,421	$109,964	$5,269	$ -	$1,201,714
Depreciation	-	58,119	50,495	11,912	2,289	22,998	1,640	-	147,453
Acquisitions through business combinations	-	4,800	15,602	22,520	-	-	-	-	42,922
Disposals	-	(11)	(38,940)	(3,698)	(1,375)	(5,200)	-	-	(49,224)
Exchange differences	-	(4,512)	3,454	(524)	(373)	(9,248)	(27)	-	(11,230)
Other changes		(174)	(487)	-	(538)	(26)	-	-	(1,225)
As of 31 December 2017	$ -	$572,938	$509,381	$96,297	$26,424	$118,488	$6,882	$ -	$1,330,410
Net carrying amount as of :
31 December 2018	$150,429	$1,042,085	$363,168	$35,293	$9,341	$108,320	$2,939	$142,426	$1,854,001
31 December 2017	$150,429	$922,235	$250,692	$30,841	$6,179	$88,218	$4,367	$33,349	$1,486,310

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Property, plant and equipment was not pledged.

There is no capitalization of interest due to purchase of property, plant and equipment

Components of building that have different useful lives are the main building structure and air conditioning, which are depreciated over 50 years and 25 years, respectively.

• (11) Other non-current assets

Other non-current assets
Prepayment for equipment Long-term deferred charges Long-term prepaid rent Refundable deposits Other assets Total	As of 31 December
	2018 $55,178 60,397 36,355 24,716 754 $177,400	2017 $180,228 68,292 38,272 22,577 754
		$310,123

Long-term prepaid rents were payments for land use rights as of 31 December 2018 and 2017.

No other non-current assets were pledged.

(12) Short-term loans

Short-term loans
Unsecured bank loans Interest rates applied	As of 31 December
	2018 $1,804,995 2018 0.60%-5.00%	2017
		$1,594,624
		2017 0.40%-5.00%

The Group’s unused short-term lines of credits amounted to NT$489,456 thousand and NT$794,828 thousand as of 31 December 2018 and 2017, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

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

Held for trading: Derivatives not designated as hedging Instruments Cross currency swap Embedded derivatives-bond Total Current Non-current Total	As of 31 December	As of 31 December
	2018	2017
	$ - -	$44,427 300
	$-	$44,727
	$ - -	$44,427 300
	$-	$44,727

(14) Bonds payable

Bonds payable
Liability component: Principal amount Discounts on bonds payable Subtotal Less: current portion Net Embedded derivative Equity component	As of 31 December
	2018	2017
	$411,600 (7,046)	$500,000 (16,379)
	404,554 (404,554)	483,621 -
	$-	$483,621
	$(82)	$300
	$12,061	$14,652

Issuance of convertible bonds:

On 8 June 2017, the Company issued the sixth zero coupon unsecured convertible bonds. The terms of the convertible bonds were evaluated to include a liability component, embedded derivatives (a call option and a put option) and an equity component (an option for conversion into issuer’s ordinary shares). The terms of the bonds are as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Issue amount: NT$500,000 thousand

Period: 8 June 2017 ~ 8 June 2020

Redemption clauses:

• (1) The Company may redeem the bonds, in whole or in part, after 3 months of the issuance (9 September 2017) and prior to 40 days before the maturity date (29 April 2020), at the principal amount of the bonds with an interest calculated at the rate of 0% per annum (early redemption conversion price) if the closing price of the Company’s ordinary shares on the Taiwan Stock Exchange (TWSE) for a period of 30 consecutive trading days, is at least 130% of the conversion price.

• (2) The Company may redeem the bonds, in whole or in part, after 3 months of the issuance (9 September 2017) and prior to 40 days before the maturity date (29 April 2020), at the early redemption conversion price if at least 90% in principal amount of the bonds has already been exchanged, redeemed, purchased or cancelled.

• (3) The Company may redeem the bonds in cash, within 5 trading days after the base date of withdrawing the bonds as stated on the “Withdrawal of Convertible Bonds Notice”, at the par value if the bondholders do not reply to the share affair agency in writing before the base date.

Reversal clauses:

• a. The bondholders have the right to require the Company to redeem all or any portion of the bonds, 30 days prior to 2 year anniversary (June 8, 2019) of the issuance, at the principal amount of the bonds with an interest calculated at the rate of 0.5% per annum.

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Terms of Exchange:

• a. Underlying Securities: Common shares of the Company

• b. Exchange Period: The bonds are exchangeable at any time on or after 9 September 2017 and prior to 8 June 2020 into common shares of the Company.

• c. Exchange Price and Adjustment: The exchange price was originally NT$76.6 per share. The exchange price will be subject to adjustments upon the occurrence of certain events set out in the indenture.

In accordance with IFRS 9, said financial instrument is classified as an embedded derivative so the exercise price of the embedded put option is allocated to the liability component and equity component. The equity component is assigned the residual amount after deducting from the fair value of the instrument as a whole the amount separately determined for the liability component. The difference between the equity component and the book value was recognized in profit or loss. The difference between the liability component and the book value was recognized in “Share premium-warrants”. The financial assets (liabilities) of convertible bonds are measured at amortized cost, fair value through profit or loss amounted to NT$82 thousand, NT$(300) thousand as at 31 December 2017 and 2018.

The convertible bonds that have already been converted were: NT$88,400 thousand and NT$0 thousand, as at 31 December 2018 and 2017.

• (15) Long-term Deferred Revenue

ong-term Deferred Revenue
Beginning balance Amortization Exchange difference Ending Balance	For the years ended 31 December
	2018	2017
	$16,256 (377) (374)	$16,858 (373) (229)
	$15,505	$16,256

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred revenue - related to assets	As of 31 December	As of 31 December
	2018	2017
	$15,505	$16,256

Government grants have been received for the purchase of certain items of property, plant and equipment. There are no unfulfilled conditions or contingencies attached to these grants.

(16) Post-employment benefits

Defined contribution plan

The Company and its domestic subsidiaries adopt a defined contribution plan in accordance with the Labor Pension Act of the R.O.C. Under the Labor Pension Act, the Company and its domestic subsidiaries will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts. The Company and its domestic subsidiaries have made monthly contributions of 6% of each individual employee’s salaries or wages to employees’ pension accounts.

Subsidiaries located in the People’s Republic of China will contribute social welfare benefits based on a certain percentage of employees’ salaries or wages to the employees’ individual pension accounts.

Pension benefits for employees of overseas subsidiaries and branches are provided in accordance with the local regulations.

Pension expenses under the defined contribution plan for the years ended 31 December 2018 and 2017 were NT$28,514 thousand and NT$32,395 thousand, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Defined benefits plan

The Company and its domestic subsidiaries adopt a defined benefit plan in accordance with the Labor Standards Act of the R.O.C. The pension benefits are disbursed based on the units of service years and the average salaries in the last month of the service year. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year. The total units shall not exceed 45 units. Under the Labor Standards Act, the Company and its domestic subsidiaries contribute an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited at the Bank of Taiwan in the name of the administered pension fund committee. Before the end of each year, the Company and its domestic subsidiaries assess the balance in the designated labor pension fund. If the amount is inadequate to pay pensions calculated for workers retiring in the same year, the Company and its domestic subsidiaries will make up the difference in one appropriation before the end of March the following year.

The Ministry of Labor is in charge of establishing and implementing the fund utilization plan in accordance with the Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund. The pension fund is invested in-house or under discretionary accounts, based on a passive-aggressive investment strategy for long-term profitability. The Ministry of Labor establishes checks and risk management mechanism based on the assessment of risk factors including market risk, credit risk and liquidity risk, in order to maintain adequate manager flexibility to achieve targeted return without over-exposure of risk. With regard to utilization of the pension fund, the minimum earnings in the annual distributions on the final financial statement shall not be less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. Treasury Funds can be used to cover the deficits after the approval of the competent authority. As the Company does not participate in the operation and management of the pension fund, no disclosure on the fair value of the plan assets categorized in different classes could be made in accordance with paragraph 142 of IAS 19.The Group expects to contribute NT$4,560 thousand to its defined benefit plan during the 12 months beginning after 31 December 2018.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The weighted average duration of the defined benefits obligation was 15 years as of 31 December 2018.

Pension costs recognized in profit or loss are as follows:

Current service costs Net interest on the net defined benefit liabilities(Assets) Total	For the years ended 31 December	For the years ended 31 December
	2018	2017
	$1,340 1,185	$1,577 1,311
	$2,525	$2,888

Reconciliations of liabilities (assets) of the defined benefit obligation and plan assets at fair value are as follows:

plan assets at fair value are as follows:
Defined benefit obligation Plan assets at fair value Net defined benefit liabilities, noncurrent recognized on the consolidated balance sheets	31 Dec. 2018 $144,516 (56,006) $88,510	As of
		31 Dec. 2017	1 Jan.2017
		$147,616 (58,320)	$147,969 (64,615)
		$89,296	$83,354

Reconciliation of liabilities (assets) of the defined benefit plan are as follows:

follows:
As of 1 January 2017 Current service cost Interest expense (income) Subtotal Remeasurements of the defined benefit liabilities /assets: Actuarial gains and losses arising from changes in demographic assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal		As of
	Defined benefit obligation	Plan assets at fair value	Net defined benefit liabilities
	$147,969 1,577 2,368	$(64,615) - (1,057)	$83,354 1,577 1,311
	151,914 4,660 971 -	(65,672) - - 388	86,242 4,660 971 388
	5,631	388	6,019

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Payments of benefit obligation Contributions by employer As of 31 December 2017 Current period service costs Interest expense (income) Subtotal Remeasurements of the defined benefit liabilities /assets: Actuarial gains and losses arising from changes in demographic assumptions Experience adjustments Remeasurements of the defined benefit assets Subtotal Payments of benefit obligation Contributions by employer As of 31 December 2018		As of
	Defined benefit obligation	Plan assets at fair value	Net defined benefit liabilities
	(9,929) -	9,929 (2,965)	- (2,965)
	147,616 1,340 1,992	(58,320) - (807)	89,296 1,340 1,185
	150,948 4,248 (1,300) -	(59,127) - - (1,778)	91,821 4,248 (1,300) (1,778)
	2,948	(1,778)	1,170
	(9,380) -	9,380 (4,481)	- (4,481)
	$144,516	$(56,006)	$88,510

The principal assumptions used in determining the Company’s defined benefit plan are shown below:

The principal assumptions used in determining the Company’s defined benefit plan are shown below:	The principal assumptions used in determining the Company’s defined benefit plan are shown below:	The principal assumptions used in determining the Company’s defined benefit plan are shown below:	The principal assumptions used in determining the Company’s defined benefit plan are shown below:	The principal assumptions used in determining the Company’s defined benefit plan are shown below:
As of 31 December 2018 2017 Discount rate 1.10% 1.35% Expected rate of salary increases 3.00% 3.00% Sensitivity analysis for significant assumption are shown below: For theyears ended 31 December 2018 2017 Defined benefit obligation increase Defined benefit obligation decrease Defined benefit obligation increase Defined benefit obligation decrease Discount rate increase by 0.50% $ - $8,320 $ - $9,123 Discount rate decrease by 0.50% 9,065 - 9,958 - Future salary increase by 1.00% 18,380 - 20,263 - Future salary decrease by 1.00% - 15,837 - 17,391
	2018		2017
	Defined benefit obligation increase	Defined benefit obligation decrease	Defined benefit obligation increase	Defined benefit obligation decrease
	$ - 9,065 18,380 -	$8,320 - - 15,837	$ - 9,958 20,263 -	$9,123 - - 17,391

Sensitivity analysis for significant assumption are shown below:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The sensitivity analyses above are based on a change in a significant assumption (for example: change in discount rate or future salary), keeping all other assumptions constant. The sensitivity analyses may not be representative of an actual change in the defined benefit obligation as it is unlikely that changes in assumptions would occur in isolation of one another.

There was no change in the methods and assumptions used in preparing the sensitivity analyses compared to the previous period.

(17) Equity

(a) Common stock

The Company’s authorized capital was NT$4,500,000 thousand as of 31 December 2018 and 2017. The paid-in capital was NT$2,257,273 thousand and NT$2,254,162 thousand, divided into 225,727 and 225,416 thousand shares with par value of NT$ 10 each, respectively. Each share has one voting right and a right to receive dividends.

The investors requested to convert the Company’s convertible bonds into common stocks by issuing new common shares from 1 January 2018 to 31 December 2018 amount to NT$12,792 thousand in a total of 1,279 thousand shares and had been completed the registration process for 311 thousand shares as of 31 December 2018. The rest has not yet been completed. Therefore, the accumulated book value of certificates of bond - to - stock conversion is NT$9,681 thousand in a total of 968 thousand shares.

As of 1 January 2017, the accumulated book value of certificates of bond - to - stock conversion that had completed the registration process amounted to NT$8,094 thousand in a total of 809 thousand shares as of 31 March 2017.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(b) Capital surplus

Capital surplus
Additional paid-in capital Treasury share transactions Share of changes in net assets of associates and joint ventures accounted for using the equity method From share of changes in net assets of associates Premium from merger Stok options Total	As of 31 December
	2018 $890,036 5,749 (1,690) (2,775) 705 12,061 $904,086	2017
		$813,537 5,749 (1,690) (2,688) 705 14,652
		$830,265

According to the Company Act, the capital reserve shall not be used except for making good the deficit of the company. When a company incurs no loss, it may distribute the capital reserves related to the income derived from the issuance of new shares at a premium or income from endowments received by the company. The distribution could be made in cash or in the form of dividend shares to its shareholders in proportion to the number of shares being held by each of them.

(c) Retained earnings and dividend policies

According to the Company’s original Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

• a. Payment of all taxes and dues;

• b. Offset prior years’ operation losses;

• c. Set aside 10% of the remaining amount after deducting items (a) and (b) as legal reserve;

• d. Set aside or reverse special reserve in accordance with law and regulations; and

• e. The distribution of the remaining portion, if any, will be recommended by the Board of Directors and resolved in the shareholders’ meeting.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As the Company is undergoing a growth stage, the policy of dividend distribution should reflect its long-term financial planning. The Board of Directors shall make the distribution proposal annually and present it at the Shareholder’s meeting every year. The distribution of shareholders dividend shall be allocated cash dividends to be distributed may not be less than 10% of total dividends to be distributed.

