TECO - Annual Report 2018 | FinancialReports.eu

TSE:1504

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2018 Annual Report

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Printed on April 30, 2019

Spokesperson

Name:Kevin Yeh Title: Assistant Vice President Tel: 886-2-2655-3333 ext. 3318 E-mail: [email protected]

Auditors

PricewaterhouseCoopers, Taiwan Auditors: Wu, Yu-Lung, Chou, Chien-Hung Address: 27F., No. 333, Keelung Rd., Sec. 1, Taipei, Taiwan, R.O.C. Tel.: 886-2-2729-6666 Website: http://www.pwcglobal.com.tw

Deputy Spokesperson

Name : Andy Chien Title: Deputy Director Tel: 886-2-2655-3333 ext. 3542 E-mail: [email protected]

Corporate Website

http://www.teco.com.tw Taiwan Stock Exchange Market Observation Post System: http://newmops.twse.com.tw Printed on 30th April, 2019

Stock Transfer Agent

Taishi International Bank Address: B1, No. 96, Jianguo N. Rd., Sec. 1, Taipei, Taiwan R.O.C. Tel: 886-2-2504-8125 ext. 6301 ~ 6306 Website: www.taishinbank.com.tw

Headquarters, Branches and Plant

Headquarter

Address: 5F., No. 19-9, San Chong Rd., Nan Kang, Taipei, Taiwan, R.O.C. Tel: 886-2-2655-3333

Plant Kuan-Yin II No.6 Guojian 1[st ] Rd., Guanyin, Taoyuan City, Taiwan, R.O.C Tel:886-3-483-2258

Plant Chung-Li

No. 11 An-Tung Rd., Tao-Yuan City, Taiwan, R.O.C. Tel: 886-3-452-5101

Plant Hu-Kou

15, Chung-hwa Rd., Hsinchu Industrial Park, Hsinchu County, Taiwan, R.O.C. Tel: 886-3-598-1711

Plant Kuan-Yin I

No. 1568-1, Chung Shan Rd., Sec. 1, Kuan-Yin, Taoyuan City, Taiwan, R.O.C. Tel: 886-3-473-4901

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Contents I.Letter to Shareholders ....................................................................................1 II. Company Profi le ...........................................................................................3 III. Corporate Governance Report 3.1 Organization. .......................................................................................................................5 3.2 Directors and Management Team .......................................................................................7 3.3 Implementation of Corporate Governance ........................................................................18 3.4 Information on CPA fee ....................................................................................................53 3.5 Information on Replacement of CPA ................................................................................54 3.6 Information on Service of the Company’s Chairman, President, and Financial or Accounting Managers at the Accounting Firm or Its Affi liates ........................................54 3.7 Changes in Shareholding of Directors, Managers and Major Shareholders .....................56 3.8 Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders ......................................................................................................................57 3.9 Long-Term Investments Ownership .................................................................................57 3.10 Procedure of Material Information: The company has stipulated Rules of Anti Insider Transaction in internal control system, and announced to the emploees ...........57 IV. Capital Overview 4.1 Capital and Shares .............................................................................................................58 4.2 Corporate Bonds ...............................................................................................................61 4.3 Special Shares with stock options .....................................................................................61 4.4 Special Shares ...................................................................................................................62 4.5 Global Depositary Shares .................................................................................................62 4.6 Employee Stock Options ...................................................................................................62 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions ................62 4.8 Financing Plans and Implementation ................................................................................62 V. Operational Highlights 5.1 Business Activities ............................................................................................................63 5.2 Market and Sales Overview ..............................................................................................69

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5.3. Human Resources ............................................................................................................75 5.4 Information on Outlay for Environment Protection ..........................................................75 5.5 Labor Relations .................................................................................................................79 5.6 Important Contracts ..........................................................................................................82 VI. Financial Information 6.1 Five-Year Financial Summary ..........................................................................................83 6.2 Five-Year Financial Analysis ............................................................................................87 6.3 Inspection Report of Audit Committee .............................................................................89 Parent Company Only Financial Statements and Report of Independent Accountants December 31, 2018 and 2017 .................................................................................................90 Consolidated Financial Statements and Report of Independent Accounts December 31, 2018 and 2017 ................................................................................................................................201 VII. Review of Financial Conditions, Operating Results, and Risk Management 7.1 Analysis of Financial Status ............................................................................................348 7.2 Analysis of Operation Results .........................................................................................349 7.3 Analysis of Cash Flow ....................................................................................................350 7.4 Major Capital Expenditure Items ....................................................................................351 7.5 Investment Policy in Last Year, Main Causes for Profi ts or Losses, Improvement Plans and the Investment Plans for the Coming Year .....................................................351 7.6 Analysis of Risk Management ........................................................................................352 VIII. Special Disclosure 8.1 Summary of Affi liated Companies ..................................................................................359 8.2 Private Placement Securities in the Most Recent Years ..................................................368 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years ....................................................................................................................368

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I.Letter to Shareholders

Dear Shareholders,

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External environment fluctuated in 2018, posing multiple challenges for enterprise. Volatile factors include prolonging China-U.S. trade friction, stagnant Brexit, attempt by North Korea to return to the international arena, and slackened market of crude oil and raw materials. However, continuing expansion of the electric-car market has triggered demands for auto motors, and the automation and AI current has fostered huge business potential. In the quest for sustainable development, the company has adhered to the vision of "energy conservation, emission reduction, intelligence, and automation," pushing the automation, smart production, and consistency of the company's production bases

worldwide and rolling out innovative high-performance and smart products, in order to uphold strong growth momentum, minimize the effect of external changes, and retain steady profi ts.

A. Review of Business Performance in 2018

Analysis of the company’s business performance in 2018 follows:

a.Parent Company

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Unit: NT$ thousand
2018 2017 Change
Sales revenue 20,879,719 21,301,208 -1.98%
Operating profi t 1,410,943 1,507,068 -6.38%
Profi t for the year 3,150,089 3,092,358 -1.87%
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Motor’s order intake and sales picked up signifi cantly, thanks to increased share on domestic and Australian markets, plus robust demands from power generation and oil & gas industries in North America. Affected by sluggish realty market and private consumption, sales of home appliances and power devices dropped. In general, the company's 2018 revenue scored slight decline of 1.98%.

In response to China-U.S. trade war, some orders for the U.S. were shifted to Taiwan for production, dampening gross margin. Consequently, the company has endeavored to cut material and other costs, reduce product weight and size, to boost competitiveness. Still, affected mainly by profi t margin drop of air conditioning products, overall gross margin decreased by 0.9%. The company, though, managed to decrease operating expense by near NT$70 million, via working-fl ow improvement and outlay rationalization, as a result of which operating profi t only declined by NT$96 million.

Continuing sales and profi t growth of affi liates in China, North America, and Australia led to increase of NT$330 million in investment income under equity method in 2018. In 2018, the company's net profit increased by 1.87%.

In 2018, the company had a remarkable performance in R&D, launching high-power smart motor, permanent-magnet motor for electric car, smart air quality and air-conditioning energy management system for hospitals, and service-oriented robot, which won the company 15 awards of Taiwan Excellent Award, the highest among electromechanical manufacturers.

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b.Consolidated Financial Statements

Unit: NT$ thousand

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2018 2017 Change
Sales revenue 50,104,927 50,942,521 -1.64%
Operating profi t 3,520,486 3,496,200 0.69%
Profi t for the year 3,475,969 3,544,248 -1.93%
Total comprehensive income for the year 3,908,980 4,326,037 -9.64%
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Sales in China grew, thanks to the policy separating production and sales, increased market share of largesized motor and air-separation equipment, grasp of the business opportunities related to "Road and Belt" program, and focus on gear reducer and explosion-proof electric machinery. Sales in North America and Europe both scored double-digit growth, thanks to brisk demands for large-sized motors and gear reducers, respectively, while sales growth in Australia exceeds 5% and domestic sales also grew, despite exclusion of the revenue of Kuenling Air. After excluding the contribution of Kuenling Air, operating income still grew slightly by NT$60 million, due to merger of regional organizations and further rationalization of expenses. Affected by loss in the valuation of financial assets and reduced investment income, current net profit dropped by 1.93%, while total comprehensive income also tumbled by 9.64%, due to decline in unrealized valuation income from equity investment instruments.

B.Outline of 2019 Business Plan

In the coming year, the company will continue embracing the vision of "energy conservation, emission reduction, intelligence, and automation," focusing on IoT-enabled motor digital service, double growth for inverters, electromechanical equipment sales program, overseas electromechanical engineering, and smart communities, so as to sustain sales growth.

For energy conservation and emission reduction, the company has engaged in the RD& on high-effi ciency low-energy consumption permanent-magnet motor for use as motive force, and the development, via utilization of “synchronous reluctance assisted permanent magnet technology,” of traction power modules, for deployment in the markets of electric cars and electric vessels. The company is also actively foraying into the supply chain for offshore wind-power turbines, plans to engage in the grid-connection power control panel and assembly of wind turbine, using Taiwan as a springboard for inroads into the markets of Japan, South Korea, and Southeast Asia.
To achieve intelligence and automation, the company will establish industry IoT at all of its factories, on the basis of MES (manufacturing execution system), which will be coupled with big-data analysis in forging smart electromechanical factory solutions. Automated guided vehicles and service-oriented robots will also be applied, to further boost the operating effi ciency of factories.

C.External Competition, Legal and Microeconomy

The global economy is expected to remain sluggish in 2019, according to the prediction of major forecast bodies. The Cabinet-level Directorate General of Budget, Accounting, and Statistics forecasts that Taiwan's economy will score 2.27% growth in 2019, compared with the forecasts of other bodies ranging 2.18-2.45%. Faced with even steeper challenges, the company will continually strive for technology innovation, accelerate to enhance the techmology level and installation of automatic and intelligent prosution equipment, in order to minimize the impact from external unfavorable factors to sustain the business growth and profi t.

The company has been granted golden award of Taiwan Top 50 Corporate Sustainability Report Award for fi ve years in row and Corporate Citizen Award by Commonwealth magazine for seven consecutive years. As a vanguard of Taiwan's electromechanical industry, the company will continue adhering to the concept of sustainable development and, in response to the need for innovative technology and the current of Industry 4.0, will dedicate to the development of IoT and smart environment-friendly products, in the hope of turning in a good performance amid stern international environment and creating optimal benefi ts for shareholders and investing public, in return for their longstanding support and patronage.

Chairman Sophia TECO Electric & Machinery Co., Ltd

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II.Company Profi le

Date of Incorporation: June, 1956

Company History

1956 Established
1970 Produced air conditioners and entered the home appliances market
1986 Joint venture with Westinghouse Electric to form TECO Westinghouse Motor
1989 Founded TECO Industry Malaysia Sdn. Bhd.
1990 Founded Toshiba Compressor (Taiwan) Corp. with Toshiba
1992 Established Yatec Engineering Corporation with Yaskawa Electric Manufacture Co., Ltd of Japan
1995 Acquired Westinghouse Motor Co., Ltd (USA)
1998 Founded TECO Electro Devices Co., Ltd. for manufacturing of stepping motors
1999 Founded TECO (Dong Guan) Air Conditioning Equipment Co., Ltd. for manufacturing and sales of commercial air conditioning
2000 Founded Suzhou TECO Electric & Machinery Co., Ltd for the production and distribution of small motors
2001 Established Smart Card Division for National Health Insurance IC-card project
2002 Founded Wuxi TECO with China Steel, Nippon Steel and Marubeni-Itochu Steel for production and distribution of large motors
2003 Wuxi TECO Electric & Machinery Co., Ltd commenced mass production Merged Tai-An Electric Co., Ltd.
2004 Exported large-sized LCD TV to Japan Established Jiangxi TECO Electric & Machinery Co., Ltd.
2005 Founded Yaskawa TECO Motor Engineering Corp. to expand to Japanese market Won bid of orange/blue line extension projects of TRTS project
2006 Strategic alliance with CTC to set up the fi rst Wind Power Project in Texas, USA
Founded TECO (Vietnam) Electric & Machinery Co., Ltd.
Founded TECO Electric & Machinery (Chin-Tao) Co., Ltd. to manufacture compressors
2007 Joint venture with South Korea’s Finetec Century in setting up a compressor manufacturing facility in Qingdao, China Launched into Wind-Power Generation; introduce a 2MW Wind-Power generator
Set up Asia Innovative Technology (Xiamen) to produce LCD monitors
Announced the “TECO Go Eco” declaration to join the cause of reducing carbon emissions
2008 Founded Fujian TECO Precision Co., Ltd.
Asia Innovative Technology Co., Ltd. (Xiamen) commenced operation
TECO Electric & Machinery (Qingdao) Co., Ltd. commenced production
2009 Completion of TECO Mexico plant
Inauguration of Qingdao TECO Century
Inauguration of Tianjin operating center
2010 Inauguration of Fujian Teco Precision Co., Ltd.
Rollout of TECO’s fi rst 2MW wind-power turbine
Inauguration of TECO Sichuan Trading Co., Ltd.

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2011	Formal operation of TECO’s large-scale 2MW wind turbine
	Completion the new plant of Tai-An Technology (Wuxi) Co., Ltd.
	Inauguration the new plant of TECO Middle East (TME)
2012	Gained corporate-citizen award granted by Common Wealth magazine
	Announced whole series electric vehicle motor
	TECO’s 2MW wind-power turbine got golden medal of Taiwan Excellence Awards
2013	Grand opening of TECO’s Turkey branch
	Winning the “Award of Corporate Citizen” granted by Commonwealth magazine for the second time
	Formation of strategic alliance with Kuenling Machinery Refrigerating Co., Ltd.
	Issuance of renminbi-denominated Formosa bond
2014	Social harmony award & Champion for the category of big-enterprise technology at Taiwan Corporate
	Sustainability Awards(TCSA)
	“Award of Corporate Citizen” granted by Commonwealth magazine for the third consecutive year
	Nation’s foremost electric-machinery manufacturer, according to the study on the Top 2,000 enterprises
	conducted by the Commonwealth magazine
	Dedicated to pushing energy-conserving and environment-friendly products, TECO’s high effiecieny
	motor, smart appliances and other seven products were awarded “Taiwan Exellence Award”
	Inauguration of Hunan TECO Wind Energy Limited
2015	Acquired Motovario S.p.A, extending the operation from motors to power transmission system, and
	facilitating expansion of TECO’s operation into Europe
	Erected a joint venture with China Steel Machinery, aiming at offshore wind turbine market
	“Award of Corporate Citizen” granted by Commonwealth magazine for the fourth consecutive year
	Acquired top 5% of Corporate Governance Evaluation fot the f rst consecutive year
	Nation’s foremost electric-machinery manufacturer, according to the study on the Top 2,000 enterprises
	conducted by the Commonwealth magazine
2016	The diecasting center in Wuxi was opened with certif cation of LEED
	The automatic product center for motor stator was erected
	TECO’s 60 Anniversary, keeps moving forward to intelligent automation
	Social harmony award & Champion for the category of big-enterprise technology at Taiwan Corporate
	Sustainability Awards(TCSA) for the third consecutive year
	Acquired top 5% of Corporate Governance Evaluation fot the second consecutive year
	“Award of Corporate Citizen” granted by Commonwealth magazine for the f fth consecutive year
	Nation’s foremost electric-machinery manufacturer, according to the study on the Top 2,000 enterprises
	conducted by the Commonwealth magazine
	Subscribed 100 million kWH green electricity which can decrease emission of 50,000 kg carbon
	Rotor with venting function acquired National Invention&Creation Prize
2017	Opening automatic stator manufacturing center to realize the spirit of “energy conservation, emissions
	reduction, intelligence and automation”
	Taiwan Corporate Sustainability Awards (TCSA) for the fourth consecutive year
	Acquired top 5% of Corporate Governance Evaluation fot the third consecutive year
	“Award of Corporate Citizen” granted by Commonwealth magazine for the sixth consecutive year
	Nation’s foremost electric-machinery manufacturer, according to the study on the Top 2,000 enterprises
	conducted by the Commonwealth magazine
	TECO inked production/sales and technological cooperation agreement with Visedo of Finland
	Theodore Huang, chairman of TECO Group, was granted by the Japanese government the "Order of the
	Rising Sun."
	Granted National Innovation Award for Air-Quality Monitoring System
	TECO Smart E-Tricycle Wins 2018 System Integration Award
2018	Ground breaking for TECO's plant in Binh Duong province, Vietnam
	Granted Taiwan Corporate Sustainability Awards for f fth straight year
	Inclusion in top 5% among public companies in corporate governance evaluation for fourth year in a
	row
	Rollout of "Very High Power Density and Smart Motor”
	Signing of memorandum of understanding with Mitsubishi Vesta Offshore Wind for cooperation
	Granted "smart machinery golden awards" for the "automated motor-stator production center" at the
	Chungli plant
	Honor of emerging brands in Taiwan international brand awards

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III.Corporate Governance Report

3.1 Organization

3.1.1 Organization Chart

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Shareholder’s Meeting
Remuneration Committee
Audit Committee
Internal Audit Division Board of Director
C orporate Governance & Sustainability Committee
Legal & Compliance Division Research and Innovation Committee
Secretariat Division Chairman
Safety & Health Team
Planning & Coordination Center
Office of President
Information Technology Dep. President Corporate Governance Center
Human Resource Center
Quality Assurance Dep.
Finance Group
Corporate Purchasing Division
National Healthy Insurance Project
Wind Energy Forward Development Team
ManufacturingAutomation & Intelligent Center AppliancesHouseholdGroup Machine Electric Green Group IndustrialProductGroupHeavy EngineeringEnergy & Group Automation & Intelligent System Group Product SalesElectrificationGroup ResearchInstituteGroupTeco
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3.1.2 Major Corporate Functions

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Business Unit Operations
Heavy Industrial Products Production of medium to large-sized 3-phase motors, medium to large-sized high-
Group effi ciency motors, medium to large-sized explosion-proof motors, medium to large-
sized inverter-duty motors, DC motor and medium to large-sized generators.
Green Electric Machine Production of single-phase motors, vehicle-used motors, permanet magnet mo-
Group tors, small-sized 3-phase motors, small-sized high-effi ciency motors, small-sized
explosion-proof motors, small-sized inverter-duty motors, small-sized generators, die
casting.
Automation & Intelligent Production of inverters and programmable logic controllers, servo controllers and so
System Group on Production and sale of AGV(automated guided vehicle)
Energy & Engineering Supplier of profession electric equipment and systems-related materials (R&D, de-
Group sign, production, and sales of equipment)
Undertaking of projects related to power generationand transportation (transmission
& distribution of power, power plant, alternative energy, and contruction and main-
tainance of rail stations and airports, as well as railway power system);
Air-conditioning equipment for specifi c environments such as clean rooms;
Design, construction, and management of electrical engineering systems for high-
rise buildings & Internet Data Center; integration of air-conditioning and electrical
engineering systems for hospitals and hotels; Water resource/water pump stations
and other related projects; Ultra-high pressure 161KV/69KV substations switchgears
and installation projects;Project of smart grid and energy storage; system integra-
tion nosiness of solor power system;Production and sale of electromagnetic switch,
molded- case circuit breakers and electronic relays
Household Appliances Production, assembly, sales, and repair of residential air conditioners, refrigerators,
Group washing machines, dehumidifi ers, dryers, LCD monitors, air purifi ers, small appli-
ances, DVD recorders, stereo systems, health appliances, beauty appliances, freezer
storages, low-temperature caged carts, freezers, chillers for machine tools, inverter
duty water/oil cooling machine tool set, assembly-type air-conditioning box, VRF
air conditioning set, Water-cooled wholly encased type/semi-encased spiral type/cen-
trifugal icy-water machine set, cloud-end smart system, business air-cooled split-type
air conditioner, water-/air-cooled packaged air conditioner, air-cooled chiller ma-
chine, fan fi lter unit, air vent, industrial-use dehumidifi er, freezing/cooling machine,
dealership of other domestic and foreign home appliances brands, as well as various
typles of air-conditioned products.
Electrifi cation Products Sales of medium to large-sized 3-phase motors, medium to large-sized high-effi cien-
Sales Group cy motors, medium to large-sized explosion-proof motors, medium to large-sized
inverter-duty motors, DC motor, medium to large-sized generators, single-phase
motors, vehicle-used motors, permanet magnet motors, small-sized 3-phase motors,
small-sized high-effi ciency motors, small-sized explosion-proof motors, small-sized
inverter-duty motors, small-sized generators, die casting, small-sized coolant com-
pressors. ;Sales of inverters and programmable logic controllers, servo controllers;
Overseas sales of electromagnet switch, molded-case circuit breakers, electronic
relays
Automation & Intelligent Integration of producting resources in the company, and promote biotechnology proj-
Manufacturing Center ects improving layout of production effi ciency and AIM strategy.
Teco Group Research Research and development catering to requirements of the medium-to-long term
Institute development of new products and technical support to members of the TECO group.
Intelligent System Divi- Chip-embedded cards for fi nancial, medical, membership loyality, survelliance, e-
sion invoice, and public transportation services; systems integration for ITS- and RFID-
based cards; non-person vending machine.
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3.2 Directors and Management Team

3.2.1 Directors

																April. 30,2019	April. 30,2019	April. 30,2019
Title	Nationality/ Companies Registry	Name	Date Elected	Term (Years)	Date First Elected (Note)	Shareholding when Elected		Current Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience （Education）	Other Position	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
						Shares	％	Shares	％	Shares	％	Shares	％			Title	Name	Relation
Chairman	ROC	Tung Kuang Investment Co., Ltd.	2018.6.15	3	2000.4.21	30,341,364	1.52%	30,341,364	1.52%	0	0	0	0	MBA, University of Michigan, Ann-Arbor	Chairman of Taiwan Pelican Express Co., Ltd Chairman of Motovario Chairman of TECO Westinghouse Motor Co., Ltd. USA	-	-	-
	ROC	Representative: Chwen-Jy, Chiu	2018.6.15	3	2006.6.15	1,741,964	0.09%	2,041,964	0.10%	16,987	0.00%	0	0
Managing Director	ROC	Tong Ho Gloabl Investment Co., Ltd	2018.6.15	3	2000.4.21	2,240,262	0.11%	2,240,262	0.11%	0	0	0	0	Ph.D of Electric & Engineering, University of Illinois	Chairman of Tecom Co., Ltd. & Shanghai TECO Electric & Machinery Co.,Ltd
		Representative: Chao-Kai,Liu	2018.6.15	3	2000.4.21	300,000	0.02%	300,000	0.01%	122,018	0.01%	0	0
Managing Director	ROC	Cheng-Tsung, Huang	2018.6.15	3	1991.5.8	15,279,849	0.76%	15,279,849	0.76%	2,110,934	0.11%	0	0	Bachelor of Economics, Fu Jen Catholic University	Chairman of Sen Yeh Construction Co., Ltd. Independent Director of Aurotek Corporation
Managing Director	ROC	Creative Sensor Inc.	2018.6.15	3	2009.6.19	10,000,000	0.54%	10,000,000	0.50%	0	0	0	0	Master of Electric & Engineering, Columbia University	Chairman of Creative Sensor Inc. , TECO Image Systems Co., Ltd. & Lien Chang Electronic Co., Ltd.		Director	Mao- Hsiung, Huang
	Japan	Representative: Yu-Ren,Huang	2018.6.15	3	2012.6.15	234,623	0.01%	234,623	0.01%	0	0	0	0
Managing & Independent Director	ROC	Wei-Chi, Liu	2018.6.15	2	2018.6.15	0	0	0	0	0	0%	0	0	Ph.D of Business Administration, Northwestern University	Independent Director of Fusheng Precision Co., Ltd.
Independent Director	ROC	Jin-Fu, Chang	2018.6.15	3	2018.6.15	0	0	0	0	0	0.	0	0	Ph.D of Electric & Engineering and computer science, University of California, Berkeley	Independent Director of Taiwan Secom Co., Ltd.
Independent Director	ROC	Ting-Wong, Cheng	2018.6.15	2	2016.6.16	0	0	0	0	0	0	0	0	Ph.D & Master of Accountancy, University of Missouri	Independent Director of Asia Pacific Telecom And SuperAlloy Industrial Co., Ltd.

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Title	Nationality/ Companies Registry	Name	Date Elected	Term (Years)	Date First Elected (Note)	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience （Education）	Other Position	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
						Shares	％	Shares	％	Shares	％	Shares	％			Title	Name	Relation
Director	ROC	Mao-Hsiung, Huang	2018.6.15	3	1972.5.12	18,486,633	0.92%	18,486,633	0.92%	5,839,071	0.29%	0	0	Master of Economics, University of Pennsylvania	Chairman of Century Development Corporation, Tong-An Invesmtnet and Teco Australia Pte Limited.		Managi ng Director	Yu-Ren, Huang
Director	ROC	Yinge Int. Inv. Co.,Ltd	2018.6.15	3	2018.6.15	10,079,600	0.50%	14,454,698	0.72%	0	0	0	0	Master of Mechanical Engineering, University of Tokyo
															Director
	ROC	Representative: Po-Chih, Huang	2018.6.15	3	1988.3.28	11,614,831	0.58%	7,344,746	0.37%	150,975	0.01%	14,454,6 98	0.7 2%
															of Tecom Co., Ltd.,
Director	ROC	Hung Shun Investment Co., Ltd	2018.6.15	3	2018.6.15	304,000	0.02%	604,000	0.03%	0	0	0	0	Bachelor of Business Administration, University of Southern California	Chairman of PT Group; Chairman of South Taiwan Bus	-	-	-
	ROC	Representative: Tzu-Yi, Kuo	2018.6.15	3	2018.6.15	724,559	0.04%	724,559	0.04%	0	0	0	0
Director	ROC	Tong-An Investment Co., Ltd.	2018.6.15	3	2018.6.15	19,540,052	0.98%	19,540,052	0.98%	0	0	0	0	Master of Business Administration, National Taiwan University of Science and Technology	Chairman of Information Technology Total Service Corp; Chairman of TECO Smart Technologies Co., Ltd.	-	-	-
	ROC	Representative : Shang-Wei, Kao	2018.6.15	3	2018.6.15	15,000	0.00%	15,000	0.00%	0	0	0	0
Director	ROC	Kuang Yuan Industrial Co., Ltd.	2018.6.15	3	2009.6.19	22,033,919	1.10%	22,033,919	1.10%	0	0	0	0	Ph.D. of Electric & Engineering, Northwestern University, US	Chairman of Global Strategic Venture; Independent Director of Topkey Corporation & WUS Printed Circuit	-	-	-
	ROC	Representative: Shih- Chien, Yang	2018.6.15	3	2009.6.19	0	0	0	0	0	0	0	0
Director	ROC	Tung Kuang Investment Co., Ltd.	2018.6.15	3	2000.4.21	30,341,364	1.52%	30,341,364	1.52%	0	0	0	0	Master of Mechanical Engineering, University of Houston	Chairman of TECO (Vietnam) Electric & Machinery Co.,Ltd., Wuxi TECO Precision Mechatronics Co., Ltd	-	-	-
	ROC	Representative： Hong-Hsiang, Lin	2018.6.15	3	2012.6.1 5	2,161,893	0.11%	2,116,893	0.11%	800,000	0.04%	0	0

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Title	Nationality/ Companies Registry	Name	Date Elected	Term (Years)	Date First Elected (Note)	Shareholding when Elected	Shareholding when Elected	Current Shareholding	Current Shareholding	Spouse & Minor Shareholding	Spouse & Minor Shareholding	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	Experience （Education）	Other Position	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship	Executives, Directors or Supervisors who are spouses or within two degrees of kinship
						Shares	％	Shares	％	Shares	％	Shares	％			Title	Name	Relation
Director	ROC	Yubantec & Co., Ltd.	2018.6.15	3	2018.6.15	13,200,000	0.66%	13,200,000	0.66%	0	0	0	0	Advance Course for Business	Chairman of Inotec Taiwan Co., Ltd; Vice Chairman of Yubantec & Co., Ltd.	-	-	-
	ROC	Representative: Tung-Hai, Kao	2018.6.15	3	2018.6.15	1,463	0.00%	1,463	0.00%	0	0	0	0	Manager, Division
														of Financial Management, National Chengchi University
Director	ROC	Yung-Hsiang, Chang	2018.6.15	3	2006.9.6	0	0.00%	600,000	0.03%	0	0	0	0	Bachelor of Industrial Engineering and Management, Minghsin University of Science and Technology	Chairman of Hong Tong Co., Ltd.		-	-

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Data for Directors

Data for Directors
Criteria Name	Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work Experience			Independence Criteria(Note)										Number of Other Public Companies in Which the Individual is Concurrently Serving as an Independent Director
	An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University	A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company	Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company	1	2	3	4	5	6	7	8	9	10
Tung Kuang Investment Co., Ltd. Representative：Chwen-Jy,Chiu			V			V	V	V	V	V	V	V		0
Tong Ho Gloabl Investment Co., Ltd Representative：Chao-Kai,Liu			V	V		V	V	V	V	V	V	V		0
Cheng-Tsung,Huang			V	V		V	V	V	V	V	V	V	V	1
Creative Sensor Inc. Representative: Yu-Ren,Huang			V			V		V		V		V		0
Wei-Chi,Liu	V		V	V	V	V	V	V	V	V	V	V	V	1
Jin-Fu, Chang	V		V	V	V	V	V	V	V	V	V	V	V	1
Ting-Wong,Cheng	V	V	V	V	V	V	V	V	V	V	V	V	V	2
Mao-Hsiung,Huang			V	V				V	V	V		V	V	0
Yinge Int. Inv. Co.,Ltd Representative： Po-Chih,Huang			V	V				V	V	V	V	V		0
Hung Shun Investment Co., Ltd Representative: Tzu-Yi,Kuo			V	V	V	V	V	V	V	V	V	V		0
Tong-An Investment Co., Ltd. Representative : Shang-Wei,Kao			V	V		V	V	V	V	V	V	V		0
Kuang Yuan Industrial Co., Ltd. Representative: Shih- Chien, Yang			V	V		V	V	V	V	V	V	V		2
Tung Kuang Investment Co., Ltd. Representative: Hong-Hsiang, Lin			V			V	V	V	V	V	V	V		0
Yubantec & Co., Ltd. Representative: Tung-Hai,Kao		V	V	V	V	V	V	V	V	V	V	V		1
Yung-Hsiang,Chang			V	V	V	V	V	V	V	V	V	V	V	0

Note: Please tick the corresponding boxes if directors or supervisors have been any of the following during the two years prior to being elected or during the term of office.

Not an employee of the Company or any of its affiliates.
Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in cases where the person is an independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.

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Not a natural-person shareholder who holds 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 1% or more of the total number of outstanding shares of the Company or ranking in the top 10 in holdings.
Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of any of the persons in the preceding three subparagraphs.
Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in the top five in holdings.
Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company.
Not a professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.
Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.
Not been a person of any conditions defined in Article 30 of the Company Law.
Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

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3.2.2 Management Team

3.2.2 Management Team	3.2.2 Management Team	3.2.2 Management Team	3.2.2 Management Team
												April 30,2019
Title	Nationality	Name	Date Effective	Shareholding		Spouse & Minor Shareholding		Shareholding by Nominee Arrangement		Experience（Education）	Other Position	Managers who are Spouses or Within Two Degrees of Kinship
				Shares	％	Shares	％	Shares	％			Title	Name	Relation
Acting President	ROC	Chao-Chih, Lien	2001.8.1	783,130	0.04%	0	0.00%	0	-	Masterof Civil Enginerring, Stevens Institute of Technology	Chairman of Teco Electric & Machinery Pte Ltd	-	-	-
Executive Consultant	ROC	Hong-Hsian g, Lin	1998.8.21	2,161,893	0.11%	800,000	0.04%	0	-	Master Mechanical Engineering, University of Houston	Chairman of Wuxi TECO Precision Mechatronics Co.,Ltd	-	-	-
Assistant Vice President	ROC	Sheng-chyu an, Lin	2017.1.1	1,193,245	0.06%	40,434	0.00%	0	-	Bachelor of Electric & Engineering, National Taiwan University	Chairman of Teco Electro Devices Co., Ltd.
Assistant Vice President	ROC	Sung-Pin, Chang	2015.8.12	20,376	0.00%	0	0.00%	0	-	Bachelor of Chemical Engineering, National Tsing Hua University	Chairman of Hubbell-Taian Co.,Ltd	-	-	-
Assistant Vice President	ROC	Chi-Tseng, Peng	2017.1.1	0	0.00%	0	0.00%	0	-	Master of Telecom Engineering, University of Pittsburgh	Director of A-Ok Technical Co., Ltd.
Assistant Vice President	ROC	Fei- Yuan, Kao	2017.1.1	30,589	0.00%	305	0.00%	0	-	Master of Mechanical Engineering, National CentralUniversity	Chairman of Wuxi Teco Co., Ltd
Assistant Vice President	ROC	Kevin Yeh	2017.1.1	0	0.00%	0	0.00%	0	-	Bachelor of Business Administration, Boston University	Chairman of TECO Electric Europe LTD
Assistant Vice President	ROC	Kuo-Min, Chen	2018.11.13	0	0.00%	0	0.00%	0	-	PH.D. of Industrial engineering and management information from TunghaiUniversity	President of Teco Electro Devices Co., Ltd.
Assistant Vice President	ROC	Hank Horng	2018.1.1	0	0.00%	0	0.00%	0	-	EMBA of National Taiwan University; Master of Mechanical Engineering, National ChengKungUniversity	Chairman of Taisan Electric Co.,Ltd

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3.2.3 Remuneration of Directors, President and Vice President

Remuneration of Directors (Including Independent Directors)

December 31, 2018 / Unit: NT$ thousands

Code	Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Compensation paid to directors from an invested company other than the company’s subsidiary
			Base Compensation(A)		Severance Pay(B)		Bonus to Directors( C)		Allowances(D)		Ratio of total remuneration (A+B+C+D) to net income(%)		Salary, Bonuses, and Allowances (E)		Severance Pay (F)		Profit Sharing- Employee Bonus (G)				Ratio of total compensation (A+B+C+D+E+F+G) to net income(%)
			The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	0The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements		The company	Companies in the consolidated financial statements
																	Cash Dividend	Stock Dividend	Cash Dividend	Stock Dividend
1	Chairman	Tung Kuang Investment Co., Ltd. Representative： Chwen-Jy,Chiu	-	-	-	-	Total: 113,379	Total: 113,379	Total 1,083	Total: 1,321	3.63%	3.64%	Total: 8,633	Total: 9,833	Total: 108	Total: 108	-	-	-	-	3.91%	3.96%	yes
2	Managing Director	Tong Ho Gloabl Investment Co., Ltd Representative： Chao-Kai,Liu
3	Managing Director	Cheng-Tsung, Huang
4	Managing Director	Creative Sensor Inc. Representative: Yu-Ren,Huang
5	Managing & Independent Director	Wei-Chi, Liu
6	Independent Director	Ting-Wong, Cheng
7	Director	Mao-Hsiung, Huang
8	Director	Yinge Int. Inv. Co.,Ltd Representative： Po-Chih, Huang (note 1)
9	Director	Kuang Yuan Industrial Co., Ltd. Representative: Shih- Chien,Yang
10	Director	Tong Kuang Investment Co,Ltd Representitive: Hong-Hsiang,Lin

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Code	Title	Name	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Remuneration	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees	Relevant remuneration received bydirectors who are also employees
			Base Compensation(A)		Severance Pay(B)		Bonus to Directors( C)		Allowances(D)		Ratio of total remuneration (A+B+C+D) to net income(%)		Salary, Bonuses, and Allowances (E)		Severance Pay (F)		Profit Sharing- Employee Bonus (G)				Ratio of total compensation (A+B+C+D+E+F+G) to net income(%)
			The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	0The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements		The company	Companies in the consolidated financial statements
																	Cash Dividend	Stock Dividend	Cash Dividend	Stock Dividend
11	Director	Yung-Hsiang, Chang (note 3)
12	Independe nt Director	Jin-Fu, Chang
13	Director	Hung Shun Investment Co., Ltd Representative: Tzu-Yi,Kuo
14	Director	Yubantec & Co., Ltd. Representative: Tung-Hai,Kao
15	Director	Tong-An Investment Co., Ltd. Representative : Shang-Wei,Kao
16	Managing & Independe nt Director	Chien-Yuan, Lin (note 2)
17	Director	Jing-Shown, Wu (note 2)
18	Director	Hsien-Sheng Kuo (note 2)
19	Director	Yaskawa Electric Corporation Representative: Hiroyuki Ougi (note2)
20	Director	Lien Chang Electronic Co., Ltd. Representative: Ming-Feng, Yeh (note 2)

Note 1: Following expiration of his previous term on June 14, 2018, Po-chih, Huang was reelected as a representative of Yinge International Investment Co., Ltd. Note 2: expiration of tenure on June 14, 2018

Note 3: Yung-hsiang, Chang was reelected on June 15, 2018, following the expiration of his previous term as a representative of Mao Yang Co., Ltd. on June 14, 2018. Note 4: As there was no employee who retired in 2018, fund in the column is either provision or appropriation for retirement payment and is treated as expenses.