According to the Company Act, the Company needs to set aside amount to legal reserve unless where such legal reserve amounts to the total authorized capital. The legal reserve can be used to make good the deficit of the Company. When the Company incurs no loss, it may distribute the portion of legal serve which exceeds 25% of the paid-in capital by issuing new shares or by cash in proportion to the number of shares being held by each of the shareholders.

Pursuant to existing regulation, the Company is required to appropriate addition special reserve in the amount equal to the net debit balance of the other components of shareholders’ equity. However, if any of the debit elements is reversed, the special reverse in the amount equal to the reversal maybe released for earnings distribution or offestting accumulated deficit.

Following the adoption of TIFRS, the FSC on 6 April 2012 issued Order No. Financial-Supervisory-Securities-Corporate-1010012865, which sets out the following provisions for compliance:

On a public company's first-time adoption of the TIFRS, for any unrealized revaluation gains and cumulative translation adjustments (gains) recorded to shareholders’ equity that the company elects to transfer to retained earnings by application of the exemption under IFRS 1, the company shall set aside an equal amount of special reserve. Following a company’s adoption of the TIFRS for the preparation of its financial reports, when distributing distributable earnings, it shall set aside to special reserve, from the profit/loss of the current period and the undistributed earnings from the previous period, an amount equal to “other net deductions from shareholders’ equity for the current fiscal year, provided that if the company has already set aside special reserve according to the requirements in the preceding point, it shall set aside supplemental special reserve based on the difference between the amount already set aside and other net deductions from shareholders’ equity. For any subsequent reversal of other net deductions from shareholders’ equity, the amount reversed may be distributed.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The Company did not reverse any special reserve as a result of using, disposing of or reclassifying related assets in 31 December 2018 and 2017.

Details of the 2018 and 2017 earnings distribution and dividends per share as approved and resolved by the Board of Directors’ meeting and shareholders’ meeting on 14 March 2019 and 8 June 2018, respectively, are as follows:

Common stock -cash dividend Legal reserve Special reserve Total	Appropriation of earnings	Appropriation of earnings	Dividendper share(NT$)	Dividendper share(NT$)
	2018	2017	2018	2017
	$1,026,622 141,348 108,492	$901,664 122,647 52,417	$4.5	$4
	$1,276,462	$1,076,728

Please refer to Note 6(20) for further details on employees’ compensation and remuneration to directors and supervisors.

(d) Non-controlling interests

(d) Non-controlling interests
Beginning balance Gains attributable to non-controlling interests Other comprehensive income, attributable to non-controlling interests, net of tax: Exchange differences resulting from translating the financial statements of foreign operations Non-controlling interest attributable to acquisition through business combination Disposal of the shares of the subsidiary Changes in subsidiaries’ ownership Acquisition of the shares of the subsidiary Acquisition of new shares in a subsidiary not in proportionate to ownership interest Ending balance	For the years ended 31 December
	2018 $211,619 (41,948) (2,681) - (1,120) - (906) 59,025 $223,989	2017
		$46,699 (2,383) (6,714) 176,918 (4,132) 1,231 - - $211,619

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(18) Operating revenue

Revenue from contracts with customers Sale of goods Rendering of service Other operating revenue Total	For the years ended 31 December	For the years ended 31 December
	2018 $15,437,646 189,678 17,929 $15,645,253	2017
		$12,843,553 203,589 14,297
		$13,061,439

Note: The Group adopted IFRS 15 on 1 January 2018. The Group elected to apply the standard retrospectively by recognizing the cumulative effect of initially applying the standard at the date of initial application (1 January 2018).

The Group adopted IFRS 15 on 1 January 2018. Analysis of revenue from contracts with customers during the year is as follows:

(1) Disaggregation of revenue

For the year ended 31 December 2018

Sale of goods Rendering of services Other operating revenues Total Timing of revenue recognition : At a point in time Over time Total	Cable Segment	Electronic Segment	Management Operation Segment	Total
	$10,332,113 158,007 17,169	$3,555,635 31,671 760	$1,549,898 - -	$15,437,646 189,678 17,929
	$10,507,289	$3,588,066	$1,549,898	$15,645,253
	$10,507,289 -	$3,588,066 -	$1,549,898 -	$15,645,253 -
	$10,507,289	$3,588,066	$1,549,898	$15,645,253

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(2) Contract balances

Contract liabilities - current

Contract liabilities - current
Sales of goods	Beginning balance	Ending balance	Difference
	$153,313	$328,405	$175,092

For the year ended 31 December 2018, contract liabilities increased as the consideration received from customers did not satisfy its performance obligations.

(3) Transaction price allocated to unsatisfied performance obligations

As at 31 December 2018, the Group expected that all of the transaction price allocated to unsatisfied performance obligations will be recognized as revenue within one year.

(4) Assets recognized from costs to fulfil a contract

None

(19) Expected credit losses

Expected credit losses
Operation expense- Expected credit losses Trade receivables	As of 31 December
	2018	2017
	$1,061	$-

Please refer to Note 12 for more details on credit risk.

The Group measures the loss allowance of its trade receivables (including note receivables and trade receivables) at an amount equal to lifetime expected credit losses. The assessment of the Group’s loss allowance as at 31 December 2018 is as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Gross carrying amount Loss ratio Lifetime expected credit losses Carrying amount	Not yet due(note) $4,359,983 -% - $4,359,983		Overdue			Total
		<=30 days 31-60 days	61-90 days $8,524 -% - $8,524	91-120 days	>=121 days $37,430 30-100% (27,655) $9,775
		$185,637 $22,533 -% -%		$6,895 -%		$4,621,002
		- -		-		(27,655)
		$185,637 $22,533		$6,895		$4,593,347

Note: The Group’s note receivables are not overdue.

The movement in the provision for impairment of note receivables and trade receivables during the year ended 31 December 2018 is as follows:

Beginning balance (in accordance with IAS 39) Transition adjustment to retained earnings Beginning balance (in accordance with IFRS 9) Write off Addition/(reversal) for the current period Exchange difference Ending balance	Note receivables $ - - - - - - $-	Trade receivables
		$51,620 -
		51,620 (25,733) 1,061 707
		$27,655

(20) Summary statement of employee benefits, depreciation and amortization expenses by function for the years ended 31 December 2018 and 2017:

		For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December	For theyears ended 31 December
		2018			2017
	Operating costs	Operating expenses	Total	Operating costs	Operating expenses	Total
Employee benefits expense
Salaries	$755,356	$1,097,325	$1,852,681	$739,249	$892,196	$1,631,445
Labor and health insurance	101,045	126,907	227,952	87,406	104,455	191,861
Pension	6,584	24,455	31,039	10,257	25,026	35,283
Other employee benefits expense	73,667	56,997	130,664	60,804	55,994	116,798
Depreciation	88,698	71,730	160,428	83,625	63,828	147,453
Amortization	9,309	35,825	45,134	9,459	29,000	38,459

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

The number of employees for Company and its subsidiaries are 5,912 and 5,858 on 31 December 2018 and 2017, respectively.

According to the Articles of Incorporation, 1% to 15% of profit of the current year is distributable as employees’ compensation and no higher than 3% of profit of the current year is distributable as remuneration to directors and supervisors. However, the company's accumulated losses shall have been covered. The Company may, by a resolution adopted by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, have the profit distributable as employees’ compensation in the form of shares or in cash; and in addition thereto a report of such distribution is submitted to the shareholders’ meeting. Information on the Board of Directors’ resolution regarding the employees’ compensation and remuneration to directors and supervisors can be obtained from the “Market Observation Post System” on the website of the TWSE.

Based on profit of 31 December 2018, the Company estimated the amounts of the employees’ compensation and remuneration to directors and supervisors for the period ended of 31 December 2018 to be 1.44% and 0.92% of profit, respectively. The employees’ compensation and remuneration to directors and supervisors for the period ended of 31 December 2018 amount to NT$24,000 thousand and NT$15,300 thousand respectively, recognized as employee benefits expense.

A resolution was passed at a Board of Directors meeting held on 14 March 2019 to distribute NT$24,000 thousand and NT$15,300 thousand in cash as employees’ compensation and remuneration to directors and supervisors of 2018, respectively. Differences between the estimated amount and the actual distribution of the employee compensation and remuneration to directors and supervisors for the years ended 31 December 2018 are recognized in profit or loss of the subsequent year in 2018.

The employees’ compensation and remuneration to directors and supervisors for the year ended of 31 December 2017 amount to NT$16,000 thousand and NT$11,000 thousand respectively. No material differences exist between the estimated amount and the actual distribution of the employee bonuses and remuneration to directors and supervisors for the year ended 31 December 2017.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(21) Non-operating income and expenses

(a) Other income

Other income
Sample income Dividend income Interest income Financial assets measured at amortized costs Others Total Other gains and losses Foreign exchange gains (losses), net Loss on disposal of investments Gains of financial asset at fair value through profit or loss(Note1) Gains of financial liabilities at fair value through profit or loss(Note2) Losses on disposal of property, plant and equipment Other (expense) income Total	For theyears ended 31 December
	2018 2017 $44,491 $27,342 18,117 17,270 11,454 11,801 52,031 171,054 $126,093 $227,467 For theyears ended 31 December	2017
		$27,342 17,270 11,801 171,054
		$227,467
	2018 $113,221 - 38,949 44,727 (4,626) (32,434) $159,837	2017
		$(136,760) (4,110) 11,439 10,063 (6,450) 108,793
		$(17,025)

(b) Other gains and losses

Note:

• 1.Balance in current period arose from financial assets mandatorily measured at fair value through profit or loss and balance in prior period arose from held for trading investment.

• Balances in both periods arose from held for trading investment.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(c) Finance costs

Finance costs
Interest on loans from bank Interest on bonds payable Total	For theyears ended 31 December
	2018 $37,726 5,645 $43,371	2017
		$26,487 3,281
		$29,768

(22) Components of other comprehensive income

For the year ended 31 December 2018:

Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans Unrealized gains on equity instruments measured at fair value through other comprehensive income of associates and joint ventures Share of other comprehensive income of associates and joint ventures accounted for using the equity method To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of a foreign operation Total of other comprehensive income	Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income,net of tax
	$(1,170) 110,611 (2,107) (106,632)	$ - - - -	$(1,170) 110,611 (2,107) (106,632)	$1,624 - - 22,757	$454 110,611 (2,107) (83,875)
	$702	$ -	$702	$24,381	$25,083

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the year ended 31 December 2017

Not to be reclassified to profit or loss in subsequent periods: Remeasurements of defined benefit plans To be reclassified to profit or loss in subsequent periods: Exchange differences resulting from translating the financial statements of a foreign operation Unrealized gains (losses) from available-for-sale financial assets Share of other comprehensive income of associates and joint ventures accounted for using the equity method Total of other comprehensive income	Arising during theperiod	Reclassification adjustments duringtheperiod	Other comprehensive income, before tax	Income tax relating to components of other comprehensive income	Other comprehensive income,net of tax
	$(6,019) (120,217) 28,973 13,964	$ - - - -	$(6,019) (120,217) 28,973 13,964	$1,023 18,149 - -	$(4,996) (102,068) 28,973 13,964
	$(83,299)	$ -	$(83,299)	$19,172	$(64,127)

(23) Income tax

Based on the amendments to the Income Tax Act announced on 7 February 2018, the Company’s applicable corporate income tax rate for the year ended 31 December 2018 has changed from 17% to 20%. The corporate income surtax on undistributed retained earnings has changed from 10% to 5%.

The major components of income tax expense are as follows:

Income tax expense recognized in profit or loss

Current income tax expense : Current income tax charge Adjustments in respect of current income tax of prior periods Deferred tax expense: Deferred tax expense relating to origination and reversal of temporary differences Adjustments of prior year’s defferred income tax Reversal of deferred income tax Deferred tax expense (income) relating to changes in tax rate or the imposition of new taxes Total income tax expense	For the years ended 31 December	For the years ended 31 December
	2018 $422,390 (24,246) 131,584 144 (2,058) 20,725 $548,539	2017
		$418,166 (19,081) (1,953) 196 (1,872) -
		$395,456

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Income tax relating to components of other comprehensive income

For the years ended 31 December 2018 2017 Deferred tax income: Exchange differences on translation of foreign operations $(22,757) $(18,149) Remeasurements of defined benefit plans (1,624) (1,023) Income tax relating to components of other comprehensive income $(24,381) $(19,172) A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows: For the years ended 31 December 2018 2017 Accounting profit before tax from continuing operations $1,920,068 $1,619,544 Tax at the domestic rates applicable to profits in the country concerned 384,014 $275,322 Tax effect of revenues exempt from taxation (55,486) (30,722) Tax effect of expenses not deductible for tax purposes 3,906 2,992 Tax effect of deferred tax assets/liabilities 189,009 120,158 10 % surtax on undistributed retained earnings 14,485 19,947 Tax effect of different tax rates for entities in other tax regions 15,988 26,644 Adjustments in respect of deferred income tax of prior periods 144 196 Adjustments in respect of current income tax of prior periods (24,246) (19,081) Deferred tax expense (income) relating to changes in tax rate or the imposition of new taxes 20,725 - Total income tax expense recognized in profit or loss $548,539 $395,456	For the years ended 31 December 2018 2017 Deferred tax income: Exchange differences on translation of foreign operations $(22,757) $(18,149) Remeasurements of defined benefit plans (1,624) (1,023) Income tax relating to components of other comprehensive income $(24,381) $(19,172) A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows: For the years ended 31 December 2018 2017 Accounting profit before tax from continuing operations $1,920,068 $1,619,544 Tax at the domestic rates applicable to profits in the country concerned 384,014 $275,322 Tax effect of revenues exempt from taxation (55,486) (30,722) Tax effect of expenses not deductible for tax purposes 3,906 2,992 Tax effect of deferred tax assets/liabilities 189,009 120,158 10 % surtax on undistributed retained earnings 14,485 19,947 Tax effect of different tax rates for entities in other tax regions 15,988 26,644 Adjustments in respect of deferred income tax of prior periods 144 196 Adjustments in respect of current income tax of prior periods (24,246) (19,081) Deferred tax expense (income) relating to changes in tax rate or the imposition of new taxes 20,725 - Total income tax expense recognized in profit or loss $548,539 $395,456	For the years ended 31 December 2018 2017 Deferred tax income: Exchange differences on translation of foreign operations $(22,757) $(18,149) Remeasurements of defined benefit plans (1,624) (1,023) Income tax relating to components of other comprehensive income $(24,381) $(19,172) A reconciliation between tax expense and the product of accounting profit multiplied by applicable tax rates is as follows: For the years ended 31 December 2018 2017 Accounting profit before tax from continuing operations $1,920,068 $1,619,544 Tax at the domestic rates applicable to profits in the country concerned 384,014 $275,322 Tax effect of revenues exempt from taxation (55,486) (30,722) Tax effect of expenses not deductible for tax purposes 3,906 2,992 Tax effect of deferred tax assets/liabilities 189,009 120,158 10 % surtax on undistributed retained earnings 14,485 19,947 Tax effect of different tax rates for entities in other tax regions 15,988 26,644 Adjustments in respect of deferred income tax of prior periods 144 196 Adjustments in respect of current income tax of prior periods (24,246) (19,081) Deferred tax expense (income) relating to changes in tax rate or the imposition of new taxes 20,725 - Total income tax expense recognized in profit or loss $548,539 $395,456
	2018	2017
	$1,920,068	$1,619,544
	384,014 (55,486) 3,906 189,009 14,485 15,988 144 (24,246) 20,725	$275,322 (30,722) 2,992 120,158 19,947 26,644 196 (19,081) -
	$548,539	$395,456