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Bracket	Name of Directors(Note 1)	Name of Directors(Note 1)	Name of Directors(Note 1)	Name of Directors(Note 1)
	Total of(A+B+C+D)		Total of(A+B+C+D+E+F+G)
	The company	Companies in the consolidated financial statements(I)	The company	Companies in the consolidated financial statements(J)
Under NT$2,000,000	5,9,12,16,17	5,9,12,16,17	5,9,12,16	5,9,12,16
NT$2,000,000 ~ Under NT$5,000,000	10,11,13,14,15,20	10,11,13,14,15,20	10,11,13,14,15,17,20	10,11,13,14,15,17,20
NT$5,000,000 ~ Under NT$10,000,000	6,7,8,18,19	6,7,8,18,19	6,8,18,19	6,8,18,19
NT$10,000,000 ~ Under NT$15,000,000	1,2,3,4	1,2,3,4	1,2,3,4,7	1,2,3,4,7
NT$15,000,000 ~ Under NT$30,000,000
NT$30,000,000 ~ Under NT$50,000,000
NT$50,000,000 ~ Under NT$100,000,000
Over NT$100,000,000
Number of Directors	20	20	20	20

Note 1: Shown by code of Directors in the previous table

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Compensation of President and Vice President

									December 31, 2018 / Unit: NT$ thousands	December 31, 2018 / Unit: NT$ thousands	December 31, 2018 / Unit: NT$ thousands	December 31, 2018 / Unit: NT$ thousands	December 31, 2018 / Unit: NT$ thousands	December 31, 2018 / Unit: NT$ thousands	December 31, 2018 / Unit: NT$ thousands
Code	Title	Name	Salary (A)		Severance Pay (B)		Bonuses and Allowances (C)		Profit Sharing- Employee Bonus (D)				Ratio of total compensation (A+B+C+D) to net income(%)	Ratio of total compensation (A+B+C+D) to net income(%)	Compensation paid to the president and vice president from an invested company other than the company’s subsidiary
			The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company	Companies in the consolidated financial statements	The company		Companies in the consolidated financial statements		The company	Companies in the consolidated financial statements
									Cash	Stock	Cash	Stock
1	Chairman(note 1)	Chwen-Jy,Chiu	Total 22,948	Total 22,948	Total 1,480	Total 1,480	Total 25,919	Total 27,538	Total 18,648	-	Total 18,648	-	2.19%	2.24%	Yes
2	ActingPresident	Chao-Chih,Lien
3	Executive Consultant	Hong-Hsiang,Lin
4	Assistant Vice President	Sheng-chyuan, Lin
5	Assistant Vice President	Steven Chiang
6	Assistant Vice President	Sung-Pin,Chang
7	Assistant Vice President (note 2)	K.R Chen
8	Assistant Vice President	Chi-Tseng,Peng
9	Assistant Vice President	Fei-Yuan,Kao
10	Assistant Vice President	Kevin Yeh
11	Assistant Vice President (note 3)	Kuo-Min, Chen

Bracket	Name of President and Vice President(Note 1)	Name of President and Vice President(Note 1)
	The company	Companies in the consolidated financial statements
Under NT$2,000,000	11	11
NT$2,000,000 ~ under NT$5,000,000	7, 8	7, 8
NT$5,000,000 ~ under NT$10,000,000	1, 3,4, 5, 6, 9,10	1, 3,4, 5, 6, 9,10
NT$10,000,000 ~ under NT$15,000,000	2	2
NT$15,000,000 ~ under NT$30,000,000
NT$30,000,000 ~ under NT$50,000,000
NT$50,000,000 ~ under NT$100,000,000
Over NT$100,000,000
Number of Executives	11	11

Note 1: Chairman Sophia Chiu relinquished the concurrent position as the company's president, which was taken over by vice president Chao-chih, Lien on a provisional basis on April 25, 2018, in compliance with the spirit of corporate governance.

Note 2: Assistant Vice president K. R. Chen relinquished his position on Aug. 18, 2018

Note 3: Kuio-ming, Chen assumed the position of Assistant vice president on Nov. 13, 2018 Note 4: Shown by code of Executives in the previous table

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Employee Bonus to Executive Officers

2018.12.31/ Unit: NT$ thousand

	Title	Name	Employee Bonus - in Stock (Fair MarketValue)	Employee Bonus - inCash	Total	Ratio of Total Amount to Net Income（％）
Executive Officers	Chairman	Chwen-Jy, Chiu	-	Total 18,648	Total 18,648	0.59%
	Acting President	Chao-Chih, Lien
	Executive Consultant	Hong-Hsiang, Lin
	Assistant Vice President	Sheng-chyuan, Lin
	Assistant Vice President	Steven Chiang
	Assistant Vice President	Sung-Pin, Chang
	Assistant Vice President	K.R Chen
	Assistant Vice President	Chi-Tseng, Peng
	Assistant Vice President	Fei-Yuan, Kao
	Assistant Vice President	Kevin Yeh
	Assistant Vice President	Kuo-Min, Chen

3.2.4 Comparison of Remuneration for Directors, Presidents and Vice

Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents

Unit: NT$ thousand

		Unit: NT$ thousand
Year	Total remuneration paid to directors, presidents and vice presidents	Ratio of total remuneration paid to directors, presidents and vice presidents to net income (%)
2018	195,254	6.20%
2017	204,026	6.60%

The company’s compensations are set according to levels offered by peers for the same positions, responsibilities of the positions, and their contribution to the company in achieving its business goal. The determination of compensations is based on the company’s guidelines for performance and compensations, which take into account the company’s overall business performance, achievement of an employee’s personal performance goal, and his/her contribution to the corporate performance, in order to reach reasonable levels of compensation. Year-end bonus is paid out according to a fixed share of net profits, which can only be changed by a resolution of the board of directors.

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3.3 Implementation of Corporate Governance

3.3.1 Board of Directors

A total of 9 meetings of the board of directors were held in 2018, director attendance was as follows:

Title	Name	Attendance in Person	By Proxy	Attendance rate (%)	Remarks
Chairman	Tung Kuang Investment Co., Ltd. Representative：Chwen-Jy, Chiu	9	0	100 %	Re-election (re-elected on 2018.6.15) Should attend 9 times
Managing Director	Tong Ho Gloabl Investment Co., Ltd Representative：Chao-Kai, Liu	9	0	100%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Managing Director	Cheng-Tsung, Huang	9	0	100%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Managing Director	Creative Sensor Inc. Representative: Yu-Ren, Huang	9	0	100%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Managing & Independent Director	Wei-Chi, Liu	5	0	100%	Newly elected (elected on 2018.6.15) Should attend 5 times
Independent Director	Jin-Fu, Chang	5	0	100%	Newly elected (elected on 2018.6.15) Should attend 5 times
Independent Director	Ting-Wong, Cheng	9	0	100%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Director	Mao-Hsiung, Huang	8	1	89%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Director	Yinge Int. Inv. Co.,Ltd Representative： Po-Chih, Huang (note 1)	9	0	100%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Director	Hung Shun Investment Co., Ltd Representative: Tzu-Yi, Kuo	5	0	100%	Newly elected (elected on 2018.6.15) Should attend 5 times
Director	Tong-An Investment Co., Ltd. Representative : Shang-Wei, Kao	5	0	100%	Newly elected (elected on 2018.6.15) Should attend 5 times
Director	Kuang Yuan Industrial Co., Ltd. Representative: Shih- Chien, Yang	8	1	89%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Director	Tong Kuang Investment Co,Ltd Representitive: Hong-Hsiang, Lin	8	1	89%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Director	Yubantec & Co., Ltd. Representative: Tung-Hai, Kao	5	0	100%	Newly elected (elected on 2018.6.15) Should attend 5 times

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Title	Title	Name	Attendance in Person	By Proxy	Attendance rate (%)	Remarks
Director		Yung-Hsiang, Chang (note 2)	7	2	78%	Re-election (re-elected on 2018.6.15) Should attend 9 times
Managing & Independent Director		Chien-Yuan, Lin	4	0	100%	Resigned (2018.5.23) Should attend4times
Director		Jing-Shown, Wu	4	0	100%	Retired (re-elected on 2018.6.15) Should attend4times
Director		Yaskawa Electric Corporation Representative: Hiroyuki Ougi	3	1	75%	Retired (re-elected on 2018.6.15) Should attend4times
Director		Hsien-Sheng Kuo	2	2	50%	Retired (re-elected on 2018.6.15) Should attend4times
Director		Lien Chang Electronic Co., Ltd. Representative: Ming-Feng, Yeh	2	2	50%	Retired (re-elected on 2018.6.15) Should attend4times
Note 1: Po-chih, Huang became the company's director as a representative of Yinge International Investment Co., Ltd. on June 15, 2018. Note 2: Yung-hsiang, Chang became the company's director as a natural person on June 15, 2018. Other mentionable items: 1.If there is the following situation referred to the operation of Board of Director, the date of Board meeting, period, contents of the case, opinion of all Independent Director, and company’s respond toward Independent Director should be narrated. (1) Article 14-3 of Securities and Exchange Act: Please refer to the page about Audit Committee (2) The resolution about the objection or reservations of Independent Director which was record or written proclamation: None 2. The implemention of Directors’ avoidance of motions in conflict of interest: i. 24-21 Board Meeting: 2018.3.26 Director’s Name: Yu-Ren Huang (Managing Director), Po-Chih Huang (Director), Ming-Feng, Yeh (Director) Contents of the case: Donation to “TECO Technology Foundation” for various events in 2018. Reason for avoidance of conflict of interest and the status of voting: Since the aforementioned managing director and directors also serves as director, they left the meeting and abstained from taking part in the voting. Other directors passed the case without objection. Director’s name: Chwen-Jy, Chiu (Chairman), Chao-Kai, Liu (Managing Director), Yu-Ren Huang (Managing Director), Mao-Hsiung, Huang (Director), Ming-Feng, Yeh (Director), Hong-Hsiang, Lin (Director) Contents of the case: Plan to supply affiliates and oversea subsidiaries with endorsement guarantee Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy Chiu is the director of An-Tai International Investment Co., Ltd., GD TECO Taiwan Co., Ltd., TECO International Investment Co., Ltd., president of Sankyo Co, Ltd., chairman of Asia Innovative Technology (Xiamen) Co., Ltd., chairman of Motovario S.p.A., abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Chien-Yuan, Lin. Chao-Kai, Liu is the dirctor of TECO International Investment Co., Ltd., Asia Innovative Technology (Xiamen) Co., Ltd., Motovario S.p.A, abstained from the discussion and voting for the case based upon interest conflict. Yu-Ren, Huang is director of Sankyo Co, Ltd., Mao-Hsiung, Huang is chairman of An-Tai International Investment Co., Ltd., TECO International Investment Co., Ltd., chairman of Sankyo Co, Ltd., director of Asia Innovative Technology (Xiamen) Co., Ltd. Ming-Feng, Yeh is director of TECO International Investment Co., Ltd. Hong-Hsiang, Lin is director of TECO Middle East, Motovario S.p.A, abstained from the discussion and voting for the case based upon interest conflict Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Chien-Yuan, Lin, who consulted other attending directors, none whom objected the case.
	Director), Mao-Hsiung, Huang (Director), Ming-Feng, Yeh (Director), Hong-Hsiang, Lin (Director) Contents of the case: Plan to supply affiliates and oversea subsidiaries with endorsement guarantee Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy Chiu is the director of An-Tai International Investment Co., Ltd., GD TECO Taiwan Co., Ltd., TECO International Investment Co., Ltd., president of Sankyo Co, Ltd., chairman of Asia Innovative Technology (Xiamen) Co., Ltd., chairman of Motovario S.p.A., abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Chien-Yuan, Lin. Chao-Kai, Liu is the dirctor of TECO International Investment Co., Ltd., Asia Innovative Technology (Xiamen) Co., Ltd., Motovario S.p.A, abstained from the discussion and voting for the case based upon interest conflict. Yu-Ren, Huang is director of Sankyo Co, Ltd., Mao-Hsiung, Huang is chairman of An-Tai International Investment Co., Ltd., TECO International Investment Co., Ltd., chairman of Sankyo Co, Ltd., director of Asia Innovative Technology (Xiamen) Co., Ltd. Ming-Feng, Yeh is director of TECO International Investment Co., Ltd. Hong-Hsiang, Lin is director of TECO Middle East, Motovario S.p.A, abstained from the discussion and voting for the case based upon interest conflict Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Chien-Yuan, Lin, who consulted other attending directors, none whom objected the case.

1.If there is the following situation referred to the operation of Board of Director, the date of Board meeting, period, contents of the case, opinion of all Independent Director, and company’s respond toward Independent Director should be narrated. (1) Article 14-3 of Securities and Exchange Act: Please refer to the page about Audit Committee

(2) The resolution about the objection or reservations of Independent Director which was record or written proclamation: None

Director’s Name: Yu-Ren Huang (Managing Director), Po-Chih Huang (Director), Ming-Feng, Yeh (Director) Contents of the case: Donation to “TECO Technology Foundation” for various events in 2018. Reason for avoidance of conflict of interest and the status of voting: Since the aforementioned managing director and directors also serves as director, they left the meeting and abstained from taking part in the voting. Other directors passed the case without objection.

Director’s name: Chwen-Jy, Chiu (Chairman), Chao-Kai, Liu (Managing Director), Yu-Ren Huang (Managing - - - Director), Mao Hsiung, Huang (Director), Ming Feng, Yeh (Director), Hong Hsiang, Lin (Director) Contents of the case: Plan to supply affiliates and oversea subsidiaries with endorsement guarantee Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy Chiu is the director of An-Tai International Investment Co., Ltd., GD TECO Taiwan Co., Ltd., TECO International Investment Co., Ltd., president of Sankyo Co, Ltd., chairman of Asia Innovative Technology (Xiamen) Co., Ltd., chairman of Motovario S.p.A., abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Chien-Yuan, Lin. Chao-Kai, Liu is the dirctor of TECO International Investment Co., Ltd., Asia Innovative Technology (Xiamen) Co., Ltd., Motovario S.p.A, abstained from the discussion and voting for the case based upon interest conflict. Yu-Ren, Huang is director of Sankyo Co, Ltd., Mao-Hsiung, Huang is chairman of An-Tai International Investment Co., Ltd., TECO International Investment Co., Ltd., chairman of Sankyo Co, Ltd., director of Asia Innovative Technology (Xiamen) Co., Ltd. Ming-Feng, Yeh is director of TECO International Investment Co., Ltd. Hong-Hsiang, Lin is director of TECO Middle East, Motovario S.p.A, abstained from the discussion and voting for the case based upon interest conflict

Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Chien-Yuan, Lin, who consulted other attending directors, none whom objected the case.

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Director’s name: Chwen-Jy, Chiu (Chairman), Chao-Kai, Liu (Managing Director), Cheng-Tsung, Huang

(Managing Director), Mao Hsiung, Huang (Director)

Contents of the case:Provision of loans among the company and affiliates

Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy Chiu is the director of TECO Westinghouse Motor Company, chairman of Asia Innovative Technology (Xiamen) Co., Ltd., director of UVG Investment Co.Ltd., director of Tong-An Assets Management & Development Co., Ltd., supervisor of Tai-An Technology (Wuxi) Co., Ltd. abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Chien-Yuan, Lin. Chao-Kai, Liu is the dirctor of TECO Westinghouse Motor Company, chairman of Tai-An Technology (Wuxi) Co., Ltd., director of Asia Innovative Technology (Xiamen) Co., Ltd., director of UVG Investment Co.,Ltd., Mao-Hsiung, Huang is the director of TECO Westinghouse Motor Company, director of Asia Innovative Technology (Xiamen) Co., Ltd., director of Tong-An Assets Management & Development Co., Ltd, Cheng-Tsung, Huang is the director of Tong-An Assets Management & Development Co., Ltd. abstained from the discussion and voting for the case based upon interest conflict.

Director’s name: Ting-Wong,Cheng (Independent Director)

Contents of the case: Nomination of candidates for 25[th] term Independent Director of the company Reason for avoidance of conflict of interest and participation in voting: Ting-Wong Cheng is current independent director of the company. The above director were abstained from the discussion and voting for the case based upon interest conflict.

Resolution: The nomination was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case.

ii. 24-22 Board Meeting: 2018.4.17

Director’s Name: Chwen-Jy, Chiu (Chairman)

Contents of the case: Discussion of disposing the shares of Kuenling Machinery Refrigerating Co., Ltd. and its subsidiary.

Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy, Chiu is the director of Kuenling Machinery Refrigerating Co., Ltd., abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Chien-Yuan, Lin.

iii. 24-23 Board Meeting: 2018.4.30

Director’s Name: Chwen-Jy, Chiu (Chairman), Chao-Kai, Liu (Managing Director), Cheng-Tsung, Huang - - - (Managing Director), Yu Ren Huang (Managing Director), Mao Hsiung, Huang (Director), Po Chih, - - - Huang(Director), Shih Chien, Yang (Director) , Yung Hsiang, Chang (Director), Hong Hsiang, Lin (Director), - Ting Wong,Cheng (Independent Director)

Contents of the case: Review the qualification of candidates of 25[th] term director and independent director. Reason for avoidance of conflict of interest and the status of voting: Chwen-Jy, Chiu is the current chairman of board of directors and abstained from the discussion and voting for the case based upon interest conflict and presided over by managing & independent director, Chien-Yuan, Lin. Chao-Kai, Liu (Managing Director), Cheng-Tsung, Huang (Managing Director), Yu-Ren Huang (Managing Director), Mao-Hsiung, Huang (Director), Po-Chih, Huang(Director), Shih-Chien, Yang (Director) , Yung-Hsiang, Chang (Director), Hong-Hsiang, Lin (Director), Ting-Wong,Cheng (Independent Director) abstained from the discussion and voting for the case based upon interest conflict.

Resolution: Except when the nominated candidate of director/independent director is a current director, he/she shall be abstained during the review. The case was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case.

iv. 24-24 Board Meeting: 2018.5.14 Director’s Name: Chwen-Jy, Chiu (Chairman), Mao-Hsiung, Huang (Director) Contents of the case: Discussion on capital increase of TEMICO Singapore

Reason for avoidance of conflict of interest and the status of voting: Chwen-Jy, Chiu is the director of TEMICO Singapore, abstained from the discussion and voting for the case based upon interest conflict and presided over by managing & independent director, Chien-Yuan, Lin. Mao-Hsiung, Huang (Director) is chairman of TEMICO Singapore, abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided over by managing &

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independent director, Chien-Yuan, Lin, who consulted other attending directors, none whom objected the case. v. 25-1 Board Meeting: 2018.6.15 Director’s Name: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong,Cheng (Independent Director), Jin-Fu, Chang(Independent Director) Contents of the case: Discussion of the appointment of the members of the company's fourth "compensation committee." Reason for avoidance of conflict of interest and the status of voting: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong, Cheng (Independent Director), Jin-Fu, Chang(Independent Director) are the candidates of "compensation committee." and abstained from the discussion and voting for the case based upon interest conflict Resolution: expect those who abstained from the case, the case was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case. vi. 25-2 Board Meeting: 2018.7.2 Director’s Name: Chwen-Jy, Chiu (Chairman), Mao-Hsiung, Huang (Director), Cheng-Tsung, Huang (Managing Director), Contents of the case: Ratification of investment and capital expenditure budget of Tong-An Assets Management & Development Co., Ltd Reason for avoidance of conflict of interest and the status of voting: Chwen-Jy, Chiu is the director of Tong-An Assets Management & Development Co., Ltd and abstained from the discussion and voting for the case based upon interest conflict and presided over by managing & independent director, Wei-Chih, Liu. Mao-Hsiung, Huang (Director) is chairman of Tong-An Assets Management & Development Co., Ltd., and Cheng-Tsung, Huang (Managing Director) is a director of Tong-An Assets Management & Development Co., Ltd. abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Wei-Chi, Liu, who consulted other attending directors, none whom objected the case. Director’s Name: Chwen-Jy, Chiu (Chairman), Mao-Hsiung, Huang (Director), Yu-Ren Huang (Managing Director) Contents of the case: Discussion of capital increase of Royal Host Taiwan Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy, Chiu is the director of Royal Host Taiwan., abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Wei-Chih, Liu. Mao-Hsiung, Huang (Director) is chairman of Royal Host Taiwan, Chairman and president of Royal Host Taiwan is respectively Yu-Ren, Huang’s one and two degrees of kinship, abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Wei-Chi, Liu who consulted othehr attending directors, none whom objected the case. Director’s Name: Chwen-Jy, Chiu (Chairman), Shang-Wei, Kao (Director) Contents of the case: Discussion for share issuance by ITTS for application for share listing on the over-the-counter market Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy, Chiu is the director of ITTS, abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Wei-Chih, Liu. Shang-Wei, Kao (director) is the chairman of ITTS, abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Wei-Chi, Liu who consulted othehr attending directors, none whom objected the case. vii. 25-3 Board Meeting: 2018.8.13 Director’s Name: Chao-Kai, Liu (Managing Director) Contents of the case: Discussion on equity buyback of Roteco Reason for avoidance of conflict of interest and the status of voting: Chao-Kai, Liu is a director of Ropali-TECO Corporation and abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case. Director’s Name: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong,Cheng (Independent Director), Jin-Fu, Chang(Independent Director) Contents of the case: Discussion on the adjustment of the compensations for the company's independent directors Reason for avoidance of conflict of interest and the status of voting: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong, Cheng (Independent Director), Jin-Fu, Chang(Independent Director) are the candidates of "compensationcommittee."and abstainedfromthe discussionand votingforthe case based upon interest	v. vi.	independent director, Chien-Yuan, Lin, who consulted other attending directors, none whom objected the case. 25-1 Board Meeting: 2018.6.15 Director’s Name: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong,Cheng (Independent Director),
		Jin-Fu, Chang(Independent Director) Contents of the case: Discussion of the appointment of the members of the company's fourth "compensation committee." Reason for avoidance of conflict of interest and the status of voting: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong, Cheng (Independent Director), Jin-Fu, Chang(Independent Director) are the candidates of "compensation committee." and abstained from the discussion and voting for the case based upon interest conflict Resolution: expect those who abstained from the case, the case was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case. 25-2 Board Meeting: 2018.7.2 Director’s Name: Chwen-Jy, Chiu (Chairman), Mao-Hsiung, Huang (Director), Cheng-Tsung, Huang (Managing
		Director), Contents of the case: Ratification of investment and capital expenditure budget of Tong-An Assets Management & Development Co., Ltd Reason for avoidance of conflict of interest and the status of voting: Chwen-Jy, Chiu is the director of Tong-An Assets Management & Development Co., Ltd and abstained from the discussion and voting for the case based upon interest conflict and presided over by managing & independent director, Wei-Chih, Liu. Mao-Hsiung, Huang (Director) is chairman of Tong-An Assets Management & Development Co., Ltd., and Cheng-Tsung, Huang (Managing Director) is a director of Tong-An Assets Management & Development Co., Ltd. abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Wei-Chi, Liu, who consulted other attending directors, none whom objected the case. Director’s Name: Chwen-Jy, Chiu (Chairman), Mao-Hsiung, Huang (Director), Yu-Ren Huang (Managing
		Director) Contents of the case: Discussion of capital increase of Royal Host Taiwan Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy, Chiu is the director of Royal Host Taiwan., abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Wei-Chih, Liu. Mao-Hsiung, Huang (Director) is chairman of Royal Host Taiwan, Chairman and president of Royal Host Taiwan is respectively Yu-Ren, Huang’s one and two degrees of kinship, abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Wei-Chi, Liu who consulted othehr attending directors, none whom objected the case. Director’s Name: Chwen-Jy, Chiu (Chairman), Shang-Wei, Kao (Director) Contents of the case: Discussion for share issuance by ITTS for application for share listing on the over-the-counter market Reason for avoidance of conflict of interest and participation in voting: Chwen-Jy, Chiu is the director of ITTS, abstained from the discussion and voting for the case based upon interest conflict, and presided over by managing & independent director, Wei-Chih, Liu. Shang-Wei, Kao (director) is the chairman of ITTS, abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Wei-Chi, Liu who consulted othehr attending directors, none whom objected the case.

vii. 25-3 Board Meeting: 2018.8.13 Director’s Name: Chao-Kai, Liu (Managing Director) Contents of the case: Discussion on equity buyback of Roteco Reason for avoidance of conflict of interest and the status of voting: Chao-Kai, Liu is a director of Ropali-TECO Corporation and abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case. Director’s Name: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong,Cheng (Independent Director), Jin-Fu, Chang(Independent Director) Contents of the case: Discussion on the adjustment of the compensations for the company's independent directors Reason for avoidance of conflict of interest and the status of voting: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong, Cheng (Independent Director), Jin-Fu, Chang(Independent Director) are the candidates of "compensation committee." and abstained from the discussion and voting for the case based upon interest

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conflict

Resolution: the case was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case.

viii. 25-4 Board Meeting: 2018.11.13 Director’s Name: Chwen-Jy, Chiu (Chairman), Mao-Hsiung, Huang (Director) Contents of the case: Discussion on caital increase of TEMICO Singapore

Reason for avoidance of conflict of interest and the status of voting: Chwen-Jy, Chiu is the directors of TEMICO Singapore and abstained from the discussion and voting for the case based upon interest conflict and presided over by managing & independent director, Wei-Chi, Liu, Mao-Hsiung, Huang (Director) is the chairman of TEMICO Singapore, abstained from the discussion and voting for the case based upon interest conflict. Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Wei-Chi, Liu who consulted othehr attending directors, none whom objected the case.

ix. 25-5 Board Meeting: 2018.12.22 Director’s Name: Chwen-Jy, Chiu (Chairman), Hong-Hsiang, Lin (Director) Contents of the case: Discussion on Jiangxi TECO’s lending to Qingdao TECO

Reason for avoidance of conflict of interest and the status of voting: Chwen-Jy, Chiu is the director of Jiangxi TECO and abstained from the discussion and voting for the case based upon interest conflict and presided over by managing & independent director, Wei-Chi, Liu. Hong-Hsiang, Lin (Director) is the director of Jiangxi TECO, abstained from the discussion and voting for the case based upon interest conflict.

x. Resolution: The case was approved by a meeting of the board of directors, presided over by managing & independent director, Wei-Chi, Liu who consulted othehr attending directors, none whom objected the case.

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3.3.2 Audit Committee

The Company set up “Audit Committee” on June 15, 2012 to replace the original supervisor system. The committee consists of independent directors (three seats), who select one among them as the convener and chairman of its meeting, and functions according to the company’s “organizational charter of audit committee,” with the scope of its auditing covering the company’s financial statement, the company’s auditing and accounting policy and procedure, the company’s internal-control system, major transactions in assets or derivatives, raising or issuance of securities, appointment and dismissal of, along with compensations for, certified public accountant(s), and appointment and dismissal of financial, accounting, and internal-auditing managers.

A total of 8 meetings of the Audit Committee were held in 2018, and the Audit Committee attendance was as follows:

Title	Name	Attendancein Person	ByProxy	Attendancerate (%)	Remarks
Convener & Chairman	Ting-Wong, Cheng	8	0	100%	Re-election (Re-elected on 2018.6.15) Should attend 8 times
					Newly Elected
Member	Wei-Chi, Liu	8	0	100 %	(Re-elected on 2018.6.15)
					Should attend 5 times
					Newly Elected
Member	Jin-Fu, Chang	8	0	100%	(Re-elected on 2018.6.15)
					Should attend 5 times
Convener & Chairman	Chien-Yuan, Lin	3	0	100%	Retired (Re-elected on 2018.6.15) Should attend 3 times
					Retired
Member	Jing-Shown, Wu	3	0	100%	(Re-elected on 2018.6.15)
					Should attend 3 times

Other mentionable items:

If there is the following situation referred to the operation of Audit Committee, the date of Audit Committee meeting, period, contents of the case, opinion of all members, and company’s respond toward Audit Committee menbers should be narrated i. Items specified in article 14-5 of Securities and Exchange Act: Please see the following charts ii. Other items resolved by the audit committee member with support of two thirds of directors but without approval of the auditing committee.: None

Board Meeting	Contents of the case and follow-up	Article 14-5 of Securities and Exchange Act	Other items resolved by the audit committee member with support of two thirds of directors but without approval of the auditing committee
	Discussion on business report, parent	v
	company only financial statements
	and consolidated financial statements
	of 2017
	Discussion on Profit distribution of	v
	2017
	Internal audit report and self	v
	assesment of internalcontrolof 2017
24-21	Discussion on Due Date Quota of	v
Board Meeting	Financial Institution in 2017
2018.3.26	Discussion on provision of loans	v
	among the company and affiliates
	Adjustment of trader on derivatives	v
	and stock
	The Resolution of Audit Committee (2018.3.20): A proposal on the distribution of 2017 profit was
	formed following inquiry of the members of the audit committee present by the chairman, which was
	submitted alongside the original proposal (with preference to case one) to the board of directors for
	resolution, withothercontents ofthe case endorsed by all		themembersinattendance.
	How the companyhandle opinion of Audit Committee: Passed byall attendee directors

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24-22 Board Meeting 2018.4.17	Discussion on disposing the shares of Kuenling Machinery Refrigerating Co.,Ltd. andits subsidiary.	v
	Discussion on joint venture with Mitsui	v
	TheResolutionof Audit Committee (2018.4.17):Passed by all members
	How the companyhandle opinionof Audit Committee:Passed by allattendee directors
24-24 Board Meeting 2018.5.14	Discussion on capital increase of TEMICO Singapore	v
	Discussion on the amemdment to “Procedure of acquisition or disposal ofassets”.	v
	The Resolution of Audit Committee (2018.5.7): Proposal to suspend for further study article 7-2-1 and article 11-2-1 of the company's "procedure for acquisition or disposal of assets, with other contents of the case being endorsed by allthe directors present upontheinquiry by the chairman.
	How the companyhandle opinionof Audit Committee:Passed by allattendee directors
25-2 Boarding Meeting 2018.7.2	Discussion of capital increase of Royal HostTaiwan	v
	Discussion for share issuance by ITTS for application for share listing on the over-the-counter market	v
	The Resolution of Audit Committee (2017.7.2): Proposal of suggestion for faithful execution of its business improvement plan by Royal Host Taiwan Co., Ltd. in the case involving its capital increase, with other contents of the case approved by all the members present.
	How the company handle opinion of Audit Committee: Passed by all attendee directors
25-3 Boarding Meeting 2018.8.13	2017Q2 consolidated financial statements	v
	Discussion on equity buyback of Roteco	v
	The Resolution of Audit Committee (2018.8.8): Proposal for further study of its business model in the case involving share buyback of subsidiary Roteco in Philippines, with other contents of the case endorsed by allthemembers ofthe committee present.
	How the company handle opinion of Audit Committee: For the case involving share buyback by Filipino subsidiary Reteco, in addition to suggestion of the authorization for decision by standing directions for cases with value under a certain amount via revision of related measures, other opinions ofthe audit committee were allapproved by allthe directors present.
25-4 Boarding Meeting 2018.11.13	Discussion on caital increase of TEMICO Singapore	v
	Discussion on the amemdment to “Procedure of acquisition or disposal ofassets”.	v
	The Resolution of Audit Committee (2018.11.7): Case involving capital increment by TEMICO Singapore was approved after inquiry of all the committee members present by the chairman, who, though, suggested the company to consider the first option of self-own in priority and intensify analysis and explanation of the third option, should it be adopted, with other contents of the case being endorsed by allthe committeemembers present.
	How the companyhandle opinionof Audit Committee:Passed by allattendee directors
25-5 Boarding Meeting 2018.12.22	Internalaudit plan for 2019	v
	Plan to buy back shares to maintain the company’s credit and shareholders’ interest, as well as draft the announcement that no impact on company’s capital maintainance	v
	Discussion on Jiangxi TECO’s lending to QingdaoTECO	v
	Discussion on CPA’s independence and adequacy	v
	Discussionon remunerationofCPA	v
	Discussion on change of accounting chief at the accounting management department of the financial and management center	v
	TheResolutionof Audit Committee (2018.4.17):Passed by all members
	How the companyhandle opinion of Audit Committee: Passed byall attendee directors

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2. The avoidance of Independent Director due to interest conflict i. 24-21 Board Meeting: 2018.3.26 Director’s name: Ting-Wong,Cheng (Independent Director) Contents of the case: Nomination of candidates for 25thterm Independent Director of the company Reason for avoidance of conflict of interest and participation in voting: Ting-Wong Cheng is current independent director of the company. The above director were abstained from the discussion and voting for the case based upon interest conflict. Resolution: The nomination was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case. ii. 25-1 Board Meeting: 2018.6.15 Director’s Name: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong,Cheng (Independent Director), Jin-Fu, Chang(Independent Director) Contents of the case: Discussion of the appointment of the members of the company's fourth "compensation committee." Reason for avoidance of conflict of interest and the status of voting: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong, Cheng (Independent Director), Jin-Fu, Chang(Independent Director) are the candidates of "compensation committee." and abstained from the discussion and voting for the case based upon interest conflict Resolution: expect those who abstained from the case, the case was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case. iii.25-3 Board Meeting: 2018.8.13 Director’s Name: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong,Cheng (Independent Director), Jin-Fu, Chang(Independent Director) Contents of the case: Discussion on the adjustment of the compensations for the company's independent directors Reason for avoidance of conflict of interest and the status of voting: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong, Cheng (Independent Director), Jin-Fu, Chang(Independent Director) are the candidates of "compensation committee." and abstained from the discussion and voting for the case based upon interest conflict Resolution: the case was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case.	avoidance of Independent Director due to interest conflict 24-21 Board Meeting: 2018.3.26 Director’s name: Ting-Wong,Cheng (Independent Director) Contents of the case: Nomination of candidates for 25thterm Independent Director of the company Reason for avoidance of conflict of interest and participation in voting: Ting-Wong Cheng is current independent director of the company. The above director were abstained from the discussion and voting for the case based upon interest conflict. Resolution: The nomination was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case. 25-1 Board Meeting: 2018.6.15 Director’s Name: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong,Cheng (Independent Director),	avoidance of Independent Director due to interest conflict 24-21 Board Meeting: 2018.3.26 Director’s name: Ting-Wong,Cheng (Independent Director) Contents of the case: Nomination of candidates for 25thterm Independent Director of the company Reason for avoidance of conflict of interest and participation in voting: Ting-Wong Cheng is current independent director of the company. The above director were abstained from the discussion and voting for the case based upon interest conflict. Resolution: The nomination was approved by a meeting of the board of directors, presided by chairman, who consulted other attending directors, none whom objected the case. 25-1 Board Meeting: 2018.6.15 Director’s Name: Wei-Chi, Liu (Managing & Independent Director), Ting-Wong,Cheng (Independent Director),
3. The communication between independent director, internal audit chief and CPA (1) Communications method of independent directors with internal auditing chief and certified public accountants: The company has put in place direct contact channel for independent directors to communicate with internal auditing chief and certified public accounts. In line with the regulation of the regulator, the company audits its finance and business status regularly and communicates directly with management and corporate governance unit. i. The company's internal auditing chief delivers internal auditing report at the quarterly meeting of the audit committee, covering status of the execution of auditing operation and improvement and tracking, as well as effect, of the audited defects. In addition to delivery of written auditing report to independent directors monthly, internal auditing chief also makes specific business reports on the suggestion of any independent director. ii. After completing the auditing of the semiannual and annual financial statements, the company's contracted certified public account reports the result of the auditing or checking of the financial statements of the company and its subsidiaries, both domestic and overseas ones, at the auditing committee, as well as other legally required communications items. (2) Independent Director and internal audit chief have good communication, and independent directors have no suggestions. Communication issues are showed asfollows.
Audit Comittee	Communication Item	Communication Result
2-23 (2018.3.20)	Reportfor 2017Internal Audit	Notification
	2017 Internal Audit Self Evaluation (Announcement of Internal Control)	Approval after review before submission to the board of directors for resolution
2-25 (2018.5.7)	Report for 2018 1Q Internal Audit	Notification
3-3 (2018.8.8)	Report for 2018 2Q Internal Audit	Notification
3-5 (2018.12.17)	Report for 2018 3Q Internal Audit	Notification
	Audit Project for 2019	Approval after review before submission to the board ofdirectorsfor resolution
(3) Independent Director and CPA have good communication, and independent directors have no suggestions. Summary of communication issues are showed asfollows.
Audit Comittee	Communication Item	Communication Result
2-23 (2018.3.20)	Report for 2017 consolidate and parent company only financial statements	Approval after review before submission to the board of directors for resolution
	The effect resulted from updated IFRS, regulations and tax law	Notification
3-3 (2018.8.8)	Report for 2018 2Q consolidate financial statements	Approval after review before submission to the board ofdirectorsfor resolution
	Effect of the revised Income Tax Act	Notification