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Deferred tax assets (liabilities) relate to the following:

For the year ended 31 December 2018

Temporary differences Exchange differences on translation of foreign operations Investments accounted for using the equity method Unrealized intragroup profits and losses Unrealized foreign exchange gains or losses Loss from price recovery (reduction) of inventories Revaluations of financial liabilities at fair value through profit or loss Remeasurements of defined benefit plans Non-current liability – Defined benefit liability Deferred income-government grants Accumulated losses Loss allowance Convertible bonds Depreciation Deferred tax (income) /expense Net deferred tax assets (liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Balance as of 1 January $14,891 (156,340) 5,963 (3,040) 18,275 7,119 7,877 8,576 4,065 4,273 709 (825) (513) $(88,970) $71,748 $160,718	Recognized in profit or loss $ - (128,952) 1,938 2,820 (12,257) (15,380) - 293 (95) 2,814 265 (227) (1,614) $(150,395)	Recognized in other comprehensive income $22,757 - - - - - 1,624 - - - - - - $24,381	Acquisition through business combinations $ - - - - - - - - - - - - - $ -	Exchange differences $ - (1,331) - - (121) - - 1,184 (94) - - - 42 $(320)	Balance as of 31 December $37,648 (286,623) 7,901 (220) 5,897 (8,261) 9,501 10,053 3,876 7,087 974 (1,052) (2,085)
						$215,304
						$82,937
						$298,241

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

For the year ended 31 December 2017

Temporary differences Exchange differences on translation of foreign operations Investments accounted for using the equity method Unrealized intragroup profits and losses Unrealized foreign exchange gains or losses Loss from price recovery (reduction) of inventories Revaluations of financial liabilities at fair value through profit or loss Remeasurements of defined benefit plans Non-current liability – Defined benefit Liability Deferred income-government grants Accumulated losses Allowance for doubtful accounts Convertible bonds Depreciation Deferred tax (income)/ expense Net deferred tax assets (liabilities) Reflected in balance sheet as follows: Deferred tax assets Deferred tax liabilities	Balance as of 1 January $(3,258) (135,578) 3,989 (878) 13,332 10,573 6,854 7,315 4,214 2,401 402 (397) - $(91,031) $49,089 $140,120	Recognized in profit or loss $ - 606 1,974 (2,172) 5,008 (2,928) - (13) (93) 1,872 307 (428) (504) $3,629	Recognized in other comprehensive income $18,149 - - - - - 1,023 - - - - - - $19,172	Acquisition through business combinations $ - (21,277) - - - - - 1,097 - - - - - $(20,180)	Exchange differences $ - (91) - 10 (65) (526) - 177 (56) - - - (9) $(560)	Balance as of 31 December $14,891 (156,340) 5,963 (3,040) 18,275 7,119 7,887 8,576 4,065 4,273 709 (825) (513)
						$(88,970)
						$71,748
						$160,718

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Unrecognized deferred tax liabilities relating to the investment in subsidiaries

The Company shall recognize the relevant deferred income tax liabilities for the income tax payable that may arise when the undistributed surplus of a foreign subsidiary is remitted back, in accordance with the undistributed surplus expected to be allocated by the future subsidiary.

The assessment of income tax returns

As of 31 December 2018, the assessment of the income tax returns of the Company and its subsidiaries is as follows:

The Company Subsidiary- Kwan-Ze Corporation Ltd. Subsidiary- T-CONN Precision Co., Ltd. Subsidiary- Radbon Avionics Inc..	The assessment of income tax returns
	Assessed and approved up to 2016 Assessed and approved up to 2016 Assessed and approved up to 2016 Assessed and approved up to 2016

(24) Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent entity by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent entity (after adjusting for interest on the convertible preference shares) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(a) Basic earnings per share Profit attributable to ordinary equity holders of the Company Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands) Basic earnings per share (NT$) (b) Diluted earnings per share Profit attributable to ordinary equity holders of the Company Add: Interest expense from convertible bonds Profit attributable to ordinary equity holders of the Company after dilution Weighted average number of ordinary shares outstanding for basic earnings per share (in thousands) Effect of dilution: Employee compensation-stock (in thousands) Convertible bonds (in thousands) Weighted average number of ordinary shares outstanding after dilution (in thousands) Diluted earnings per share (NT$)	For the years ended 31 December	For the years ended 31 December
	2018 $1,413,477 225,685 $6.26 $1,413,477 4,516 $1,417,993 225,685 290 6,352 232,327 $6.10	2017
		$1,226,471
		225,416
		$5.44
		$1,226,471 2,723
		$1,229,194
		225,416 185 3,905
		229,506
		$5.36

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date of completion of the financial statements.

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(25) Business Combinations

Acquisition of SINBON Electronic

On 20 July 2017, the Group acquired 51% interest in its subsidiary - SINBON Electronic. SINBON Electronic is a holding company that invests in Europe. The Group acquired SINBON Electronic so that its subsidiaries, ET Hungary and ET Germany, can help expand the Group’s business in Europe.

The Group has selected to measure the non-controlling interest of SINBON Electronic at fair value.

The fair value of the identifiable assets and liabilities of SINBON Electronic at the date of acquisition were:

at the date of acquisition were:
Asset Cash on hand & demand deposits Account receivable Other receivable Inventories Prepayments Other current assets Property, plant and equipment Intangible Assets Deferred tax assets Liabilities Account payable Other payable Other current liabilities Deferred tax liabilities Identifiable net assets	Amount
	$99,670 47,540 456 46,562 1,762 20,556 208,778 46,048 1,097
	472,469
	47,676 23,660 18,801 21,277
	111,414
	$361,055

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Acquisition consideration

Cash flow analysis of acquisition: Transaction costs of the acquisition Net cash acquired with the subsidiary Net cash flow on acquisition	Amount
	$(184,139) 99,670
	$(84,469)

(26) Additional information of cash flow

The effects of disposal of subsidiaries in 2017 were as follows:

On 30 September 2017, the Company disposed of 51% interest in its subsidiary - JPSB and lost control of the entity. The cash consideration was NT$3,975 thousand and the Company has recognized loss on disposal of investment amounting to NT$(4,151) thousand, which was recorded in the statements of comprehensive income.

The book value of the identifiable assets and liabilities of JPSB as of 30 September 2017 were:

Asset Cash on hand & demand deposits Financial assets held for trading Account receivable Other receivable Inventories Prepayments Other current assets Property, plant and equipment Other non-current assets Liabilities Account payables Other payables Other current liabilities Long-term loan The net asset disposition		Amount
		$15,931 1,356 10,348 474 5,459 2,954 3,051 14,588 2,915 57,076 (21,591) (577) (13) (21,122)
		(43,303)
		$13,773

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(1)Gain on disposal of subsidiaries

Gain on disposal of subsidiaries
The consideration in cash and cash equivalents The net asset value of the sale Less: Non-controlling interests Less: Reclassified Exchange differences on translation of foreign operations Loss on disposal of subsidiaries	Amount
	$3,975 13,773 (4,132) (2,066) 551
	$(4,151)

(2) Net cash outflow from disposal of subsidiaries

Net cash outflow from disposal of subsidiaries
The consideration in cash and cash equivalents Less: Disposition of cash and cash equivalents balances Net cash outflow from disposal of subsidiaries	Amount
	$3,975 (15,931)
	$(11,956)

• (27) Change of Ownership of subsidiaries

Acquisition of issued shares of subsidiaries

On 18 January 2018, the Group further acquired 10% shares with voting rights from Radbon which is a sub-subsidiary of the Group. Thus, the Group increased its ownership in the entity to 100%. Cash paid to non-controlling interest shareholder amounted to NT$1,426 thousand. Net asset of Ray Service was NT$9,060 thousand. The additional equity information such as reduction of non-controlling interests and adjustment of other comprehensive income or loss are as follows:

Cash consideration paid to the non-controlling shareholders Reduction of non-controlling interests Difference in additional paid-in capital from investee under equity method	Amount $1,426 (906) $520

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Acquisition of new shares in a subsidiary not proportionate to ownership interest

Radbon issued new shares on 27 June 2018, however the Group did not purchase the new shares according to its shareholding percentage, consequently the ownership interest in Radbon was reduced to 55%. The Group received additional intangible assets from the issuance of new shares in the amount of NT$27,000 thousand. The carrying amount of Radbon’s net assets was NT$60,000 thousand. The following table is a schedule of interest disposed of by Radbon including changes in non-controlling interests:

non-controlling interests:
Additional intangible assets received from the issuance of new shares Increase to non-controlling interests Difference recognized in capital surplus or retained earning within equity		Amount
		$(27,000) 27,000
		$ -

On 9 November 2018, T-CONN raised capital; however, the Company did not acquire shares of T-Conn according to the shareholding percentage. Therefore, the Company’s ownership dropped to 62.25%, thereby increasing the non-controlling interest by NT$32,458 thousand.

7. Related party transactions

Information of the related parties that had transactions with the Group during the financial reporting period is as follows:

Name and nature of relationship of the related parties

Name of the relatedparties	Nature of relationshipof the relatedparties
Argosy Research Inc. Hebang Electron (Suzhou) Co. (Note) Shanghai Huangze Electronic Co., Ltd. Hebang Electron (China) Co. (Note) INPAQ Technology Co., Ltd. (Note) Circuits & Cables LLC	Associate Substantive related party Substantive related party Substantive related party Associate Associate

Note: On 30 June 2017, the Company stepped down as a board director of the company and became a nonrelated party.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(a) Sales

ales
Associates Others Other related parties Others Total	For the years ended 31 December
	2018 $9,983 -	2017
		$16,211 2
	$9,983	$16,213

The sales price to the above related parties was determined through mutual agreement based on the market rates. The collection periods for domestic sales to related parties were month-end 60~120 days, while the term for overseas sales was net 45~75 days. The outstanding balance as of 31 December 2018 and 2017 was unsecured, non-interest bearing and must be settled in cash. The receivables from the related parties were not guaranteed.

(b) Purchases

urchases
Associates Others Other related parties Others Total	For the years ended 31 December
	2018 $2,177 115 $2,292	2017
		$1,510 20,887
		$22,397

The purchase price from the above related parties was determined through mutual agreement based on the market rates. The payment terms from the related party suppliers were comparable with third party suppliers and were set between one to four months.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (c) Accounts Receivable-Related Parties

Accounts Receivable-Related Parties
Associates Others	As of 31 December
	2018 $2,027	2017
		$10,833

• (d) Other Receivables-Related Parties

ther Receivables-Related Parties
Associates Others	For the years ended 31 December
	2018 $1,752	2017
		$47

(e) Accounts payable-related parties

ccounts payable-related parties
	For the	years ended
	31 December
	2018	2017
Associates
Others	$183	$228
Other related parties
Others	-	12
Total	$183	$240
ey management personnel compensation
	For the	years ended
	31 December
	2018	2017
Short-term employee benefits	$176,475	$159,195
Post-employment benefits	31,039	35,283
Total	$207,514	$194,478

(f) Key management personnel compensation

8. Assets pledged as security

None.

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(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

9. Significant contingencies and unrecognized contract commitments

The Company provided guarantees for subsidiaries’ financing to banks for the years ended 31 December 2018. Please refer to Note 13.(1)(b).

10. Significant disaster loss

None.

11. Significant subsequent events

None.

1. Others

2. (1)Categories of financial instruments

Financial assets

Financial assets
Financial assets at fair value through profit or loss: Mandatorily measured at Fair value through profit or loss Held for trading Financial assets at fair value through other comprehensive income Available-for-sale financial assets： Financial assets at fair value Financial assets at cost-noncurrent Subtotal Financial assets measured at amortized cost (Note 2) Loans and receivables(Note 2): Total	As of 31 December
	2018 $171,099 (Note1) 276,727 (Note1) (Note1) (Note1) 7,378,464 (Note1) 7,826,290	2017
		(Note1) $61,630 (Note1) 137,900 369,608
		507,508
		(Note1) 6,697,725
		$7,266,863

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Financial liabilities Financial liabilities at amortized cost: Short-term loans Notes and accounts payable Bonds payable (including current portion with maturity less than 1 year) Long-term loans (including current portion with maturity less than 1 year) Others payables Subtotal Financial liabilities at fair value through profit or loss: Held for trading Total	As of 31 December	As of 31 December
	2018 $1,804,995 3,337,688 404,554 10,041 875,407 6,432,685 - $6,432,685	2017
		$1,594,624 2,720,958 483,621 - 783,172
		5,582,375
		44,727
		$5,627,102

Note:

• (1)The Group adopted IFRS 9 on 1 January 2018. The Group elected not to restate prior periods in accordance with the transition provision in IFRS 9.

• (2)Including cash and cash equivalents, notes receivable, trade receivables and other receivables.

• (2) Financial risk management objectives and policies

The Group’s principal financial risk management objective is to manage the market risk, credit risk and liquidity risk related to its operating activates. The Group identifies measures and manages the aforementioned risks based on the Group’s policy and risk appetite.

The Group has established appropriate policies, procedures and internal controls for financial risk management. Before entering into significant transactions, due approval process by the Board of Directors and Audit Committee must be carried out based on related protocols and internal control procedures. The Group complies with its financial risk management policies at all times.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(3) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of the changes in market prices. Market prices comprise currency risk, interest rate risk and other price risk (such as equity risk).

In practice, it is rarely the case that a single risk variable will change independently from other risk variable, there are usually interdependencies between risk variables. However the sensitivity analysis disclosed below does not take into account the interdependencies between risk variables.

Foreign currency risk

The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or expense are denominated in a different currency from the Group’s functional currency) and the Group’s net investments in foreign subsidiaries.

The Group has certain foreign currency receivables to be denominated in the same foreign currency with certain foreign currency payables, therefore natural hedge is received. The Group also uses forward contracts to hedge the foreign currency risk on certain items denominated in foreign currencies. Hedge accounting is not applied as they did not qualify for hedge accounting criteria. Furthermore, as net investments in foreign subsidiaries are for strategic purposes, they are not hedged by the Group.

The foreign currency sensitivity analysis of the possible change in foreign exchange rates on the Group’s profit is performed on significant monetary items denominated in foreign currencies as at the end of the reporting period. The Group’s foreign currency risk is mainly related to the volatility in the exchange rates for USD and RMB.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s loans and receivables at variable interest rates, bank borrowings with fixed interest rates and variable interest rates.

The interest rate sensitivity analysis is performed on items exposed to interest rate risk as at the end of the reporting period, including investments and borrowings with variable interest rates and interest rate swaps. At the reporting date, a change of 10 basis points of interest rate in a reporting period could cause the profit.

Pre-tax sensitivity analysis of changes in related risk factors for the years ended 31 December 2018 and 2017 are as follows:

For the year ended 31 December 2018

Main Risk Foreign currency risk Interest rate risk	Fluctuation NTD/USD rate +/− 1% NTD/RMB rate +/− 1% Market rate +/− 10 basis points	Sensitivity of profit/loss +/−$16,917 +/−$115 +/−$1,609	Sensitivity of equity
			+/−$251 +/−$9,712 -

For the year ended 31 December 2017

Main Risk Foreign currency risk Interest rate risk	Fluctuation NTD/USD rate +/− 1% NTD/RMB rate +/− 1% Market rate +/− 10 basis points	Sensitivity of profit/loss +/−$15,846 +/−$498 +/−$1,631	Sensitivity of equity
			+/−$(346) +/−$9,307 -

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Equity price risk

The fair value of the Group’s listed and unlisted equity securities and conversion rights of the Euro-convertible bonds issued are susceptible to market price risk arising from uncertainties about future values of the investment securities. The Group’s listed and unlisted equity securities are classified under held for trading financial assets or available-for-sale financial assets, while conversion rights of the Euro-convertible bonds issued are classified as financial liabilities at fair value through profit or loss as it does not satisfy the definition of an equity component. The Group manages the equity price risk through diversification and placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Group’s senior management on a regular basis. The Group’s Board of Directors reviews and approves all equity investment decisions.

At the reporting date, a change of 10% in the price of the listed equity securities, mandatorily measured at could increase/decrease the Group’s profit for the year ended 31 December 2017 by NT$13,790 thousand.

At the reporting date, a change of 10% in the price of the listed equity securities, equity instrument measured at fair value through other comprehensive income could increase/decrease the Group’s equity for the year ended 31 December 2018 by NT$1,570 thousand.

Please refer to Note 12(9) for sensitivity analysis information of other equity instruments or derivatives that are linked to such equity instruments whose fair value measurement is categorized under Level 3.

(4) Credit risk management

Credit risk is the risk that counterparty will not meet its obligations under a contract, leading to a financial loss. The Group is exposed to credit risk from operating activities (primarily for accounts receivables and notes receivables) and from its financing activities, including bank deposits and other financial instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to credit risk management. Credit limits are established for all counter parties based on their financial position, rating from credit rating agencies, historical experience, prevailing economic condition and the Group’s internal rating criteria etc. Certain counter parties’ credit risk will also be managed by taking credit enhancing procedures, such as requesting for prepayment or insurance.

As of 31 December 2018 and 2017, amounts receivables from top ten customers represented 22% and 21% of the total accounts receivables of the Group. The credit concentration risk of other accounts receivables is insignificant.

Credit risk from balances with banks, fixed income securities and other financial instruments is managed by the Group’s treasury in accordance with the Group’s policy. The Group only transacts with counterparties approved by the internal control procedures, which are banks and financial institutions, companies and government entities with good credit rating. Consequently, there is no significant credit risk for these counter parties.

(5) Liquidity risk management

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of cash and cash equivalents, highly liquid equity investments, bank borrowings, convertible bonds and finance leases. The table below summarizes the maturity profile of the Group’s financial liabilities based on the contractual undiscounted payments and contractual maturity. The payment amount includes the contractual interest. The undiscounted payment relating to borrowings with variable interest rates is extrapolated based on the estimated interest rate yield curve as of the end of the reporting period.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Non-derivative financial instruments

As of 31 December 2018 Loans Notes and accounts payable Convertible bonds As of 31 December 2017 Loans Notes and accounts payable Convertible bonds	Less than 1year $1,831,295 3,337,688 408,610 $1,613,940 2,720,958 -	2 to 3years $4,823 - - $ - - 505,013	4 to 5years $2,871 - - $ - - -	> 5years	Total
				$ - - - $ - - -	$1,838,989 3,337,688 408,610 $1,613,940 2,720,958 505,013

Derivative financial instruments

As of 31 December 2018 Cross Currency Swap Inflows Outflows Net As of 31 December 2017 Cross currency swap Inflows Outflows Net	Less than 1year $853,959 (851,675) $2,284 $1,750,269 (1,629,072) $121,197	2 to 3years $ - - $ - $ - - $ -	4 to 5years $ - - $ - $ - - $ -	> 5years $ - - $ - $ - - $ -	Total
					$853,959 (851,675)
					$2,284
					$1,750,269 (1,629,072)
					$121,197

The table above contains the undiscounted net cash flows of derivative financial instruments.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (6) Reconciliation of liabilities from financing activities

Reconciliation of liabilities for the year ended 31 December 2018:

As of 1 January 2018 Cash flow Currency change As of 31 December 2018		Short-term loans	Long-term deferred income	Long-term loan(including maturity within a year)	Deposits received	Total liabilities from financing activities
		$1,594,624 210,371 - $1,804,995	$16,256 (377) (374) $15,505	$ - 10,041 - $10,041	$ - 13,428 - $13,428	$1,610,880 233,463 (374) $1,843,969

Reconciliation of liabilities for the year ended 31 December 2018:

Not applicable

• (7) Fair values of financial instruments

• (a) The methods and assumptions applied in determining the fair value of financial instruments:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used by the Group to measure or disclose the fair values of financial assets and financial liabilities:

• a. The carrying amount of cash and cash equivalents, accounts receivables, accounts payable and other current liabilities approximate their fair value due to their short maturities.

• b. For financial assets and liabilities traded in an active market with standard terms and conditions, their fair value is determined based on market quotation price (including listed equity securities, beneficiary certificates, bonds and futures etc.) at the reporting date.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• c. Fair value of equity instruments without market quotations (including private placement of listed equity securities, unquoted public company and private company equity securities) are estimated using the market method valuation techniques based on parameters such as prices based on market transactions of equity instruments of identical or comparable entities and other relevant information (for example, inputs such as discount for lack of marketability, P/E ratio of similar entities and Price-Book ratio of similar entities).

• d. Fair value of debt instruments without market quotations, bank loans, bonds payable and other non-current liabilities are determined based on the counterparty prices or valuation method. The valuation method uses DCF method as a basis, and the assumptions such as the interest rate and discount rate are primarily based on relevant information of similar instrument (such as yield curves published by the Taipei Exchange, average prices for Fixed Rate Commercial Paper published by Reuters and credit risk, etc.)

• e. The fair value of derivatives which are not options and without market quotations, is determined based on the counterparty prices or discounted cash flow analysis using interest rate yield curve for the contract period. Fair value of option-based derivative financial instruments is obtained using on the counterparty prices or appropriate option pricing model (for example, Black-Scholes model) or other valuation method (for example, Monte Carlo Simulation).

• (b) Fair value of financial instruments measured at amortized cost

The carrying amount of the Group’s financial assets and liabilities measured at amortized cost approximate their fair value.

• (c) Fair value measurement hierarchy for financial instruments

Please refer to Note 12.(9) for fair value measurement hierarchy for financial instruments of the Group.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (8) Derivative financial instruments

The Group’s derivative financial instruments include forward currency contracts, cross currency swap and embedded derivatives. The related information for derivative financial instruments not qualified for hedge accounting and not yet settled as of 31 December 2018 and 31 December 2017 is as follows:

Cross currency swaps and currency option contracts

The Group entered into cross currency swaps to manage its exposure to financial risk, but these contracts are not designated as hedging instruments. The table below lists the information related to cross currency swaps option:

Items(bycontract) As of 31 December 2018 Cross currency swaps As of 31 December 2017 Cross currency swaps	Notional Amount(in thousands) USD 28,000 USD 53,000	Contract Period
		2 January 2018 – 13 March 2019 14 January 2016 – 22 March 2018

Embedded derivatives

The embedded derivatives arising from issuing convertible bonds have been separated from the host contract and were carried at fair value through profit or loss. Please refer to Note 6(14) for further information on this transaction.

The counterparties for the aforementioned derivatives transactions are well known local or overseas banks, as they have sound credit ratings, the credit risk is insignificant.

The forward exchange contracts, Cross currency swaps and currency option contracts have been entered into to hedge the foreign currency risk of net assets or net liabilities, and there will be corresponding cash inflow or outflows upon maturity and the Group has sufficient operating funds, the cash flow risk is insignificant.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (9) Fair value measurement hierarchy

• (a)Fair value measurement hierarchy

All asset and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole. Level 1, 2 and 3 inputs are described as follows:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities that the entity can access at the measurement date

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 – Unobservable inputs for the asset or liability

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorization at the end of each reporting period.

• (b)Fair value measurement hierarchy of the Group’s assets and liabilities

The Group does not have assets that are measured at fair value on a non-recurring basis. Fair value measurement hierarchy of the Group’s assets and liabilities measured at fair value on a recurring basis is as follows:

As of 31 December 2018

Financial assets: Financial assets at fair value through profit or loss Fund Stock Cross currency swaps Embedded derivatives-bond Financial assets at fair value through other comprehensive income Equity instrument measured at fair value through other comprehensive income	Level 1 $158,548 2,596 - - 15,698	Level 2 $ - - 9,873 82 -	Level 3 $ - - - - 261,029	Total
				$158,548 2,596 9,873 82 276,727

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As at 31 December 2017

Level 1 Level 2 Level 3 Financial assets: Financial assets at fair value through profit or loss Fund $57,849 $ - $ - Stock 3,781 - - Available-for-sale financial assets: Stock 132,170 - - Beneficiary certification 5,730 - - Financial liabilities: Financial liabilities at fair value through profit or loss Cross currency swap $ - $44,427 $ - Embedded derivative - bond - 300 - Transfers between Level 1 and Level 2 during the period During the years ended 31 December 2018 and 2017, there were no transfers between Level 1 and Level 2 fair value measurements.

Total

$57,849 3,781 132,170 5,730 $44,427 300

Reconciliation for fair value measurements in Level 3 of the fair value hierarchy for movements during the period is as follows:

Beginning balances as of 1 January 2018 Total gains and losses recognized for the year ended 31 December 2018: Amount recognized in OCI (presented in “Unrealized gains (losses) from equity instruments investments measured at fair value through other comprehensive income) The return of paid-in capital for capital reduction Ending balances as of 31 December 2018	Assets
	At fair value through other comprehensive income
	Stocks
	$231,424 36,804 (7,199)
	$261,029

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Information on significant unobservable inputs to valuation

Description of significant unobservable inputs to valuation of recurring fair value measurements categorized within Level 3 of the fair value hierarchy is as follows:

As of 31 December 2018

Financial assets: At fair value through profit or loss Stocks and others	Valuation techniques	Significant unobservable inputs	Quantitative information	Relationship between inputs and fair value	Sensitivity of the input to fair value
	Market approach	Discount for lack of marketability	30%	The higher the discount for lack of marketability, the lower the fair value of the stocks	10% increase (decrease) in the discount for lack of marketability would result in increase (decrease) in the Group’s profit or loss by NT$26,103 thousand

Valuation process used for fair value measurements categorized within Level 3 of the fair value hierarchy

The Group’s Financial Department is responsible for validating the fair value measurements and ensuring that the results of the valuation are in line with market conditions, based on independent and reliable inputs which are consistent with other information, and represent exercisable prices. The Department analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies at each reporting date.

As at 31 December 2018 Financial assets not measured at fair value but for which the fair value is disclosed: Investments accounted for using the equity method(please refer to Note 6(9))	Level 1	Level 2	Level 3	Total
	$526,199	$ -	$ -	$526,199

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

As at 31 December 2017 Financial assets not measured at fair value but for which the fair value is disclosed: Investments accounted for using the equity method(please refer to Note 6(9))	Level 1	Level 2	Level 3	Total
	$561,337	$ -	$ -	$561,337

(10) Significant assets and liabilities denominated in foreign currencies

Information regarding the significant assets and liabilities denominated in foreign currencies is listed below:

Financial assets Monetary items: USD RMB EUR Financial liabilities Monetary items: USD RMB EUR	As of	31 December 2018 Foreign exchange rate NTD 30.73 $3,128,157 4.48 2,501,964 35.20 107,940 30.73 1,411,342 4.48 1,519,250 35.20 23,281	As of	31 December 2017	31 December 2017
	Foreign currencies $101,785 558,943 3,066 45,923 339,406 661	Foreign exchange rate 30.73 4.48 35.20 30.73 4.48 35.20	Foreign currencies $100,384 490,382 2,515 48,451 286,322 565	Foreign exchange rate 29.85 4.58 35.67 29.85 4.58 35.67	NTD
					$2,996,253 2,247,687 89,733 1,446,171 1,312,366 20,167

The Company has a number of different functional currencies; therefore, we are unable to disclose the exchange loss and gain of monetary financial assets and financial liabilities under each foreign currency that has significant impact. The Company had NT$113,221 thousand and NT$(136,760) thousand foreign exchange gains(losses) for the years ended 31 December 2017 and 2018, respectively.