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3.3.3 Corporate Governance Execution Status and Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

Items	Implementation status	Implementation status	Implementation status	Discrepancy with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “ and reasons
	Yes	No	SummariedExplanation
A. Whether the company has formulated and publicized “Corporate Governance Best Practice Principles”, according to “Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies”	V		The company’s 21th board of directors already approved the company’s “Corporate Governance Best Practice Principles” at its 13th meeting (March 25, 2008) and also made four amendaments by Boeard of directos from 2013 to 2016, which has been posted on the Market Observation Post System and the company’s website.	Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “
B. The company’s shareholding structure and shareholders’ equity a. Whether the company has formulated and implemented internal procedure for handling suggestions, questions, disputes, and litigation of shareholders. b. Whether the company has got hold of the list of major shareholders and their ultimate controllers. c. Whether the company has established and implemented risk-management and firewall mechanism pertaining to affiliates. d. Whether the company has formulated internal norms forbidding the company’s insiders to take advantage of unpublicized information in tradinginsecurities.	V		a. The company has installed stock-affairs unit, which handles shareholders’ suggestions or disputes, among others. b. The company has got hold of the list of major shareholders and their ultimate controllers, which is updated regularly. c. The company has distinct relationship of rights and obligations with affiliates, in terms of personnel, assets, and financial management, and regularly audits the accounting and internal control system of affiliates, on top of putting in place adequate risk-management mechanism and firewall. d. The company has formulated internal norms forbidding insiders to take advantage of unpublicized information in trading in securities.	a. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”. b. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”. c. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”. d. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”.
C. Composition and duties of the board of directors a. Whether the board of directors has formulated and achieved diversification for the composition of its membership.			a. In line with the policy of membership diversification for the board of directors, as stipulated in the "practical guidelines for corporate governance." Include but not restrict the following 2 standards: i. Basic condition: sex, age, nationality and culture ii. rofessional knowledge and skill: professional background (such as law, accounting, industry, finance, marketing and technology), professional skill and industrial experience. The company implemented the policy of diversification. The company implemented the policy of diversification in the board(Note 1). There is one female director and one Japanese director sitting on the company's 25th board of directors, which has 15 seats (including three for independent directors), with a three-year term, which can be continued via reelection. Members	a. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

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Items	Implementation status	Implementation status	Implementation status	Discrepancy with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “ and reasons
	Yes	No	SummariedExplanation
b. Whether the company has installed on its own various functional committees other than the compensations committee and the auditing committee.			of the board of directors are all outstanding figures in industry and academia, with abundant experience in corporate governance and industrial technologies, as well as expertise in money, finance, accounting, and law. Members of the Board attend the BOD meeting actively and attendance in person in 2018 reaches at 93.17%. The members monitored and understand the execution of business plans effectively. b. The company already approved the institution of the “compensations committee” at the 13th meeting of the 22th board of directors (Aug. 22, 2011) and the “audit committee” at the first meeting of the 23th board of directors (June 15, 2012). In order to establish a good governance system, rationalize and strengthen management functions, fulfill corporate social responsibilities, and attain sustainable development, the 25th board of directors resolved in its third meeting (on Aug. 13, 2018) to set up "corporate governance and sustainability committee."(note2)	b. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”
c. Whether the company has formulated measures and methods for the evaluation of the performance of the board of directors and carryout regular performance evaluation every year.	V		c. According to its organizational charter, the company's salary and compensations committee convenes regularly to evaluate the performance of the board of directors every year. In order to materialize corporate governance and clearly delineate performance objective, for enhancing the function and operating efficiency of the board of directors, the board of directors resolved to formulate the company's "measures for evaluating the performance of the board of directors" on November 13, 2015, in line with the stipulation of article 37 of "Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies" At the end of every year, the secretariat of the board of directors would collect information on the activities of the board of directors and issue questionnaires for self evaluation before recording the evaluation results and reporting them to the board of directors for review and improvement. External professional independent agent or external expert team may be hired to evaluate the performance evaluation of BOD and issue external evaluation report every three years. In 2017, the company entrusted the Taiwan Institute of Ethical Business and Forensics in evaluating the performance of the board of directors (including functional committees under the jurisdiction of the board of directors, such as audit committee and compensation committee), via the methods of data review, questionnaire, and interviews. Evaluation dimensions include: participation in the meetings of the board of directors(attendance	c. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

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Items	Implementation status	Implementation status	Implementation status	Discrepancy with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “ and reasons
	Yes	No	SummariedExplanation
d. Whether the company has regularly evaluated the independence of certified public accountants.			rate/activeness in participating in discussion), professional competence (continuing study), legal compliance (conformance to regulation in reporting share transfer/assistance for the company in legal compliance), and community participation (attendance rate for corporate events/assistance for the company in upholding the company's relationship with stakeholders). The evaluation report, which was submitted to the board of directors on March 26, 2018, points out that operation of the meetings of the board of directions and functional committees was smooth and communication channel among members was not blocked, and members identified with corporate culture and management concept in 2017. Suggestion for improvement: the management team can consider including report on the global market and industrial trend for the company's products at the meetings of the board of directors, so as to give directors an opportunity in accessing information on business management environment, in addition to reviewing and analyzing failures in the execution of resolutions, so as to improve the effectiveness of decision making. 2018 Performance evaluation of BoD was conducted by secretariat division of the board of directors through internal self evaluation. Items covered by self evaluation questionnaire includes 48 items in five sections: participation in company’s operation, enhancement of quality of decision made by BoD, Composition and structure of BoD, selection and continual training of directors and internal control. The evaluation report was submitted to the board meeting on March 26th, 2018. All items reached the related standard. The performance of BoD in 2018 demonstrates its sound operation. d. The 23rdboard of directors also approved at its 19thmeeting Dec. 22, 2014) the company’s “measures for the selection and evaluation of certified public accounts,” calling for regular review of the independence and adequacy of certified public accountants. The company's financial and accounting units evaluated CPAs Wu, Yu-Lung and Chou, Chien-Hung of PwC Taiwan according to the CPA evaluation scale and ascertained their conformance to the company's evaluation standards, in terms of independence and suitability, proving their qualification to become the company's contracted CPA, finding which was approved by the 24th board of directors at the 20th meeting (Dec. 22, 2017) and the 25th board of directorsat the 5th meeting (Dec.22,2018)	d. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”
D. Does the listed company assign a department for corporate	V		In line with article 3-1 of "practical guidelines for corporategovernance," the companyset up	Compliance with “Corporate Governance

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Items	Implementation status	Implementation status	Implementation status	Discrepancy with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “ and reasons
	Yes	No	SummariedExplanation
governance or a staff in charge of related issues (include but not restrict providing directors and supervisors with information to conduct business, holding board meeting, AGM, registration and updated registration for the company, composing meeting minutes for board meeting and AGM based upon the regulation			"corporate governance center" in July 2015, and also upgraded “Legal Divion” to “Legal and Compliance Division” to strengthen the concept of compliance. The two units are supervised by dedicated director-level above chiefs with the qualification of more-than three years related experience or lawyer. They are Joinly responsible for the matters related to corporate governance. The main duties are handling in a legal manner affairs related to the meetings of the board of directors and shareholders' meeting, production of minutes of the meetings of the board of directors and shareholders' meeting, assistance for directors in assuming their offices and continual traning, and undertaking continuing provision of data needed by directors in the execution of their duties, assistance for directors in legal compliance, safeguard of shareholders' benefits, and strengthening of the function of the board of directors. The implementation of corporate governance 2018 has summited to the meeting of Corporate Governance and Sustainability Committee on January 24th, 2018 as well as Bod meeting on march 26th, 2018. The report is showed as follow: i. Arrangement of the meetings of the board of directors according to law/regulation: Notify all directors seven days in advance and provide related data, to facilitate their understanding of items on the agenda; remind directors avoiding interest of conflict, should the items be related to their interests or the interests of legal entities they represent; distribute minutes for the meeting within 20 days. ii. Arrangement of shareholders' meeting according to law/regulation: Register date for shareholders' meeting by legal deadline, produce and submit notice, manual, and minutes of the meeting by deadline, and change corporate registration after revision of corporate charter or election of directors and supervisors. iii. Based upon “Regulations Governing the Board Performance Evaluation,” board secretary collects the information related activities of the board, distributing the questionnaire to collect self evaluation of the board of directors, turning in to the board to review and improve at the end of the year. And commission outside independent institutions or experts/scholars to carry out the evaluation at least once every three years. iv. Assistance for directors in compliance with various laws, regulations, and guidelines: Arrange study courses for directors at least twice a year and provide data irregularly needed by directors in the execution of their duties,conducive to their understandingof	Best-Practice Principles for TWSE/GTSM Listed Companies “

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Items	Implementation status	Implementation status	Implementation status	Discrepancy with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “ and reasons
	Yes	No	SummariedExplanation
			latest legal development related to the company's operation; invite certified public accountant to attend meetings of the board of directors at least twice a year to exchange opinions with directors on annual report and semiannual report, as well as the updating of IFRSs, securities laws/regulations, and tax laws/regulations. v. Oversee the establishment of "administrative platform for corporate governance," in order to integrate and track various corporate-governance indicators and have a firm grip of the progress of corporate governance. Starting from the company's vision for corporate governance and based on the evaluation indicators of the "corporate governance evaluation," drafted by the Taiwan Stock Exchange, the platform reviews regularly, alongside various related units, various corporate-governance items, sets various corporate-governance goals, and tracks the execution, as well as results, of various corporate-governance items by units in charge, so as to sustain performance. vi. Handle related issue about investor relations: investor relations team provides AGM information, material information announcement, financial statements, presentation material about finance and operation, information about domestic and overseas conferences. According to "Taiwan Stock exchange Corporation Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board’s Exercise of Powers" the board of directors has resolved to designate a manger to be dedicated corporate-governance chief by June 30, 2019. According to "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies," the company's corporate governance chief will arrange courses related to execution of duties with study time meeting legal requirement. The company will disclose the scope of the duties of corporate-governance chief, business focuses of the year, and the status of continuing study.
E. Whether the company has established communications channel for stakeholders (include but not restrict shareholders, employees, customers and suppliers) and dedicated sector for stakeholders on its website, in addition to responding properly	V		The company has high regard for issues concerned by stakeholders and channels for communication with them(note 4), keeping smooth communications with shareholders, employees, customers, suppliers, local communities, NGOs, and government units, via regular or irregular publication of messages or direct communication with stakeholders,so as to	Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “

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Items	Implementation status	Implementation status	Implementation status	Discrepancy with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “ and reasons
	Yes	No	SummariedExplanation
to key issues on corporate social responsibility concerned by stakeholders.			respect and uphold their legal rights. There is a section on the company's website for identification of and communication with stakeholders, in addition to designation of staffers in responding to questions by stakeholders on key issues of corporate social responsibilities. http://tecocsr.teco.com.tw/page1.php?gid=11
F. Whether the company has entrusted professional stock-affairs agent to handle shareholder’ meeting.	V		The company has entrusted professional stock-affairs agent to handle shareholders’ meeting.	Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies“
G. Information publication a. Whether the company has installed website for publication of information on finance, business, and corporate governance. b. Whether the company has publicized information via other methods (such as installation of English-language website, designations of persons in charge of collection and publication of company information, materialization of the system of spokesman, and posting of the process of investors’ conference on the company website).	V		a. The company institutes website for disclosing the status of finance and corporate governance. The address of the corporate website: www.teco.com.tw b. The company institutes English-language website (http://www.teco.com.tw/en_version/index.asp ), According to the company's measures for news release, Collection and disclosure of company information is in the charge of designated staffer. After approval by the president, various units can notify the public relations unit for news release which will then be transferred to the spokesman for execution. According to the company's measures for information publication, spokesman should disclose company information to all investors andmedia at the same timeinafair manner.	a. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies“ b. Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies“
H. Whether the company has other information conducive to understanding the status of corporate governance (including, but not limited to, staffers’ interests, concern for staffers, investor relationship, supplier relationship, stakeholders’ rights, advanced study of directors and supervisors, execution of risk-management policy and criteria for risk assessment, execution of customer policy, and taking out of liabilities insurance for directors, and supervisors.	V		a. a. In order to safeguard employees' benefits, labor union has been established, on top of regular labor-management meeting, as a bridge of communications with employees. At quarter meeting at headquarters and weekly meeting at various plant premises, senior managers would explain to employees the company's current business performance and challenges and open commend those with extraordinary performance. b. The company set up committee of employees' welfare as early as 1964, in charge of pushing various welfare measures and planning series of measures caring for employees' families, so as help employees build a harmonious familial relationship and improve their health, so as to enhance their performance. c. The company has set up a unit dedicated to periodic disclosure the company's major business information, boosting information transparency, as well as a feedback mechanism for accepting suggestions of investors on the company's development, in addition to active participation in investor conferences, so that investors can have firm grip on the company current business status and developmentplanning.	Compliance with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies“

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Items	Implementation status	Implementation status	Implementation status	Discrepancy with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “ and reasons
	Yes	No	SummariedExplanation
			d. The company's representatives visit each supplier at least twice a year. The company has been pushing the establishment of e-procurement platform, as an effective communications channel for suppliers worldwide. The business group has also formulated a uniform list of qualified sales agents. e. To uphold the rights of stakeholders, they can express their suggestions and complaints via telephone, fax, or e-mail, which will be handled by designated staffers, and employees are also encouraged to report violations of laws or regulations via dedicated mailbox. f. In 2018, all the directors of the company engaged in advanced study with hours meeting the requirement of "Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies," with total study time reaching 141 hours, on top of total study time of 48 hours for managers. g. The company has dedicated to the establishment of a complete risk-management system, actively taking into account all the risks which may occur in the company's operation and assuring compliance by the company with related laws and regulations. Meanwhile, assure continuing effectiveness of the company's internal control system via auditing system. Various auditing tasks by the auditing unit ascertain the effectiveness of the company's internal control system, as shown in the low risks of various environmental indicators in 2018. h. The company has dedicated to the provision of quality products with high price-performance ratio to customers. In order to meet customer demands for products and services, the company has also endeavored to better understand their expectation for the company and its products, via multiple channels, including dedicated customer service phone lines, seminars, field visits, after-sales tracking, telephone calls, corporate website, and media, so as to lower the risks of major loss for the company and shareholders which could be caused by the mistake or negligence of directors. i. The company has taken out liabilities insurance for directors covering possible liabilities related to their responsibilities during their tenure since 1999. Report on the insurance, including insurance amount (US$10 million), coverage (all the directors), premium rate, and insurance period (2018 and 2019) was delivered at the 21th meeting of the 24th board of directors and sixth meeting of the25thboard ofdirectors.
I. Please illustrate the improvement based upon Corporate	V		a. The company was granted top 5% evaluation in corporate-governance evaluation for three	Compliance with “Corporate Governance

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Items	Implementation status	Implementation status	Implementation status	Discrepancy with “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies “ and reasons
	Yes	No	SummariedExplanation
Governance Evaluation Result released by Taiwan Stock Exchage.			years running since fiscal 2015. b. In compliance with the new version of corporate governance roadmap, "Corporation Operation Directions for Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers", and "2019 evaluation indicators for corporate governance," the company is scheduled to complete the standard operating procedure for handling the demands by directors by June 30, 2019 and the board of directors has resolved to designate a manger to be dedicated corporate-governance chief.	Best-Practice Principles for TWSE/GTSM Listed Companies”

Note 1: Implement the policy of diversification in the borad

Name Name	Basic Condition and Value	Basic Condition and Value	Back- ground	Knowledge and Skill	Knowledge and Skill	Knowledge and Skill	Knowledge and Skill	Knowledge and Skill	Knowledge and Skill	Knowledge and Skill	Knowledge and Skill
	Sex	Nationality	Education	Judg-ment for operation	Analytical Skills for accounting and finance	Mana- gement	Crisis Mana- gement	Industry know- ledge	Inter- national outlook	Lead- Ing Ability	Decision Making
Tung Kuang Investment Co., Ltd. Representative: Chwen-Jy,Chiu	F	Taiwan	Business Administration	v	v	v	v	v	v	v	v
Tong Ho Gloabl Investment Co., Ltd Representative：Chao-Kai,Liu	M	Taiwan	Electronic Engineering	v	v	v	v	v	v	v	v
Cheng-Tsung,Huang	M	Taiwan	Economy	v	v	v	v	v	v	v	v
Creative Sensor Co., Ltd. Representative: Yu-Ren Huang	M	Japan	Electronic Engineering	v	v	v	v	v	v	v	v
Wei-Chi, Liu	M	Taiwan	Business Administration	v	v	v	v		v	v	v
Jin-Fu, Chang	M	Taiwan	Electronic Engineering	v		v	v	v	v	v	v
Ting-Wong,Cheng	M	Taiwan	Accounting	v	v	v	v	v	v	v	v
Mao-Hsiung,Huang	M	Taiwan	Economy	v	v	v	v	v	v	v	v
Yinge Int. Inv. Co.,Ltd Representative： Po-Chih,Huang	M	Taiwan	Engineering	v	v	v	v	v	v	v	v
Hung Shun Investment Co., Ltd Representative: Tzu-Yi,Kuo	M	Taiwan	Business Administration	v	v	v	v		v	v	v
Tong-An Investment Co., Ltd. Representative : Shang-Wei,Kao	M	Taiwan	Management	v	v	v	v		v	v	v
Kuang Yuan Industrial Co., Ltd. Representative: Shih- Chien,Yang	M	Taiwan	Electronic Engineering	v	v	v	v	v	v	v	v
Tung Kuang Investment Co., Ltd. Representative: Hong-Hsiang,Lin	M	Taiwan	Mechanical Engineering	v	v	v	v	v	v	v	v
Yubantec & Co., Ltd. Representative: Tung-Hai,Kao	M	Taiwan	Accounting	v	v	v	v		v	v	v
Yung-Hsiang, Chang	M	Taiwan	Industrial Management	v	v	v	v	v	v	v	v

Note 2: Information on the operation of corporate governance and sustainability committee

In order to establish a good governance system, rationalize and strengthen management function, fulfill corporate social responsibilities, and attain sustainable development, the company's 25th board of directors resolved in its third meeting (on

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Aug. 13, 2018) to set up "corporate governance and sustainability committee." The committee consists of more than three directors, over half of them independent directors, with convener and chairman of committee meetings being served by an independent director to be elected by committee members.

According to the company's "organization regulations for corporate governance and sustainability committee," the committee convenes at least twice a year and is in charge of reviewing the soundness of the company's corporate governance organization and system, the nomination of the candidates for directors and independent directors, supervision of the fulfillment of corporate social responsibilities and attainment of sustainable development, and strengthening of the operation and management of the units under the direct jurisdiction of the board of directors, among others.

The current corporate governance and sustainability committee consists of five members, with tenure starting from Aug. 13, 2018 through June 14, 2021. Status of attendance for the two meetings of the committee in the recent year follows:

		Times of
Title	Name	attendance	Attendance rate (%)	Note
Convener and chairman	Wei-Chi,Liu	2	100%
Member	Ting-Wong, Cheng	2	100%
Member	Jin-Fu, Chang	2	100%
Member	Chwen-Jy, Chiu	2	100%
Member	Mao-Hsiung,Huang	2	100%

Other items of mandatory registration:

In case the board of directors turns down suggestions of corporate governance and sustainability committee, specify the date and number of the meeting, contents of the case, resolutions of the board of directors, and status of the handling of the committee's opinions by the company: nil
Opposition or reservation of members on record or in written statement against resolutions of corporate governance and sustainability committee: nil

Note 3: Evaluation for CPA

Note 3: Evaluation for CPA	Note 3: Evaluation for CPA	Note 3: Evaluation for CPA	Note 3: Evaluation for CPA
A. Requirement of Independence
Item		Result	Comply with the standard
1	Do certified public accountants, their spouses, or minor children have relationship of investment or financial-interest sharingwith the company?	No	v
2	Whether certified public accountants, their spouses, or minor children have borrowing or loaning relationship with the company? It doesn't cover cases involving financial institutions as clients for normal dealings.	No	v
3	Whether certified public accounts or members of auditing service panel serve as the company's directors, managing staffers, or other positions with significant influence on the audited cases at present or recent two years?	No	v
4	Whether certified public accountants or members of auditing service panel undertake promotion or brokerage of stocks or other securities floated bythe company?	No	v
5	Whether certified public accountants or members of auditing service panel represent the company in defendingcases involvingthe companyand thirdparties or other disputes?	No	v
6	Whether certified public accounts or members of auditing service panel are spouses, direct blood relatives, direct relatives by marriage, or relatives within second-degree kinship of the company's directors, managerial staffers,or employees with significant influence on audited cases?	No	v
7	Whether there are certified public accountants relieving joint practice within one year who now serve as the company's directors,managerial staffers,or otherpositions with significant influence on audited cases?	No	v
8	Whether certified public accountants or members of auditing service panel receive major gifts or preferential treatments from the company's directors,managerial staffers,or major shareholders?	No	v
9	Whether certified public accountants are hired by clients or persons under investigation for regular jobs, reception of fixedpays,or service of directors or supervisors?	No	v
Operation of Independence
Item		Result	Comply with the standard
1	Whether certified public accounts can maintain independence in substance and form for audition, perusal, recheck,or special inspection of financial statements before offeringopinions?	Yes	v
2	Whether members of auditing service panel, other certified public accountants with joint practice or shareholders of legal firms, legal firms, affiliates of legal firms, or allied legal firms can keep independence with the company?	Yes	v
3	Whether certifiedpublic accountants carryoutprofessional service in upright and rigorous manner?	Yes	v
4	Whether certified public accountants can keep fair and objective stance, avoiding influence of prejudice, conflictinginterest,or relationshipof interest onprofessionaljudgment?	Yes	v

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Note 4: Issues whick stakeholders focus and communication channel

Stakeholder	Issue		CommunicationChannel
Shareholder	Business development and operation Financial transparency Risk management Corporate governance *Environmental protection	●Market Observation Post System at Taiwan Stock Exchange ●Shareholder meeting---at least once a year ●Investment forums in Taiwan and abroad---six forums in 2018 ●Visits by representatives of investment corporations---91 person-visits in 2018 ●Relation/stock mailboxes dedicated to investors---immediate replies by responsible persons	●Chosen as a component stock of Taiwan Sustainability Index ●In 2018 corporate governance evaluation, Teco Electric & Machinery ranked high in every performance indicator for the evaluation and consequently was among the top-5% of evaluated enterprises.
Employee	Business development and operation Relations between company and employees Employees' rights and interests Training and career development Occupational environment Expression of employees' opinions and communication	●Company-employee meetings---once every quarter ●Employees' meetings---once every quarter ●Executives' symposiums---once half a year ●Occupational safety and health committee---a meeting every quarter ●Employee welfare committee ●Publication of a bimonthly ●Survey of employees' satisfaction---once a year ●Proposals for improvement	●A symposium is held once a year for company president, manager of every factory, company's human resource director as well as directors and supervisors of the company's labor union, with all of the company's executives aforementioned and 80% of directors and supervisors on average attending. ● Employees' satisfaction remains at a high level of over 80% ●Employees' social participation is encouraged, with voluntary social workers' total input exceeding 784 hours in 2018. Besides, the company promoted a credit system and paid leaves for voluntary contribution to social benefit. ●498 courses were offered in 2018 under the company's training program and business units' separate training plans, with an employee receiving 17.6-hour training on average.
Client	Labeling for products and services Customers' health and safety Marketing communication Survey of customers' satisfaction *Green products	●Dedicated telephone lines for response to customers if needed ●1-4 symposiums a year for sales agents and irregular calls on sales agents ●Tracking of after-sale services---by telephone talks ●company's website and media---updated in needed ●Questionnaire survey of satisfaction---1-4 times a year	●Teco regularly mails questionnaires to customers globally to survey their satisfaction twice a year. The global customers' satisfaction in 2018 stood at 95%. ●High-efficiency energy-saving motors sold globally in 2018 were estimated to save total power consumption of 650 million kWh; green energy-saving home electric appliances sold in 2018 were estimated to reduce carbon dioxide emission by 34,710 metric tons a year.
Supplier	Green supply chain management Human right evaluation for suppliers Operational performance Order management Quality management Technology used in production	●Evaluation of suppliers---70 suppliers are evaluated every year ●Examination of suppliers---once a quarter ●Counseling for suppliers---offered if needed ●E-procurement---if needed	●Risk assessment and on-site evaluation were undertaken for key suppliers, with key suppliers of which evaluation was finished expected to take up 75% of total value of procurement from all suppliers, but in fact, the proportion in 2018 was 84%. ●99% of suppliers signed agreements for protection of human rights and environment

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Stakeholder	Issue		CommunicationChannel
Local community	Occupational safety and health Environmental management Social participation Voluntary services for social benefit	●Service centers in industrial parks---services provided irregularly ●Joint efforts to prevent impact of disasters on neighborhoods of industrial parks---once every quarter ●Communication mailbox at the company's website---for use irregularly ●Employees' voluntary work for social benefit---activities held every quarter	●No violations of regulations on air pollution and waste disposal as well as no events with negative impact on neighboring communities ●Participation in joint efforts and cooperation with other companies stationed in industrial parks to prevent impact of disasters on residential communities neighboring industrial parks ●Energy-saving education totaling 1,125 man-hours was offered for localcommunities and schools
NGO (non-governm ental organization)	Environmental protection Social benefit *Labor conditions	●Disclosure of non-financial information---regular publication of CSR (corporate social responsibility) reports every year, disclosing the company's action in environmental protection, social responsibility and corporate governance and results accordingly ●Greenhouse gas inventory---the company passes BSI (British Standards Institution) ISO 14064-1 verification to obtain reasonable levelofassurance every year	●Collaboration with 30 NPOs (nonprofit organizations) and NGOs as well as 34 enterprises to implement a project aimed to maintain and conserve aborigines' culture ●Active participation in external organizations and advocacy to support goals of sustainable development and government policies
Government agency	Regulatory compliance Occupational safety and health Reduction in greenhouse gas emission Environmental protection *Energy management	●Irregular attendance in symposiums and public hearings on regulations held by authorities concerned ●Promotion of compliance with latest anti-corruption regulations and rules of faithful operation at employees' meetings---once every quarter	● Market Observation Post System at Taiwan Stock Exchange---declaration of important information ●Pursuant to OHSAS (Occupational Health and Safety Assessment Series) 18001 and CNS 15506 under Taiwan Occupational Safety & Health Management System (TOSHMS), the company has set up an OSHMS for efficient management to secure employees' occupational safetyand health

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3.3.4 Compensations Committee

(1)Information on Members of Compensations Committee

Status	Conditions Name	Whether or not possess over five years of working experience and following professionalqualifications	Whether or not possess over five years of working experience and following professionalqualifications	Whether or not possess over five years of working experience and following professionalqualifications	Conformance to independency (note 2)	Conformance to independency (note 2)	Conformance to independency (note 2)	Conformance to independency (note 2)	Conformance to independency (note 2)	Conformance to independency (note 2)	Conformance to independency (note 2)	Conformance to independency (note 2)	Number of part-time positions on the compensations committees of other companies	Note
		Instructors or higher position in the fields of commerce, law, finance, accounting or other related departments at universities	Judges, prosecutors, lawyers, certified public accountants, or other related professionals or technicians with government licenses	Working experience in commerce, law, finance, accounting, or other related fields	1	2	3	4	5	6	7	8
Independent Director	Wei-Chi, Liu	v		v	v	v	v	v	v	v	v	v	1	Newly Elected (Re-electedon 2018.6.15)
Independent Director	Ting-Wong, Cheng	v			v	v	v	v	v	v	v	v	2	Newly Elected (Re-electedon 2018.6.15)
Independent Director	Jin-Fu, Chang	v		v	v	v	v	v	v	v	v	v	0	Re-elected (Re-electedon 2018.6.15)
Independent Director	Chien-Yuan ,Lin	v		v	v	v	v	v	v	v	v	v	1	Resigne (on 2018.5.13)
Other	Charles Kau			v	v	v	v	v	v	v	v	v	0	Retied (Re-electedon 2018.6.15)

Note 1: Status would be filled as Director, Independent Director or Other..

Note 2: For members conforming the following conditions during the two years before the appointment or the term of the position, please give a check mark “  ”in the black space under the code of various conditions:
(1) Not an employee of the company or its affiliates
(2) Not a director or supervisor of the company or its affiliates, excluding independent director set up by the parent company and subsidiary based upon Company Law or local reulations.
(3) Not a shareholder owning over 1% stake in the company, in the names of himself/herself, the spouse, offspring before the age of majority, or others, or not one of the top-10 natural-person shareholders
(4) Not spouse or relatives within second kinship or relatives of direct lineage within third kinship of the aforementioned three kinds of persons
(5) Not director, supervisor, or employee of institutional shareholder owing over 5% stake in the company directly, or director, supervisor, or employee of the top-five institutional shareholders
(6) Not director, supervisor, manager, or shareholder with over 5% stake of specific company or institution with financial or business dealing with the company
(7) Not professionals providing commercial, legal, financial, and accounting services or consulting to the company or its affiliates; not owner, partner, director, manager, or spouse of such person of firms of sole proprietorship or partnership, companies, or institutions providing aforementioned services or consulting to the company and its affiliates.

(8) Without cases mentioned in various clauses of Article 30 of Company Law

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(2) Information on Members of Compensations Committee
A. There are three members in Compensations Committee

B. The term of the current committee: June 15, 2018 to June 14, 2021. The committee has met two times (A) in the recent year. The attendance and qualifications of committee members follow:

Title	Name	Number of attendance (B)	Number of attendance via proxy	Actual attendance rate (%) (B/A) (note)	Note
Covener & Chairman	Wei-Chi, Liu	1	0	100%	Newly Elected (Re-electedon 2018.6.15) Should attend1time
Member	Ting-Wong, Cheng	2	0	100%	Re-elected (Re-electedon 2018.6.15) Should attend 2 times
Member	Jin-Fu, Chnag	1	0	100%	Newly Elected (Re-electedon 2018.6.15) Should attend1time
Covener & Chairman	Chien-Yuan, Lin	1	0	100%	Resigned (on 2018.5.23) Should attend1time
Member	Charles Kau	1	0	100%	Retired (Re-electedon 2018.6.15) Should attend1time
Other items needing registration: 1. In case the board of directors declines or modifies the suggestions of the compensations committee, specify the date, number, contents, and resolutions of the meeting of the board and its handling of the opinions of the compensations committee: None. 2. If a member opposes or has reservation, on record or in written form, about the resolutions of the compensations committee: None 3. Summary of main subjects of communication and results in 2018
Compensation committee		Subject of communication		Communication Result
3-8 (2018.3.20)		Renumeration to executive manager in 2017		Approved, subject to final decision at directors ofboard'smeeting
		Renumeration to director of board in 2017		Approved, subject to final decision at directors ofboard'smeeting
4-1 (2018.12.17)		Report on distribution of renumeration to executive manager in 2017		Ratification
		Distribution of 2018 year-end bonuses among employees		Ratification
		Report of examining structure of the company's salary system		Ratification
		Report on salary for assistant vice president Chen Kuo-min for AIM center		Approved, subject to final decision at directors of board's meeting
		How to adjust executive managers' salaries in line with adjustment in corporate operational system		Approved, subject to final decision at directors of board's meeting

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3.3.5 Social Responsibility

Fulfillment of social responsibility: The company’s system, measures, and fulfillment for events related to social responsibility, including environmental protection, communal participation, social contribution, social services, public benefits, consumer rights, human rights, and security and hygienic.