The above information is disclosed based on the carrying amount of foreign currency (after conversion to functional currency).

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

(11) Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximize shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust dividend payments to shareholders, return capital to shareholders or issue new shares.

(12) Transfer of financial assets information

Part of the Group’s notes receivable has been signed into with recourse contracts with financial institutions. Yet the Group transferred the cash flow rights of such receivables, the company still bear the credit risk that notes receivable cannot be collected, which does not meet the de-recognition of financial assets. The transaction related information is as follows:

Counterparty BOCOM Beijing Development Zone Branch HSBC Bank (China) Co., Ltd. Beijing Branch	Amount to be transferred $247,715 182,595	Amount have been advanced（note）
		$247,715 182,595

Note: Recorded in short-term loans

13. Other disclosure

(1) Information at significant transactions

• (a) Financing provided to others for the year ended 31 December 2018: Please refer to Attachment 1.

• (b) Endorsement/Guarantee provided to others for the year ended 31 December 2018: Please refer to Attachment 2.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (c) Securities held as of 31 December 2018: Please refer to Attachment 3.

• (d) Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2018: None.

• (e) Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the paid-in capital for the year ended 31 December 2018: None.

• (f) Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended 31 December 2018: None.

• (g) Related party transactions for purchases and sales exceeding the lower of NT$100 million or 20 percent of the capital stock for the year ended 31 December 2018: Please refer to Attachment 4.

• (h) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of year ended 31 December 2018: Please refer to Attachment 5.

• (i) Financial instruments and derivative transactions: Please refer to Note 12. (8).

• (j) The business relationship, significant transactions and amounts between parent company and subsidiaries: Please refer to Attachment 6.

• (2) Information on investees:

Names, locations, main businesses and products, original investment amount, investment as of 31 December 2018, net income (loss) of investee company and investment income (loss) recognized as of 31 December 2018: Please refer to Attachment 7.

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SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

• (3) Information on investments in mainland China

• (a) Investment in Mainland China: Please refer to Attachment 8.

• (b) Significant transactions through third regions with the investees in Mainland China:

  • i. Purchases amount and percentage, and related ending balance and percentage of payables: Please refer to Attachment 4.

  • ii. Sales amount and percentage, and related ending balance and related ending balance and percentage of receivables: None.

iii. Property transaction amount and occurred gain (loss): None.

• iv. Ending balance and purpose of endorsement/guarantee provided for notes or collateral: None.

• v. Highest balance, ending balance, interest rate interval and total interest amount in current period of financing: None.

• vi. Other transactions with significant influence on current period income or financial position: Please refer to Attachment 4.

14. Segment information

For management purposes, the Group is organized into business units based on their products and services and has three reportable operating segments as follows:

• (1) DMIS: The segment focuses on manufacturing and sale of cable assemblies.

• (2) Component: The segment is in charge of selling various electronic connectors and electronic components.

• (3) Headquarter Operating: The segment focuses on managing investment and other businesses beyond the scopes of DMIS and Component segments.

196

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Operating segments are not aggregated to be reported as aforementioned operating segments.

The management monitors the operation results of its business units individually to make decisions on resource allocation and performance assessment. Segment performance is evaluated by its operating profit or loss and is measured in consistence with the operating profit or loss in the consolidated financial statements. However, the income taxes are managed on a consolidated basis and are not allocated to operating units.

Transfer prices between operating segment are on an arm’s length basis in a manner similar to transactions with third parties.

Information on profit or loss, assets and liabilities of the reportable segment:

For the year ended 31 December 2018

Revenue External customer Inter-segment Total revenue Segment profit	Cable Segment $10,507,289 3,065,127 $13,572,416 $1,964,685	Electronic Segment		Management Operation Segment	Adjustment and Cancellation (Note)	Consolidated
		$3,588,066 21,504		$1,549,898 391,346	$ - (3,477,977) $(3,477,977) $-	$15,645,253 -
		$3,609,570		$1,941,244		$15,645,253
		$414,691		$(459,308)		$1,920,068

Note: Inter-segment revenues were eliminated when consolidated.

For the year ended 31 December 2017

Revenue External customer Inter-segment Total revenue Segment profit	Cable Segment $8,553,201 2,528,107 $11,081,308 $1,487,244	Electronic Segment		Management Operation Segment	Adjustment and Cancellation (Note)	Consolidated
		$3,649,534 20,532		$858,704 285,295	$ - (2,833,934) $(2,833,934) $-	$13,061,439 -
		$3,670,066		$1,143,999		$13,061,439
		$330,294		$(197,994)		$1,619,544

Note: Inter-segment revenues were eliminated when consolidated.

Information on assets and liabilities of the operating segment as of 31 December 2018 and 31 December 2017 are as follows:

197

SINBON ELECTRONICS CO., LTD. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

Segment Assets:

31 December 2018 31 December 2017	Cable Segment	Electronic Segment $1,934,106	Management Operation Segment	Subtotal	Adjustment and Elimination	Consolidated
	$8,202,295		$1,245,919	$11,382,320	$2,819,216	$14,201,536
	$6,280,117	$1,671,415	$1,125,084	$9,076,616	$3,442,861	$12,519,477

Segment Liabilities:

31 December 2018 31 December 2017	Cable Segment	Electronic Segment $1,428,858	Management Operation Segment	Subtotal	Adjustment and Elimination	Consolidated
	$4,573,586		$1,313,950	$7,316,394	$88,510	$7,404,904
	$3,550,080	$1,326,561	$1,257,284	$6,133,925	$89,296	$6,223,221

• (a) Geographical information

• i. Revenue from external customers:

Revenue from external customers:
Mainland China (Hong Kong) United States Taiwan Other countries Total	For theyears ended 31 December
	2018	2017
	$9,269,754 2,414,415 780,945 3,180,139	$7,251,594 1,915,252 698,608 3,195,985
	$15,645,253	$13,061,439

The revenue information above is based on the location of the customers.

• ii. Non-current assets:

Mainland China Taiwan United States Other Total	As of 31 December 2018 2017 $1,314,091 $1,144,254 1,229,336 1,338,568 35,943 50,956 260,618 269,581 $2,839,988 $2,803,359	As of 31 December 2018 2017 $1,314,091 $1,144,254 1,229,336 1,338,568 35,943 50,956 260,618 269,581 $2,839,988 $2,803,359
		2017
		$1,144,254 1,338,568 50,956 269,581
		$2,803,359

• (b) Information about major customers

There’s no sales revenue from a single customer accounting for over 10% of revenue on income statement for the years ended 31 December 2018 and 2017.

198

Attachment 1: Financing provided to others for the three-month period ended 31 December 2018

No.	Lender (Note 1)	Counter-party	Financial statement account	Related Party	Maximum balance for the period	Ending balance	Actual amount provided	Interest rate	Nature of financing	Amount of sales to (purchases from) counter-party	Reason for short-term financing	Allowance for doubtful accounts	Collateral	Collateral	Limit of financing amount for individual counter-party (Note2)	Limit of total financing amount (Note3)
													Item	Value
$1	BJSB	BJSB Tongan	Other receivables	Y	$46,836	$44,762	$ -	0.00%	Note 4	$ -	Need for operating	$ -	-	$ -	$91,188	$91,188
$2	Kwan-Ze	Radbon	Other receivables	Y	$15,000	$15,000	-	0.00%	Note 4	$ -	Need for operating	$ -	-	$ -	$139,471	$139,471

Note 1: The above transations were all made between consolidated entities in the Group and have been reversed.

Note 2: BJSB's financing limit for BJSB Tongan was set at 40% of the lender's net worth of the financial report audited by the certified public accountants as of 31 December 2018.

$227,971*40%=$91,188

Kwan-Ze's financing limit for Ray Service was set at 40% of the lender's net worth of the financial report audited by the certified public accountants as of 31 December 2018. $348,677*40%=$139,471

Note 3: Total financing limit for individual counterparty was set at 40% of the lender's net worth of the financial report audited by the certified public accountants as of 31 December 2018.

BJSB ： $227,971*40%=$91,188

Kwan-Ze ： $348,677*40%=$139,471

Note 4: For short-term financing.

199

Attachment 2: Endorsement/Guarantee provided to others as of 31 December 2018

(Note 1) No.	Endorsor/ Guarantor	Receiving party	Receiving party	Limit of guarantee/endorseme nt amount for receiving party (Note 3)	Maximum balance for the period	Ending balance	Actual amount provided	Amount of collateral guarantee/ endorsemen t	Percentage of accumulated guarantee amount to net assets value from the latest financial statement	Limit of total guarantee/ endorsement amount (Note 4)	Parent company's guarantee/ endorsement amount to subsidiaries (Note 5)	Subsidiaries' guarantee/ endorsement amount to parent company (Note 5)	Guarantee/ endorsement amount to company in Mainland China (Note 5)
		Company name	Releationship (Note 2)
0	The Company	SHSB	2	$2,629,057	$46,452	$46,100	$ -	none	0.70%	$6,572,643	Y	N	Y
0	The Company	SZSB	2	$2,629,057	$15,484	$15,366	$ -	none	0.23%	$6,572,643	Y	N	Y
0	The Company	TCSB	2	$2,629,057	$170,324	$169,032	$ -	none	2.57%	$6,572,643	Y	N	Y
0	The Company	EM	2	$2,629,057	$201,292	$199,764	$ -	none	3.04%	$6,572,643	Y	N	Y
0	The Company	JYSB	2	$2,629,057	$371,616	$368,796	$ -	none	5.61%	$6,572,643	Y	N	Y
0	The Company	BJSB Tongan	2	$2,629,057	$735,321	$444,291	$ -	none	6.76%	$6,572,643	Y	N	Y
0	The Company	T-CONN Precision	2	$2,629,057	$177,420	$176,832	$ -	none	2.69%	$6,572,643	Y	N	N
0	The Company	ET Hungary	2	$2,629,057	$257,924	$254,804	$141,516	none	3.88%	$6,572,643	Y	N	N
0	The Company	T-CONN Zhongshan	2	$2,629,057	$417,011	$414,896	$70,682	none	6.31%	$6,572,643	Y	N	Y
0	The Company	Radbon	2	$2,629,057	$50,000	$50,000	$30,000	none	0.76%	$6,572,643	Y	N	N

• Note 1: The Company and its subsidiaries are coded as follows:

• The Company is coded "0".

• The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

• Note 2: According to the "Guidelines Governing the Preparation of Financial Reports by Securities Issuers" issued by the R.O.C. Securities and Futures Bureau, the receiving parties shall be disclosed as one of the following: 1. A company with which it does business.

• A company in which the public company directly and indirectly holds more than 50 percent of the voting shares.

• A company that directly and indirectly holds more than 50 percent of the voting shares in the public company.

• A company in which the public company holds, directly or indirectly, 90 percent or more of the voting shares.

• A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

• A company that all capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentages.

• Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.

• Note 3: Limit of guarantee/endorsement amount for receiving party is 40% of the net worth of the financial report reviewed by the certified public accountants as of 31 December 2018. $6,572,643Í40%=$2,629,057

• Note 4: Limit of total guarantee/ endorsement amount is 100% of the net worth of the financial report reviewed by the certified public accountants as of 31 December 2018.

• Note 5: "Y" for the listed (OTC) parent company guarantees/endorses for subsidiary, subsidiary guarantees/endorses for the listed (OTC) parent company or guarantee/endorse for companies in Mainland China.

200

Attachment 3: Securities held as of 31 December 2018. (Excluding subsidiaries, associates and joint ventures)

Holding Company	Type and name of securities	Relationship (Note 1)	Financial statement account	a	s of 31 December 2018	s of 31 December 2018	s of 31 December 2018	Note
				Shares	Book value	Percentage of ownership (%)	Fair value
The Company	Chengding Venture Capital Co., Ltd.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	15,000,000 shares	$103,372	11.11%	$103,372	-
The Company	Top Taiwan Venture Capital Co., Ltd.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	6,000,000 shares	57,359	7.50%	57,359	-
Kwan-Ze	Chengding Venture Capital Co., Ltd.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	5,000,000 shares	34,426	3.70%	34,426	-
The Company	Dynahz Technologies	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	2,771,670 shares	32,470	16.67%	32,470	-
The Company	Top Taiwan VII Venture Capital Co., Ltd.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	1,897,960 shares	18,684	3.06%	18,684	-
The Company	Gongwin Biopharm Holdings Co., Ltd.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	235,000 shares	15,698	0.25%	15,698
Kwan-Ze	Actmax Technologies Inc.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	-	4,890	19.00%	4,890	-
The Company	Top Taiwan III Venture Capital Co., Ltd.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	691,057 shares	4,287	4.07%	4,287	-
The Company	Top Taiwan II Venture Capital Co., Ltd.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	347,500 shares	2,235	5.00%	2,235	-
Sinbon USA L.L.C	HOTWIRE Development LLC		Equity instrument investments measured at fair value through other comprehensive income–Non-current	697,500 shares	1,962	5.00%	1,962
The Company	Bandrich, Inc.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	330,000 shares	549	1.62%	549	-
The Company	Japen Sinbon Electronics Co., Ltd.	-	Equity instrument investments measured at fair value through other comprehensive income–Non-current	75 shares	795	15.00%	795	-
The Company	Nextronics Engineering Corp.	-	Financial asset measured at fair value through profit or loss– current	2,950 shares	77,438	9.94%	77,438
The Company	Cayman Lan-Cheng Fund	-	Financial asset measured at fair value through profit or loss– current	30 shares	76,634	17.14%	76,634
T - CONN	Funds Beneficiary Certificate	-	Financial asset measured at fair value through profit or loss– current	-	4,476	-	4,476
The Company	Trutankless, Inc.		Financial asset measured at fair value through profit or loss– current	162 shares	2,596	-	2,596
			Total		437,871

Note 1: Not required if the issuer of securities is not a related party.

201

Attachment 4: Related party transactions for purchases and sales exceeding the lower of NT$100 million or 20 percent of the capital stock as of 31 December 2018

Related party	Counterparty	Relationship	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Intercompany Transactions	Details of non-arm's length transaction	Details of non-arm's length transaction	Notes and accounts receivable (payable)	Notes and accounts receivable (payable)	Note
			Purchases (Sales)	Amount	Percentage of total consolidated purchase(Sales)	Terms	Unit price	Terms	Carrying amount	Percentage of total consolidated receivables (payable)
The Company	JYSB	Subsidiary	Purchase	$1,595,777	42.37%	Trading condition is as same as other supplier	N/A	N/A	$(287,872)	(32.23)%
HKSB	JYSB	Associates	Purchase	$707,104	33.02%	Trading condition is as same as other supplier	N/A	N/A	$(183,370)	(31.39)%
T-CONN	SPL	Associates	Purchase	$127,757	19.26%	Trading condition is as same as other supplier	N/A	N/A	$(23,072)	(12.60)%
T-CONN	T-CONN Zhongshan	Associates	Purchase	$260,190	39.22%	Trading condition is as same as other supplier	N/A	N/A	$(32,711)	(17.86)%
EM	BJSB Tongan	Associates	Purchase	$139,238	26.52%	Trading condition is as same as other supplier	N/A	N/A	$(158,574)	(38.95)%
JYSB	Sinbon USA	Associates	Purchase	$104,223	2.61%	Trading condition is as same as other supplier	N/A	N/A	$(11,841)	(0.94)%
BJSB Tongan	EM	Associates	Purchase	$121,865	5.99%	Trading condition is as same as other supplier	N/A	N/A	$(69,056)	(9.45)%

Attachment 5: Receivables from related parties with accounts exceeding the lower of NT$100 million or 20 percent of the capital stock as of 31 December 2018

Related party	Counterparty	Relationship	Amount	Average collection turnover	Overdue account receivable-related	Overdue account receivable-related	Collection in subsequent period	Allowance for doubtful debts
					Amount	Processing method
JYSB	The Company	Subsidiary	$287,872	4.8	$-	-	$44,630	$-
JYSB	HKSB	Associates	$183,370	4.0	$-	-	$26,767	$-
BJSB Tongan	EM	Associates	$158,574	1.8	$ -	-	-	$ -

202

Attachment 6: The business relationship, significant transactions and amounts between parent company and subsidiaries

No. (Note 1)	Related-party	Counter-party	Relationship with the Company (Note 2)	Transactions	Transactions	Transactions	Transactions
				Account	Amount	Terms	~~Percentage of consolidated~~ operating revenues or consolidated total ~~assets (Note3)~~
0	The Company	JYSB	1	Purchase	$1,595,777	(Note 4)	10.20%
1	JYSB	The Company	2	Sales	$1,595,777	(Note 4)	10.20%
1	JYSB	HKSB	3	Sales	$707,104	(Note 4)	4.52%
2	HKSB	JYSB	3	Purchase	$707,104	(Note 4)	4.52%
3	SPL	T-CONN Precision	3	Sales	$127,757	(Note 4)	0.82%
4	T-CONN	SPL	3	Purchase	$127,757	(Note 4)	0.82%
4	T-CONN	T-CONN Zhongshan	3	Purchase	$260,190	(Note 4)	1.66%
5	T-CONN Zhongshan	T-CONN	3	Sales	$260,190	(Note 4)	1.66%
6	EM	BJSB Tongan	3	Purchase	$139,238	(Note 5)	0.89%
7	BJSB Tongan	EM	3	Sales	$139,238	(Note 6)	0.89%
1	JYSB	Sinbon USA	3	Purchase	$104,223	(Note 7)	0.67%
8	Sinbon USA	JYSB	3	Sales	$104,223	(Note 8)	0.67%
7	BJSB Tongan	EM	3	Purchase	$121,865	(Note 9)	0.78%
6	EM	BJSB Tongan	3	Sales	$121,865	(Note 10)	0.78%

Note 1 : The Company is coded "0".The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2 : Transactions are categorized as follows:

1. The holding company to subsidiary.

2. Subsidiary to holding company.

3. Subsidiary to subsidiary.

Note 3 : The percentage with respect to the consolidated asset/liability for transactions of balance sheet items are based on each item's balance at period-end.

For profit or loss items, interim cumulative balances are used as basis.

Note 4 : The sales price to the above related parties was determined through mutual agreement based on the market conditions.

203

Attachment 7: Names, locations, main businesses and products, original investment amount, investment as of 31 December, net income (loss) of investee company and investment income (loss) recognized as of 31 December 2018: (Excluding investment in Mainland China)

Investor	Investee company (Note1)	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of 31 December 2018	Investment as of 31 December 2018	Investment as of 31 December 2018	Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares	Percentage of ownership (%)	Book value			(Note 1 )
The Company	HKSB	Hong Kong	Manufacturing and selling a wide variety of connectors, wires and cables.	HKD95,606,000 $401,262	HKD95,606,000 $401,262	-	100.00%	$477,520	$71,274	$71,274	Subsidiary
The Company	Kwan-Ze	New Taipei City, Taiwan	Holding company	$235,600	$235,600	23,560,000 shares	100.00%	$348,679	$53,981	$53,981	Subsidiary
The Company	Top Taiwan IV Venture Capital Co., Ltd	Taipei City, Taiwan	Holding company	$22,400	$40,000	2,240,000 shares	20.00%	$24,061	$18	$4	Investee under the equity method
The Company	SB BVI	British Virgin Islands	Holding company	USD45,021,000 $1,461,158	USD40,021,000 $1,309,185	-	100.00%	$3,663,702	$465,726	$465,726	Subsidiary
The Company	Argosy Technologies Co., Ltd.	Hsinchu City, Taiwan	Produce and sells a variety of electronic components, computers andperipheral equipment	$30,648	$30,648	2,945,034 shares	3.59%	$49,210	$295,644	$10,605	Investee under the equity method
The Company	Worldwide Wire Harnesses Co., Ltd.	Samoa	Logistic center.	$ -	USD75,000 $2,451	-	-	-	$(9,595)	$(4,797)	Subsidiary
The Company	S E L	Mauritius	Holding company	USD3,726,000 $120,732	USD 4,233,000 $136,361	-	64.48%	$108	$(8)	$(5)	Subsidiary
The Company	Sinbon USA LLC	216th street SW,Suite D Lynneood WA 98036	Logistic center.	USD4,059,000 $128,061	USD3,000,000 $93,412	-	100.00%	$61,182	$(9,860)	$(9,860)	Subsidiary
The Company	Sinbon Europe GmbH	Pfarrkirchen, Germany	Logistic center.	EUR5,209,000 $185,241	EUR5,209,000 $185,241	-	100.00%	$110,496	$(50,628)	$(50,628)	Subsidiary
The Company	Radbon	Miaoli County, Taiwan	Manufacturing and selling signal cables and cabin wiring.	$33,000	$27,000	3,300,000 shares	55.00%	$30,527	$(4,494)	$(6,761)	Subsidiary
The Company	T-CONN	New Taipei City, Taiwan	Manufacturing and selling a wide variety of connectors, wires and cables.	$116,804	$56,510	11,308,970 shares	62.52%	$153,467	$37,730	$24,233	Subsidiary
T-CONN	S P L	Mauritius	Logistic center.	$3,039	$3,039	-	100.00%	$23,748	$5,693	$ -	Subsidiary
Sinbon USA LLC	Circuits & Cables LLC (C&C)	815 South Brown School Road Vandalia, OH 45377, USA	Selling a wide variety of connectors and cables.	USD 1,604,000	USD 1,604,000	-	40.00%	$32,181	USD(1,344,000) $(40,545)	$(16,218)	Investee under the equity method
Sinbon USA L.L.C	Worldwide Wire Harnesses Co.,Ltd.	Samoa	Logistic center.	USD 75,000	$ -	-	50.00%	$1,799	$(9,595)	$ -	Subsidiary
Kwan-Ze	Digi O2	Miaoli Country, Taiwan	Selling a wide variety of connectors and cables.	$ -	$108,770	-	-	$ -	$ -	$ -	Subsidiary

204

Attachment 7: Names, locations, main businesses and products, original investment amount, investment as of 31 December, net income (loss) of investee company and investment income (loss) recognized as of 31 December 2018: (Excluding investment in Mainland China)

Investor	Investee company (Note1)	Address	Main businesses and products	Initial Investment	Initial Investment	Investment as of 31 December 2018	Investment as of 31 December 2018	Investment as of 31 December 2018	Net income (loss) of investee company	Investment income (loss) recognized	Note
				Ending balance	Beginning balance	Number of shares	Percentage of ownership (%)	Book value			(Note 1 )
Kwan-Ze	Argocy Research Inc.	Hsinchu City, Taiwan	Produce and sells a variety of electronic components, computers andperipheral equipment	$147,175	$147,175	14,624,200 shares	17.81%	$248,651	$295,644	$ -	Investee under the equity method
Worldwide Wire Harnesses Co., Ltd.	STT	U.S.A Tennessee	Logistic center.	USD140,000 $4,542	USD140,000 $4,542	-	50.00%	USD(133) $(4,087)	USD(318) $(9,595)	$ -	Subsidiary
Argocy Research Inc.	Argosy Technology Inc.(USA)	U.S.A	Sell Multimedia related products, ODM and OED	$30,347	$30,347	900 shares	100.00%	$ -	$ -	$ -	Investee under the equity method
Argocy Research Inc.	Ari International B.V.	The Netherlands	Leasing operations and sell ODM and OED	$22,314	$22,314	-	100.00%	$16,338	$(76)	$ -	Investee under the equity method
Argocy Research Inc.	Ari International (Singapore)Pte.,Ltd. (AIS)	Singapore	Holding company	$32,697	$32,697	-	100.00%	$4,571	$(344)	$ -	Investee under the equity method
Argocy Research Inc.	NOVAC ARGOSY	Tokyo	Sell computer peripheral products	$4,294	$4,294	-	49.00%	$ -	$ -	$ -	Investee under the equity method
Argocy Research Inc.	Global Saber Electronics Co., Ltd.	Mauritius	Selling a wide variety of connectors and cables.	$ -	$ -	-	100.00%	$82,875	$9,408	$ -	Investee under the equity method
Argocy Research Inc.	ROTEC LIMITED	British Virgin Islands	Holding company	$268,479	$268,479	8,550 shares	77.38%	$426,874	$57,123	$ -	Investee under the equity method
Global Saber Electronics Co., Ltd	ROTEC LIMITED	British Virgin Islands	Holding company	$72,918	$72,918	2,500 shares	22.62%	$124,785	$57,123	$ -	Investee under the equity method
Sinbon Europe GmbH	Sinbon Elcotronic Holding GmbH	Germany	Holding company	EUR5,184,000 $181,113	EUR5,184,000 $181,113	-	51.00%	EUR3,116,000 $109,676	EUR(2,602,000) $(92,654)	$ -	Subsidiary
Sinbon Elcotronic Holding GmbH	ET Hungary	Hungary	Selling,Producting and Processing a wide variety of connectors and cables.	EUR1,080,000 $38,364	EUR1,080,000 $38,364	-	100.00%	EUR911,000 $32,078	EUR(2,365,000) $(84,206)	$ -	Subsidiary
Sinbon Elcotronic Holding GmbH	ET Germany	Germany	Logistic center.	EUR1,245,000 $44,225	EUR1,245,000 $44,225	-	100.00%	EUR1,258,000 $44,271	EUR(140,000) $(5,000)	$ -	Subsidiary

Note 1: （ 1 ） Information of "Investee company", "Address", "Main businesses and products", "Initial Investment"and "Investment as of 31 December 2018" shall be filled in the table according to the Company's reinvestmet and the to the subsidiaries' re-investment in corresponding order, and indicate the relationship in the Notes.

（ 2 ） Net income (loss) of investee shall be filled in"Net income (loss) of investee company".

（ 3 ） "Investment income (loss) recognized for the period" shall contain only investment income (loss) of all direct investees and investees under the equity method, and the investor shall confirm that its investment income (loss) of all direct investees includes the subsidiaries' re-investment.