Items	Implement Status	Implement Status	Implement Status	Difference with “ Corporate Social Responsibilty Best Practice Principles for TWSE/GTSM-Listed Company”and reasons
	Yes	No	Summaried Explanation
A. Implementation of corporate governance a. Whether the company has formulated social responsibility policy or system and reviewed the implementation result. b. Whether the company has held education and training on social responsibility regularly. c. Whether the company has instituted unit for pushing fulfillment of corporate social responsibility, either on full- or part-time basis, in addition to having the board of directors authorize ranking management to handle the issue before reporting the outcome to the board of directors. d. Whether the company has formulated sound compensations policy and integrated the evaluation system for staffer performance and corporate social responsibility policy, in addition to putting in place a clear and effective system of incentives and penalties.	V		a. The company has clear policy for corporate social responsibilty, and reviewed and improved its CSR performance in various aspects when compling its CSR report. In addition, performance in key talent cultivation and training and development of green products was reviewed quarterly, and related to salary of manager. b. The company constantly gets hold of information on courses on corporate social responsibility and conducts training on environment, vocational safety and related laws/regulations every year, in addition to providing timely related training for members of the corporate responsibility committee and panel, in order to achieve consensus among staffers and the vision of corporate sustainability. c. The company has instituted corporate social responsibility committee. President is the chairman, assistant vice presidents are members, directly subordinated by CSR working group. Corporate social responsibility committee is chaired by chairman, which oversees a panel responsible for handling CSR-related affairs, including performance evaluation, compilation and publication of annual CSR report, and irregular reporting to the board of directors on the execution and tracking of corporate social responsibility. d. In order to provide protection of reasonable compensations to staffers, the company’s compensations policy calls for provision of reasonable and competitive compensations, not below minimum wage regulated by the Authority and linkage of staffer performance with incentives, as stipulated in the “performance-evaluation measures” and “measures for management and assistance of staffer performance.” To materialize linkage between performance evaluation and corporate social responsibility, the company has formulated “measures or implementation of goal management,” which list talent and system and forward-looking deployment as key performance-evaluation criteria, in line with the mission of upholding human value and achievingcorporate sustainability.	No difference

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Items	Implement Status	Implement Status	Implement Status	Difference with “ Corporate Social Responsibilty Best Practice Principles for TWSE/GTSM-Listed Company”and reasons
	Yes	No	Summaried Explanation
B. Environment for sustainable development a. Status for the dedication of the company to enhancing the utilization efficiency of various resources and utilizing recycled materials in lowering the impact on the environment; b. Status of the company in establishing proper environmental-management system according to its industrial features; c. Whether the company has noticed the effect of climate change on its business activities, conducted check on greenhouse gases, and formulated strategy on energy conservation and carbon/greenhouse gases abatement.	V		a. Develop IE3/IE4 high-efficiency motor, inverter, air conditioners and home appliances with first-grade energy performance, and achieve energy conservation in production process via adoption of high-efficiency motor and energy-saving lighting. Reduce consumption of resources by developing compact motors, use for silicon-steel scraps and renewed materials from scrap steel for the casting of motor cases, reducing packages for transportation, and recycling and reuse of containers. Develop and use environment-friendly refrigerants, such as R600a and R32 for refrigerators and air conditioners, slashing greenhouse-gas emission from the effusion of refrigerants during the stages of the manufacturing, and disposal of products. Lower impact on environment in efforts in various aspects. b. Set up Environment management system based on ISO 14001 and passed the certification. c. On the issue of climate change, in adherence to the vision of “energy conservation, emissions reduction, intelligence and automation,” the company has been developing wind-power products and high energy-efficient products, in the hope of maximizing its contribution to energy conservation and carbon abatement. Various factories have also been improving their manufacturing process, taking into account energy conservation and carbon abatement. In addition, the company started to have external party check its greenhouse-gases emission in 2012, to assure the accuracy of data, as the basis for the effort of energy conservation and carbon abatement, whose outcome is disclosed in the annual CSR report.	No difference
C. Upholding of public benefits a. Whether the company has formulated relevant management policy and procedure, according to related laws/regulations and international convention on human rights. b.Whether the company has instituted mechanism and channel for complaints by staffers and handled the complaintsproperly.	V		a. Posting of employee work rules, performance evaluation measures, rules for employee leave on corporate poster. To demonstrate its emphasis on and executive power for human right, formulate “Declaration of TECO Corp. on Human-Right Policy" and post it on the company's website. In addition, require suppliers to sign "commitment to human right and environmental sustainability," along with contracts, to contribute to the cause of human right jointly. b.The company has set up an “opinion mailbox” for employees to communicate directly with the management and obtain rapid services from the company. As for employee reward and discipline,	No Difference

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Items	Implement Status	Implement Status	Implement Status	Difference with “ Corporate Social Responsibilty Best Practice Principles for TWSE/GTSM-Listed Company”and reasons
	Yes	No	Summaried Explanation
c. Whether the company has provided staffers safe and healthy working environment and held regular safety and health education for staffers. d.Whether the company has established mechanism for regular communications with staffers and inform, in a reasonable manner, staffers possible material influence which may be caused by changes in its operation. e. Whether the company has established effective cultivation plan for staffers in developing capabilities essential for their career.			formulate procedure on the handling of employee reward and discipline, mandating objective investigation and fact finding before any discipline and the setup of personnel evaluation committee to assist in cases of major disciplines. Moreover, establish dedicated e-mail([email protected] )as a channel for filing complaints, to ward off irregularities or unfair treatments at workplace, and dedicated e-mail([email protected] )as a channel for consulting and reporting of workplace violence, to prevent such violence and illegal damage. Formulate "measures on reporting and handling of sexual harassments," to handle complaints of sexual harassments at workplace filed by staffers, so as to uphold a safe and friendly working environment. c. In compliance with the requirement of laws/regulations related to vocational hygiene and safety, carry out safety and hygiene education, disaster-prevention training, and health management, needed by employees in their works. To safeguard safety of employees at workplace, conduct safety protection of equipment and install personal-safety gear according to standard norm, on top of safety inspection and supervision by managerial staffers in charge. In addition, general manager conducts occupational safety committee- labor represents 1/3, and reviews every management and training every quarter. d.In accordance with the measures for labor-management meeting, the company holds labor-management meeting regularly to exchange opinions and solve problems via consultation. For listening to the opinions of staffers, the chairman and managerial staffers at various levels hold seminars irregularly to understand the work status of staffers and learn their suggestions for the company. As for the company's business performance, the headquarters convene quarterly meeting, wherein the chairman would explain the company's business performance in the quarter and the management policy. In addition, the chairman would meet with cadres of the labor union twice a year, to exchange opinions for achieving a win-win outcome for management and labor. e.Cultivate the expertise of staffers along the dual lines of professional jobs and management jobs and combine the training with staffers' individual development plan (IDP) for follow-up tracking and confirmation. Provide complete and plural training to staffers to improve their expertise and expand their knowledge and experience. Carry out performance evaluation every half year, when staffers and their direct superiors would talk for

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Items	Implement Status	Implement Status	Implement Status	Difference with “ Corporate Social Responsibilty Best Practice Principles for TWSE/GTSM-Listed Company”and reasons
	Yes	No	Summaried Explanation
f. Whether the company has formulated consumer-right protection policy and complaint procedure on the flow of R&D, procurement, production, operation, and service. g. Whether the company has complied with related laws/regulations and international norms in the marketing and labeling of products and services. h. Whether the company has checked the track record of prospective suppliers on anti-environment and –society behaviors. i. Whether the contracts between the company and major suppliers include a clause empowering the company to terminate or revoke the contracts, in case the suppliers involve in behaviors which run counter to the company’s CSR policy and have marked adverse influence on environment and society.			full communication on their personal career development plan. In addition, the company will continue the endeavor for institutionalizing the promotional channel and the system of job rotation, so as to augment and diversify staffers' capabilities and putting in place a complete career development channel. In addition, it embraces institutionalized promotion channel and the system of job rotation, to help staffers develop plural capabilities. The institution of a complete career development route is an objective of the company. f. The company adheres to ISO 9001/ISO/TS 16949 in various work flows, on a process-oriented basis, in contrast to the customer orientation for marketing, including presales, sales management, and after-sales service, which, along with payback to customers, constitutes a cyclic system, materializing a complete customer service system. g. The company acquires certification of products’ safety, reliability, and functionality according to the following standards: CE, IEEE, CNS, CQC., etc. Product fact conform with related regulation. h. The company demands suppliers to fill in the questionnaire produced by the company, which includes their practice in the human rights and environment. i. Note 41 in “Basic Engagement of Transaction with Supplier”
D. Whether the company has disclosed essential and reliable CSR-related information on its website and the Market Observation Post System.	V		The company has instituted “CSR section” on its	No difference
			website for disclosure of related information, so
			that interested parties can understand the
			operation and result of TECO’s corporate social
			responsibility. TECO also has third party certify
			its CSR report from 2012.
E. Describe the operation of company’s Corporate Social Responsibilty Best Prectice Principles, should it exist, and its difference with “Corporate Social Responsibilty Best Prectice Principles for TWSE/GTSM-Listed Companies.” No difference
F. Other key information conducive to the understanding of the company’s CSR-related affairs: (1) Via the function of the TECO Technology Foundation, the company supports the humanistic aspect of Taiwan with its technological expertise, encourages sci-tech innovation, and holds “Green Tech” international contest, to highlight the “Corporate social responsibility” spirit and encourages young students to engage in sci-tech R&D on energy conservation and carbon abatement. During 24 consecutive, TECO Award (1994-2017), there are 132 winners from Electric Machinery/ Information/ Communication, Machinery/ Energy/ Environment, Chemical/ Material, Biology/ Medical professionals/ Agriculture,four “science “categoryand one “human culture”. In order to consolidate the humanistic

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Items	Implement Status	Implement Status	Implement Status
	Yes	No	Summaried Explanation
power of Taiwan, the company pushes “creativity education,” to innovate and update teaching model of schools’ teaches, also provide school children in remote area with high quality learning opportunities resources. The “heritage education” rallies various parties to make contributions for the expense of the event, with the aim of recruiting teachers for the program as TECO’s staffers and helping tribal children learn their own culture and tradition, as well as sustain and develop further. (2) Other related information is contained in the CSR report, which has been posted on TECO’s website. http://tecocsr.teco.com.tw/
G. In case the company’s report on products or corporate social responsibility has passed the certification of related certification bodies, describe the inspection standards: The company’s 2017 CSR report was certified by PricewaterhouseCoopers according to ISAE 3000 and GRI G4 guideline onglobal sustainabilityreport.

3.3.6 Adherence to the Ethical Corporate Management and Measures

The company executes ethical corporate management based on “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies”

Items	Implementation Status	Implementation Status	Implementation Status	Difference with “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies
	Yes	No	Summaried Explanation
A. Formulate policy and program for ethical corporate management a. Whether the company has explicitly express the policy and methods of ethical corporate management in its charter and outbound documents and whether the board of directors and management have fulfilled the commitment to the policy of ethical corporate management b. Whether the company has program preventing unethic behaviors with the principle of ethical corporate management, in addition to specifyingand	V		a. The company has yet to formulate “Ethical Corporate Management Best Practice Principles” on August 14 in 2014, announced and carried out “The Principle of Antitrust” on October 1 in 2015, amended “Rules of Ethical Conduct to Directors and Managers” on March 20 in 2015.The company’s directors and management have been cautiously fulfilling their duties in compliance with the obligation of attention of a prudent administrator. The company has disclosed Rules of Faithful Operation and Standards for Directors' and Executive Managers' Ethic Behavior at its website. The company in August 2018 prepared an organization chart for Committee on Corporate Governance and Sustainability and later in the month established the committee. The committee consists of more than three directors of whom over half are independent directors. An independent director was elected as meeting convener and chairman who is responsible for evaluating performance in corporate governance and social responsibility as well as faithful operation. There are at least two committee meetings a year and the company's Legal & Compliance Division has to report what has been done on faithful operation. b. The company on October 31, 2017 announced Standards for Behavior and Practice and Behavioral Guidelines for Faithful Operation which prohibits employees from accepting gifts worth over	Prepare rules according to the regulations concerned and put them into force

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Items	Implementation Status	Implementation Status	Implementation Status	Difference with “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies
	Yes	No	Summaried Explanation
executing operating procedure, behavioral guidelines, penalties for violation of regulations and complaint system. c. Whether the company has adopted precautionary measures against business activities with higher risk of violating the principle of ethical corporate management, as specified in item 2 of article 7 of the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies”			NT$3,000 from the company's suppliers or individuals in business deal with the company without supervisors' permission. If gift giving has something to do with job positions, employees should decline or return gifts and report to their supervisors and the company's responsible units. The company's responsible units, depending on motivations of gift giving and value of gifts, should propose disposal of the gifts including return, acceptance with payment, appropriation for public use, and transfer to charity organizations. The company on December 23, 2016 put into force Procedures for Handling Cases of Reported Illegal, Unethical or Unfaithful Behavior, setting up channels of internally and externally reporting and a handling system. Specifically for the regulation, there are operating procedures, behavioral guidelines as well as punitive measures for violation and mechanism for appeal. In order to realize faithful operation, the company has set up a unit specifically for promoting policies on faithful operation and preventing unfaithful behavior, with the unit belonging to the board of directors. c. The Standards for Behavior and Practice and Behavioral Guidelines for Faithful Operation announced on October 31, 2017 is based on Provision 2, Article 7 or preventive measures for business activities with relatively high risks of unfaithful behavior under Rules of Faithful Operation for Listed Companies, the company demands that all business units comply with the regulation. In addition, the Regulatory Compliance and legal Affairs Office belonging to the board of directors examines contracts to prevent violations of the regulation and the board's auditing unit irregularly checks and keeps tracking contra
B. Materialize ethical corporate management a. Whether the company has evaluated the track record on the integrity of business partners and whether the contracts with business partners include an article on behavioral integrity. b. Whether the company has instituted unit pushing ethical corporate management, either on a full-time or part-time basis, which is under the jurisdiction of the board of directors and reports to the latter regularly.			a. The company’s legal & compliance division reviews contracts signed by company for outbound business activities, to avoid dealing with those violating the principle of integrity of management on record. b. The company sets up a legal & compliance division office, under the direct jurisdiction of the board of directors, in charge of the formulation and implementation of the policy of integrity-oriented management and would be supervised by an auditing unit before being reported to the board of directors once per year. Auditing unit audited related operation in September 2018,and reported to the board on	Put into force according to the regulations concerned

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Items	Implementation Status	Implementation Status	Implementation Status	Difference with “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies
	Yes	No	Summaried Explanation
c. Whether the company has formulated policy preventing conflict of interest and provided, as well as faithfully executed, proper channel for complaints. d. Whether the company has instituted effective accounting system and internal control system for the materialization of the policy of ethical corporate management, which is audited regularly by in-house auditing unit or certified public account under its entrustment. e. Whether the company had held internal or external education and training regularly on ethical corporate management.			December 22 in 2018. c. The company has formulated “behavioral guidelines,” demanding all staffers not to take benefits and sacrifice the company’s interests for personal benefits. When discovering violation of integrity-related regulations, one can make compliant or report, according to the company's "measures for handling reports on illegal, unethical, or dishonest behaviors." d. To assure the materialization of ethical corporate management, the company has instituted effective accounting system and internal-control system, with in-house auditors checking their compliance regularly. e. The company holds internal education and training on ethical corporate management regularly in 2017. And also promote “Ethical Corporate Management Best Practice Principles” & “Standards for Behavior and Practice and Behavioral Guidelines for Faithful Operation” durting the trainingcourse of new employees.
C. Status of the company’s reporting system: a. Whether the company has formulated concrete reporting and rewarding system, as well as convenient reporting channel, in addition to designation of specific person handling the reporting. b. Whether the company has instituted standard operating procedure for handling reported items and related confidentiality mechanism. c. Whether the company has adopted measures to protect informants from improper treatment.	V		a. As part of the company’s reporting system, the company has formulated “measures for handling reports on illegal, unethical, or dishonest behaviors,” containing ethical norms for staffers, and has instituted reporting e-mail address [email protected] with the audit division b. For Procedures for Handling Cases of Reported Illegal, Unethical or Unfaithful Behavior, Articles 3 and 4 specify channels of reporting and handling procedures while Provision 5 under Articles 4 specifies secrecy mechanism that keeps the reporters or responsible investigators and content of reporting secret to prevent them from unfair treatment or revenge. c. Provision 5 under Articles 4 of Procedures for Handling Cases of Reported Illegal, Unethical or Unfaithful Behavior specifies secrecy mechanism that protects the reporters or responsible investigators and content of reporting from unfair treatment or revenge.	Prepare rules for reporting and keeping secrets according to the regulations concerned
D. Intensifying information disclosure a. Whether the company has disclosed its “Ethical Corporate Management Best Practices Principles” on its website and the implementation effect.	V		a. The company has disclosed information related to “Ethical Corporate Management Best Practice Principles” on website, and disclosed the operation situation in year book and CSR Report.	No major difference
E. Should the company formulate own ethical corporate management principles according to “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Company,” specifyits execution and difference with the

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Items	Implementation Status	Implementation Status	Implementation Status
	Yes	No	Summaried Explanation
principles: The company has already formulated its own ethical corporate management principles and disclosed on the Company’s webite. There is no major difference between its execution andprinciples.
F. Other key information conducive to the understanding of the company’s ethical corporate management (such as review and revision to the company’s ethical corporate management): The company materializes ethical corporate management via compliance with Company Law, Securities Exchange Act, and regulations and lawsgoverninglisted firms,in addition to forbiddingunethical behaviors in business dealings.

3.3.7 Corporate Governance Guidelines and Regulations

The company has instituted “Corporate Governance Best Practice Principles”. The docunment could be accessed “Corpoarte Goverance” on Market Observation Post System (http://mops.twse.com.tw) comforming to related regulations.

3.3.8 Other Important Information Regarding Corporate Governance

A. The important information regarding corporate governance has been disclosed on Market Observation Post System (http://newmops.twse.com.tw) comforming to related regulations.
B. Advanced studies for directors and supervisors in 2018:

Title	Name	Date	Organizer	Training Course	Time
Chairman	Tung Kuang Investment Co., Ltd. Representative : Chwen-Jy, Chiu	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Managing Director	Tong Kuang Investment Co., Ltd Representative： Chao-Kai, Liu	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Managing Director	Cheng-Tsung, Huang	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs

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Title	Name	Date	Organizer	Training Course	Time
Managing Director	Creative Sensor Inc. Representative: Yu-Ren, Huang	2018.11.15	Accounting Research and Development Foundation	Major points and practical implications of recently revised Company Act	3 hrs
		2018.12.20	Accounting Research and Development Foundation	Analysis of recently revised Company Act and practical implications and effect on public companies	3 hrs
Managing & Independent Director	Wei-Chi, Liu	2018.3.15	Taiwan Listed CompanyAssociation	Management of altruistic enterprises	3 hrs
		2018.7.16	Taiwan Listed Company Association	Valuation formula of innovative digital economy and strategy and practice for the upsurge of Taiwaneseindustry
		2018.8.15	Taiwan Listed Company Association	Successful transformation experience of Nan Shan Life Insurance Company, LTD.
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Independent Director	Ting-Wong, Cheng	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Independent Director	Jin-Fu, Chang	2018.7.10	Securities & Future Insititutle	Instruction conference on legal compliance related to insider trading of listed companies and companies with public share offering	3 hrs
		2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.9.26	Taiwan Stock Exchange	2018 ESG investment forum	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Director	Mao-Hsiung, Huang	2018.4.10	Securities & Futures Institute	Trend and challenge of information-safety governance	3 hrs
		2018.5.7	Chunghwa Corpporate Governance Association	Evaluation of the performance of board of directors	3hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs

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Title	Name	Date	Organizer	Training Course	Time
Director	Yinge Int. Inv. Co.,Ltd Representative： Po-Chih, Huang	2018.3.5	Taiwan Stock Exchange	Forum on full e-voting and enhancement ofcorporate value	3 hrs
		2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Director	Kuang Yuan Industrial Co., Ltd. Representative: Shih- Chien, Yang	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Director	Tung Kuang Investment Co., Ltd. Representative : Hong-Hsiang, Lin	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Director	Yubantec & Co., Ltd. Representative: Tung-Hai, Kao	2018.7.24	Securities & Future Insititutle	Instruction conference on legal compliance related to insider trading of listed companies and companies with public share offering	3 hrs
		2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.9.19	Chunghwa Corpporate Governance Association	14th international corporate governance forum-obligation of directors for compliance and supervision	6 hrs
		2018.9.26	Taiwan Stock Exchange	2018 ESG investment forum	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Director	Hung Shun Investment Co., Ltd Representative: Tzu-Yi, Kuo	2018.8.3	Securities & Future Insititutle	Instruction conference on legal compliance related to insider trading of listed companies and companies with public share offering	3 hrs
		2018.8.13	Chunghwa	Application of local companyact	3 hrs

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Title	Name	Date	Organizer	Training Course	Time
			Corpporate Governance Association	on different overseas subsidies of multinational corporations (MNC) and management of local board of directors
		2018.11.16	Chunghwa Corpporate Governance Association	Indispensable knowledge on brand and IP strategy for directors and supervisors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Director	Tong-An Investment Co., Ltd. Representative : Shang-Wei, Kao	2018.5.16	Taiwan Academy of Banking andFinance	Class on corporate governance	3 hrs
		2018.5.22	Chinese National Association of Industry and Commerce, Taiwan	Indispensable knowledge on the revision trend for Company Act for directors and supervisors	3 hrs
		2018.7.26	Chinese National Association of Industry and Commerce, Taiwan	Regulation and operation of auditing committee and compensation committee	3 hrs
		2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.10.16	Chinese National Association of Industry and Commerce,Taiwan	Protection of business secrets from the angle of corporate governance	3 hrs
		2018.10.25	Chinese National Association of Industry and Commerce,Taiwan	Recent changes of labor law/regulation and effect on corporatemanagement	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Director	Yung-Hsiang, Chang	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.9.19	Chunghwa Corpporate Governance Association	14th international corporate governance forum--performance and support of independent directors(afternoon session)	3 hrs

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C. Advanced studies for managing staffers in 2018:

Title	Name	Date	Organizer	Traning course	Time
Chairman	Chwen-Jy, Chiu	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Acting President	Chao-Chih,Lien	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Executive Consultant	Hong-Hsiang, Lin	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Assistant Vice President	Sheng-chyuan, Lin	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
Assistant Vice President	Sung-Pin, Chang	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
Assistant Vice President	Kevin Yeh	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Assistant Vice President	Kuo-Min, Chen	2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs

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Title	Name	Date	Organizer	Traning course	Time
Assistant Vice President	Chi-Tseng, Peng	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
		2018.12.22	The Business Council for Sustainable Development of Taiwan	Explanation of the status of corporate sustainable development and non-financial information disclosure	3 hrs
Assistant Vice President	Fei-Yuan, Kao	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
Assistant Vice President	Steven Chiang (Note)	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs
Assistant Vice President	K.R Chen (note)	2018.8.13	Chunghwa Corpporate Governance Association	Application of local company act on different overseas subsidies of multinational corporations (MNC) and management of local board of directors	3 hrs

Note: Assistant vice president Steven Chiang retired in Feb. 2019 and assistant vice president K. R., Kuo was reassigned to the position of consultant in Aug. 2018.

D. The situation of resignation in the Company: None

Title	Name	Appointment Date	DischargeDate	Reason
President	Chwen-Jy, Chiu	2005.6.1	2018.4.25	Stop doubleing as president and chairman

Note:Chairman will no longer hold the office of president of TECO. Vice president, Caho-Chih, Lien serves as acting president.

3.3.9 Internal Control System

Please refer to page 58 of the Chinese annual report.

3.3.10 In the recent year and up to the publication of the annual report, legal penalties for the company and internal staffers, penalties of internal staffers by the company for violation of internal control system and regulation, major defects and improvement status

None

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3.3.11 Major Resolutions of Shareholders’ Meeting and Board Meetings

A. Major Resolutions of Shareholders’ Meeting and Board Meetings in the recent two years

2018/03/26	(1)The board of directors resolved to convene 2018 shareholders’ meeting on June 15, 2018. (2)The Board of Directors resolved 2017 financial statements with consolidated sales revenue NT$50,942,521 thousand, EPS 1.56, and plans to pay cash divident NT$0.86 per share with the total amount NT$ 1,722,316 thousand. The related financial reports material would be submitted to 2018 shareholders’ meeting. (3) The board of directors approved employees' compensation of NT$ 250,553 thousand and directors' remunerationof NT$111,357 thousand in 2017. The above amount will be distributed through cash. There is no differencefromthe expense amountsin 2017recognized by the board ofdirectors.
2018/4/25	For pushing corporate governance policy, vice president Lien Chao-chih was approved to serve as the company's acting president.
2018/5/14	Submission of 2018 Q1 consolidated financial report to the board of directors, which shows that consolidated operating revenue stood at NT$12,155,711,000 in the first quarter of 2018, with earnings per share reaching NT$0.27.
2018/6/15	Important resolutions in Annual Shareholders’ Meeting (1) Acknowledged 2017 business report and financial statement. (2) Acknowledged 2017 earnings allocation, amounting to NT$0.86 per share for cash dividend payment. (3) Election of the company's 25th board of directors (including independent directors) (4) Approval of the lifting of non-competence clause for 25th directors (including independent directors) and their representatives
2018/6/15	Election of 25th standing directors by the board of directors followed by election of chairman by standing directors
2018/8/13	Submission of 2018 Q2 consolidated financial report to the board of directors, which shows that consolidated operating revenue stood at NT$25,045,475,000 in the first half of 2018, with earnings per share reaching NT$0.83.
2018/11/13	Submission of 2018 Q3 consolidated financial report to the board of directors, which shows that consolidated operating revenue stood at NT$37,109,837,000 in the first nine months of 2018, with earnings per share reaching NT$1.24
2018/12/22	In order to hold the company's credit standing and shareholders' interests, the board of directors resolved to buy back 35,000,000 shares of the company, 1.75% of the total issued shares, at maximum cost of NT$28,636,888,000.
2018/12/12	The board of directors approved the change of auditing chief, substituting Lin Hung-ming, deputy department director,for manager LanChun-hsiung, as part ofjobrotation.
2019/03/26	(1)The board of directors resolved to convene 2019 shareholders’ meeting on June 14, 2019. (2)The Board of Directors resolved 2018 financial statements with consolidated sales revenue NT$50,104,927 thousand, EPS 1.59, and plans to pay cash divident NT$0.90 per share with the total amount NT$ 1,770,923 thousand. The related financial reports material would be submitted to 2019 shareholders’ meeting. (3) The board of directors approved employees' compensation of NT$ 255,103 thousand and directors' remunerationof NT$113,379 thousand in 2017. The above amount will be distributed through cash. There is no difference from the expense amounts in 2018 recognized bythe board of directors.

B. Implemntation of Resolutions made in Annual Shareholders’ Meeting on June 15, 2018.

Number	Resolution	Implementation
1	Acknowledged of the 2017 Business Report andFinancialStatements	※ The proposal was approved by the participating Shareholders with 88.14% approved percentage.
2	Acknowledged of cash dividend payout of NT$0.86 per share for the distribution of 2017 profits.	1. The proposal was approved by the participating Shareholders with 88.57% approved percentage. 2.Ex-Dividend Trading Date: 2018/07/11. Cash DividendPayout date: 2018/07/31.
3	Election of 25th shareholders' meeting	1.Election of 15 25th directors (including three independent directors) , with a three-year tenure from June 15, 2018 through June 14, 2021. 2. The appointment of new directors was approved by the Department of Commerce, the Ministry of Economic Affairs, for registration on July13,2018 (No.10701078140 decree).
4	Approval of non-competence restriction on 25th directors	※The proposal was approved with 87.61% weighted share of the votingrights of shareholderspresent at shareholders' meeting.。

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3.3.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors

None

3.3.13 Resignation or Dismissal of Personnel Involved in Preparation of Financial Reports

Title	Name	Starting date for job	Date of dismissal	Reason for resignation or dismissal
Accounting chief	Lan Chun-hsiung	2015.03.21	2018.12.31	Reassigned to business division as part ofjob rotation

3.4 Information on CPA fee

3.4.1 Accountant Information

CPA names	CPA names	Auditing period	Note
Wu, Yu-Lung	Chou, Chien-Hung	2018

3.4.2 Table of Brackets for CPA Fees

Fee item Fee brackets	Fee item Fee brackets	Auditing fee	Non-auditing fee (Note)	Total
1	Lower than NT$2 M.		V	V
2	NT$2-4 M.
3	NT$4-6 M.
4	NT$6-8 M.
5	NT$8-10 M.
6	NT$10 M. and higher	V		V

Note: NT$1,050,000 of non-auditing public expense, including certification expense for auditing business income tax return and English-language translation fee for financial report and consolidated financial report.

3.4.3 Non-inspection fees for CPAs, accounting firms, and its affiliates account for over one quarter of inspection fee: Nil

3.4.4 Replacement of accounting firm and auditing fee for the replacement year is lower than amount in the year prior to the replacement: Nil

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3.4.5 Auditing fee decreases by over 15% from the previous year: Nil

3.5 Information on replacement of CPA: Not applicable

3.6 Information on service of the company’s chairman, president, and financial or accounting managers at the accounting firm or its affiliates: Nil

3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

3.7.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

Unit: Share

				Unit: Share	Unit: Share
Title	Name	2018		Apr. 30,2019
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
Chairman	Tong Kuang Investment Co., Ltd. Representative: Chwen-Jy, Chiu	0	600,000	0	0
		300,000	0	0	0
Managing Director	Tong Ho Gloabal Investment Co., Ltd. Representative：Chao-Kai,Liu	0	(325,000)	0	40,000
		0	0	0	0
Managing Director	Cheng-Tsung, Huang	0	0	0	0
Managing Director	Creative Sensor Inc. Representative: Yu-Ren, Huang	0	0	0	0
		0	0	0	0
Managing & Independent Director	Wei-Chi, Liu	0	0	0	0
Independent Director	Jin-Fun, Chang	0	0	0	0
Independent Director	Ting-Wong, Cheng	0	0	0	0
Director	Mao-Hsiung,Huang	0	0	0	0
Director	Yinge Int. Inv. Co.,Ltd Representative： Po-Chih,Huang	10,079,600	0	4,375,098	0
		(10,000,000)	0	(4,270,085)	0
Director	Hung Shun Investment Co., Ltd Representative:Tzu-Yi,Kuo	300,000	0	0	0
		0	0	0	0
Director	Tong-An Investment Co., Ltd. Representative : Shang-Wei, Kao	0	0	0	0
		0	0	0	0
Director	Kuang Yuan Industrial Co., Ltd. Representative: Shih-Chien,Yang	0	(470,067)	0	0
		0	0	0	0
Director	Tong Kuang Investment Co., Ltd. Representative: Hong-Hsiang, Lin	0	600,000	0	0
		0	0	0	0
Director	Yubantec & Co., Ltd. Representative: Tung-Hai,Kao	0	0	0	0
		0	0	0	0
Director	Yung-Hsiang,Chang	600,000	0	0	0

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Title	Name	2018	2018	Apr. 30,2019	Apr. 30,2019
		Holding Increase (Decrease)	Pledged Holding Increase (Decrease)	Holding Increase (Decrease)	Pledged Holding Increase (Decrease)
President	Chwen-Jy,Chiu	0	0	0	0
ActingPresident	Chao-Chi,Lien	0	0	0	0
Executive Consultant	Hong-Hsiang, Lin	(43,000)	0	0	0
Management	Sheng-chyuan,Lin	0	0	0	0
Management	Sung-Pin,Chang	0	0	0	0
Management	Chi-Tseng,Peng	0	0	0	0
Management	Fei-Yuan,Kao	0	0	0	0
Management	Kevin Yeh	0	0	0	0
Management	Albert Peng	0	0	0	0
Management	Fei-Yuan,Kao	0	0	0	0
Management	Kuo-Min,Chen(note)	0	0	0	0
Management	Hank Horng (note)	0	0	0	0
Major Shareholder	None	N/A	N/A	N/A	N/A

Note: Kuo-min, Chen reported to his job on Nov. 13, 2018; Hank Horng reported to his job on Jan. 1, 2019

3.7.2 Shares Transfer with Related Parties

Name	Reason of Transfer	Date of Transaction	Transferee	Relationship between Transferee and the Company, Directors, Supervisors and Shareholders with more than 10% shareholding	Shares	Transaction Price (NTD)
Po-Chih, Huang	Disposal (exchange shares for price)	2018.3.6	YINGE Int. Inv. Co.,Ltd.	Director holds it under the name of third party	10,000,000	26.45
Po-Chih, Huang		2019.1.23	YINGR Int. Inv. Co.,Ltd.	Director holds it under the name of third party	4,270,085	18.1
	Disposal
	(exchange
	shares for
	price)

3.7.3 Shares Pledged with Related Parties

Name	Reason of Pledge	Date of Transaction	Transferee	Relationship between Transferee and the Company, Directors, Supervisors and Shareholders with more than 10% shareholding	Shares	Shares holding %	Shares Pledged %	Pledged Amount
Not Applicable

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3.8 Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders

April 30, 2019

Name	Shareholding	Shareholding	Spouse & Minor	Spouse & Minor	Shareholding by Nominee Arrangement	Shareholding by Nominee Arrangement	The relationship between any of the Company’s TopTen Share holders	The relationship between any of the Company’s TopTen Share holders	Remarks
	Shares	%	Shares	%	Shares	%	Name	Relation
Silchester International Investors International ValueEquityTrust	90,033,000	4.50%	0	-	0	-	None	-	-
Silchester International Investors International ValueEquity GroupTrust	46,802,000	2.34%	0	-	0	-	None	-	-
PJAssetManagement	45,292,000	2.26%	0	-	0	-	None	-	-
Edgbaston Asian Equity Trust	45,152,000	2.25%	0	-	0	-	None	-	-
WGI Emerging Markets Smaller Companies Fund, LLC	39,236,000	1.96%	0	-	0	-	None	-	-
Silchester International Investors International Value Equity Taxable Trust	30,486,000	1.52%	0	-	0	-	None	-	-
Tong Kuang Investment Co.,Ltd.	30,341,364	1.52%	0	-	0	-	None	-	-
ChunghwaPost Co.,Ltd.	30,028,000	1.50%	0	-	0	-	None	-	-
Yaskawa Electric Corporation	29,541,089	1.48%	0	-	0	-	None	-	-
Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	29,408,000	1.47%	0	-	0	-	None	-	-

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3.9 Long-Term Investments Ownership

3.9 Long-Term Investments Ownership	3.9 Long-Term Investments Ownership	3.9 Long-Term Investments Ownership	3.9 Long-Term Investments Ownership	3.9 Long-Term Investments Ownership	3.9 Long-Term Investments Ownership	3.9 Long-Term Investments Ownership
December 31,2018
Investee	Ownership by TECO		Direct / Indirect Ownership by Directors, Supervisors and Management		Total Investment
	Shares	%	Shares	%	Shares	%
TongDai Co.,Ltd.	5,290,800	92.63%	0	0.00%	5,290,800	92.63%
Teco Nanotech Co.,Ltd.	21,502,098	86.01%	205,000	0.82%	21,707,098	86.83%
TECO International Investment Co.,Ltd.	57,533,521	100.00%	0	0.00%	57,533,521	100.00%
TECO Holding,USA	1,680	100.00%	0	0.00%	1,680	100.00%
TECO Electric & Machinery Pte Ltd. Singapore	7,200,000	90.00%	800,000	10.00%	8,000,000	100.00%
TECO Electric Europe Ltd.	4,500,000	100.00%	0	0.00%	4,500,000	100.00%
Tong An Assets Management & Development Co.,Ltd.	147,323,399	100.00%	0	0.00%	147,323,399	100.00%
Appliance(HK)Ltd.	1,499,999	99.99%	0	0.00%	1,499,999	99.99%
Tong An Investment Co., Ltd.	444,134,422	99.60%	1,670,084	0.40%	445,804,506	100.00%
TECO Electro Devices Co.,Ltd.	15,386,949	62.57%	371,324	1.51%	15,758,273	64.08%
Tecnos International Consultant Co.,Ltd.	5,601,014	57.52%	1,402,134	16.02%	7,003,148	73.54%
TongTai JungCo.,Ltd.	3,960,000	60.00%	0	0.00%	3,960,000	60.00%
UVG Investment Co.,Ltd.	195,416,844	100.00%	0	0.00%	195,416,844	100.00%
Information Technology Total Services Co., Ltd.	11,723,844	57.64%	1,925,922	9.47%	13,649,170	67.11%
Tesen Electric & MachineryCo.,Ltd.	20,000,000	100.00%	0	0.00%	20,000,000	100.00%
GD TECO Taiwan Co.,Ltd.	5,400,000	100.00%	0	0.00%	5,400,000	100.00%
Taitec TechnologyCO.,LTD.	950,000	95.00%	0	0.00%	950,000	95.00%
Yatec EngineeringCorp.	7,799,996	64.95%	0	0.00%	7,799,996	64.95%
Taian(Subic)Electric Co.,Inc.	17,131,155	76.70%	0	0.00%	17,131,155	76.70%
Taian(Malaysia)Electric Sdn. Bhd.	13,113,235	66.85%	1,961,934	10.00%	15,075,169	76.85%
An Tai International Investment Co.,Ltd.	25,018,661	100.00%	0	0.00%	25,018,661	100.00%
Micropac(BVI)	14,883,591	100.00%	0	0.00%	14,883,591	100.00%
Taian-Etacom TechnologyCo.,Ltd.	7,033,000	84.73%	0	0.00%	7,033,000	84.73%
Taian Electric Co.,Ltd.	100,000	100.00%	0	0.00%	100,000	100.00%
Tecom	200,301,025	63.52%	0	0.00%	200,301,025	63.52%
E-JoyInternational Co.,Ltd.	9,500,000	93.60%	500,000	4.93%	10,000,000	98.53%
A-Ok Technical Co.,Ltd.	1,950,000	86.67%	0	0.00%	1,950,000	86.67%
TECO Technology (Vietnam)Co.,Ltd.	29,013,668	100.00%	0	0.00%	29,013,668	100.00%
TECO(Philippines)3C & Appliances,Inc.	2,604,000	60.00%	0	0.00%	2,604,000	60.00%
An-ShengTravel Co.,Ltd.	480,000	16.00%	2,400,000	80.00%	2,880,000	96.00%
Taiwan Pelican Express Co.,Ltd.	24,121,700	25.27%	6,570,940	6.88%	30,692,640	32.15%
Eagle HoldingCo.	1	100.00%	0	0.00%	1	100.00%
CenturyDevelopment	96,353,338	28.67%	73,736,289	24.08%	170,089,627	52.75%
Teco Sun Energy	2,100,000	30.00%	2,100,000	30.00%	4,200,000	60.00%
Temico Inteernational Pte. Ltd.	348,000	60.00%	0	0.00%	348,000	60.00%
TECO EV Philippines Corporation	53,999,994	100.00%	0	0.00%	53,999,994	100.00%

3.10 Procedure of Material Information: The company has stipulated Rules of Anti Insider Transaction in internal control system, and announced to the emploees.

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IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

A. Type of Stock

A. Type of Stock
	April 30,2019
Share Type	Authorized Capital			Remarks
	Issued Shares	Un-issued Shares	Total Shares
Common Share	2,002,692,886	1,027,857,114	3,030,550,000	-

4.1.2 Status of Shareholders

April 30, 2019

						April 30,2019
Item	Government Agencies	Financial Institutions	Other Juridical Person	Domestic Natural Persons	Foreign Institutions & Natural Persons	Total
Number of Shareholders	3	80	244	90,412	530	91,269
Shareholding (shares)	20,027,528	102,371,260	298,325,645	679,727,369	902,241,084	2,002,692,886
Percentage	1.00%	5.11%	14.90%	33.94%	45.05%	100.00%

4.1.3 Shareholding Distribution Status

The par value for each share is NT$10

April 30, 2019

Class of Shareholding (Unit : Share)	Number of Shareholders	Shareholding (Shares)	Percentage
1 ~999	40,798	8,954,015	0.45%
1,000 ~ 5,000	33,944	78,353,931	3.91%
5,001 ~ 10,000	7,717	59,915,925	2.99%
10,001 ~ 15,000	2,552	31,871,051	1.59%
15,001 ~ 20,000	1,596	29,365,171	1.47%
20,001 ~ 30,000	1,553	39,114,935	1.95%
30,001 ~ 40,000	661	23,520,359	1.17%
40,001 ~ 50,000	521	24,058,878	1.20%
50,001 ~ 100,000	909	65,991,874	3.30%
100,001 ~ 200,000	415	59,320,585	2.96%
200,001 ~ 400,000	236	67,323,819	3.36%
400,001 ~ 600,000	82	39,769,416	1.99%
600,001 ~ 800,000	54	37,620,887	1.88%
800,001 ~ 1,000,000	32	29,003,625	1.45%
1,000,001orover	199	1,408,508,415	70.33%
Total	91,269	2,002,692,886	100.00%

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4.1.4 List of Major Shareholders

Shareholder's Name	Shares	Percentage
Silchester International Investors International ValueEquityTrust	90,033,000	4.50%
Silchester International Investors International Value Equity Group Trust	46,802,000	2.34%
PJAssetManagement	45,292,000	2.26%
Edgbaston Asian EquityTrust	45,152,000	2.25%
WGI EmergingMarkets SmallerCompaniesFund,LLC	39,236,000	1.96%
Silchester International Investors International Value Equity Taxable Trust	30,486,000	1.52%
TongKuangInvestment Co.,Ltd.	30,341,364	1.52%
Chunghwa Post Co., Ltd.	30,028,000	1.50%
Yaskawa Electric Corporation	29,541,089	1.48%
Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds	29,408,000	1.47%

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Unit: NT$

			Unit: NT$
Item	2017	2018	April 30,2019
Market Price per Share (Note 3)
Highest Market Price	31.85	29.15	23.30
Lowest Market Price	27.10	16.60	16.95
AverageMarket Price	28.69	22.64	19.87
Net Worthper Share
BeforeDistribution	26.17	27.11	28.00
After Distribution	25.29	Note 1	Note 2
Earnings per Share
Weighted Average Shares (thousand shares)	1,980,250	1,980,250	1,964,298
EarningsPerShare	1.56	1.59	0.34
Dividends per Share
Cash Dividends	0.86	0.90(Note1)	Note 2
Stock Dividends
 Dividendsfrom RetainedEarnings	0	0	0
 DividendsfromCapitalSurplus	0	0	0
Accumulated UndistributedDividends	0	0	0
Returnon Investment
Price /EarningsRatio (Note4)	18.39	14.24	19.48
Price /DividendRatio (Note5)	33.36	25.16	Note 2
Cash Dividend Yield Rate(Note 6)	3.00%	3.98%	Note 2

Note 1: Pending for approval of Shareholders' meeting

Note 2: Pending for approval of Shareholders' meeting and Board of Directors' meeting

Note 3: List the highest and lowest market price in each year and calculate average market price by total trading volume/total trading shares

Note 4: Price / Earnings Ratio = Average Market Price / Earnings per Share

Note 5: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share

Note 6: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price

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4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

TECO deals in a line of business characterized by steady growth, but many of its investees have yet to take off. Therefore, its distribution of earnings must take into account the need for further expansion and more reinvestments going forward. After legal and special reserves are set aside. In principle, 80% of the remainder and retained earnings from the previous year will be drawn upon as dividend payments to shareholders. Of all dividend payments, cash generally accounts for 50% but must not run below 5%

B. Proposed Distribution of Dividend

Cash dividend of NT$0.90 per share.

4.1.7 Impact on Company’s business performance, EPS and ROI from the stock

grant proposed by Shareholders Meeting:

Not applicable.

4.1.8 Employee and Directors' Remuneration

A. The company should allocate 1%-10% of profit for employee remuneration based upon its profit in a given year; less than 5% for the directors.
B. Estimate of Employee Remuneration and Directors’ Remuneration
a.Foundation of estimation
1.Amount of net income
2.Regulations in Article of Corporation
3.Historical record of distribution
b.Foundation of share calculation for stock dividend: Not Applicable

c.No difference between total amount paid and number of estimation

C. Profit Distribution of Year 2018 Approved in Board of Directors Meeting for Employee and Directors’ Remuneration
a.Recommended Distribution of Employee and Directors’ Remuneration:

(NT$ Employee Bonus – in Cash $ Employee Bonus – in Stock Directors' Remuneration No difference from the number of estimation	thousand) 255,103 0 113,379

b.Ratio of Recommended Employee Stock Bonus to Capitalization of Earnings: Not applicable

c.Recounted EPS after Recommended Distribution of Employee Bonus and Directors’ and Supervisors’ Remuneration: (NT$ thousands)

Not applicable

D. Information of 2016 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration:

. Information of 2016 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration:	. Information of 2016 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration:	. Information of 2016 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration:	. Information of 2016 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration:
Unit：NT$ thousand
	Amount recognized in the previous year	Amount recommended by the Board of Diretors	Amount resolved by the Shareholders’Meeting
Employee Bonus - Cash	250,481	250,553	250,553
Directors' Remuneration – Cash	111,325	111,357	111,357
Total	361,806	361,910	361,910

The actual distribution of employee bonus and directors’ and supervisors’ remuneration above is parallel with the recommended resolution of the Board of Directors.

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4.1.9 Buyback of Treasury Stock

None in 2018

4.2 Corporate Bonds

4.2.1 Issuance of Corporate Bonds

Type of Corporate Bond	Type of Corporate Bond	1stUnsecured Ordinary CorporateBondsin 2015	1stUnsecured Ordinary CorporateBondsin 2017
Issue date		2015/06/18	2015/09/15
Par value		NT$1,000,000	NT$1,000,000
Issue and TradingPlace		Domestic	Domestic
Issue Price		Accordingto face amount	Accordingto face amount
Total Amount		NT$3 billion	NT$10 billion
Interest Rate		1.45%	1.02%
Duration		5years,Expiration Date: 2019/06/18	5years,Expiration Date: 2021/09/15
Assurance Institution		None	None
Assignee		Hua Nan Commercial Bank Ltd.	Taishin International Bank Ltd.
UnderwritingInstitution		None	Yuanta Securities
Signed Lawyer		Handsome Attorneys-at-Law Ya-Wen Chiu	Handsome Attorneys-at-Law Ya-Wen Chiu
Signer Accountants		PricewaterhouseCoopers, Taiwan Audrey Tseng Dexter Chang	PricewaterhouseCoopers, Taiwan Wu, Yu-Lung Chou, Chien-Hung
Repayment		Accrual Bond	Accrual Bond
OutstandingAmount		NTD$3 billion	NTD$10 billion
Redeption or Advanced Repayment		N/A	N/A
Restrictive Clauses		N/A	N/A
Credit Rating Institution, Credit Rating Date and the Outcome of the Rating		Taiwan Ratings Rating Date:2015/2/16 Issuer Ratng: twA+ IssueRating: N/A	Taiwan Ratings Rating Date:2017/3/30 Issuer Ratng: twA+ IssueRating: N/A
Others	None	None	None
	None	None	None
Shares Dilution & Influence onSrockholders’ Equity		None	None
Entrust Institution of Exchange Object		None	None

4.2.2 Information of the Convertible Bond

None

4.2.3 Information of Shelf Registration Corporate Bond

None

4.2.4 Equity warrant bonds

None

4.3 Special Shares with stock options

None

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4.4 Special Shares

None

4.5 Global Depositary Shares

None

4.6 Employee Stock Options

4.6.1 Issuance of Employee Stock Options

None

4.6.2 List of Executives Receiving Employee Stock Options and the Top 10 Employees with Options Valued in Excess of NT$30 Million None
4.6.3 Status on Restricted Share Award

None

4.6.4 List of Executives and Top 10 Employees Receiving Restrcied Share Award

None

4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions

None

4.8 Financing Plans and Implementation

None

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V. Operational Highlights

5.1 Business Activities

5.1.1 Business Scope

A. Business Scope

Business Scope	Sales %
Industrial Products	59%
Home Appliances	12%
Construction	7%
Others	22%
Total	100%

B. Products and service nowadays
a. Industrial Products Business
- Medium to large voltage motor (100-100,000 HP)
- Low voltage permanent-magnet motor (3-120HP) & Induction motor (1/4-300HP)
- Motor for electric vehicle(1-270 HP)
- Gear reducer
- Medium to large voltage inverter (200-12,000HP)
- Programmable Logic Controller (PLC)
- Human Machine Interface (HMI)
- Circuit breaker (50-1600AF/2.5Ka-100kA)
- Air Circuit breaker (2000-5000AF/85KA-130KA)
- Magnetic Contactor(7-630A)
b. Automation and Intelligent System
- System integration for robot
- AGV (automated guided vehicle)
c. Home appliance and air conditioner
- Air-conditioning (air conditioner, chiller)
- Large size home appliance (fridge, washer, TV)
- Small size home appliance (inverter DC fan, air purifier, vacuum, blender, microwave, oven )
d. Energy& Engineering
- Electrical and mechanical engineering (provide project management, design, procurement, construction and mantenance service)
- Electric equipment (switchboard, generator set, power distribution equipment, management, design and construction service for energy distribution system)
- IDC construction
- Smart Grid and power storage project
e. Other
- Electric vehicle
- Photovoltaics
- EMS
- Electrical and mechanical managemnet system
- Energy saving and intelligent supervisor service for air quality

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C. New products development

a. Industrial Products Business:

High Power Density general purpose Induction Motor, North America general purpose medium voltage motor, medium voltage Exd explosion-proof motors, High pole-number semi-tight large motor for vertical cyclic pump for power plant and water resources, high voltage exp explosion-proof motor, gigh spped motor for air compressor, offshore wind power technology, high speed permanent-magnet motor, auto motor, IE3/4 high efficient IMD(Integrated Motor Drive), IE4 permanent-magnet high efficiency motor for industrial machinery, Forced Ventilation(IC416) Ex nA tD Explosion-Proof Motor, Steel rolling motor and yaw motor for wind turbine.

b. Home-appliances business:

In line with the core values of "energy conservation, emission reduction, intelligence, and automation" for new product development, the home appliances business division has developed entire-range air conditioners and fully smart home appliances, Offer complete solutions for cloud-end applications. Set up environmental sensing network by combining the environmental temperature/humidity sensors of the company's air conditioners, refrigerators, and dehumidifiers, plus addition of human body-sensing, PM 2.5, and VOC components, according to product features. Establish smart Internet-access modules to furnish home appliances with remote monitoring function by integrating smart communications structure and developing TaiSEIA technology. Provide optimal environment air management. In the establishment of energy information system (EIS), carry out optimal power-demand control and -operation management via the combination of distributed treatment of controllers and combination of graphic-control software and the Internet. Application in social care, public construction, and BEMS and HEMS, leading to materialization of low-carbon society. In the light of the restriction from government, CSPF, the technology and system of domestic and commercial air-conditioner will be upgrated and integrated. Other projects underway:

I. All variable-frequency home appliance attain the government's grade-1 CSPF in air-conditioning seasonal performance factor and employs high-performance energy-saving R32 refrigerant, enhancing performance and lowering carbon emission, to contribute to slowdown of global warming. Production of energy-saving and environment-friendly products via clean manufacturing and the use of green materials for continuing contribution to energy conservation and emission reduction.
II. In order to meet the new MEPS (minimum energy performance standard) implemented by the government in 2018 and retain their grade level, existing refrigerators with first-grade performance must enhance their performance by 39%. TECO invests in molds for home appliances and develop energy-conserving refrigerators with performance exceeding the new grade-1 standard, as well as brand new appearance and functions quite different from Japanese brands. One model, a 600 liter/three-door refrigerator, boasting variable temperature, has been eligible for government subsidy after passing screening by Bureau of Energy, the Ministry of Economic Affairs, in Dec. 2017.
III. R&D on VRF (variable refrigerant flow) system for parallel-connection variable-frequency external unit, with entire series conforming to grade-1 CSPF energy performance, meeting the demands of green buildings and high-class business offices.
IV. R&D on 500 RT variable-frequency centrifugal chiller, which has been adopted by Taoyuan International Airport for II stage expansion project, serving as a best track record for future promotion. Provision of HVAC (heating, ventilation, and air conditioning) solution, linkage of multiple air conditioning units to a centralized control system, with individual controller for each unit..
V. R&D on 8 RT and 10 RT direct-current variable-frequency water-cooling packaged air conditioner, the first such model capable of attaining grade-1 CSPF energy performance, which has been granted Taiwan Excellence Awards. It is the optimal choice for medium- and small-sized central air conditioners for use in factories and restaurants.
VI. Rollout of IPLV (integrated part load value) chiller, centralized control of main engines via central controller, automatic adjustment and control system capable of integrating efficiency curve of main engines, automatic adjustment of the operating units of main engines according to load of the system, coordination of the launch and stoppage of cooling tower and chiller, materialization of system

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optimization, and attainment of optimized IPLV operating efficiency of the system. In addition to high energy performance of product, provide check of product health and one-stop integrated service for air conditioning systems via various management and control systems, including visualized power-consumption management and monitoring of indoor air quality.

c. Solar business undertakes the project and construction of solar power generation, and supply the procurement and installation service.
d. The power business division integrates the group's multiple industrial products, maximizing synergy effect. For engineering business, the company focuses on the provision of engineering services featuring smart application, green energy, energy conservation, and energy storage, in an extensive range, such as major transportation and aviation projects, and Internet data centers (IDC), biotech/dedicated cancer hospitals, luxury houses, hi-tech factory buildings, green building, PV power and energy storage systems. In line with the development of offshore wind power and green energy, dedicate to engineering works for onshore substation and develop high-quality smart green-energy and energy-conserving products, such as "smart generator," "power distribution board," "smart micro grid," so as to create new development momentum.

5.1.2 Industry Overview

A. Industrial Product Business

With industrial motors featuring extensive applications and steady demand on the global market, Taiwan’s industrial motor is a major export item for heavy-electricity products, thanks to the excellent evaluation it enjoys. Under the energy-conservation and carbon abatement policy of governments worldwide, the development of industrial motor centers on high efficiency, environmental protection, and low carbon emission. TECO has been developing low energy-consumption and low material-waste products featuring high speed and permanent magnet, in addition to conformance to the industrial trend of compact wind and hydraulic equipment. In addition, when vehicle suppliers announce to stop production of gasoline engine car, the development of EV motor becomes the target. TECO has also take part in the emerging green energy industry. Taking advantage of its excellent technology for design and production of rotating electrical machine, TECO has become a supplier of wind turbine.

System Automation products are critical for industrial automation, as low-voltage switches which offer basic control and protection functions for control loop of power distribution or motors and inverters which enable motors to attain the requirement of speed control and torsion control, plus energy conservation, for applicZAtion in various process. In line with the current of industrial IoT (Internet of Things), electric-control products are furnished with the function of high-speed Internet access, whenever possible, facilitating not remote monitoring but also massive data collection and analysis, which leads to improvement of process. In recent years, in addition to application in Industry 4.0, servo products have been gradually applied in daily-life care, such as service-oriented robots and long-term care for the elderly, foraying into the emerging markets of smart home and city.

B. Home-appliances industry

"In deciding to push smart home appliances, TECO Group has defined its role as a home-appliances brand integrating science, technology, and intelligence." Therefore, TECO has forayed into market from IT angle, integrating the group's internal resources, including industrial drive, motor control, communications, and computing technologies, making TECO not only a home-appliances brand but also a home-appliances technological service provider. With firm grip on the development of industrial energy conservation, the company has developed a whole series of energy-saving products meeting government standard for first-tier energy performance and engaged in joint development with other enterprises and government R&D units. Under the auspices of government-sponsored Technology Development Program, the company has applied cutting-edge energy conservation technology in technological innovation, product innovation, and service innovation, thereby enhancing the international competitiveness of Taiwanese brands.

C. Enegy & Engineering- development of smart grid:

The completed installation of a MW-level PV power station in the premises of Guanyin plant in Taoyuan County. To raise the utilization efficiency of renewable energy, integrate energy generation, storage, and

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management systems, leading to smooth operation of PV power generation. In addition to the domestic market, the company has joined hands with energy storage system firms in tapping overseas markets for smart grids, thereby fulfilling the vision of clean energy and the responsibilities of corporate systems.

5.1.3 Research and Development

A. The company spent NT$1,120,748 thousand on R&D in 2018. R&D expense is booked as NT$369,788 thousand as of the issue deadline in 2019.
a. Industrial Motors Category
High Power Density Induction MotorDevelopment of series of high power-density inductive motors
Development of all-purpose high power-density motor for North America
Development of premium energy-performance large-power variable-frequency explosion-proof motor
Development of diagnosis technology for motor malfunction
Development of high-power permanent-magnet super-cool motor
Development of permanent-magnet self-cooling motor for North America
b. System Automation Category
IP66 protection class inverter product development
Network communication applications inverter product development
PMSM(Permanent-magnet synchronous motor) control algorithm technical development
AFE(Active Front End) technical development
Development of MTPA (maximum torque per ampere) technology
Slim-type servo drive product development
High-frequency response and economical servo drive product development
Automated parameter tuning for motor technical development
Development of control interface software for servo driver
EtherCAT/CANopen communication applications technical development
Development network communications cards EtherCat/Profibus/CANopen
Development of direct-current servo driver
Development of functional-safety certification technology
Development of SOC (system on chip) servo control technology
Development of control-platform technology for AGV (automated guided vehicle)
Development of next-generation servo driver prototype
Development of model tracking technology
Development of positionfeed forward technology
Development of integrated MCU/FPGA technology
Development of synchronous bridge-type technology
Development of energy recovery technology
Development of autonomous power-factory calibration technology
Development of autonomous power-source phase/frequency detection technology

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Development of multi-axis motion control IC
Development of multi-axis motion controller prototype
Development of electronic cam technology
Development of mail-delivery robot prototype
Development of SLAM autopilot technology
Development of AMCL route positioning technology
Development of differential motion control technology
Development of autonomous bias-in-localization calibration technology
c. Renewable energy- green energy
OEM & ODM for electric vehicle motor
Development of offshore wind turbine technology
d. Freezing and Air-Conditioning Category
High CSPF variable-frequency multi-split VRF air conditioner
High CSPF(Cooling Seasonal Performance Factor) inverter air conditioner (split/multi split)
High CSPF water-cooled variable-frequency pack air conditioner
R&D on commercial multi-split air conditioner and smart air conditioner
New refrigerant R32 inverter air conditioner
Inverter air conditioner with intelligent mobile control
Energy-saving inverter refrigerator
High EF(Energy Factor) refrigerator
Air conditioner for elevator
Energy saving management system for air contitioner
Intelligent cloud centrifugal chiller
Commercial air-cooled split conditioner
High efficiency inverter centrifugal chiller
Air handling unit

5.1.4 Long-term and Short-term Development

In heavy electric machinery, create new sales mode, enhancing sales profits and sustaining sales growth. In the long run, dedicated to the goal of selling total solutions for dynamic system and planning the roadmap for TECO "power transmission system." For short-term business development plan, focus on associated sales and service-oriented sales, so as to meet customers' demands for integrated transmission systems. In execution strategy, in order to remove trade barrier caused by geographic position and tariff, the company, in line with global deployment strategy, will gradually expand penetration of the markets of China, Turkey, and India and integrate the production resources of plants in Penang of Malaysia, and Dong Nai and Vietnam. The company has set up a small-motor production base in Penang Province of Vietnam, turning out 300,000 small motors a year, mainly for shipment to Southeast Asia, North America, New Zealand, Australia, and Europe. The company has also set sights on emerging markets, such as Iran, India, the Philippines, Turkey, Africa, and Russia.

For package sales, focus on transmission equipment, food machinery, plastic machinery, rubber manufacturing, air compressor, petroleum/ natural gas, and air conditioning, in addition to foraying into new application fields, such as applications in shipping and rolling stock. For service-oriented sales, offer integrated service with the establishment of rapid maintenance center, capable of offering customers instant maintenance, technological transformation, and replacement services. Under the global current of industrial automation, provide systematic products featuring high efficiency, energy conservation, and precision system control, so as to meet the demands for industrial power safety, automation, and energy conservation.

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To respond the trend of IIOT, TECO has started to integrate the selling of electrification, maximize the profit of stategy, and streghthen the customer mastery. Furthermore, TECO can create more potencial opportunity on resource integration, so that reach selling target fastly. In the future, the company's heavy-electricity motors will be furnished, as a standard auxiliary, with self-developed sensor meeting Industry 4.0 specification, capable to be linked to customers' monitoring system, thereby providing vibration figures of motors, and motor's operating management system, for monitoring of operation and warning of possible malfunction, which greatly lowers the risk of abrupt equipment breakdown

For home appliances, in the long run, the company aspires to become the leading brand in Taiwan and actively penetrate overseas market. In response to the government's energy-conservation policy, TECO has rolled out household refrigerator featuring proprietary variable-frequency strategy, with flexible compartment arrangement, which has been granted 2019 Taiwan Excellent Awards. The company has also rolled out a variable-frequency DC commercial refrigerator, boasting over 60% energy saving, compared with rival brands, plus cloud-end IoT smart management, which can effectively cut foodstuff waste for commercial establishments. Entire series of washing machine meets the double energy- and water-conservation market and models with capacity exceeding 14 kg are furnished with variable-frequency function, to be followed by rollout of variable-frequency washing machines with small 10-12 kg capacity.

Tapping new markets of clean room for medical-care and electronic industries and high-tier air handling unit. In 2019, the company will roll out updated versions of commercial air conditioners, in several models and energy fields, applicable to different sites and meeting different needs. The company has also launched VRF whole variable-frequency central air conditioners, the most common commercial model, in various sizes for different spaces, attaining one-stop shopping service. Series of chillers featuring "large capacity, small size, and super thinness" are available, capable of being dismantled before reassembly, which facilitates installation. In recent years, in order to foray into the market of high-performance electromagnetic-suspension centrifugal machines, mainly for application in civil engineering works and green buildings, the company has put forth IPLV chillers, with 30% power saving than non-variable frequency models. In addition to high performance, the company's air conditioners are equipped with the functions of product health diagnosis, visualized power-consumption management, and indoor air-quality monitoring. Following passage of TAF certification, the company's Guanyin plant installed a dedicated IPLV testing station in 2018, assuring optimal energy-saving operation for air-conditioner main engines under various loading conditions.

Taking advantage of the successful experience in Taiwan, the company has been actively tapping the Southeast Asian and Chinese markets. As for liquid crystal products, actively augment share in Taiwan's 4 K market by improving and integrating cross-Strait supply chain, expanding product lineup, raising functions and specifications, and significantly augmenting product quality and supply stability. Other noticeable products include small home appliances with fashionable designs, desktop personal purifiers, and three-in-one wireless vacuum cleaner with mopping function. Due to higher living standards, plus the emergence of e-commerce, home delivery, low-temperature foods, and urbanization, cold chain logistics has become an emerging industry.

Due to increased living standards, online business and home-delivery business boom, low-temperature foods multiply, population concentrates in urban areas, leading to emergence of cold-chain logistics. According to the study of the Industrial Technology Research Institute (ITRI), annual output value of low-temperature foods in Taiwan hits NT$280 billion and output value of cold-chain logistics reaches NT$50 billion, including over NT$8 billion for low-temperature logistics. TECO Group will take advantage of refrigerating and heat-insulation technologies, plus IT smart monitoring, in meeting needs of various customers for logistics and home-delivery services, tapping the new blue ocean of low-temperature logistics, whose potential is very promising.

Adhering to the concept of "quality and innovation" and backed by abundance engineering experience in electric machinery of buildings, MRT, and high-speed rail, the power division has spared no effort in soliciting engineering businesses in the fields of large commercial buildings, MRT, and rail. In recent years, the Energy & Engineering division has managed to land businesses for a number of major projects, including construction of IDC central offices and IDC centers for some cloud-end Internet firms, foraying into the booming cloud-end industry. In addition, it aggressively integrate related products in side the group to form smart power supply equipment and installation of energy storagesystem, expanding on-shore substation of offshore wind farm, successfully tapped emerging business opportunities for smart energy conservation and overseas markets.

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5.2 Market and Sales Overview

5.2.1 Market Analysis

A. Sales (Service) Region

The company is shipping industrial products to such major regions as America, Europe, Australia, Japan, China and Taiwan, and targets to extend the reach to the Middle East, India and Turkey. Home appliances are shipped mainly to the domestic market, with minor markets including Australia, Southeast Asia, Singapore, and Japan. M&E Construction also positively develops Vietnam and Indonisia markets. The business mode of PV ESCO is mainly in Taiwan.

B. Market Share (%) of Major Product Categories
(1) Industrial Product

The company boasts 50% domestic market share in general purpose sector; regarding overseas market, TECO takes over high market share in North America, South East Asia and Australia. TECO also offers customers custom motor featuring special usage and specifications, with the capacity reaching 30,000 horsepower in induction motors, ranking Top 5 around the world.

(2) Home Appliances and Air Conditioner

The company is one of the top three makers of home appliances and air conditioners in Taiwan, with market share reaching 9% for household air conditioners, 14% for refrigerators, 15% for washing machines, 10% for LCD, and 35% for commercial-use air conditioners.

(3) Control Device

The company is Top 2 producer of circuit breaker, wildly used in power distribution and machinery market. Domestic market share is around 20%.

C. Market Trend of Major Product Categories
(1) Industrial Products

TECO originated from motor production, which has remained a core part of the company’s operation, offering the dynamism for Taiwan’s industrial development. According to the analysis of the International Energy Agency (IEA), industrial machinery with motor as core drive is the industrial equipment with the largest power consumption, such as machine tool, pump, air compressor, and wind turbine, accounting for 46% of the world's total power consumption. In Taiwan, motor accounts for 68% of industrial power consumption. For motor manufacturers, the development of high-efficiency motors is not only out of market consideration but also corporate social responsibility. Therefore, TECO dedicates to the development of energy-conserving products, as evidenced by the rollout of high-efficiency motors conforming to IE3 requirement in July 2014, even before implementation of the standard by the government in 2016. At present, TECO has provided many customers IE4 motors, notably for rubber and plastic industry with the largest power consumption, even though the government has yet to implement the standard.

Teco Electric & Machinery and affiliated companies jointly showcased smart electric machinery solutions based on IoT (Internet of Things) and hardware/software integration. In particular, the company showcased a VHPD (very high power density) motor model with power density exceeding the globally highest level for frame number 355 motors. The model, in addition to ultra-high power density, features high energy efficiency at IE4 level, small weight and dimensions to take less space and a smart health management system, and thereby is suitable for use in match with wind-powered and hydraulic machines in oil refineries and power plants.

In the IE3 era, in addition to its own energy performance, motor has been increasingly coupled with inverter to expand energy-conserving benefit of the system. Therefore, with its price gap with induction motors gradually narrowing, permanent-magnet motors have become increasingly popular on the market, thanks to their higher efficiency. In general, with environment-protection and energy-conservation

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demands becoming ever higher, combination motor-inverter market has been growing rapidly. The CEMEP (the European Committee of Manufacturers of Electrical Machines and Power Electronics) forecasts that the market share of combination motor-inverter will top 45% by 2020, up from 22% in 2012.

The aspect of heavy-electric products, the company will continue intensifying integration of marketing and production, in order to boost market share and cut cost, development new products, and develop, via concerted effort of domestic and overseas companies under the group, OEM markets and emerging markets, in addition to aggressively soliciting orders for domestic and overseas civil-engineering works, so as to achieve the high-growth target. To tap the global business opportunities related to energy conservation and carbon abatement. To adapt to the trend of system sale, TECO lauched transmission system solution of I+M+G (I: Iinverter, M: motor, G: gear reducer), and expects to provide customers with connected sequence of service enhancing customer’s satisfication.

The smart health management system, developed by the company's affiliate Tecom, enables remote and real-time maintenance and is a globally leading technology in line with the company's goals---energy saving, reduction in carbon dioxide emission, intelligent and automation.

(2) Home Appliances

The company produces air conditioning equipment of diverse models in capacity and purpose of use for sale in Taiwan and overseas markets. In particular, the company had offered new chiller models featuring high capacity as well as small dimensions and thickness, with the models able to be dismantled and then assembled to facilitate installation at some places. The company had been developing magnetic bearing centrifugal chillers with high energy efficiency and offered IPLV (integrated part load value) models catering to green buildings and public construction projects. In 2018, the company aimed at 35% on-year growth in shipment for commercial air conditioning equipment and 25% on-year growth in shipment for home-use air conditioner in the Taiwan market. Besides, the company aimed to export large chillers to the Southeast Asia market.

Among local vendors of commercial air conditioning equipment, the company had maintained leading status. In 2019, the company will upgrade existing models of air conditioning product lines to cover a wide range of capacity for use at various places and to meet different purposes. For VRF (variable refrigerant flow) multi-unit central air conditioning equipment commonly used in commercial space, the company offered a series models of varying sizes to suit various types of commercial space. Such models had been exported to the Southeast Asia market including Malaysia and Singapore.

The company was promoting development of smart home-use electric appliances, including 43- to 65-inch 4K+Smart LCD monitors, high energy-efficiency variable-frequency refrigerators, multi-temperature refrigerators, remotely monitored SAA (Smart Appliance Alliance) air conditioners and air conditioners equipped with HEPA (high-efficiency particulate air) medical-grade filters. The company aimed to increase sales revenues and profitability by product differentiation.

Along with technological development and growing use of Internet, IT products have been increasingly integrated with home-use electric appliances to become IT-enabled home-use electric appliance models. The company will use decades of experience and cutting-edge IT technologies developed by the Teco Group to develop IT-enabled home-use electric appliances to carter to market demand.

Besides domestic market, the company has also made major inroads into the international market, following years of strenuous effort, especially for LCD TV and air conditioner which have enjoyed very good sales to Southeast Asia, Australia, and Europe. In the future, along with increase in national income and the advent of the information age, the company will continue to launch various even more human-friendly new products, so as to meet market demand.

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D. Favorable and Unfavorable Factors in the Long-range Future and Countermeasures
(1) Industrial Product

The company’s industrial product has won very good repute, in terms of quality and function, in the industry. It has established a far-reaching operation network on both domestic and overseas fronts, including production and marketing bases in the U.S., China, and Southeast Asia, and marketing offices in Japan, Europe, and Australia. However, rapid change in the business climate and the transformation of economic conditions and industrial structure has posed major challenge to the company’s future development. The company will seek sustained development on niche basis cultivated over the past years, to cope with rapid change in the business environment.

Favorable and unfavorable factors for industrial product business, along with countermeasures follow:

A. Strong sales network

TECO has several sales points globally. After making effort several years, TECO gains high market share in different regions. In addition, the biggest distribution channel would be OEM (Original Equipment Manufacturer) and EPC (Engineering 、 Procurement 、 Construction). Therefore, forming a strategic alliance with target local OEM and EPC would be the main way to increase market share. TECO also directly sale to end user and retailer, smaller size sales channel. Therefore, if TECO would like to expand the U.S. and Europe market, cooperation with local large size OEM and EPC is a necessary strategy.

B. Solution projects and after service

Providing solution projects for specific industry, product mantainance, efficiency evaluation, complete repair and mantainance can upgrade the add value of motor and ensure the sales of motor. Therefore, the international peers, such as ABB and Siemens, make an effort to integrate system.

C. M&A

Many renowned international brands are actively seeking mergers and acquisitions, for the sake of expanding capacity and sales channels, in addition to extending the magnitude and depth of products and establishing motor-related product lines (such as generator, driver, inverter, and gear reducer, etc.), facilitating provision of more complete engineering solutions, and enhancing market shares of motors and related products. Meanwhile, M&A can pave the way for entry into new market, raising brand visibility and awareness on the market. For some M&A targets, TECO will first seek cooperation to augment market share and sales.

Favorable and unfavorable factors for industrial product business, along with countermeasures follow:

a. Favorable factors
R&D and self made ability, good in tailor made
Leading position in production scale and market share
Reliable in quality and good brand image
Complete product offering line, getting certification of every motor with special demand
Complete sales channel globally
b. Unfavorable factors
Market saturation leading to price competition among machinery firms and increasingly rigorous demand for price and delivery by buyers
Transplantation of traditional machinery firms to China and other countries
Tier 1 motor suppliers promote scope by solid capital and M&A
Due to the low entry barrier of small sized motor, loacal player in various countries are able to produce. Low price competition results into decreasing market share, and TECO takes stress of dumping from China player.

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  - Tier 1 motor suppliers sell system or total solution. In fact, more and more customers expect to buy total solution with motor.