205

Attachment 8: Investment in Mainland China

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1 January 2018	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of 31 December 2018	Net income (loss) of investee company	Percentag e of Ownership	Investment income (loss) recognized	Carrying Value as of 31 December 2018	Accumulated Inward Remittance of Earnings as of 31 December 2018
					Outflow	Inflow
BJSB	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 4,450,000	Indirectly investment in Mainland China through remittance from a third region.	USD 1,020,000 $30,719	$ -	$ -	USD 1,020,000 $30,719	$4,925	100.00%	$4,925 (Note 1)	$226,114	USD11,030,000 $351,623
JY Sinact	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 31,780,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 22,050,000 $705,108	$ -	$ -	USD 22,050,000 $705,108	USD12,691,000 $382,791	100.00%	USD12,691,000 $382,791 (Note 1)	USD87,189,000 $2,679,590	USD19,761,000 $608,088
SHSB	Selling a wide variety of connectors, wires and cables.	USD 3,280,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 1,700,000 $55,358	$ -	$ -	USD 1,700,000 $55,358	USD480,000 $14,470	100.00%	USD480,000 $14,470 (Note 1)	USD6,285,000 $193,142	USD1,587,000 $48,389
SZSB	Selling a wide variety of connectors, wires and cables.	USD 2,810,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 2,750,000 $83,385	$ -	$ -	USD 2,750,000 $83,385	USD1,171,000 $35,319	100.00%	USD1,171,000 $35,319 (Note 1)	USD10,077,000 $309,706	RMB13,500,000 $61,261
TCSB	Selling a wide variety of connectors, wires and cables.	USD 14,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 3,000,000 $96,090	USD 5,000,000 $151,973	$ -	USD 8,000,000 $248,063	USD1,294,000 $39,039	100.00%	USD1,294,000 $39,039 (Note 1)	USD16,321,000 $501,604	USD196,000 $5,890
China Digital Library Corp.Ltd.	Technology development of computer software, transfer of technology, advisory service	RMB 88,600,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 750,000	$ -	$ -	USD 750,000	$ -	4.85%	$ - (Note 2)	$ -	$ -
Argosy (Beijing) Technologies Co., Ltd.	Selling a wide variety of connectors, wires and cables.	RMB 5,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 76,000	$ -	$ -	USD 76,000	$ -	12.00%	$ -	$ -	$ -
Wu Xi S&D	Manufacturing and selling new flat panel displays.	USD 4,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 1,900,000 $61,823	$ -	$ -	USD 1,900,000 $61,823	$ -	-	$ -	$ -	$ -
Ning Bo Smart and Diligent Co., Ltd.	Manufacturing and selling a new Flat Panel Display.	USD 2,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 1,140,000 $37,025	$ -	$ -	USD 1,140,000 $37,025	$ -	-	$ -	$ -	$ -
JY Sinact	Manufacturing and selling a wide variety of electronic materials.	USD 9,500,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 5,266,000 $164,599	$ -	$ -	USD 5,266,000 $164,599	$ -	-	$ -	$ -	$ -

206

Attachment 8: Investment in Mainland China

Investee company	Main Businesses and Products	Total Amount of Paid-in Capital	Method of Investment	Accumulated Outflow of Investment from Taiwan as of 1 January 2018	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of 31 December 2018	Net income (loss) of investee company	Percentag e of Ownership	Investment income (loss) recognized	Carrying Value as of 31 December 2018	Accumulated Inward Remittance of Earnings as of 31 December 2018
					Outflow	Inflow
Shang Hai Comtek Electronics Trading Co., ltd.	Selling a wide variety of electronic materials.	USD 160,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 104,000 $3,302	$ -	$ -	USD 104,000 $3,302	$ -	-	$ -	$ -	$ -
Dong Guan CMK	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 1,000,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 645,000 $20,768	$ -	$ -	USD 645,000 $20,768	$ -	-	$ -	$ -	$ -
T-CONN Zhongshan	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 7,100,000	Indirectly investment in Mainland China through companies registered in a third region.	USD 3,086,000 $99,007	$ -	$ -	USD 3,086,000 $99,007	$9,883	62.52%	$9,883 (Note 3)	$(993)	$ -
BJSB Tongan	Manufacturing and selling a wide variety of connectors, wires and cables.	USD 3,000,000	Indirectly investment in Mainland China through remittance from a third region.	USD 3,000,000 $89,134	$ -	$ -	USD 3,000,000 $89,134	$378,553	100.00%	$378,553 (Note 1)	$1,294,388	USD4,600,000 $138,528
Accumulated Investment in Mainland China as of 31 December 2018 Investment Amounts Authorized by Investment Commission, MOEA Upper Limit on Investment USD51,487,000 USD 53,420,000 N/A (Note 4)
Accumulated Investment in Mainland China as of 31 December 2018			Investment Amounts Authorized by Investment Commission, MOEA		Upper Limit on Investment
USD51,487,000			USD 53,420,000		N/A (Note 4)

Note 1: Based on the financial statements certificated by the public accountant of the parent company in Taiwan.

Note 2: The financial statements were not audited by independent accounts.

Note 3: The financial statements certificated by other public accountant.

Note 4: According to No. Shen-Zi-09704604680 issued by Ministry of Economic Affairs, R.O.C., the Company's investment in Mainland China is not limited to 60% of net worth or consolidated net worth specified by the Investment Commission.

207

• 6.5. The company or affiliates has/have experienced financial difficulty in the last year and by the report publishing date, and its impact on the corporate financial status: N/A

• 208 -

7. Review and Analysis of Financial Situation and Financial Performance and Risk Items

7.1. Financial situation: Major causes and impact of material changes of assets, liabilities, and shareholder equity in the last two years and future responsive plans:

Expressed in Thousands of NTD

Year Item	2017	2018	Difference	Difference
			Amount	Percentage
Current assets	9,716,118	11,361,548	1,645,430	16.94
Fixed assets	1,486,310	1,854,001	367,691	24.74
Other assets	310,123	177,400	(132,723)	(42.80)
Total assets	12,519,477	14,201,536	1,682,059	13.44
Current liabilities	5,473,028	6,981,572	1,508,544	27.56
Long-term liabilities	483,921	7,646	(476,275)	(98.42)
Total liabilities	6,223,221	7,404,904	1,181,683	18.99
Capital stock	2,254,162	2,266,954	12,792	0.57
Capital surplus	830,265	904,086	73,821	8.89
Retained earnings	3,233,651	3,743,536	509,885	15.77
Total equities	6,296,256	6,796,632	500,376	7.95
Note: (1) Fixed assets increase because completed a second factory in Miaoli. (2) Other assets decrease was caused by pre-paid equipment. (3) Current liabilities increase because of the short-term loan and accounts payable growth. Also long-term company bond transfer into. (4) Long-term liabilities decrease because of long-term company bond transfer into current liabilities. (5) Retained earnings increased as revenue and netprofit of the currentperiod increased.

7.2. Financial performance: Major causes of material changes in revenue, net profit margin, and net profit before tax and estimated sales quantity in the last two years and their references, and future responsive plans:

Expressed in Thousands of NTD

		2017	2018	2018	Increased) (reduced) amount	Variable proportion %
	Subtotal	Total	Subtotal	Total
Total operating revenue Minus: Sales return and Sales discount Sales income Other operating revenues Net operating revenue amount Operating cost	(55,285)	13,116,724 (55,285)  13,061,439 -  13,061,439 (9,781,088) 	(44,036 ) 	15,689,289 (44,036)  15,645,253 -  15,645,253 (11,725,308) 	2,572,565 11,249  2,583,814  2,583,814 (1,944,220) 	19.61 (20.35)  19.78  19.78 19.88 

• 209 -

	2017	2017	2017	2018	2018	2018		Increased) (reduced) amount		Variable proportion %
	Subtotal		Total	Subtotal		Total
Operating gross profit Minus: End unrealized gross profit Plus: Beginning realized a gross profit Net operating gross profit Operating expense Net operating margin Non-operating income and expense Continuing operating income before tax Income tax expense Continuing operating income after tax			3,280,351  3,280,351 (1,887,205)  1,393,146 226,398  1,619,544 (395,456)  1,224,088			3,919,945  3,919,945 (2,288,256)  1,631,689 288,379  1,920,068 (548,539)  1,371,529		639,594  639,594 (401,051)  238,543 61,981  300,524 (153,083)  147,441		19.50  19.50 21.25  17.12 27.38  18.56 38.71  12.04
Addition/reduction variable analysis: Non-operatingincome increased as exchangegain increased.

7.3. Cash flows

7.3.1. Analysis of cash flows in the last two years

Year Item	Year Item	2017	2017	2017	2018	2018	Increase (reduction) proportion	Increase (reduction) proportion
Cash flow ratio		14.11%			4.92%		-9.19%
Cash flow adequacyratio		114.45%			78.45%		-36.00%
Cash reinvestment ratio		-0.74%			-6.54%		-5.80%
Note: Cash flow adequacyratio down was caused byincreasingcash dividends in 2017.
7.3.2. Analysis of cash flows in the coming year						Expressed in Thousands of NTD
Beginning cash balances (1)	Estimated net cash flows from annual business activities (2)		Estimated annual cash outflows (3)	Estimated cash balances (shortages) (1)+(2)-(3)		Remedies for Estimated Cash Shortages
						Investment plans		Financial management plans
788,605	536,115		1,068,882	255,838		-		-

7.4. Impact of major capital expenses on finance in recent years.

• 7.4.1. Utilization and sources of major capital expenses: None.

• 7.4.2. Estimated benefits: None.

• 210 -

7.5. Re-investment policies and major causes of profits or losses in recent years, improvement plans, and investment plans in the coming year:

Expressed in Thousands of NTD

Description Item	The amount by 31 Dec 2018	Policy	Major causes of P/L	Improvement plans	Other future investment plans
SINBON Electronics Hong Kong	401,262	Center for Mainland product and capital and international trade	Operations of that company brought profits.	－	－
SINBON International Enterprise Co., Ltd.	1,461,158	Reinvestment framework consideration and international trade.	Operations of the subsidiaries of that company brought profits.	－	－
Guanze Co, Ltd.	235,600	Professional domestic investor.	Operations of the subsidiaries of that company brought profits.	－	－
SINBON Electronics Beijing	30,719	Cultivation of and service for customers in northern China.	Operations of that company brought profits.	－	－
Super Elite Ltd.	120,732	Indirect control of the electronics part/ component business in the Mainland.	Operations of the subsidiaries of that company cause losses.	Continuous cultivation of new Mainland customers.	－
SINBON Tongan Electronics (Beijing)	89,134	Cultivation of and service for customers in northern China.	Operations of that company brought profits.	－	－
SINBON USA LLC.	128,061	Cultivation of customers in the USA.	Operation losses.	Continuous cultivation of local customers.
Radbon Avionics Inc.	33,000	Development products in the aviation industry.	Operation losses and in the beginning stage.	Continuous cultivation of local customers.
SINBON Europe GmbH	185,241	Cultivation of customers in the EU.	Operation losses and in the beginning stage.	Continuous cultivation of local customers.
T-conn Precision Corporation	116,804	Connecters’manufactu ring and trading	Operations of that company brought profits.	－	－

7.6. Risk items

• 7.6.1. Impact on profits and losses of interest rate and exchange rate volatility and inflation and future countermeasures:

• (1) Impact on profits and losses of interest rate volatility and future countermeasures in recent years

  • We will continuously observe future market changes and take action to prevent risk at appropriate times to reduce potential risk from the interest rate volatility.

• (2) Impact on profits and losses of exchange rate volatility and future countermeasures in recent years

• 211 -

In 2018, the recognized losses from the exchange were NT$113,221 thousands. We have implemented currency hedging to prevent the impact of exchange rate volatility on profits and losses.

• (3) Impact on profits and losses of inflation and future countermeasures in recent years

No unfavourable impact was reported in 2018.

• 7.6.2. Policies for high-risk, high-leverage investments, capital lending to others, endorsement and guarantee for others, and derivatives transaction; major causes for losses and profits; and future countermeasures:

• (1) In 2018, we did not engage in high-risk, high-leverage investments.

• (2) In 2018, we provided endorsements and guarantees mainly for the bank loans of subsidiaries. These endorsements and guarantees were provided with reference to the “Endorsements and Guarantees Regulations” and the maximum amount of endorsement and guarantee is NT$6,572,643 thousands. By the end of 2017, the balance of endorsements and guarantees was NT$2,139,881 thousands.

• 7.6.3. Future R&D plans and estimated R&D investments: In 2017, we invested a total of NT$582,938 thousand for R&D, with 4% higher than the previous year. In the future, SINBON actively develops electronic parts and components for the Internet of Thing (IoT), robots, and smart home applications. We will spend at least NT$300 million each year or over 3% of revenue on R&D in the future.

• 7.6.4. Impact of major policy or legal changes at home and abroad on organizational finance and countermeasures: None.

• 7.6.5. Impact of technology and industry changes on organizational finance and countermeasures:

• In response to the rapid change of the high-tech industry, we have a professional R&D team to develop products meeting customer demand to enhance competitiveness.

• 7.6.6. Impact of corporate image on organizational crisis management and countermeasures:

• We officially listed on the Taiwan Stock Exchange on 26 August 2002. This will improve our corporate. In the future, we will uphold the corporate spirit and fulfil CSR as a listed company and will seek the greatest benefits for shareholders and employees.

• 7.6.7. Estimated benefits and potential risks of acquisition and countermeasures: N/A

• 7.6.8. Estimated benefits and potential risks of factory expansion and countermeasures: The expansion of the company's Miaoli II plant is expected to increase revenues and profits in Taiwan and provide more job opportunities; the risk may arise from the fact that when the revenues and profits are not as expected, the plant will be idle and the cost will increase; the Company could create other business or transfer business from other sites to prevent it happens.

• 7.6.9. The risk from the centralization of material input and sales and countermeasures: N/A

• 212 -

• 7.6.10. Impact and risk of mass share transfer or conversion of directors, supervisors, or major shareholders holding over 10% of shares and countermeasures: None.

• 7.6.11. Impact and risk of the right of management change and countermeasures: None.

• 7.6.12. For convicted or in-progress major litigation, non-litigation, or administrative litigation incidents involving the company, directors, supervisors, executives, mortgage responsible persons, major shareholders holding over 10% of shares, and subsidiaries whose outcomes may bring material impact to shareholder equities or stock prices, disclose the fact in dispute, amount, litigation start date, major parties involved, and the status by the report publishing date: None.

• 7.6.13. Other major risks and countermeasures: None.

7.7. Other major items: None.

• 213 -

8. Special Notes

8.1. Information of affiliates

8.1.1. Consolidated business reports of affiliates

• (1) Affiliates organization chart

==> picture [432 x 388] intentionally omitted <==

(2) Basic information of affiliates

Name	Establishment Date	Paid-in Capital	Address	The major scope of business orproducts
SINBON Beijing (Factory)	1993.12.20	US$4.45 million	Building No. 26, Liando U Valley, No. 15, Jingsheng South 4th Street, Majuqiao, Tongzhou, District, Beijing,101102,China	Production and sales of comprehensive connectors.
SINBON Hong Kong (Contact Office)	1995.6.20	HK$95.61 million	Unit 05, 18/F, Lemmi Centre, 50 Hoi Yuen Road, Kwun Tong, Kowloon,HongKong	Sales of comprehensive cables, connectors, and other electronic parts and components.