  - The strategy between motor and set maker would affect order taking.

c. Countermeasures
- Reduce cost, shorten delivery schedule, enhance competitive edge, and boost market share.
- Accelerate new-product development, develop products with high added value, and establish a production system featuring cross-strait division of labor.
- Increase overseas marketing offices and establish an effective service network.
- Strive for emerging business opportunities related to environmental production and energy conservation.
- Join hands with foreign engineering firms in soliciting project orders.
(2) Home Appliances and Air-Conditioning Business
a. Favorable factors
TECO's home-appliances division has constantly rolled out innovative high-performance products, taking advantage of the company's good brand image, synergy resulting from resource sharing of the group, and its variable-frequency drive technology, which was transformed via re-platform from heavy-electricity variable-frequency drive technology. At the juncture of its 60th anniversary, TECO's home appliances have entered a new era.
Roll out, one step ahead of peers, around-the-clock service and grasp channel, to augment competitive edge. Establish inverter common platform for products, enabling precision variable-frequency drive for various motor compressors and coordinate the control logics of different products, such as air conditioner, refrigerator, and washing machine, creating dynamism for innovation for the creation of new products and new functions. In addition, commit to the satisfaction of consumers in service quality and stock of materials.
The company adopts environmentally friendly manufacturing processes and materials to produce green products. The company in 2016 took the initiative among fellow makers to adopt R32 refrigerant air conditioner production lines to produce energy-saving air conditioners. In order for energy saving and reduction in carbon dioxide emission, the company is the first Taiwan-based home-use electric appliance maker to promote green factories.
The company joined the Smart Appliance Alliance to boost development of smart home-use electric appliance models. Among Taiwan-based fellow makers, the company is the first one to integrate IoT with home-use electric appliances. The company took the initiative to offer cloud computing-based air conditioning systems featuring user-oriented functions including schedule control, visualization of power consumption, remote control, reminding for switching off.
The company has offered models that meet requirements for energy-saving, environmental protection and excellence product awards, MIT (Made in Taiwan) labels as well as first-grade energy-saving standards,
The company took the initiative to offer cloud computing-based air conditioning systems and has provided HVAC (heating, ventilation and air conditioning) solutions
b. Unfavorable factors
To over the Japanese myth among Taiwanese people, TECO has no other choice but augment its product technologies and thereby compete with Japan's common models, boosting production cost.
Home appliances/household air conditioning market has saturated, featuring acute competition and low margin.
WTO membership entails tariff cuts, bringing in competition from renowned brands of Japan, the U.S., Korea, and China.

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The Taiwanese market is limited in scale and it’s difficult to develop the global branding, due to high expense for marketing own brands and insufficient price competitiveness.
Competition from hypermarkets and chain sales channels impacts the traditional channel of agents.
The current of bilateral or regional free-trade agreements in recent years has posed major challenge to Taiwan.
c. Countermeasures
Make transformation in the direction of the Internet, expand online sales, develop high-performance IoT cloud-end fashion home appliances, and dedicate to the pushing of marketing 4.0, so as to appeal to white-collar workers aged under 4.0.
Expand the professional ability of research and marketing, keep innovation.
Expand product lineup and cut cost via OEM (original equipment manufacturer) strategic alliance, thereby raising market share.
Create the edge combining Taiwan's innovation and the large-scale cost advantage of mainland China's hardware, via SKD assembly in China.
Grasp product development trend in domestic and overseas markets via the operation of product panel and new-product review sessions, thereby introducing innovative products timely.

5.2.2 The Production Procedures of Main Products

Industrial Products:

Industrial Products:
Products	Use	Production Process
High-efficiency motors, single-phase motors, low- and high-voltage 3-phase motors, synchronous motors, explosion-proof motors, brake motors, variable-pole motors, gear-reducing motors, crane motors, high-temperature exhaust gas fan motors, inverter-duty motors, high-thrust motors, steel-cased motors, aluminum-cased motors, eddy-current motors, wound rotor motors, submersible motors, DC motors, ventilationblowers, wind-powered generators.	Provision of power for industrial production	Casting, Stamping, Electrical Engineering, Mechanical Engineering, Design,
Planning, Assembly, Integration

Home Appliances & Air Conditioners:

Home Appliances & Air Conditioners:
Products	Use	Production Process
CSPF-first class air conditioner , new environment-friendly coolant inverter duty air conditioner (one to one and VRF type), smart air conditioner, energy-saving inverter duty refrigerator, high EF-value refrigerator, direct-drive inverter duty washing machine, dehumidifier, clothes dryer, small home appliances, home-delivery low-temperature table trolley, elevator air conditioner, cooling device for machine tool, low-temperature logistics freezer, heat-dissipation module for PC	Household, commercial, industrial use
	Design, planning, assembly, and peripheral

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5.2.3 Main Material

	Main Material	Main Source	Supply
Motor	Silicon Steel	At home and abroad	Centralized Procurement byseason
	Aluminum Ingot	At home and abroad	Centralized Procurement byseason
	Rod Iron	At home and abroad	Procurement byContract
	Copper Wire	At home and abroad	Procurement byContract and Order Placing
	Bearing	At home and abroad	Procurement byContract
	Engine	Abroad	Procurement byContract
	GAS Insulated Switchgear	Abroad	Procurement by Contract

5.2.4 Major Suppliers and Clients

A. Major Suppliers Information for the Last Two Calendar Years

None

B. Major Clients (each commanding 10%-plus share of annual order volume) Information for the Last Two Calendar Years

None

5.2.4 Production over the Last Two Years

Unit: Units; NT$thousand

Year Output Major Products	2017	2017	2017	2018	2018	2018
	Capacity	Quantity	Amount	Capacity	Quantity	Amount
Motor	1,328,030	1,210,881	12,353,709	1,328,030	1,078,353	13,373,284
System Automation	12,407,514	7,623,587	4,757,588	12,174,439	7,260,245	4,408,893
Home Appliance	380,661	275,704	4,163,978	301,613	276,015	3,939,173
Others	594,435	594,435	2,466,566	494,066	494,066	2,097,531
Total	14,710,640	9,704,607	23,741,841	14,298,148	9,108,679	23,818,881

5.2.5 Shipments and Sales over the Last Two Years

Unit: Units; NT$thousand

					Unit: Units; NT$thousand	Unit: Units; NT$thousand	Unit: Units; NT$thousand	Unit: Units; NT$thousand
Year Shipments & Sales Major Products	2017				2018
	Local		Export		Local		Export
	Quantity	Amount	Quantity	Amount	Quantity	Amount	Quantity	Amount
Motor & System Automation	1,328,030	1,210,881	12,353,709	1,328,030	1,078,353	13,373,284	1,328,030	1,210,881
Home Appliacne & Air Conditioner	12,407,514	7,623,587	4,757,588	12,174,439	7,260,245	4,408,893	12,407,514	7,623,587
Construction	380,661	275,704	4,163,978	301,613	276,015	3,939,173	380,661	275,704
Other	594,435	594,435	2,466,566	494,066	494,066	2,097,531	594,435	594,435
Total	14,710,640	9,704,607	23,741,841	14,298,148	9,108,679	23,818,881	14,710,640	9,704,607

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5.3 Human Resources

Human Resources
Year	2017		2018		March 31 2019
	TECO	Global	TECO	Global	TECO	Global
Number of Employees	2,410	15,438	2,356	14,363	2,295	14,748
Average Age	41.5	40.0	41.8	40.6	42.0	38.5
Average Years of Service	14.2	9.4	14.4	8.76	14.5	8.48
Masters above	15.2	7.2	14.6	6.8	14.7	6.1
Bachelor’s Degree	51.5	49.1	51.9	47.1	51.9	45.5
Senior High School	27.2	32.0	27.4	33.5	27.6	34.7
Below Senior High School	6.1	11.8	6.1	12.6	5.8	13.5

5.4 Information on Outlays for Environmental Protection

Explain in the recent one year up to the publication of the yearbook, the total amount of the company’s loss (including compensation) from pollution and fines, plus possible outlay from countermeasures.

5.4.1 Loss resulted from polluting environment

None

5.4.2 Countermeasures

A. Improvement measures planned
a. Improvement plan for environmental-protection equipment

Installation of new environmental-protection equipment, waste reduction by strengthening the maintenance of existing equipment and improvement of production process, improvement of workplace, promotion of energy conservation, recycle and reuse of waste water, and reuse of waste materials, so as to prevent emission of pollutants and comply with legal requirements

b. Plan for management improvement

Continue pushing ISO14001 environment management system, pinpoint sections in the operational process (covering the entire product life which includes production, sales, the usage of product, and its disposal) which produce impact on the environment and improve the emission of pollutants, thereby alleviating the environmental impact and augmenting environmental performance.

Continue pushing OHSAS 18001 vocational safety and hygiene management system and the passage of the certification of CNS 15506 by the Council of Labor Affairs; incorporate safety and hygiene management into the corporate management culture; regularly hold environmental-protection and safety/hygiene training, fire-fighting drill and drill emergency response; regularly inspect operating environment and physical examination of employees, so as to lower the hazards of risk of workplace and prevent the occurrence of vocational disaster.

c. Continue pushing the program for checking and reduction greenhouse-gas emission

In response to global climate change, the company began to check greenhouse-gas emission in 2005 and passed external greenhouse gas inspection (ISO 14064-1) in 2012. The company started to push

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energy-conservation and carbon-abatement program, in 2006 and The company has set a goal of reducing carbon dioxide emission by 20% in 10 years, especially power usage in the second category, which has been participated all the factories and staff units. The company has also established energy-conservation task force and hired experts to help with diagnosis and offer advices for the execution of the program.

TECO has been dedicating to the materialization of the strategic vision of “energy conservation, emissions reduction, intelligence and automation,” which calls for the production of energy-saving and environment-friendly products, via efforts in the fields of R&D, production, materials, process technology, and marketing. We also focus on green energy in business expansion and even organize various sci-tech and humanistic events via the foundation, in order to substantiate eco value and induce the company to develop in the direction of sustainability.

d. TECO Corporate Social Responsibility Report

Sustainable development for enterprise is an indispensable mindset for corporate management in the new century. At the time when enterprises are facing rigorous challenges, they need to rethink the direction and strategy for their sustainable development and manifest their management performance via report on corporate social responsibilities. The report covers information on the three major aspects of economy, society, and environment, so as to improve external image and help communicate with stakeholders. Corporate social reponsibility is the fifth information report unrelated to financial performance publicized by TECO in 2014, with the purpose of manifesting the company’s methods, achievements, and related strategies and goals of the company in fulfilling social responsibilities in a transparent and open manner for the social public and stakeholders. The report mainly covers various acts and performance figures concerning corporate governance, environmental protection, social participation, and concern for employees, clients, and consumers. In 2017, the company obtained a top-50 Taiwan Corporate Sustainability Award, a Corporate Sustainability Report Award, a Social Inclusion Award and a Transparency and Integrity Award.

e. Projected capital outlay for environmental protection in the next three years
(a)Planned procurement of anti-pollution equipment and outlays

i. Plans in next three years

i. Plans in next three years
2019	2020	2021
Change in consumable materials including activated carbon, filters, bio-filter balls and improvement in organic solvent manufacturing process	Change in consumable materials including activated carbon, filters, bio-filter balls and improvement in organic solvent manufacturing process	Change in consumable materials including activated carbon, filters, bio-filter balls and improvement in organic solvent manufacturing process
Replacement of the consumption materials of activated carbon, filteringnet,andfiltering ball	Replacement of the consumption materials of activated carbon, filteringnet,andfiltering ball	Replacement of the consumption materials of activated carbon, filteringnet,andfiltering ball
EnergyMonitor	EnergyMonitor	EnergyMonitor
Replacement of conventional lighting products with energy-saving models, adoption of a smart-control painting system	Examination and founding of gas storage tank and heavy oil steam boiler. Improving surroundings	Examination and founding of gas storage tank and heavy oil steam boiler. Improving surroundings
Kitchen cleaning by removing greasy dirt	Replacement of conventional lighting products with energy-saving modelsandlight hoods	Replacement of conventional lighting products with energy-saving modelsandlight hoods
Improvement of waste-water equipment	Pipeline for waste-water	Pipeline for waste-water

ii. Projected outlays (Unit: NT$thousand)

2019		2020 ＄48,579	2021
＄35,793			＄35,718

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(b) Expected improvements
- i. Cut emission of air pollutants and waste water to the level in compliance with legal requirement.
- ii. Push cut on industrial waste by reducing output of waste materials, strengthening mechanism for the recycle of waste materials, implementing control for emission reduction.
- iii. Establish energy-conservation and carbon-abatement task force, which will pinpoint equipment with larger energy consumption and areas with higher power consumption, as well as formulate feasible energy conservation programs after consulting experts/scholars and push their execution, thereby slashing carbon emission.
- iv. Push to cut emission of greenhouse gas and dedicate to the development of energy-conserving environment-friendly products, to alleviate the impact on the environment and fulfill corporate social responsibility.
- v. Install high-efficiency power-saving lighting to enhance the efficiency of existing lighting equipment and adopt proper power deployment and control circuit to save power.
- vi. Carry out risk evaluation for workplace, so as to assure the provision of a safe workplace.
f. Expected effect of improvement
(a) Effect on net profits
- i. Avoidance of loss from fines
- ii. Avoidance of loss from suspension of operation
- iii. Avoidance of disputes for environmental pollution
- iv. Cut production cost via reduction of environmental-protection outlays, thanks to waste abatement and pollution prevention.
(b) Effect on competitiveness status
- i. Augment the corporate image and meet the expectation of related parties.
- ii. Comply with the global environmental-protection current, avoid trade barriers, and boost sales opportunities.
B. Failure to adopt countermeasures
a. Failure to adopt improvement measures: Nil
b. State of pollution: Nil
c. Possible loss and compensation amount: Nil

5.4.3 Workplace and Protection Measures for the Personal Safety of Employees

A. The safety and hygiene management system was vertified and passage of performance certification.

The safety and hygiene management system of various plants (Plant Chung-Li, Plant Kuan-Yin, and Plant Hu-Kou) has passed the “OHSAS 18001,” “Taiwan Occupational Safety & Health Management Sysytem (CNS15506),” and its following check.

B. Special environmental-protection and safety/hygiene units are presented at the headquarters, every department, and factory.

Complying with “Enforcement Rules of the Occupational Safety and Health Act”, specialized units and staffers are instituted to handle affairs related to environmental protection and safety/hygiene and practices

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related to safety/hygiene affairs are carried out regularly, according to legal requirement.

C. Environmental-protection and safety/hygiene training are conducted regularly:

New employees and employees shifted to new positions must undertake safety/hygiene training courses, whose duration and contents comply with legal requirement. Only trained personnel with necessary licenses can operate dangerous machines or equipment, such as overhead traveling crane, forklift, organic solvent, boiler, and high-pressure gases. Specialized staffers or technicians all must undertake retraining regularly. The company conducts training on occupational safety for employees, with the training totaling 3,660 man-hours every year.

D. Workplace safety

In addition to the Occupational Safety and Health Act for machinery equipment and norms for use and safe utilization of personal protective gears, the company has managerial staffers carry out safety inspection regularly, to assure compliance by employees to safety norms in their operation and detect points of further improvement, thereby fostering the safety awareness among all employees and achieve safety protection better than legal requirement, to assure safety of workplace.

E. Pushing Globally Harmonized System of Classification & Labeling of Chemicals

To highlight dangerous and hazardous substances, safety labels for materials have been installed in workplaces, where updated information on safety data sheet (SDS) is available as reference for employees. Change in raw materials and production process cannot be made before the review, collection of information on safety data sheet (SDS), and completion of training of related employees in accordance with the company’s management measures.

F. Detection of operating environment

According to “Enforcement Measures for Detecting Laborers’ Operating Environment,” detect the operating environment for chemical and physical elements, with the former including carbon dioxide, dust particle, and organic solution, and the latter including noise and overall temperature index. Entrust qualified operating-environment detecting institutions to carry out the detection periodically, to assure compliance of the operating environment with law/regulation.

G. Fire-fighting drill and emergency-response drill for special workplaces are held regularly:

Ordinary fire-fighting drill takes place every half a year and covers such training items as team organization, practice, response to emergency, and post-accident handling. Emergency-response drill for special workplaces is conducted every year, in order to train employees’ capability in handling accidents.

H. Health care and management

Employee health is the largest assets of the company. The Company respectively exercised health examination for regular task and special dangerous task acoording to “Labr Safety and Health Act”. Organize health classes, publicize health information and organize health-improvement activities. Continue pushing employees to stress self-health management and create a safe and comfortable working environment, so as to enhance employees’ health and physical strength and further extend the concept to their families.

I. Carry out the event of environmental-protection and industrial-safety month

TECO carries out the event of environmental-protection and industrial-safety month in June and August every year, consisting of various activities, including hanging of event banners and posting of posters on environmental protection and industrial safety, holding of training on environmental protection and industrial safety and awarded answers for questions, a blending of education and fun for all staffers, so as to augment staffers' knowledge of environmental protection and industrial safety and arouse their awareness of environmental protection and industrial safety, on top of plant inspection by external experts, for enhancing the performance for the execution of environmental protection and industrial safety.

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5.5 Labor Relations

5.5.1 The company’s various employee welfare measures, advanced study, training, and retirement system, along with their execution, as well as labor-management agreements and various employee-benefit protection measures follow:

A. Employee welfare measures

The company has high regard for employee welfare and work safety constantly, as evidenced by the setup of employee welfare committee back in 1964, which handles various employee welfare measures, so that employees can share the profits of the company. The company’s welfare measures follow:

a. Employee welfares provided by the company
- (a) Marriage and funeral subsidy
- (b) Physical examination for employees
- (c) Company uniform
- (d) Dividend sharing and stock option
- (e) Year-end bonus
- (f) Pension fund
- (g) Meal subsidy
- (h)Labor insurance, health insurance, group insurance, pension hand over and accident insurance
- (i) Preferential rates for purchase of the company’s products
b. Welfare measures provided by the employee welfare committee
- (a) Subsidy for travel, marriage, funeral, and hospitalization
- (b) Group parties
- (c) Birthday gift
- (d) Childbirth subsidy
- (e) Gifts for three major festivals
- (f)Scholarship for employees’ children
- (g)Other employee welfares
B. Advanced study, education, and training

The company appropriates 0.1% of its annual revenue for employee training, which is included in the annual corporate plan, holding regular courses on professional and management knowledge for employees at various positions and cultivating excellent talents with aggressive working attitude and innovative concept, according to training plans for various stages for their career.

In 2018, the company held courses on executive training, common knowledge, professional capability, and company policy, which boasted 17,199 persons of attendance, on top of 221 persons of attendance for outside courses. Every employee received 17.48 hours of training on average.

In order for executive training and succession of executive positions, the company sets managerial functions for basic-, middle- and high-level executives respectively and offers regular education for executives of each level. In addition, the company provides mentor counseling to match important executives' career planning to enhance their competency for succeeding positions of higher levels. The company in 2018 set up Corporate

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College, the company's own-use educational system, with management curriculums provided by College of Commerce under National Chengchi University for import executive managers selected by each business unit under the company. The curriculums focus on strategic planning, multinational management, global marketing, innovation management and new economics to strengthen trainees' commercial and operational management capability, and are intended to cultivate potential future business leaders. Among the trainees, 25 ones were under the company's 2018-2019 succession planning.

C. Retirement system and its implementation

The company has formulated “measures for labor retirement,” in compliance with legal requirements, according to which the company appropriate a certain amount of fund to be deposited into a specialized account at the Central Trust of China for care of employees after their retirement. For employees who embrace labor-pension system after July 1, 2005, the company appropriates a sum equivalent to 6% of their monthly pays, set according to an official pay scale, to their individual accounts at the Labor Insurance Bureau every month.

D. Labor-management agreements and protection measures for employee benefits

The company has enjoyed harmonious labor-management relationship, thanks to open-minded management style of executives and the understanding of company policy by laborers.

The company set up TECO employee welfare committee in April 1964, in charge of various employee welfare affairs, which was followed by the establishment of TECO labor union in July, 1974. In March 1980, the company’s factories initiated labor-management meeting, in order to boost working efficiency, improve labor conditions, and bridge the opinions of management and labor. The company has reported to the regulator for the establishment of those organizations, which have been functioning normally over the past years.

To safeguard the interests of both labor and management and assure their harmonious relationship, the company signed a group contract with representatives of the labor union on December 28, 1981, which was then forwarded to and approved by the regulator.

In 1999, the company was granted the “national good labor-management relationship business award” and “exemplary labor-management meeting award” by the Council of Labor Affairs and the “good labor-management relationship award” by the Taoyuan County government. In 2009, it passed the certification for healthy workplace by the Bureau of Health Promotion and in 2010 it was granted the award of “national manpower innovation” by the Council of Labor Affairs and “excellent award for healthy workplace” by Taipei city government, in 2012 it was awarded “2012 Corporate Citizen Award” by Common Wealth and was awarded “Happy Corporate Award” by Taiwan City Government in 2013, as well as “Employment Award” by Taoyuan County in 2015, in acknowledgement of the company’s effort in achieving a harmonious and co-prosperous relationship between labor and management. The company was granted an excellence enterprise award in resource recycle-based environmental protection by Taoyuan City Government in 2018.

E. Guidelines for employee behavior or ethics
a. To uphold the working order at workplace and clearly define the rights and obligations of labor and management, the company has formulated “employee working rules,” which has been approved by the regulator and publicized as the guidance for the company in employee management. The rules set out clear regulations on employees’ position, title, employment, leave, service, salary, reward and punishment, evaluation, promotion, welfare, layoff, compensation for vocational injuries, and retirement. The company expects every employee to do his/her best to contribute to the achievement of the company’s business goal and enhance his/her ethical standard. It, therefore, has formulated “behavioral guidelines,” with major contents including:
- (a) The staff in the implementation of the company's business, should avoid by means of its position in the company as of to themselves, spouse, parent, child or any other person to obtain improper benefits.
- (b) The company’s internal information (or information related to the company’s interest or business), be it in the aspect of technology, finance, or business, is the company’s business secret, for which employees have the obligation of confidentiality and cannot leak it to any outside party. In addition, after leaving

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the company, employees still have to abide by the confidentiality obligation according to the principle of integrity and refrain from leaking the company’s secrets or utilize them in engaging in illegal competition.

(c) Stake with customers: Employees should obey the lawand related regulation of the company to avoid inappropriate present under any other’s name or in any way. Trading with customers and suppliers sincerely fairly and transparently with steady, professional attitude.
(d) Political donation: Employees should not donate to or sponsor via other means political candidates under the name of the company or its affiliated institutions.
(e) Charitable donation: When making any charitable donation or sponsorship, staffers should check the outlet and purpose of such donation and sponsorship to make sure it doesn’t become bribery in disguise.
(f) Obligation of reporting and informing: The company encourages open communication with staffers and third parties, who can report or inform management or human-resources unit for any question, finding, unfair treatment at worksites, or violation of the guidelines, without vicious fabrication, though. The company will handle such reporting or informing confidentially and protect those who take part in the investigation.

Subjects of the reporting or informing should not revenge or threaten the informants, who can report any revenge, threat, or harassment to human-resources unit upon which the company will act instantly.

5.5.2 Status of the company’s staffers related to financial-information

transparency in securing certificates designated by the regulator.

License	Numberof People	Numberof People
	Financial Accounting	Auditing
CPA	3	1
CIA	1	1
Investment trust and consultingrepresentative	3

5.5.3 The company had not incurred any loss from labor-management dispute as of the date for the publication of the annual report and expects no such loss in the future.

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5.6 Important Contracts

Agreement	Counterparty	Period	Major contents	Restrictions
1. Agency contract	Yu-Shih electric and others, totaling 856 companies	One year after the starting of shipment, should any party fail to notify contrary opinion three months before the ending of the contract, the contract will be extended by one year automatically, an arrangement which will be repeatedafterwards.	Rights and obligations for agency for home appliances, electric motor, heavy electric products, power device and and air conditioners.	Nil
2. Project Undertaking	Eskyland & Kaohsiung Marriott Hotel	Based upon client’s schedule since 2017 1st quarter (estimated to Q2 2019)	New construction of E United Group 1. hydroelectric engineering 2. air conditioning engineering 3. power bus 4. Construction of switchboard in substation 5. Construction of emergency power generation	Nil
3. Project Undertaking	Taiwan Sugar Corp.	Starting from December 28th, 2018 (estimated to October 31st,2020)	Electric engineering project of Shalun smart & green residence	Nil
4. Joint venture agreement	Tong-An Invesment and Motech Energy System.	The contract comes into effect since March 5, 2018 to termination approved by 3 parties; or one party inform the others to terminate based upon the contract	Joint venture of 3 parties, SPV company for power generation and sales from solar.	Nil

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VI. Financial Information

6.1 Five-Year Financial Summary

6.1.1 Balance Sheet

A. Condensed Balance Sheet-IFRS

Unit: NT$thousand

Year Item	Year Item	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Year-to- date 2019.3.31
		2014	2015	2016	2017	2018
Current assets		12,849,769	10,117,285	10,599,153	9,781,308	10,343,772	N/A
Fixed assets		3,959,960	3,877,206	3,643,481	3,761,489	3,739,530
Intangible assets		0	0	0	0	0
Other assets		51,316,696	53,603,223	55,941,991	57,232,136	58,712,398
Total assets		68,126,425	67,597,714	70,184,630	70,774,933	72,795,700
Current liabilities	Before distribution	9,362,494	12,426,835	9,029,583	9,350,717	8,468,684
	After distribution	11,565,456	14,028,989	14,028,989	11,073,033	Note 1
Non current liabilities		9,493,858	7,706,837	11,423,480	9,594,451	10,648,356
Total liabilities	Before distribution	18,856,352	20,133,672	20,453,063	18,945,168	19,117,040
	After distribution	21,059,314	21,735,826	22,215,433	20,667,484	Note 1
Equity attriubutable to owners of parent		49,270,073	47,464,042	49,731,567	51,829,765	53,678,660
Capital stock		20,026,929	20,026,929	20,026,929	20,026,929	20,026,929
Capital surplus		7,600,552	7,638,417	7,671,889	7,628,542	7,647,215
Retained earnings	Before distribution	18,444,591	19,363,279	21,187,539	22,469,336	25,221,021
	After distribution	16,241,629	17,761,125	19,425,169	20,747,020	Note 1
Other equityinterest		3,519,564	756,980	1,166,773	2,026,521	1,105,058
TreasuryStocks		(321,563)	(321,563)	(321,563)	(321,563)	(321,563)
Non-ControllingInterest		0	0	0	0	0
Total shareholders’ equity	Before distribution	49,270,073	47,464,042	49,731,567	51,829,765	53,678,660
	After distribution	47,067,111	45,861,888	47,969,197	50,107,449	Note 1

Note 1: Earnings allocation has not yet to be passed by shareholders’ meeting.

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B. Consolidated Condensed Balance Sheet-IFRS

Unit: NT$thousand

Year Item	Year Item	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Year-to- date 2019.3. 31 (note2)
		2014	2015	2016	2017	2018
Current assets		43,275,334	42,292,402	45,296,310	44,262,768	43,760,371	44,121,114
Fixed assets		14,569,687	15,018,217	18,463,450	17,922,299	17,363,543	17,162,909
Intangible assets		174,250	5,541,844	5,636,766	5,612,315	5,557,343	5,333,841
Other assets		24,693,774	21,581,789	22,977,430	24,219,575	25,300,029	32,255,185
Total assets		82,713,045	84,434,252	92,373,956	92,016,957	91,981,286	98,873,049
Current liabilities	Before distribution	18,075,827	22,715,038	18,958,845	18,742,356	18,141,380	17,725,091
	After distribution	20,278,789	24,317,192	20,721,215	20,464,672	Note 1	Note 1
Non Current liabilities		11,348,496	10,286,710	17,690,568	15,400,464	15,348,991	20,610,889
Total liabilities	Before distribution	29,424,323	33,001,748	36,649,413	34,142,820	33,490,371	38,335,980
	After distribution	31,627,285	34,603,902	38,411,783	35,865,136	Note 1	Note 1
Equity attriubutable to owners of parent		49,270,073	47,464,042	49,731,567	51,829,765	53,678,660	55,798,754
Capital stock		20,026,929	20,026,929	20,026,929	20,026,929	20,026,929	20,026,929
Capital surplus		7,600,552	7,638,417	7,671,889	7,628,542	7,647,215	7,647,223
Retained earnings	Before distribution	18,444,591	19,363,279	21,187,539	22,469,336	25,221,021	25,607,657
	After distribution	16,241,629	17,761,125	19,425,169	20,747,020	Note 1	Note 1
Other equity interest		3,519,564	756,980	1,166,773	2,026,521	1,105,058	3,514,348
Treasury Stocks		(321,563)	(321,563)	(321,563)	(321,563)	(321,563)	(997,403)
Non-Controll Interesting	Before distribution	4,018,649	3,968,462	5,992,976	6,044,372	4,812,255	4,738,315
	After distribution	4,018,649	3,968,462	5,992,976	6,044,372	Note 1	Note 1
Total shareholders’ equity	Before distribution	53,288,722	51,432,504	55,724,543	57,874,137	58,490,915	60,537,069
	After distribution	51,085,760	49,830,350	53,962,173	56,151,821	Note 1	Note 1

Note 1: Earnings allocation has not yet to be passed by shareholders’ meeting. Note 2: Financial data (consolidated) as of March 31, 2019 had been audited by certified public accountants.

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6.1.2 Condensed Statement of Income

A. Condensed Statement of Income-IFRS

Unit: NT$thousand

Year Item	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Year-to-date 2019.3.31
	2014	2015	2016	2017	2018
Operatingrevenue	24,256,762	21,809,717	20,274,047	21,301,208	20,879,719	N/A
Grossprofit	5,374,654	4,846,552	4,739,556	4,576,185	4,372,944
Income from operations	1,949,849	1,617,491	1,615,152	1,507,068	1,410,943
Non-operating income & expenses	2,497,774	1,888,953	2,007,272	1,797,400	1,883,866
Income from operations of continued segments - before tax	4,447,623	3,506,444	3,622,424	3,304,468	3,294,809
Income from operations of continued segments- after tax	4,062,960 0	3,177,291 0	3,481,480 0	3,092,358 0	3,150,089 0
Income from discontinued departments	4,062,960	3,177,291	3,481,480	3,092,358	3,150,089
Net income	4,385,963	(2,818,225)	354,727	811,557	402,449
Other Comprehensive Income for the year Other Comprehensive Incomefor the year	8,448,923 4,062,960	359,066 3,177,291	3,836,207 3,481,480	3,903,915 3,092,358	3,552,538 3,150,089
Total Comprehensive Income for theyear	0	0	0	0	0
Total Comprehensive Income for the year profit (loss) attributable to owners ofparent	8,448,923	359,066	3,836,207	3,903,915	3,552,538
Total Comprehensive Income for the year profit (loss) attributable to non-controllinginterest	0	0	0	0	0
Extraordinary gain or loss	2.05	1.60	1.76	1.56	1.59
Cumulative effect of accounting principle changes	24,256,762	21,809,717	20,274,047	21,301,208	20,879,719
Earningsper share	5,374,654	4,846,552	4,739,556	4,576,185	4,372,944

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B. Consoladated Condensed Statement of Income-IFRS

Unit: NT$thousand

Year Item	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Five-Year Financial Summary	Year-to-date 2019.3.31 (Note 1)
	2013	2014	2016	2017	2018
Operatingrevenue	53,748,466	48,598,573	49,923,836	50,942,521	50,104,927	11,707,047
Grossprofit	13,391,803	12,400,311	13,134,395	12,196,268	12,052,674	2,904,711
Income from operations	4,422,836	3,787,627	4,189,481	3,496,200	3,520,486	926,078
Non-operating income & expenses	1,277,135	775,644	743,810	857,704	765,802	43,354
Income from operations of continued segments - before tax	5,699,971	4,563,271	4,933,291	4,353,904	4,286,288	969,432
Income from operations of continued segments - after tax	4,402,267	3,514,116	4,036,998	3,544,248	3,475,969	706,422
Income from discontinued departments	0	0	0	0	0	0
Net income	4,402,267	3,514,116	4,036,998	3,544,248	3,475,969	706,422
Other Comprehensive Income for theyear	4,589,906	(2,953,958)	323,292	781,789	433,011	2,488,218
Total Comprehensive Income for theyear	8,992,173	560,158	4,360,290	4,326,037	3,908,980	3,194,640
Total Comprehensive Income for the year profit (loss) attributable to owners ofparent	4,062,960	3,177,291	3,481,480	3,092,358	3,150,089	634,584
Total Comprehensive Income for the year profit (loss) attributable to non-controllinginterest	339,307	336,825	555,518	451,890	325,880	71,838
Extraordinary gain or loss	8,448,923	359,066	3,836,207	3,903,915	3,552,538	3,065,154
Cumulative effect of accounting principle changes	543,250	201,092	524,083	422,122	356,442	129,486
Earningsper share	2.05	1.60	1.76	1.56	1.59	0.32

Note 1: Financial data (consolidated) as of March 31, 2019 had been audited by certified public accountants.

6.1.3 Auditors’ Opinions from 2014 to 2018

Year	CPA Firm	CPA's Name	AuditingOpinion
2018	PricewaterhouseCoopers, Taiwan	Wu, Yu-Lung Chou, Chien-Hung	Unqualified Opinion
2017	PricewaterhouseCoopers, Taiwan	Wu, Yu-Lung Chou, Chien-Hung	Unqualified Opinion
2016	PricewaterhouseCoopers, Taiwan	Audrey Tseng DexterChang	Modified Unqualified Opinion
2015	PricewaterhouseCoopers, Taiwan	Audrey Tseng DexterChang	Modified Unqualified Opinion
2014	PricewaterhouseCoopers, Taiwan	Audrey Tseng Dexter Chang	Modified Unqualified Opinion

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6.2 Five-Year Financial Analysis

6.2.1 Five-Year Financial Analysis-IFRS

Item	Year	Financial analysis in thepast fiveyears	Financial analysis in thepast fiveyears	Financial analysis in thepast fiveyears	Financial analysis in thepast fiveyears	Financial analysis in thepast fiveyears	Year-to-date 2019.3.31
		2014	2015	2016	2017	2018
Financial structure (%)	Ratio of liabilities to assets	27.75	29.78	29.14	26.77	26.26	N/A
	Ratio of long-term capital to fixed	1,417.72	1,354.68	1,603.47	1,566.42	1,656.05
	assets
Solvency (%)	Current ratio	137.25	81.41	117.38	104.60	122.14
	Quick ratio	93.80	51.71	71.64	67.15	74.89
	Times interest earned ratio	47.76	31.27	30.34	36.02	35.78
Operating ability	Accounts receivable turnover	6.64	5.24	5.01	5.30	5.63
	(turns)
	Average collectionperiod	54.97	69.66	72.85	68.87	64.83
	Inventoryturnover(turns)	5.41	5.20	4.89	5.43	5.58
	Accountspayable turnover(turns)	3.68	3.71	3.50	3.46	3.59
	Average days in sales	67.47	70.19	74.64	67.22	65.41
	Fixed assets turnover(turns)	6.42	5.57	5.39	5.75	5.57
	Total assets turnover(turns)	0.38	0.32	0.29	0.30	0.29
Profitability	Return on total assets(%)	6.48	4.82	5.20	4.50	4.49
	Return on stockholders' equity (%)	8.83	6.57	7.16	6.09	5.97
	Ratio of pre-tax income to issued	22.23	17.51	18.09	16.50	16.45
	capital(Note7)
	Profit ratio(%)	16.77	14.57	17.17	14.52	15.09
	Earningsper share($)	2.05	1.60	1.76	1.56	1.59
Cash flow	Cash flow ratio(%)	32.69	21.81	25.78	30.30	14.06
	Cash flow adequacyratio(%)	98.75	86.16	81.11	76.63	67.68
	Cash reinvestment ratio(%)	1.27	0.80	1.03	1.52	-0.79
Leverage	Operatingleverage	3.40	3.68	3.49	3.68	3.77
	Financial leverage	1.05	1.08	1.08	1.07	1.07
Key Indicator	Salesgrowth(%)	-5.26	-10.09	-7.04	5.07	-1.98
	Profit after taxgrowth(%)	8.17	-21.80	9.57	-11.18	1.87

Explain changes in various financial rates, as well as reasons, in recent two years.

A.Cash flow ratio declined, due to the decreasing net operating cash inflow this year.

B. Cash flow adequacy ratio declined, due to the decreasing net operating cash inflow in recent five years.

C. Cash reinvestment ratio declined, due to the decreasing net operating cash inflow this year.

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6.2.2 Consoladated Five-Year Financial Analysis-IFRS

	Year	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Financial analysis in the past five years	Year-to-date 2019.3.31 (Note1)
Item		2014	2015	2016	2017	2018

Financial	Ratio of liabilities to assets	35.68	39.09	39.68	37.10	36.41	38.77
structure(%)	Ratio of long-term capital to fixed assets	408.75	377.76	369.12	381.31	398.75	418.48
	Current ratio	238.59	186.19	238.92	236.16	241.22	248.92
Solvency (%)	Quick ratio	168.66	129.42	170.96	168.32	168.39	173.45
	Times interest earned ratio	27.07	22.99	19.47	19.18	20.66	14.73
	Accounts receivable turnover(turns)	5.15	4.62	4.37	4.42	4.64	4.47
	Average collectionperiod	70.87	79.00	83.52	82.58	78.66	81.66
	Inventoryturnover(turns)	3.28	2.90	2.98	3.19	3.11	2.88
Operating ability	Accountspayable turnover(turns)	5.15	4.99	5.03	4.94	4.84	4.77
	Average days in sales	111.28	125.86	122.48	114.42	117.36	126.74
	Fixed assets turnover(turns)	3.60	3.29	2.98	2.80	2.84	2.71
	Total assets turnover(turns)	0.67	0.58	0.56	0.55	0.54	0.49
	Return on total assets(%)	5.75	4.41	4.82	4.06	3.97	3.20
	Return on stockholders' equity (%)	8.82	6.71	7.53	6.24	5.97	4.75
	Ratio of Pre-tax income to issued capital				21.74	21.40	19.36
Profitability		28.48	22.79	24.63
	(%) (Note7)

	Profit ratio(%)	8.19	7.23	8.09	6.96	6.94	6.03
	Earningsper share($)	2.05	1.60	1.76	1.56	1.59	0.32
	Cash flow ratio(%)	26.38	24.40	25.58	31.43	23.86	(6.17)
Cash flow	Cash flow adequacyratio(%)	111.64	118.38	117.84	122.23	116.89	109.73
	Cash reinvestment ratio(%)	3.03	3.86	3.26	4.12	2.57	(1.10)
	Operatingleverage	3.56	3.79	3.57	4.74	3.96	3.59
Leverage
	Financial leverage	1.05	1.06	1.07	1.07	1.07	1.08

Key Indicator	Salesgrowth(%)	-4.94	-9.58	2.73	2.04	-1.64	-3.69
	Profit after taxgrowth(%)	5.48	-20.17	14.88	-12.21	-1.93	19.42

Explain changes in various financial rates, as well as reasons, in recent two years. A. Cash flow ratio declined, due to cash flow from operating activities this year is less than last year. B.Cash reinvestment ratio rose, due to cash flow from operating activities this year is less than last year.

Note 1: Financial data (consolidated) as of March 31, 2019 had been audited by certified public accountants.

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6.3 Inspection Report of Audit Committee

(This English version is only a translation of the Chinese version.)

The Audit Committee has duly inspected and approved the financial statements for 2018 (include consolidated financial statements), the business report and proposed profit distribution plan prepared and proposed by the Board of Directors, with the financial statements having been audited and certified by Pricewaterhouse Coopers, hereby submit this report pursuant to Article 14 of Securities and Exchange Act and Article 219 of the Company Act.

General Shareholders Meeting 2019

TECO Electric & Machinery Co., Ltd

Audit Committee Convener：Ting-Wong, Cheng

Date: March 26, 2019

��

��

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To TECO Electric & Machinery Co., Ltd.

Opinion

We have audited the accompanying parent company only balance sheets of TECO Electric & Machinery Co., Ltd. as at December 31, 2018 and 2017, and the related parent company only statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and notes to the parent company only financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the audit reports of other independent accountants, as described in the other matter section of our report, the parent company only financial statements present fairly, in all material respects, the financial position of TECO Electric & Machinery Co., Ltd. as of December 31, 2018 and 2017, and its financial performance and cash flows for the years then ended, in accordance ��

Basis for opinion

�� Financial Statements by Certified Public A�� the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Code of Professional Ethics for �� ethical responsibilities in accordance with the Code. Based on our audits and audit reports of other independent accountants, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only financial statements as a whole and, in forming our opinion thereon, we do not provide a separate opinion on these matters.

��

Revenue recognition of export sales of heavy industrial products group

Description

Refer to Note 4(31) of the parent company only financial statements for the accounting policies on revenue recognition. Heavy industrial products group handles the manufacturing and sales of various machinery, equipment and motors. Aside from domestic sales in Taiwan, the customers of heavy industrial products group are from China, America, Southeast Asia and Europe and the sales terms vary for different customers. Thus, we consider the revenue recognition of export sales of heavy industrial products group as a key audit matter.

How our audit addressed the matter

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

Obtained an understanding of and validated the internal controls over revenue recognition of export sales of heavy industrial products group to assess the effectiveness of the internal control process.
Validated selected samples of export sales revenue transactions of heavy industrial products group to confirm the existence of export sales revenue transactions.

Investment accounted for under equity method – impairment assessment of premium generated from the acquisition of subsidiaries

Description

goodwill was NT$5,207,755 thousand. Refer to Note 4(18) of the parent company only financial statement for the accounting policies on the impairment of non-financial assets and Note 5(2) for the uncertainty of the accounting estimate regarding impairment of investment in premium. TECO Electric & Machinery Co., Ltd. assesses the impairment of investment in premium using the recoverable amount generated from the cash flow forecast discounted using a reasonable discount rate.

The aforesaid recoverable amount includes several assumptions such as the discount rate used and the preparation of financial projections to estimate the cash flows for the next three years. The discount rate and financial projections relating to the future operations of Motovario S.p.A. are subject to management judgement which have a significant impact on the measurement of the recoverable amount, thus affecting �� assessment of investments accounted for under equity method as a key audit matter.

How our audit addressed the matter

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

�� goodwill impairment assessment.
Assessed whether the future cash flows adopted in the valuation model was in accordance with �� by management.
Evaluated the reasonableness of major assumptions (including the expected growth rate and discount rate) used in the model.
Reviewed the sensitivity analysis for the above significant assumptions and parameters prepared by management and confirmed whether management has adequately addressed the possible impact of the estimation uncertainty on the impairment assessment.

Reclassification from investments accounted for under equity method - subsidiaries into associates due to loss of control

��

�� TECO Electric & Machinery

Co., Ltd.��TECO Electric & Machinery Co., Ltd.��

��

Other matter – Reports of other independent accountants

As described in Notes 6(6) of the parent company only financial statements, we did not audit the financial

statements of certain investee accounted for under the equity method. Those financial statements were audited by other independent accountants, whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements and the information on the investee disclosed in Note 13 was based solely on the reports of other independent accountants. The investments accounted for under the equity method amounted to NT$4,076,536 thousand and NT$4,043,134 thousand, both constituting 6% of the related total assets as of December 31, 2018 and 2017, respectively, and the comprehensive income amounting to NT$176,754 thousand and NT$89,767 thousand, constituting 5% and 2% of the total comprehensive income for the years then ended, respectively.

Responsibilities of management and those charged with governance for the parent company only financial statements

Management is responsible for the preparation and fair presentation of the parent company only financial �� ecessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the C�� concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the Audit Committee, are responsible for overseeing the ��

Auditor’s responsibilities for the audit of the parent company only financial statements

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee

that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.

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

Identify and assess the risks of material misstatement of the parent company only financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
Obtain an understanding of internal controls 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 ��
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriat�� and, based on the audit evidence obtained, whether a material uncertainty exists related to events ��ing concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause TECO Electric & Machinery Co., Ltd. to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within TECO Electric & Machinery Co., Ltd. to express an opinion on the parent company only 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

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NewStandards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

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

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

105

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Annual improvements to IFRSs 2014-2016 cycle-Amendments to IFRS 12, �Disclosure of interests in other entities� Annual improvements to IFRSs 2014-2016 cycle-Amendments to IAS 28, �Investments in associates and joint ventures�	January 1, 2017 January 1, 2018

��

��

A. ��
��Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.
�� The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
��
B. ��
��
- The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps: Step 1: Identify contracts with customer.
- Step 2: Identify separate performance obligations in the contract(s)

106

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price.

Step 5: Recognise revenue when the performance obligation is satisfied.

Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

(b)��

Affected items January 1, 2018 Contract assets Construction contracts receivable Total affected assets Contract liabilities Construction contracts payable Other current liabilities Total affected liabilities	Book value under Adjustment previous for initial application revenue standard of IFRS15 - $ 836,338 $ 836,338 836,338) ( 836,338 $ - $ - $ 272,330 $ 164,333 164,333) ( 224,744 107,997) ( 389,077 $ - $	Adjusted amount after IFRS15 adoption 836,338 $ - 836,338 $ 272,330 $ - 116,747 389,077 $	Remark
			(a) (a) (a)(b) (a) (b)

i. Presentation of assets and liabilities in relation to contracts with customers
In line with IFRS 15 requirements, the Company changed the presentation of certain accounts in the balance sheet as follows:
(a) Under IFRS 15, net outcome of contract revenue, received amount and receivables in relation to construction contracts are recognized in contract assets (liabilities). Progress billings on each construction contract and the net outcome of recognized cost and profit (loss) in previous reporting period are recognized in receivables from (payables to) �� As a result of above stated differences, receivables from customers on construction contracts and payables to customers on construction contracts were decreased by $836,338 and $164,333, respectively, and contract assets and contract liabilities were increased by $836,338 and $164,333, respectively, on January 1, 2018.
(b) Under IFRS 15, liabilities in relation to sales contracts are recognized as contract liabilities, but were previously presented as advance sales receipts in the balance sheet. As of January 1, 2018, the balance amounted to $107,997.

107

ii. Please refer to Note 12(4) for other disclosures in relation to the first application of IFRS 15.

(2) ��

��

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

Except for the following, the above standards and interpretations have no significant impact to the �� quantitative impact will be disclosed when the assessment is complete.

��

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

��expects�� $90,869 and $92,022�� $305,667 and $306,820��

(3) ��

��

108

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

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(1) ��

The financial statements have been prepared in accordance w��

(2) ��

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�� critical accounting estimates. It also requires management to exercise its judgment in the process �� or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
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��Financial assets at fair value through profit or loss are financial assets that are not measured at amortized cost or fair value through other comprehensive income��
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115

Buildings and structures 10 � 50 years Machinery and equipment 3 � 15 years Transportation equipment 3 � 5 years Other equipment 2 � 15 years Leasehold assets 3 � 5 years Leasehold improvements 3 � 5 years

(15) ��
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116

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A. Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in profit or loss over the period of the borrowings using the effective interest method.
B. ��
(20) ��
A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. ��
(21) ��
��Financial liabilities are classified in this category of held for trading. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges.�
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(22) ��
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117

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ii. ��
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- �� Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Company calculates the number of shares based on the closing price at the previous day of the board meeting resolution.
(28) ��
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119

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(30) ��
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(31) ��
��Sales of goods�wholesale
- �� The Company manufactures and sells various types of mechanical equipment, airconditioning units and electronic equipment products.. Sales are recognized when control of the products has transferred, being when the products are delivered to the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no

120

  - ����������������������������������������������������������������������������������������������� occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.

��Electronic and machinery, electronic equipment and power generation equipment are often sold with volume discounts based on aggregate sales over a 12-month period. Revenue from these sales is recognized based on the price specified in the contract, net of the estimated volume discounts and sales discounts and allowances. Accumulated experience is used to estimate and provide for the volume discounts and sales discounts and allowances, using the expected value method, and revenue is only recognized to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognized for expected volume discounts and sales discounts and allowances payable to customers in relation to sales made until the end of the reporting period. The sales are made with a credit term of 30 days, ��
�� terms is recognized as a provision.
(d) A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.
��Installation and construction service of electrification products
(a) The Company provides installation and construction service of electrification products. Revenue from providing services is recognized in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognized based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided. This is determined based on the actual cost spent relative to the total cost. The customer pays at the time specified in the payment schedule. If the services rendered exceed the payment, a contract asset is recognized. If the payments exceed the services rendered, a contract liability is recognized.
(b) Some contracts include sales and installation services of equipment. The equipment and the installation services provided by the Company are not distinct and are identified to be one performance obligation satisfied over time since the installation services involve significant customisation and modification. The Company recognises revenue on the basis of costs incurred relative to the total expected costs of that performance obligation. Conversely, the Company recognises revenue at an amount equal to the cost of a good if the good is not

121

distinct and its cost is significant relative to the total expected costs, the customer is expected to obtain control of the good significantly before receiving services related to the good, and the Company procures the good from a third party and is not involved in designing and manufacturing the good by acting as a principal.

(c) �� a performance obligation is subject to a revision whenever there is a change in circumstances. Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss during the period when the management become aware of the changes in circumstances.
�� costs of obtaining a contract
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122

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(1) ��

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Cash on hand and revolving funds Checking accounts and demand deposits Time deposits and notes issued under repurchase agreement	December 31,2018 306 $ 916,396 316,094 1,232,796 $	December 31,2017
		275 $ 738,110 148,800
		887,185 $

��
��
��$16,308 and $8,157� ��

123

(2) ��

��
Items	December 31,2018 879,780 $ 811,774 192,807 1,884,361 48,571) (
Current items: Financial assets mandatorily measured at fair value through profit or loss Listed and OTC stocks Emerging stocks Money Market Fund Valuation adjustment
		1,835,790 $

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

Financial assets mandatorily measured at fair value through profit or loss Equity instruments	For the year ended December 31,2018 103,280) ($

��As of December 31, 2018, for the transaction and contract of derivative instruments not held for hedge, please refer to Note 6(11).
��Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).
��

(3) ��

Items Non-current items: Listed and OTC stocks Non-listed and OTC stocks Valuation adjustment	December 31,2018
	5,229,631 $ 32,151
	5,261,782 721,679
	5,983,461 $

A. The Company has elected to �� steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to$5,983,461 as at December 31, 2018.
B. Amounts recognized in other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

124

For the year ended December 31, 2018

Equity instruments at fair value through

Equity instruments at fair value through	For the year ended December 31,2018
other comprehensive income Fair value change recognized in other comprehensive income Cumulative gains (losses) reclassified to retained earnings due to derecognition Dividend income recognised in profit or loss Held at end of year Derecognised during the year	1,251,661 $
	659,293 $
	155,889
	- $

C. The Company has no financial assets at fair value through other comprehensive income pledged to others.
D. ��

(4) ��

Notes receivable Less: Allowance for bad debts Accounts receivable Less: Allowance for bad debts	December 31,2018 406,437 $ ( 703) 405,734 $ 1,556,001 ( 27,109) 1,528,892 $	December 31,2017 289,964 $ ( 725) 289,239 $ 1,594,388 ( 26,759) 1,567,629 $

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

ollows:
Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December 31,2018 1,321,932 $ 256,184 83,583 47,159 225,768 1,934,626 $	December 31,2017
		1,416,391 $ 110,434 41,644 13,060 275,339
		1,856,868 $

The above ageing analysis was based on past due date.

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

125

(5) ��

��
Raw materials Work in progress Finished goods Inventory in transit Raw materials Work in progress Finished goods Inventory in transit		December 31,2018
	Cost 830,044 $ 499,395 1,576,129 115,704 3,021,272 $	Allowance for valuation loss 82,142) ($ 3,074) ( 177,415) ( - ($262,631) December 31,2017	Book value
			747,902 $ 496,321 1,398,714 115,704
			2,758,641 $

	Cost 774,227 $ 417,222 1,490,107 217,486 2,899,042 $		Book value
			726,348 $ 417,195 1,251,464 217,486
			2,612,493 $

�� $13,741,971 and $13,974,811��$82,454 and $61,427��

126

(6) ��

Subsidiaries: 1.Teco International Investment Co., Ltd. 2.Teco Holding USA Inc. 3.Teco Electric & Machinery (Pte) Ltd. 4.Tong-An Investment Co., Ltd. 5.United View Global Investment Co., Lt 6.Micropac Worldwide Investment (BVI) 7.Tong-An Assets Management & Development Co., Ltd. 8.Eagle Holding Co. 9.Century Development Corporation 10.Others Associates: 1. Tung Pei Industrial Co., Ltd. 2. Lien Chang Electronic Enterprise Co., Ltd. 3. Kuen Ling Machinery Refrigerating Co., Ltd. (Note 1) 4. Others Joint Venture: 1. Senergy Wind Power Co., Ltd. (Note 2) 2. ROTECO (Note 3) Less: Credit balance of long- term investments (gross amount before offset of notes receivable-related parties, accounts receivable -related parties, other receivables-related parties and other non-current liabilities) Less: Credit balance of investments accounted for using equity method	Subsidiaries: 1.Teco International Investment Co., Ltd. 2.Teco Holding USA Inc. 3.Teco Electric & Machinery (Pte) Ltd. 4.Tong-An Investment Co., Ltd. 5.United View Global Investment Co., Lt 6.Micropac Worldwide Investment (BVI) 7.Tong-An Assets Management & Development Co., Ltd. 8.Eagle Holding Co. 9.Century Development Corporation 10.Others Associates: 1. Tung Pei Industrial Co., Ltd. 2. Lien Chang Electronic Enterprise Co., Ltd. 3. Kuen Ling Machinery Refrigerating Co., Ltd. (Note 1) 4. Others Joint Venture: 1. Senergy Wind Power Co., Ltd. (Note 2) 2. ROTECO (Note 3) Less: Credit balance of long- term investments (gross amount before offset of notes receivable-related parties, accounts receivable -related parties, other receivables-related parties and other non-current liabilities) Less: Credit balance of investments accounted for using equity method	December 31,2018 1,064,316 $ 9,858,588 3,302,731 7,997,267 7,489,862 1,451,867 5,252,807 4,311,420 1,377,232 3,346,998 45,453,088 2,087,582 $ 440,000 347,255 163,985 3,038,822 - - - 48,491,910 ( 614,532) 47,877,378 ( 79,804) 47,797,574 $	December 31,2017
			1,156,169 $ 9,166,670 3,159,088 8,587,611 7,389,874 1,521,289 5,296,447 4,131,154 1,344,150 3,488,922
			45,241,374
			2,045,704 $ 526,975 - 175,826
			2,748,505
			169,815 5,757
			175,572
			48,165,451 ( 653,779)
			47,511,672 ( 83,828)
			47,427,844 $

127

��

For the year ended
December 31,2018
Subsidiaries:
1.Teco Holding USA Inc.
576,350
$ 2.Teco Electric & Machinery (Pte) Ltd.
137,869
3.Tong-An Investment Co., Ltd.
181,547
4.United View Global Investment Co., L
247,200

5.Eagle Holding Co.
205,744
6.Others
480,016
$ 1,828,726

Associates:
1. Tung Pei Industrial Co., Ltd.
174,843
$ 3. Lien Chang Electronic Enterprise
Co., Ltd.
64,244)
(

4.Kuen Ling Machinery
Refrigerating Co., Ltd.
41,264
5. Others
2,630
154,493
Joint Venture:
1. Senergy Wind Power Co., Ltd.
(Note 1)
-

2. Others (Note 2)
-

-

$ 1,983,219

For the year ended
December 31,2017

394,871
$ 251,563
405,409
233,098)
(
116,775
542,876
$ 1,478,396
193,260
$ 13,165)
(
-
3,045
183,140
7,427)
(
5,767)
(
13,194)
(
$ 1,648,342

��
��
��
��Subsidiaries�
�� For the years ended December 31, 2018 and 2017, partial investments accounted for using equity method are valued based on the financial statements aud�� independent accountants. Gain on investment accounted for using equity method and other comprehensive income, net were $176,754 and $89,767 for the years ended December 31,

128

2017 and 2016, respectively. The related balance of investment accounted for using equity method was $4,076,536 and $4,043,134 as of December 31, 2018 and 2017, respectively.�

�� Tong-An Investment Co., Ltd. and others, totalling $321,563 (22,443 thousand shares), were transferred from the investments accounted for using equity method to treasury stock.
��Please refer to Note 4(3) of the 2018 consolidated financial statements for related information about subsidiaries of the Company.
��
(a) ��

Shareholding ratio

Company name	Principal place of business	December 31, 2018	December 31, 2017	Nature of relationship	Method of measurement
Tung Pei Industrial Co., Ltd. Lien Chang Electronic Enterprise Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd. (Note)	R.O.C R.O.C R.O.C	31.14% 33.84% 17.61%	31.14% 33.84% 19.98%	Financial investment � �	Equity method Equity method Equity method

��
��
(b) ��

129

��

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		TungPei IndustrialCo.,Ltd.
		December 31,2018		December 31,2017
Current assets	$	5,460,372	$	5,420,336
Non-current assets		7,845,439		7,841,618
Current liabilities	(	3,716,167)	(	3,491,249)
Non-current liabilities	(	2,144,772)	(	2,431,291)
Total assets	$	7,444,872	$	7,339,414
Share in associate�s net
assets	$	2,087,582	$	2,045,704
Goodwill		-		-
Carrying amount of the
associate	$	2,087,582	$	2,045,704
		LienChangElectronic EnterpriseCo.,Ltd.
		December 31,2018		December 31,2017
Current assets	$	1,684,611	$	1,687,297
Non-current assets		603,290		682,745
Current liabilities	(	948,729)	(	764,895)
Non-current liabilities	(	39,090)	(	48,077)
Total assets	$	1,300,082	$	1,557,070
Share in associate�s net
assets	$	440,000	$	526,975
Goodwill		-		-
Carrying amount of the
associate	$	440,000	$	526,975
		Kuen LingMachinery	Refrigerating Co.,Ltd
		December 31,2018		December 31,2017
Current assets	$	1,972,061	$	1,757,267
Non-current assets		617,860		630,524
Current liabilities	(	955,868)	(	816,774)
Non-current liabilities	(	163,951)	(	152,935)
Total assets	$	1,470,102	$	1,418,082
Share in associate�s net
assets	$	241,171	$	262,887
Goodwill		106,084		73,560
Carrying amount of the
associate	$	347,255	$	336,447

130

��

��
		TungPei IndustrialCo.,Ltd.
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Revenue	$	7,913,408	$	7,173,122
Profit for the period from
continuing operations	$	564,485	$	629,397
Other comprehensive loss, net of tax	(	74,911)	(	157,344)
Total comprehensive income	$	489,574	$	472,053
Dividends received from associates	$	117,435	$	78,290
		LienChangElectronic EnterpriseCo.,Ltd.
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Revenue	$	2,428,431	$	2,303,239
(Loss) profit for the period from continuing operations	($	189,823)	($	38,262)
Other comprehensive loss, net of tax	(	67,165)	(	3,017)
Total comprehensive (loss) income	($	256,988)	($	41,279)

Dividends received from associates	$	-	$	28,907
		Kuen LingMachinery	RefrigeratingCo.,Ltd
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Revenue	$	2,975,329	$	2,692,408
Profit for the period from continuing operations	$	214,794	$	196,063
Other comprehensive loss, net of tax	(	9,266)	(	27,554)
Total comprehensive income	$	205,528	$	168,509
Dividends received from associates	$	30,223	$	33,481

��

�� $163,985 and $175,826��

Profit for the period from continuing operations Total comprehensive income	For the year ended December 31,2018 2,630 $ 2,630 $	For the year ended December 31,2017
		3,045 $
		3,045 $

131

(d) ��

��
1.Lien Chang Electronic Enterprise Co., Ltd. 2.Kuen Ling Machinery Refrigerating Co., Ltd.	December 31,2018 $ 334,125 410,304 744,429 $	December 31,2017
		$ 583,781 -
		583,781 $

��

��

Shareholding ratio Principal Company place of December December Nature of Method of name business 31, 2018 31, 2017 relationship measurement Senergy Wind R.O.C - 50.00% Joint Equity method Power Co., venture Ltd. (Note)

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		Senergy Wind	PowerCo.,Ltd.
		December 31,2018		December 31,2017
Cash and cash equivalents	$	-	$	339,587
Other current assets		-		1,004
Current assets		-		340,591
Non-current assets		-		53
Total assets		-		340,644
Current liabilities		-	(	1,000)
Total liabilities		-	(	1,000)
Total net assets	$	-	$	339,644
Share in joint venture�s
net assets	$	-	$	169,825
Goodwill		-		-
Carrying amount of the
joint venture	$	-	$	169,825
��

132

��

Revenue Depreciation and amortization Interest income Interest expense Profit before income tax Income tax Profit (loss)-net of tax Total comprehensive income Dividends received from joint venture	Senergy WindPowerCo.,Ltd.	Senergy WindPowerCo.,Ltd.
	For the year ended For the year ended December31,2018 September30,2017 - $ - $ - $ 42) ($ - $ 5,932 $ - $ - $ - $ 143,204) ($ - $ 471) ($ - $ 143,675) ($ - $ 143,675) ($ - $ - $	For the year ended September30,2017
		- $
		42) ($
		5,932 $
		- $
		143,204) ($
		471) ($
		143,675) ($

��
��

Loss for the period from continuing operations Total comprehensive loss	For the year ended For the year ended December31,2018 December31,2017 - $ 5,767) ($ - $ 5,767) ($

��
��

133

	Total		13,025,504 $			9,264,015) (	3,761,489 $			3,761,489 $	333,931	65,061) (	64,305	355,134) (	3,739,530 $		12,382,370 $			8,642,840) (	3,739,530 $
	Rental assets		870,492 $			741,719) (	128,773 $			128,773 $	-	-	79,870) (	9,484) (	39,419 $		656,797 $			617,378) (	39,419 $
Miscellaneous	equipment		3,879,633 $			3,239,061) (	640,572 $			640,572 $	179,530	41,677) (	54,573	172,894) (	660,104 $		3,698,390 $			3,038,286) (	660,104 $
Leasehold	improvements		131,154 $			101,640) (	29,514 $			29,514 $	12,677	299) (	-	18,018) (	23,874 $		141,121 $			117,247) (	23,874 $
Transportation	equipment		5,047 $			3,666) (	1,381 $			1,381 $	572	109) (	-	484) (	1,360 $		4,863 $			3,503) (	1,360 $
Machinery and	equipment		5,017,032 $			4,476,195) (	540,837 $			540,837 $	139,452	22,168) (	25,297	122,403) (	561,015 $		4,797,238 $			4,236,223) (	561,015 $
Buildings and	structures		1,485,582 $			667,037) (	818,545 $			818,545 $	1,700	1) (	64,305	31,851) (	852,698 $		1,448,204 $			595,506) (	852,698 $
	Land	At January 1, 2018	Cost 1,636,564 $	Accumulated	depreciation and	impairment 34,697) (	1,601,867 $	2018	Opening net book	amount 1,601,867 $	Additions -	Disposals 807) (	Reclassifications -	Depreciation charge -	Closing net book amount 1,601,060 $	At December 31, 2018	Cost 1,635,757 $	Accumulated	depreciation and	impairment 34,697) (	1,601,060 $

134

Buildings and Machinery Transportation Leasehold Miscellaneous	Land structures and equipment equipment improvements equipment Rental assets Total	At January 1, 2017	Cost 1,636,564 $ 1,481,532 $ 4,842,953 $ 5,047 $ 111,035 $ 3,887,344 $ 861,917 $ 12,826,392 $	Accumulated	depreciation and	impairment 34,697) ( 633,872) ( 4,493,421) ( 3,160) ( 84,553) ( 3,200,979) ( 732,229) ( 9,182,911) (	1,601,867 $ 847,660 $ 349,532 $ 1,887 $ 26,482 $ 686,365 $ 129,688 $ 3,643,481 $	2017	Opening net book	amount 1,601,867 $ 847,660 $ 349,532 $ 1,887 $ 26,482 $ 686,365 $ 129,688 $ 3,643,481 $	Additions - 4,050 304,037 - 20,119 141,836 - 470,042	Disposals - - 4,079) ( - - 19,691) ( - 23,770) (	Reclassifications - - 7,769) ( - - 806) ( 8,575 -	Depreciation charge - 33,165) ( 100,884) ( 506) ( 17,087) ( 167,132) ( 9,490) ( 328,264) (	Closing net book amount 1,601,867 $ 818,545 $ 540,837 $ 1,381 $ 29,514 $ 640,572 $ 128,773 $ 3,761,489 $	At December 31, 2017	Cost 1,636,564 $ 1,485,582 $ 5,017,032 $ 5,047 $ 131,154 $ 3,879,633 $ 870,492 $ 13,025,504 $	Accumulated	depreciation and impairment 34,697) ( 667,037) ( 4,476,195) ( 3,666) ( 101,640) ( 3,239,061) ( 741,719) ( 9,264,015) (	1,601,867 $ 818,545 $ 540,837 $ 1,381 $ 29,514 $ 640,572 $ 128,773 $ 3,761,489 $	��	��	��	135

135

(8) ��

At January 1, 2018 Cost Accumulated depreciation and impairment 2018 Opening net book amount Reclassifications (transfer during the year) Depreciation charge Closing net book amount At December 31, 2018 Cost Accumulated depreciation and impairment At January 1, 2017 Cost Accumulated depreciation and impairment 2017 Opening net book amount Depreciation charge Closing net book amount At December 31, 2017 Cost Accumulated depreciation and impairment	Land 1,162,511 $ - 1,162,511 $ 1,162,511 $ - - 1,162,511 $ 1,162,511 $ - 1,162,511 $ Land 1,162,511 $ - ( 1,162,511 $ 1,162,511 $ - ( 1,162,511 $ 1,162,511 $ - ( 1,162,511 $	Buildings and structures Total 1,822,836 $ 2,985,347 $ 817,807) ( 817,807) ( 1,005,029 $ 2,167,540 $ 1,005,029 $ 2,167,540 $ 64,305) ( 64,305) ( 43,053) ( 43,053) ( 897,671 $ 2,060,182 $ 1,861,764 $ 3,024,275 $ 964,093) ( 964,093) ( 897,671 $ 2,060,182 $ Buildings and structures Total 1,822,836 $ 2,985,347 $ 775,919) 775,919) ( 1,046,917 $ 2,209,428 $ 1,046,917 $ 2,209,428 $ 41,888) 41,888) ( 1,005,029 $ 2,167,540 $ 1,822,836 $ 2,985,347 $ 817,807) 817,807) ( 1,005,029 $ 2,167,540 $

136

��

Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period Direct operating expenses arising from the investment property that did not generate rental income during the period	For the year ended December 31,2018 124,185 $ 20,450 $ - $	For the year ended December 31,2017
		117,812 $
		19,679 $
		- $

�� $3,565,391 and $3,427,204��. The valuation is based on average closing prices of investment property at the area where the property is located�
(9) ��

��
Prepayment for property Guarantee deposits paid Deferred expenses Other assets	December 31,2018 4,644 $ 84,001 61,996 1,207 151,848 $	December 31,2017
		11,575 $ 74,670 61,515 1,207
		148,967 $

(10) ��

(11)

��
A. ��
��
Type of borrowings
December 31,2018
Interest rate range
Collateral
Bank borrowings
Unsecured borrowings
49,110
$ 0.89%~0.98%
None
Type of borrowings
December 31,2017
Interest rate range
Collateral
Bank borrowings
Unsecured borrowings
275,784
$ 0.87%~0.98%
None
Items
December 31,2018
December 31,2017
Current items:
Financial liabilities held
for trading
Non-hedging derivatives
-
$ 2,529
$

B. Explanations of the transactions and contract information in respect of derivative financial liabilities for which the Company does not adopt hedge accounting are as follows:

137

Financial instrument Contractperiod Forward exchange contract SELL USD/BUY JPY Feb. 2, 2018 SELL EUR/BUY USD Feb. 1, 2018		December 31,2017		Fair value
		Contract amount (notionalprincipal)
		JPY 300,000,000 EUR 3,000,000		213 $ 2,316 2,529 $

��
C. ��

(12) ��

��
Issuance of bonds payable	December 31,2018 $ 4,000,000	December 31,2017
		$4,000,000

A. ��
��
B. The terms of the first domestic unsecured ordinary corporate bonds issued by the Company in 2017 are as follows:
The Company issued $1,000,000, 1.02% first domestic unsecured ordinary corporation bonds, as approved by the regulatory authority on September 15, 2017. The bonds mature 5 years from the issue date (September 15, 2017 ~ September 15, 2022) and will be redeemed at face value at the maturity date.