• 214 -

Name	Establishment Date	Paid-in Capital	Address	The major scope of business orproducts
SINBON Shanghai (Sales Office)	1996.3.15	US$3.28 million	3F, Building 60, No. 461, Hong-Cao Rd., Shanghai 200233, China	Sales of comprehensive Cables, connectors, and other electronic parts and components.
SINBON International Enterprise CompanyLimited	2000.10.24	US$52.78 million	P.O. Box 3340, ROAD TOWN, TORTOLA, BRITISH VIRGIN ISLAND	General investment
SINBON Jiangyin (Factory)	2000.12.20	US$31.78 million	No.288, Middle Cheng Jiang Rd., Jiangyin, Jiangsu Province 214434, China	Production and sales of cables, electronic components, power electronic components, and computer peripherals; R&D, production and sales of GPS modules.
SINBON Shenzhen (Sales Office)	2001.05.09	US$2.81 million	Rm.802, Bld.212, Tairan Industrial Zone, Chegongmiao, Futian District, Shenzhen City, Guangdong Province 518040,China	Sales of comprehensive cables, connectors, and other electronic parts and components.
Guanze Co., Ltd.	2003.01.22	NT$ 235.60 million	4-1F, No. 79, Xintai 5th Road, Xiji District, New Taipei City,Taiwan	General investment
SINBON Tongcheng (Factory)	2007.07.13	US$6 million	No.168, Xing Long Rd.,Economic Development Zone, Tongcheng City, Anhui Province,China	Production and sales of comprehensive electronic connectors and cables.
SINBON Tongan Electronics Beijing	2012.02.16	US$3 million	6F, No. 15, Jingshengnansi Street, Jinqiao Science and Technolgy Industry Basement, Zhongguancun Science and Technology Park, Tongzhou District, Beijing	Production and sales of comprehensive electronic connectors and cables.
Worldwide Wire Harnesses Co.,Ltd.	2007.04.24	US$0.15 million	Samoan Islands	Overseas sales centre
SINBON Technologies Tennessee Co.,LLC.	2007.08.16	US$0.15 million	211 Industrial Park Drive Cumberland City, TN 37050	Overseas sales centre

• 215 -

Name	Establishment Date	Paid-in Capital	Address	The major scope of business orproducts
SINBON USA LLC.	2014.05.29	US$4.05 million	4265 Gibson Dr., Tipp City,Ohio 45371	Overseas sales centre
Radbon Avionics Inc.	2015.12.28	NT$60 million	No. 582 Kuohwa Road, Miaoli 360, Taiwan	Production and sales of comprehensive electronic connectors and cables.
T-CONN Precision Corporation	2002.01.18	NT$180.88 million	4-3F, No. 79, Xintai 5th Road, Xiji District, New Taipei City,Taiwan	Sales of connectors and other electronic parts and components.
Super Elite Limited	2001.10.01	US$6.43 million	2nd Floor, Felix House, 24 Dr. Joseph Riviere Street, Port Louis, Republic of Mauritius	General investments
T-CONN Precision (Zhongshan) Corporation	2001.12.21	US$7.10 million	Torch Hi-tech Industrial Development Zone Sub-district, Zhongshan City, Guangdong Province,China	Production and sales of connectors and other electronic parts and components.
Super Progressive Limited	2003.01.30	US$0.1 million	2nd Floor, Felix House, 24 Dr. Joseph Riviere Street, Port Louis, Republic of Mauritius	Offshore trading centre
SINBON Europe GmbH	2015.09	EUR 5.21 million	Passauer Str. 99 84347 Pfarrkirchen	General investment
SINBON Holding GmbH	2010.06.10	EUR 5.92 million	Passauer Str. 99 84347 Pfarrkirchen Germany	General investment
SINBON Germany GmbH	1996.11.08	EUR 550,000	Passauer Str. 99 84347 Pfarrkirchen Germany	Logistic center
SINBON Hungary Kft	1996.12.16	KFT 20 million	Tatabánya, Tarjáni út 1, 2800	Manufacturing and selling a wide variety of connectors, wires and cables
Jiangsu EnMai Energy and Technology Co., Ltd.	2017.07.21	RMB 30 million	Floor 2, Building D5, No.6, Dongsheng Xilu Road, Jiangyin, Wuxi, Jiangsu,China	Selling a wide variety of connectors, wires and cables

(3) Information of the same shareholders in re-invested enterprises with controlling power and a subsidiary relationship: None

• 216 -

(4) Directors, supervisors, and presidents of subsidiaries

Name	Title	Name or Representative	Shares Held
			Shares	Percentage
SINBON Beijing (Factory)	Chairman Director President	Joseph Wang Jun-Qiang Wang and Wei-Ming Liang Chi-Chou Chang (All are representatives of SINBON Electronics)	US$4.45 million	100.00%
SINBON Hong Kong (Contact Office)	Director	Joseph Wang, Wei-Ming Liang, Huang-Ji Lin, Chi-Chou Chang (All are representatives of SINBON Electronics)	HK$95.61 million	100.00%
SINBON Shanghai (Sales Office)	Chairman Director Supervisor	Joseph Wang Wei-Ming Liang, Xiu-Sui Lin Chi-Chou Chang (All are representatives of SINBON International Enterprise Company Limited)	US$3.28 million	100.00%
SINBON International Enterprise CompanyLimited	Chairman	Joseph Wang (Representative of SINBON Electronics)	US$47.78 million	100.00%
SINBON Jiangyin (Factory)	Chairman Director Supervisor	Joseph Wang Wei-Ming Liang, Chi-Chou Chang, Yan-Hua Wang, Xin-Chun Wu Wen-Sen Huang (All are representatives of SINBON International Enterprise Company Limited)	US$31.78 million	100.00%
SINBON Shenzhen (Sales Office)	Chairman Director Supervisor	Joseph Wang Wei-Ming Liang, Xiu-Sui Lin Chi-Chou Chang (All are representatives of SINBON International Enterprise Company Limited)	US$2.81 million	100.00%
Guanze Co., Ltd.	Chairman Director Supervisor	Joseph Wang Xin-Chi Yeh, Chi-Chou Chang Jun-Qiang Wang (All are representatives of SINBON International Enterprise Company Limited)	23,560,000 shares	100.00%
SINBON Tongcheng (Factory)	Chairman Director Supervisor	Wei-Ming Liang Chi-Chou Chang, Guo-Cai Song Wen-Sen Huang (All are representatives of SINBON International Enterprise Company Limited)	US$14 million	100.00%

• 217 -

Name	Title	Name or Representative	Shares Held
			Shares	Percentage
SINBON Tongan Electronics Beijing	Chairman Director Supervisor (concurrent)	Joseph Wang Jun-Qiang Wang and Wei-Ming Liang, Chi-Chou Chang (All are representatives of SINBON International Enterprise Company Limited)	US$3 million	100.00%
Worldwide Wire Harnesses Co., Ltd.	Director	Wei-Ming Liang and Zi-Wei Lin (Representative of SINBON Electronics) LESLIE ROY WELCH (representative of Tennessee Wire Technologies LLC)	US$75 thousand	50.00%
SINBON Technologies Tennessee Co., L.L.C.	Director	Wei-Ming Liang and Zi-Wei Lin (Representative of SINBON Electronics) LESLIE ROY WELCH (representative of Tennessee Wire Technologies LLC)	US$75 thousand	50.00%
SINBON USA L.L.C.	Chairman	Wei-Ming Liang(Representative of SINBON Electronics)	US$4.06million	100.00%
Radbon Avionics Inc.	Chairman Director	Qi-Zhong Cheng Kuo-Hong Wang and Andy T.C. Chiu (All are representatives of SINBON International Enterprise Company Limited)	3,300,000 shares	55.00%
T-CONN Precision Corporation	Chairman Director Director Supervisor Supervisor	Xin-Chi Yeh Joseph Wang Jun-Qiang Wang Chi-Chou Chang (these four people are all representatives of SINBON Electronics) Jun-Qiang Wang (representative of Wistron Corporation)	11,308,970 shares	62.52%
Super Elite Limited	Chairman Director Director Director Director	Xin-Chi Yeh Joseph Wang Chi-Chou Chang (these three people are all representatives of SINBON Electronics) Jun-Qiang Wang (representative of Wistron Corporation) Fu-Qian Lin (representative of Wistron Corporation)	US$4.23 million	64.48%
T-CONN Precision (Zhongshan) Corporation	Chairman Director Director	Xin-Chi Yeh Joseph Wang Jun-Qiang Wang (these three people are all representatives of T-CONN Precision Corporation)	US$4.58 million	62.52%
Super Progressive Limited	Chairman	Xin-Chi Yeh (representative of T-CONN Precision Corporation)	US$64,480	62.52%
SINBON Europe GmbH	Chairman	Wen-Sang Huang(representatives of SINBON Electronics)	EUR1.68 million	100%
SINBON Holding GmbH	Chairman	Tibor Kovacs	EUR 22,236	51%

• 218 -

Name	Title	Name or Representative	Shares Held
			Shares	Percentage
SINBON GermanyGmbH	Chairman	Tibor Kovacs	EUR 280,500	51%
SINBON HungaryKft	Chairman	Tibor Kovacs	KFT 10.2 million	51%
Jiangsu EnMai Energy and Technology Co., Ltd.	Chairman Director Supervisor	Wei-Ming Liang Chi-Chou Chang, Jun-Qiang Wang Ying Yan (All are representatives of SINBON Tongan Electronics Beijing)	RMB 30 million	100%

(5) Operational performance of affiliates (2018)

Name	Authorized Capital	Total Assets	Total Liabilities	Total Equity	Operating Revenue	Operating Income	Current P/L (after tax)	EPS (after tax)
SINBON Beijing (Factory) (RMB/CNY)	32,828,852	51,401,210	472,040	50,929,170	-	(2,483,421)	1,499,473	-
SINBON Hong Kong (Contact Office) (HKD)	95,606,400	321,176,336	199,290,486	121,885,850	474,184,630	48,466,912	18,729,213	-
SINBON Shanghai (Sales Office) (RMB/CNY)	25,401,762	55,731,264	12,375,464	43,355,800	79,939,808	3,253,933	3,173,947	-
SINBON International Enterprise Company Limited (USD)	52,781,715	120,424,927	-	120,424,927	-	-	15,532,240	-
SINBON Jiangyin (Factory) (RMB/CNY)	244,483,860	971,677,751	368,832,754	602,844,997	1,311,751,623	105,208,852	88,183,635	-
SINBON Shenzhen (Sales Office) (RMB/CNY)	17,924,155	83,461,613	14,272,782	69,188,831	93,930,057	10,980,736	7,747,140	-

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Name	Authorized Capital	Total Assets	Total Liabilities	Total Equity	Operating Revenue	Operating Income	Current P/L (after tax)	EPS (after tax)
Guanze Co., Ltd. (TWD)	235,600,000	349,862,191	1,184,788	348,677,403	-	(71,582)	53,980,904	-
SINBON Tongcheng (Factory) (RMB/CNY)	95,050,300	146,179,203	34,120,064	112,059,139	100,294,187	9,558,623	8,563,064	-
SINBON Tongan Electronics Beijing (RMB/CNY)	18,513,390	486,168,706	196,306,806	289,861,900	580,373,675	85,533,676	83,694,499	-
SINBON USA LLC. (USD)	4,058,541	2,745,585	713,897	2,031,688	5,422,250	21,562	(312,114)	-
Radbon Avionics Inc. (TWD)	60,000,000	93,464,427	37,958,682	55,505,745	22,736,914	(14,598,596)	(8,783,349)	-
T-CONN Precision Corporation (TWD)	87,375,400	476,329,532	239,613,708	236,715,823	737,464,939	22,563,204	29,028,799	-
Super Elite Limited (USD)	6,430,789	814	-	814	-	(1,125)	(277)	-
T-CONN Precision (Zhongshan) Corporation (RMB/CNY)	54,268,753	61,148,658	59,260,567	1,888,091	122,536,725	2,451,967	2,378,038	-
Super Progressive Limited (USD)	100,000	802,782	19,514	783,268	83,915	186,155	188,750	-
Worldwide Wire Harnesses Co., Ltd. (USD)	150,000	117,147	65	117,082	-	-	(318,107)	-

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Name	Authorized Capital	Total Assets	Total Liabilities	Total Equity	Operating Revenue	Operating Income	Current P/L (after tax)	EPS (after tax)
SINBON Technologies Tennessee Co., LLC. (USD)	139,980	642,621	775,619	(132,998)	1,003,330	(298,904)	(318,110)	-
SINBON Europe GmbH (EUR)	5,208,773	3,138,919	91	3,138,828	-	(623)	(1,421,967)	-
SINBON Holding GmbH (EUR)	43,600	2,414,274	655,339	1,758,935	-	(15,584)	(2,602,358)	-
SINBON Germany GmbH(EUR)	550,000	1,807,520	549,928	1,257,592	5,714,516	(145,132)	(140,426)	-
SINBON Hungary Kft (KFT)	20,000	2,691,316	2,393,533	297,783	3,055,995	(716,069)	(767,885)	-
Jiangsu EnMai Energy and Technology Co.,Ltd.(RMB)	30,000,000	124,633,484	93,974,219	30,659,265	110,645,015	1,067,689	774,520	-

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8.1.2. Consolidated financial statement of subsidiaries

Statement of Compliance

SINBON’s consolidated financial statement for 2018 (period: January 1, 2018 to December 31, 2018), contains the companies that should be included in the consolidated financial statement and accounting for investments in subsidies as required in the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” and the companies that should be included in the consolidated financial statement of the parent company and subsidies as required in the IAS 10–Consolidated Financial Statements and Accounting for Investments in Subsidiaries are the same. In addition, as the information that should be disclosed in the consolidated financial statement of subsidiaries has been disclosed in the said consolidated financial statement for the company and subsidiaries, no separate consolidate financial statements for subsidiaries will be published.

SINBON Electronics Co., Ltd. Joseph Wang Chairman Date: March 14, 2019

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• 8.2. Private placement of securities in last year and by the report publishing date: None.

• 8.3. Holding or settling corporate stocks in last year and by the report publishing date: None.

8.4. Other supplementations: None.

9. Incidents with significant impact on shareholder equities or market prices as specified in item 2 of paragraph 2 of Article 36 of the Securities and Exchange Act in last year and by the report publishing date

None.

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