� (13) ��

��
Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	December 31, 2018
HSBC Bank Mizuho Bank Sumitomo Mitsui Banking Corporation Hua Nan Commercial Bank Bank of Taiwan Long-term bank borrowings	Borrowing period is from Apr. 13, 2018 to Apr. 13, 2020; payable at maturity Borrowing period is from Oct. 25, 2018 to Oct. 30, 2020; payable at maturity Borrowing period is from Nov. 30, 2018 to Nov. 30, 2020; payable at maturity Borrowing period is from Jul. 13, 2018 to Jul. 13, 2020; payable at maturity Borrowing period is from Jun. 20, 2018 to Jun. 20, 2020; payable at maturity	0.94% 0.88% 0.92% 0.96% 0.80%	None None None None None	1,000,000 $ 950,000 500,000 600,000 400,000 3,450,000

138

Type of borrowings	Borrowing period and repayment term	Interest rate range	Interest rate range	Collateral	Collateral		December 31, 2018
Commercial papers payable International Bills Corporation Borrowing period is from Oct. 15, 2018 to Oct. 14, 2020; payable at maturity Grand Bills Finance Corporation Borrowing period is from Mar. 27, 2018 to Mar. 26, 2020; payable at maturity Less: Discount on commercial papers payable Borrowing period and repayment term Type of borrowings		0.35%~0.65% None 0.62%~0.78% None Interest rate range Collateral			500,000 $ 300,000 800,000 275) ( 799,725 4,249,725 $ December 31, 2017 1,000,000 $ 452,000 $ 300,000 39,000 1,791,000 200,000 $ 500,000 200,000 400,000 1,300,000 206) ( 1,299,794 3,090,794 $
The Company: HSBC Bank Borrowing period is from Apr. 18, 2017 to Apr. 18, 2019; payable at maturity Mizuho Bank Borrowing period is from Oct. 15, 2017 to Oct. 15, 2019; payable at maturity Sumitomo Mitsui Banking Corporation Borrowing period is from Nov. 30, 2016 to Nov. 30, 2019; payable at maturity Mizuho Bank Borrowing period is from Oct. 15, 2017 to Oct. 15, 2019; payable at maturity Commercial papers payable International Bills Finance Corporation Borrowing period is from May 16, 2017 to May 16, 2019; payable at maturity China Bills Finance Corporation Borrowing period is from Mar. 29, 2017 to Mar. 28, 2019; payable at maturity Taiwan Finance Corporation Borrowing period is from Jun. 23, 2017 to Jun. 22, 2019; payable at maturity Grand Bills Finance Corporation Borrowing period is from Mar. 27, 2017 to Mar. 26, 2019; payable at maturity Long-term bank borrowings Less: Discount on commercial papers payable		0.93% 0.80% 0.94% 0.80% 0.33%~0.62% 0.36%~0.60% 0.48%~0.85% 0.60%~0.81%	None None Note None None None None None

��
�� $16,556,434 and $17,337,150��
(14) ��
��

139

��

�� �� �� �� ��	�� �� �� �� ��	�� �� �� �� ��	�� �� �� �� ��
�� December 31,2018 December 31,2017 Present value of defined benefit obligations 1,774,505) ($ 1,809,652) ($ Fair value of plan assets 227,916 248,067 Net defined benefit liability 1,546,589) ($ 1,561,585) ($ Present value of defined benefit obligations Fair value of plan assets Net defined benefit liability For the year ended December 31,2018 Balance at January 1 1,809,652) ($ 248,067 $ 1,561,585) ($ Current service cost 12,157) ( - 12,157) ( Interest (expense) income 30,628) ( 4,082 26,546) ( 1,852,437) ( 252,149 1,600,288) ( Remeasurements: Return on plan asset (excluding amounts included in interest income or expense) - 6,201 6,201 Change in financial assumptions 55,883) ( - 55,883) ( Experience adjustments 15,347 - 15,347 40,536) ( 6,201 34,335) ( Pension fund contribution - 81,050 81,050 Paid pension 111,484 111,484) ( - Paid from the account 6,984 - 6,984 Balance at December 31 1,774,505) ($ 227,916 $ 1,546,589) ($

	1,809,652) ($ 12,157) ( 30,628) (	248,067 $ - 4,082 252,149 6,201 - - 6,201 81,050 111,484) ( - 227,916 $	1,561,585) ($ 12,157) ( 26,546) (
	1,852,437) ( - 55,883) ( 15,347 40,536) ( - 111,484 6,984 1,774,505) ($		1,600,288) ( 6,201 55,883) ( 15,347 34,335) ( 81,050 - 6,984 1,546,589) ($

140

Present value of defined benefit obligations	Present value of defined benefit obligations		Net defined benefit liability	Net defined benefit liability
1,838,969) ($ 15,688) ( 30,474) (		188,999 $ - 3,623 192,622 1,279) ( - - 1,279) ( 141,284 84,560) ( - 248,067 $	1,649,970) ($ 15,688) ( 26,851) (
1,885,131) ( - 7,694 40,776) (			1,692,509) ( 1,279) ( 7,694 40,776) (
	33,082) ( - 84,560 24,001 1,809,652) ($			34,361) ( 141,284 - 24,001 1,561,585) ($

(d) ��

141

(e) ��

	Year ended	Year ended
	December 31,2018	December 31,2017
Discount rate	1.35%	1.75%
Future salary increas	2.00%	2.00%
��
��

��

Discount rate Future salary increases Increase 0.5% Decrease 0.5% Increase 0.5% Decrease 0.5% December 31, 2018 Effect on present value of defined benefit obligation ($ 69,417) $ 73,992 $ 73,162 ($ 69,338) December 31, 2017 Effect on present value of defined benefit obligation ($ 79,259) $ 74,256 $ 74,455 ($ 78,689) ��

  - ���������������������������������������������������������������������������������������� ���������������������������������������

(f) �� $28,041�
��
�� $72,264 and $72,082��
(15) ��
��
��n�� outstanding ordinary shares.
��

142

��
- ��
�� When the holders of the GDRs request the Depositary to redeem the GDRs in accordance with the relevant R.O.C. regulations and the provisions in the Depositary Agreement, the Depositary may (i) deliver the underlying common shares represented by the GDRs to the GDR holders, or (ii) sell the underlying common shares represented by the GDRs in the R.O.C. stock market on behalf of the GDR holder. The payment of proceeds from such sale shall be made subject to the relevant R.O.C. laws and regulations and the provisions in the Depositary Agreement.
��
- ��
��As of ��, 2018, the Company has redeemed all depository receipts.
��
��

�� ��
Tong-An Investment Co., Ltd. An-Tai International Investment Co., Ltd. Top-Tower Enterprises Co., Ltd. Tong-An Investment Co., Ltd. An-Tai International Investment Co., Ltd. Top-Tower Enterprises Co., Ltd.	December 31,2018
	Shares Cost Market value (in thousands) (in dollars) (in dollars) 19,540 14.92 $ 17.45 2,826 10.37 17.45 77 9.37 17.45 22,443 December 31,2017
	Shares (in thousands) 19,540 2,826 77 22,443	Cost (in dollars) 14.92 $ 10.37 9.37	Market value (in dollars) 28.50 $ 28.50 28.50

(16) ��

��

143

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(17) ��

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��
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��
E. ��
��

144

(18) ��

(18)	��	��	��	��
(19)	�� A. Disaggregation of revenue from customers The Company derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines: Unrealized gains Currency on valuation translation Total At January 1, 2018 - $ 1,759,357) ($ 1,759,357) ($ IFRS opening balance adjustment 1,848,757 - 1,848,757 Unrealized gains and losses on financial assets: �Group 605,558 - 605,558 �Associates 20,180) ( - 20,180) ( Revaluation transferred to retained earnings 572,647 - 572,647 Currency translation differences: �Group - 142,367) ( 142,367) ( At December 31, 2018 3,006,782 $ 1,901,724) ($ 1,105,058 $ Unrealized gains Currency on valuation translation Total At January 1, 2017 2,218,526 $ 1,051,753) ($ 1,166,773 $ Unrealized gains and losses on financial assets: �Group 1,563,333 - 1,563,333 �Associates 4,019 - 4,019 Currency translation differences: �Group - 707,604) ( 707,604) ( At December 31, 2017 3,785,878 $ 1,759,357) ($ 2,026,521 $ For the year ended For the year ended December 31,2018 December 31,2017 Revenue from customers 20,879,719 $ 21,301,208 $ For theyear ended December 31,2018 external customer contracts Sales of heavy industrial products $ 12,814,190 Sales of home appliances 4,806,609 Others 54,902 Service revenue 424,159 Consruction contract 2,779,859 20,879,719 $
			$
			over
		Sales of heavy industrial products Sales of home appliances Others Service revenue Consruction contract		$ 12,814,190 4,806,609 54,902 424,159 2,779,859 20,879,719 $

145

B. Contract assets and liabilities

For the year ended December 31, 2018

Revenue recognized that was included in the contract liability balance at the beginning of the period Advance sales receipts $ 35,076

C. �� (20) ��

(20)	��
(21)	�� For the year ended For the year ended December 31,2018 December 31,2017 Rental revenue 141,768 $ 139,079 $ Dividend income 223,794 187,217 Interest income: Interest income from banck deposits 2,847 7,614 Other interest income 6,032 5,936 Insurance claims income - 83,897 Other non-operating income 173,934 178,951 548,375 $ 602,694 $ For theyear ended For theyear ended December,2018 December,2017 Net gain (loss) on financial liabilities at fair value through profit or loss 2,529 $ 2,529) ($ Net loss on financial assets at fair value through profit or loss 103,280) ( 19,806) ( Net currency exchange gain (loss) 2,456 12,946) ( (Loss) gain on disposal of property, plant and equipment 18,754) ( 22,878) ( Gain on disposal of investments 1,385 25,874 Gain on remeasurement 46,515 - Reversal of impairment loss recognized in profit or loss ( 20,841) - Fire loss - 97,615) ( Miscellaneous disbursements 458,557) ( 214,171) ( ($ 548,547) ($ 344,071)	For the year ended December 31,2017
		139,079 $ 187,217 7,614 5,936 83,897 178,951
		602,694 $

��

146

(22) ��

(22)	��	��
(23)	�� For the year ended December 31,2018 Interest expense: Bank borrowings 35,910 $ Corporate bonds 53,303 Others 5,517 94,730 Finance expenses 4,451 99,181 $ For the year ended December 31,2018 Wages and salaries 1,768,065 $ Employees�compensation and directors�and supervisors� remuneration 368,483 Labor and health insurance fees 156,420 Pension costs 110,967 Other personnel expenses 96,913 Depreciation charges on property, plant and equipment 345,650 Amortization charges on intangible assets 18,697 $ 2,865,195		For the year ended December 31,2017 30,971 $ 46,518 16,865 94,354 15,211 109,565 $ For the year ended December 31,2017 $ 1,806,651 361,806 158,717 114,621 99,757 318,774 19,063 $ 2,879,389

	Wages and salaries Employees�compensation and directors�and supervisors� remuneration Labor and health insurance fees Pension costs Other personnel expenses Depreciation charges on property, plant and equipment Amortization charges on intangible assets
		1,768,065 $ 368,483 156,420 110,967 96,913 345,650 18,697 $ 2,865,195
				$ 2,879,389

A. ��expenses are recognized under operating costs, operating expenses and other gains and losses.
B. ��
C. ��
D. ��
��

147

(24) ��

�� �� ��	�� �� ��	�� �� ��
�� �� �� For the year ended For the year ended December 31,2018 December 31,2017 Current tax: Current tax on profits for the period 68,376 $ 207,022 $ Tax on undistributed surplus earnings 101,261 131,590 Prior year income tax under (over) estimation 19 14,772) ( Total current tax 169,656 323,840 Deferred tax: Origination and reversal of temporary differences 178,783) ( 111,730) ( Impact of change in tax rate 153,847 - Total deferred tax 24,936) ( 111,730) ( Income tax expense 144,720 $ 212,110 $ For the year ended For the year ended December 31,2018 December 31,2017 Currency translation differences 3,000) ($ 68,109) ($ Impact of change in tax rate ( 60,232) - ($ 63,232) ($ 68,109) For the year ended For the year ended December 31,2018 December 31,2017 Tax calculated based on profit before tax and statutory tax rate 658,962 $ 561,874 $ Effects from items disallowed by tax regulation 593,709) ( 338,592) ( Overestimation of prior year's net deferred tax assets and liabilities 175,660) ( 111,730) ( Additional 10% tax on undistributed earnings 101,261 131,590 Effects by Investment tax credits - 16,260) ( Prior year income tax overestimation (underestimation) 19 14,772) ( Impact of change in tax rate 153,847 - Income tax expense 144,720 $ 212,110 $
		($ 68,109) For the year ended December 31,2017 561,874 $ 338,592) ( 111,730) ( 131,590 16,260) ( 14,772) ( - 212,110 $

148

��

��
Temporary differences �Deferred tax assets: Unrealized intercompany profit Impairment loss Currency translation differences Difference resulting from different usefullives of property, plant and equipment between financial and tax basis Unrealized expenses Permanent loss on investments Loss on inventory Over provision of allowance for doubtful accounts Others �Deferred tax liabilities: Investment income from foreign investments Land value incremental reserve	For theyear ended	Recognized in other comprehensive income December 31 - $ 153,105 $ 19,779 106,505 43453 272684 - 49,596 - 73,709 - 35,080 - 53,303 - 13,601 - 46,156 63,232 803,739 - 706,626 - 107,472 - 814,098 63,232 $ 10,359) ($ December 31,2018
	Recognized in profit January1 or loss 212,262 $ 59,157) ($ 90,530 3,804) ( 229231 0 43,205 6,391 58,642 15,067 29,817 5,263 48,713 4,590 17,009 3,408) ( 65,433 19,277) ( 794,842 54,335) ( 785,897 79,271) ( 107,472 - 893,369 79,271) ( 98,527) ($ 24,936 $	Recognized in other comprehensive income - $ 19,779 43453 - - - - - - 63,232 - - - 63,232 $

149

Temporary differences �Deferred tax assets: Unrealized intercompany profit Impairment loss Currency translation differences Difference resulting from different usefullives of property, plant and equipment between financial and tax basis Unrealized expenses Permanent loss on investments Loss on inventory Over provision of allowance for doubtful accounts Others �Deferred tax liabilities: Investment income from foreign investments Land value incremental reserve Others	For theyear ended	Recognized in other comprehensive income December 31 - $ 212,262 $ - 90,530 68,109 229,231 - 43,205 - 58,642 - 29,817 - 48,713 - 17,009 - 65,433 68,109 794,842 - 785,897 - 107,472 - - - 893,369 68,109 $ 98,527) ($ December 31,2017
	Recognized in profit January1 or loss 191,490 $ 20,772 $ 91,548 1,018) ( 161,122 - 43,357 152) ( 57,455 1,187 29,817 - 41,622 7,091 13,685 3,324 103,190 37,757) ( 733,286 6,553) ( 888,883 102,986) ( 107,472 - 15,297 15,297) ( 1,011,652 118,283) ( 278,366) ($ 111,730 $	Recognized in other comprehensive income - $ - 68,109 - - - - - - 68,109 - - - - 68,109 $

278,366) ($ 111,730 $ 68,109 $	278,366) ($ 111,730 $ 68,109 $	278,366) ($ 111,730 $ 68,109 $	98,527) ($
��			��
��
	December 31,2018		December 31,2017
Deductible temporary differences	547,202 $	$	469,069

��The Company has not recognized taxable temporary differences associated with investment in certain subsidiaries as deferred tax liabilities. As of December 31, 2018 and 2017, the amounts of temporary difference unrecognized as deferred tax liabilities were $3,603,720 and $4,630,372, respectively.
��
��Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February �� from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the change in income tax rate.

150

(25)
(26)

��
��
��
Weighted average
number of ordinary
shares outstanding
Earnings per
Amount after tax
(in thousands)
share(in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
$3,150,089
1,980,250
$ 1.59
Weighted average
number of ordinary
shares outstanding
Earnings per
Amount after tax
(in thousands)
share(in dollars)
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
$3,092,358
1,980,250
$ 1.56
For theyear ended December 31,2018
For theyear ended December 31,2017
For the year ended
For the year ended
December 31,2018
December 31,2017
Acquisition of property, plant and
equipment
333,931
$ 470,042
$ Add:
Payables at beginning of the period
131,025
112,700
Less:
Payables at end of the period
112,043)
(
131,025)
(
Cash paid
352,913
$ 451,717
$

151

7. ��

(1) ��

Names of related parties	Relationship with the Company	Names of related parties	Relationship with the Company
Teco Nanotech Co., Ltd. (Teco Nanotech) Teco International Investment Co., Ltd. (Teco International) Tong-An Assets Management & Development Co., Ltd. (Tong-An Assets) Tong Dai Co., Ltd. (Tong Dai) Tesen Electric & Machinery Co., Ltd. (Tesen) Information Technology Total Services Co., Ltd. (ITTS) Tong Tai Jung Co., Ltd. (Tong Tai Jung) Teco Electro Devices Co., Ltd. (Teco Electro) Teco Electric & Machinery (Pte) Ltd. (Teco Singapore) Teco Electric Co., Ltd. (Teco Europe) Teco Holding USA Inc. (Teco Holding) GD Teco Taiwan Co., Ltd. (GD Teco) Tecom Co., Ltd. (Tecom) Tecnos International Consultant Co., Ltd. (Tecnos) Tong-An Investment Co., Ltd. (Tong-An) Taiwan Pelican Express Co., Ltd. (Pelican) Teco Westinghouse Motor Industrial-Canada (Teco Westinghouse Canada) Teco Westinghouse Motor Company (Teco Westinghouse) Information Technology Total Service (Hang Zhu) Co., Ltd. (ITTS Hang Zhu) Teco Industrial (Malaysia) Sdn. Bhd. (Teco Malaysia) Tecoson HK Co., Ltd. (Tecoson HK) Wuxi Teco Electric & Machinery Co., Ltd. (Wuxi Teco) Nan Chang Teco Electronic & Machinery Co., Ltd. (Nanchang Teco)	The subsidiary � � � � � � � � � � � � � � � � � � � � � �	Yatec Engineering Corporation (Yatec) An-Tai International Investment Co., Ltd. (An-Tai) Micropac Worldwide Investment (BVI) (Micropac) A-Ok Technical Co., Ltd. (A-Ok Technical) Taian-Etacom Technology Co., Ltd. (Taian-Etacom) Perkilangen Elektrik Taian Jaya Sdn. Bhd. (Perkilangen) Taian (Subic) Electric Co., Inc. (Taian Subic) Taian (Malaysia) Electric Sdn., Bhd. (Taian Malaysia) E-Joy International Co., Ltd. (E-Joy International) An-Sheng Travel Co., Ltd. (An Sheng) Teco Vietnam Electric Co., Ltd. (Teco Vietnam) Teco Appliance (H.K.) Co., Ltd. (Teco Appliance) TECO (PHILIPPINES) 3C & APPLIANCES, INC. (TECO 3C) Tecoson Industrial Development Ltd. (Tecoson) Teco Electronic Devices Co., Ltd. (Teco Devices) Tasia (PTE) Ltd. (Tasia) P.T Teco Multiguna Electro (Teco Multiguna) Great Teco, S.L. (Great Teco, S.L.) Asia Air Tech Industrial Co., Ltd. (AAT) Great Teco Motor Ltd. (GTM) Teco Electronic & Machinery (THAI) Co., Ltd. (Teco THAI) Information Technology Total Services (BVI) (ITTS BVI)	The subsidiary � � � � � � � � � � � � � � � � � � � � � � �

152

Names of related parties	Relationship with the Company	Names of related parties	Relationship with the Company
Wuxi Teco Precision Industry Co. Ltd (Wuxi Teco) Jiangxi Teco Electric and Machinery Co., Ltd. (Jiangxi Teco) QingDao Teco Precision Mechtronics Co., Ltd. (QingDao Teco) Xiamen Teco Technology Co., Ltd. (Xiamen Teco) Asia Innovative Technology Co., Ltd. (Xiamen An-Tai) An-Tai International Investment (Pte) Ltd. (An-Tai Singapore) Antech Automation Corp. (Antech) An-Hubbell-Taian Co., Ltd. (An-Hubbell) Universal Mailing Service Co., Ltd. (Universal) Teco Australia Pty. Ltd. (Teco Australia) Jack Property Service & Management Company (Jack Property) Tai-An Technology (Wuxi) Co., Ltd. (Tai-An Wuxi) P.T Teco Elektro Indonesia (P.T Teco) Teco Group Science-Technology (Hang Zhou) Co., Ltd. (Teco Hang Zhou) Information Technology Total Services (Xiamen) Ltd. (ITTS Xiamen) Fujian Teco Precision Co., Ltd. (Fujian Teco) United View Global Investment Co., Ltd. (UVG) Jiangxi TECO Air Conditioning Equipment Co., Ltd. (Jiangxi Teco Air) Tianjin Teco Technology Co., Ltd. (Tianjin Teco) Top-Tower Enterprises Co., Ltd. (Top-Tower) Ching Chi International Limited (Ching Chi) Teco Yaskawa Motor Engineering Co. (Yaskawa) Motovario S.p.A. (Motovario) TA Associates International Pte Ltd. (TA Associates) United Development Corporation Ltd. (United Development)	The subsidiary � � � � � � � � � � � � � � � � The subsidiary � � (Note 4) (Note 2) The subsidiary (Note 1) The subsidiary	Asia Electric & Machinery (PTE) LTD. (AEM) STE Marketing SDN. BHD (STEM) Sankyo Co., Ltd. (Sankyo) Teco Electric & Machinery B.V. (Teco Netherlands) TYM Electric & Machinery Sdn. Bhd. (TYM) Teco (Dong Guang) Air Conditioning Equipment Co., Ltd. (Teco Dong Guang) Unison Service Corporation (Unison) Kuenling Machinery Refrigerating Co., Ltd. (Kuenling Refrigerating) Baycom Opto-Electronics Technology Co., Ltd. (Baycom) Tecom International Investment Co., Ltd. (Tecom International) Teco SichuanTrading Co., Ltd. (Teco Sichuan) Qingdao Teco Precision Mechatronics Co., Ltd. (QingDao Teco) Shanghai TecoElectric & Machinery Co., Ltd. (Shanghai Teco) TECO Elektrik Turkey A.S. (Turkey Teco) Hunan TECO WindEnergy Limited (Hunan Teco) Taian Electric Co., Ltd. (Taian) Information Technology Total Services (Wuxi) Co., Ltd. (ITTS Wuxi) Tension Envelope Taiwan Co., Ltd. (Tension) Don-Zi International Investment Co., Ltd. Qingdao TECO Century Advance High-tech Mechtronics Co., Ltd. (TECO Century ) Teco Middle East Electrical & Machinery Co., Ltd. (TME) TG Teco Vacuum Insulated Glass Corp. (TG Teco) Jiangxi Teco-Lead PM Generator Manufacturing Co., Ltd. (Jiangxi Teco-Lead) Lien Chang Electronic Enterprise Co., Ltd. (Lien Chang) Taian Shen Electric Co., Ltd. (Taian Shen)	The subsidiary � � � � � � Note The subsidiary � � � � � � � � Associate � � � � � � �

Note: The investee continued as the Company�s associate since the Company remained significant influence over the investee after losing its control in quarter of 2018.

153

Names of relatedparties	Relationship with the Company	Names of relatedparties	Relationship with theCompany
Century Development Corporation Ltd. (Century Development) TEMICO INTERNATIONAL PTE. LTD. (TEMICO) Century Tech. C&M Corp. TWMM AM SMART Technology CO., LTD Teco.Sun Energy Co., Ltd. ROPALI - TECO CORPORATION (ROTECO) Royal Host Taiwan Co., Ltd. (Royal) Tung Pei Industrial Co., Ltd. (Tung Pei) Creative Sensor Inc. (Creative Sensor)	The subsidiary � � � � � � Associate � �	Tecma Information Systems Sdn. Bhd. (TECMA) Gen Mao International Corp. Electrical Trading Co., Ltd. (Shanghai Xiangseng) Genmao Electronics (Suzhou) Co., Ltd. Teco-Motech Co., Ltd. (Teco-Motech) Fujio Food System Taiwan Co., Ltd. (Fujio Food) Le-Li Co., Ltd. (Le-Li) Nanobit Tech Co., Ltd. (Nanobit) Senergy Wind Power Co., Ltd. (Senergy Wind Power) Teco Image System Co., Ltd. (Teco Image) An-Shin Food Service Co., Ltd. (An-Shin )	Associate � � � � � � (Note 3) Joint arrangement Other related party �

��This company was dissolved in 2017. ��

��

(2) ��

��

�� ��
Sales of goods and services: �Subsidiaries Teco Westinghouse Others �Associates �Other related parties Royalty income (shown as 'other income'): �Subsidiaries Wuxi Teco Tai-An Wuxi Motovario QingDao Teco Other �Associates �Other related parties	Year ended December 31,2018 3,479,182 $ 6,010,148 298,558 347 9,788,235 $ Year ended December 31,2018 60,828 $ 26,261 10,969 7,635 5,466 390 90 111,639 $	Year ended December 31,2017
		3,515,735 $ 6,282,659 315,196 323
		10,113,913 $
		Year ended December 31,2017
		41,875 $ 11,945 31,023 2,699 7,074 73 199
		94,888 $

��

154

��$614,532 and $653,779��

(b) Royalty income consisted of consulting service income and endorsements and guarantees provided by the Company. The fee was determined in accordance with mutual agreements and collected within the contractual period.

��

��
Purchases of goods: �Subsidiaries Tesen Others �Associates �Other related parties Shipping expense: �Subsidiaries Service expense: �Subsidiaries	Year ended December 31,2018 2,270,807 $ 3,429,466 389,790 190 6,090,253 $ Year ended December 31,2018 96,031 $ Year ended December 31,2018 102,787 $	Year ended December 31,2017
		2,245,090 $ 3,659,896 73,418 -
		5,978,404 $
		Year ended December 31,2017
		107,776 $
		Year ended December 31,2017
		100,909 $

��
��
(c) The service terms, including pricing and payments, were negotiated in consideration of the cost, market, competitors and other factors.�

155

��

��
Accounts and notes receivables �Subsidiaries Teco Westinghouse Others �Associates �Other related parties Add: foreign exchange loss Less: reclassified to other receivables Less: balance of long-term equity investments		December 31,2018		December 31,2017
	$ 374,166 1,851,535 52,092 337 2,278,130 ( 10,874) 2,267,256 ( 579,125) 1,688,131 ( 76,336) 1,611,795		$ 463,325 2,046,671 56,903 127 2,567,026 ( 26,908) 2,540,118 ( 540,346) 1,999,772 ( 41,883) 1,957,889

��
��$579,125 and $540,346��

��

�� ��
Accounts and notes payable �Subsidiaries Wuxi Teco Others �Associates �Other related parties		December 31,2018	December 31,2017
		$ 406,218 428,908 203,719 200 $ 1,039,045	$ 762,090 626,502.00 56,242.00 - $ 1,444,834

��

�� Receivables from related parties � credit line

�� Interest income Subsidiaries Subsidiaries		December 31,2018		December 31,2017
		$ 225,724 December 31,2018		$ 222,661 December 31,2017
		$ 6,022		$ 5,927

��

�� Other receivables
(a) Transfer of accounts receivable that were past due

156

(b) Others �Subsidiaries Teco Netherlands Sankyo Others �Associates �Subsidiaries QinDao Teco Others �Associates �Other related parties Less�Allowance for doubtful	December 31,2018 $ 280,930 178,201 119,542 452 $ 579,125 December 31,2018 $ 268,144 451,504 30,313 1,468 751,429 ( 37,192) $ 714,237	December 31,2017
		$ 321,282 181,364 37,700.00 - $ 540,346 December 31,2017
		$ 251,159 479,836.00 12,331.00 20,875 764,201 ( 47,035) $ 717,166

Less�Allowance for doubtful ( 37,192) $ 714,237	( 47,035) $ 717,166
The above represents other receivables for rental. �� Other payables Other payables mainly consist of rent payable, etc. �� Financing with related parties (a) Payables to related parties - credit line (b) Interest expense December 31,2018 Accounts and notes receivables �Subsidiaries Teco Westinghouse $ 307,150 Tong-An Assets 212,563 Others 112,979 �Associates 2,552 �Other related parties 235 635,479 December 31,2018 Subsidiaries $ 509,550 December 31,2018 Subsidiaries $ 5,311	December 31,2017
	$ 320,126 287,520 100,443 3,588 128 711,805 December 31,2017
	$ 577,600 December 31,2017
	$ 2,255

��

157

�� Endorsements and guarantees provided to related parties

�Subsidiaries �Associates		December 31,2018		December 31,2017
		$ 2,311,022 41,772 $ 2,352,794		$ 2,976,456 40,474
				$ 3,016,930

��
�� $77,713 and $78,407�� $12,384 and $7,270��
��

(3) ��

��
Salaries and other short-term employee benefits Post-employment benefits	For the year ended December 31,2018 205,009 $ 1,748 206,757 $	For the year ended December 31,2017
		210,044 $ 1,759
		211,803 $

8. ��

8.	��
9.	Pledged asset	Book	value		Purpose
		December 31,2018		December 31,2017
	�� �� Other current assets - bank deposits 16,308 $ 8,157 $ Special bank account for government grant

(1) ��

��

(2) ��

A. ��

December 31, 2018 December 31, 2017 Property, plant and equipment $ 13,808 $ 35,223

B. �� equipment was $415,477.

10. ��

��

11. ��

��

12. ��

��

158

��

��

��Financial instruments by category

�� Financial instruments by category
Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Available-for-sale financial assets Financial assets at amortised cost /Loans and receivables Cash and cash equivalents Notes receivable Accounts receivable Other receivables Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Short-term borrowings Notes payable Accounts payable Other payables Bonds payable Long-term borrowings (including current portion) Guarantee deposits received		December 31,2018		December 31,2017
		1,835,790 $ 5,983,461 $ - $ 1,232,796 $ 732,576 2,813,845 1,356,297 84,001 6,219,515 $ - $ 49,110 169,201 4,248,129 3,225,945 4,000,000 4,249,725 22,496 15,964,606 $		- $ - $ 6,609,115 $ 887,185 $ 605,829 3,208,928 1,400,598 74,670 6,177,210 $ 2,529 $ 275,784 188,734 4,597,027 3,266,045 4,000,000 3,090,794 23,712 15,444,625 $

159

��
�� To minimise any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts are used to hedge certain exchange rate risk. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
��
��Information about derivative financial instruments that are used to hedge certain exchange rate risk are provided in Note 6(11).
��
��
- ��
- i. ��
- ii. �� Exchange rate risk is measured through a forecast of highly probable USD and RMB expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of the exchange rate affecting cost of forecast inventory purchases�
- iii. The Company hedges foreign exchange rate by using forward exchange contracts. However, the Company does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(13).
- iv. ��

160

	Effect on other	Effect on comprehensive	profit or loss income				21,498 $ - $	5,801 -	2,577 -	3,192 -	938 -									11,771 -	747 -	180 -
December 31, 2018		Book value Degree of	(NTD) variation				2,149,774 $ 1%	580,061 1%	257,743 1%	319,211 1%	93,766 1%		18,980,249	4,311,420	3,302,731	337,986	145,076			1,177,091 1%	74,730 1%	18,032 1%
		Exchange	rate				30.7150	35.2000	0.2782	4.4720	21.6650		30.7150	35.2000	22.4800	0.0013	7.3789			30.7150	35.2000	0.2782
	Foreign	currency amount	(In thousands)				69,991 $	16,479	926,465	71,380	4,328		617,947	122,484	146,919	259,989,231	19,661			38,323	2,123	64,815
							USD	EUR	JPY	RMB	AUD		USD	EUR	SGD	VND	MYR			USD	EUR	JPY
				(Foreign currency: functional	Financial assets	Monetary items	USD:NTD	EUR:NTD	JPY:NTD	RMB:NTD	AUD:NTD	Non-monetary items	USD:NTD	EUR:NTD	SGD:NTD	VND:NTD	MYR:NTD	Financial liabilities	Monetary items	USD:NTD	EUR:NTD	JPY:NTD

161

	Effect on other	Effect on comprehensive	profit or loss income				20,820 $ - $	5,154 -	3,613 -	3,243 -	1,042 -									17,333 -	221 -	893 -
December 31, 2017		Book value Degree of	(NTD) variation				2,082,010 $ 1%	515,409 1%	361,322 1%	324,252 1%	104,217 1%		18,241,096	4,131,154	3,159,088	164,897	128,993			1,733,282 1%	22,053 1%	89,317 1%
		Exchange	rate				29.7600	35.5700	0.2642	4.5650	23.1850		29.7600	35.5700	22.2600	0.0013	7.3215			29.7600	35.5700	0.2642
	Foreign	currency amount	(In thousands)				69,960 $	14,490	1,367,608	7,103	4,495		612,940	116,142	141,918	126,843,846	17,618			58,242	620	338,065
							USD	EUR	JPY	RMB	AUD		USD	EUR	SGD	VND	MYR			USD	EUR	JPY
				(Foreign currency: functional	Financial assets	Monetary items	USD:NTD	EUR:NTD	JPY:NTD	RMB:NTD	AUD:NTD	Non-monetary items	USD:NTD	EUR:NTD	SGD:NTD	VND:NTD	MYR:NTD	Financial liabilities	Monetary items	USD:NTD	EUR:NTD	JPY:NTD

162

v. �� $2,456 and ($12,946)��
��
i. ��posed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.
ii. �� $91,790�� $299,173 and $330,456��
��
i. ��rest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. Company policy is to maintain at least 30% of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. For the years ended �� borrowings at variable rate were mainly denominated in NTD, USD and RMB.
ii. �� periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.
iii. �� $8,598 and $6,986��
��
i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost.
ii. �� concern. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. According to the �� local entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.
iii. �� If the contract payments were past due over 30 days based on the terms, there has been

163

a significant increase in credit risk on that instrument since initial recognition.
iv. The Company adopts the assumption under IFRS 9, whereby the default occurs when the contract payments are past due over 90 days.
v. �� receivable in accordance with credit rating of customer and credit risk on trade. The Company applies the simplified approach using loss rate methodology to estimate expected credit loss under the provision matrix basis.
vi. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i) ��
(ii) ��
(iii) ��
(iv) ��
vii. As at December 31, 2018 and 2017, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the ��eceivable were $405,734 and $289,239, $1,528,892 and $1,567,629, respectively.
viii. The Company uses the forecastability of Taiwan Institute of Economic Research boom observation report to adjust historical and timely information to assess the default possibility of accounts receivable and contract assets. On December 31, 2018, the loss rate methodology is as follows:

December 31, 2018

ssibility of accou e methodology is	nts receivable and contract assets. On Decembe as follows: December 31,2018	nts receivable and contract assets. On Decembe as follows: December 31,2018	r 31, 2018, the loss
Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days Individual Group A Group B Group C Group D Group E	Expected credit loss rate Total book value 0%~1% 1,321,932 $ 0%~2% 256,184 1%~20% 84,455 1%~100% 48,013 1%~100% 251,854 1,962,438 $ December 31,2018		Loss allowance - $ - 872) ( 854) ( 26,086) ( 27,812) ($ Loss allowance 25,250) ($ 55) ( 13) ( 98) ( 305) ( 2,091) ( 27,812) ($
	Expected credit loss rate 100% 0%~5% 1%~10% 1%~20% 1%~40% 1%~100%	Total book value 25,250 $ 1,370,395 40,235 110,643 88,260 327,655 1,962,438 $

ix. ��

164

At January 1_IAS 39 Adjustments under new standards At January 1_IFRS 9 Provision (reversal) for impairment Write-offs during the period At December 31			For the year ended 'December 31, 2018 Notes receivable and accounts receivable		For the year ended 'December 31, 2017 Notes receivable and accounts receivable
	27,484 $ 31,222 $ - - 27,484 31,222 441 3,738) ( 113) ( - 27,812 $ 27,484 $

��
i. ��
ii. As of December 31, 2018 and 2017, the undrawn credit amounts are $16,556,434 and $17,337,150, respectively.
iii. ��

165

	-	-	-	-	-		-		-	-	-	-	-		-
Over 5 years								Over 5 years
	$								$
Between 3 and 5 years	- $	-	-	-	-		-	Between 3 and 5 years	- $	-	-	-	1,000,000		-
Between 2 and 3 years	- $	-	-	-	1,000,000		-	Between 2 and 3 years	- $	-	-	-	3,000,000		-
Between 1 and 2 years	- $	-	-	-	3,000,000		-	Between 1 and 2 years	- $	-	-	-	-		-
Up to 1 year	49,110 $	169,201	4,248,129	3,225,945	-		4,249,725	Up to 1 year	275,784 $	188,734	4,597,027	3,266,045	-		3,090,794
December 31, 2018	Short-term borrowings	Notes payable	Accounts payable	Other payables	Bonds payable	Long-term borrowings	(including current portion)	December 31, 2017	Short-term borrowings	Notes payable	Accounts payable	Other payables	Bonds payable	Long-term borrowings	(including current portion)

166

     - iv. ���������������������������������������������������������������������������������������� �������������������������������������

(3) ��
��
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
- Level 1: ��
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Company�� investment in derivative instruments is included in Level 2.
- Level 3: Unobservable inputs for the asset or liability. The fair value of the Company�� investment in derivative instruments is included in Level 3.
C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

December 31, 2018 Financial assets at fair value through profit or loss Equity securities Financial assets at fair value through other comprehensive income Equity securities Assets Recurring fair value measurements December 31, 2017 Available-for-sale financial assets Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts Assets Recurring fair value measurements	Level 1 917,591 $ 5,976,234 6,893,825 $ Level 1 5,731,495 $ - $	Level 2 - $ - - $ Level 2 - 2,529 $	Level 3 918,199 $ 7,227 925,426 $ Level 3 877,620 $ - $	Total
				1,835,790 $ 5,983,461
				7,819,251 $
				Total
				6,609,115 $
				2,529 $

167

��

Open-end fund

Market quoted price

Closing price

��
��
��
��
��
��

168

Beginning balance Gains and losses recognized in profit or loss Gain and loss recognized in other comprehensive income (Note) Acquired during the year Sold during the year Ending balance	For the years ended For the years ended December 31,2018 December 31,2017 $ 877,620 $ 914,778 10,938 - ( 24,886) ( 12,811) 61,754 - - ( 24,347) $ 925,426 $ 877,620 Non-derivative equity	Non-derivative equity	Non-derivative equity
			For the years ended December 31,2017
			$ 877,620

��
��

Non-derivative equity: Unlisted shares Private equity fund	Fair value at December 31, 2018	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	925,426 $	Market comparable companies	Price to earnings ratio multiple Discount for lack of marketability	0.99~3.46 15%~20%	The higher the multiple and control premium, the higher the fair value The higher the discount for lack of marketability, the lower the fair value

169

Fair value at Significant Range December Valuation unobservable (weighted Relationship of 31, 2017 technique input average) inputs to fair value Non-derivative equity: Unlisted shares $ 877,620 Market Price to 1.13~3.42 The higher the comparable earnings ratio multiple and control companies multiple premium, the higher the fair value Private equity Discount for 15%~20% The higher the fund lack of discount for lack of marketability marketability, the lower the fair value

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

December 31, 2018

			December31,2018	December31,2018	December31,2018
Financial assets Equity instrument Financial assets Equity instrument	Input	Change	Recognizedinprofitor loss			Recognized in other comprehensiveincome
			Favourable change	Unfavourable change		Favourable change	Unfavourable change
	Discount for lack of marketability	±5%	45,910 $ 45,910) ($ December 31,2017			361 $	361) ($
	Input	Change	Recognizedinprofitor loss			Recognized in other comprehensiveincome
			Favourable change	Unfavourable change		Favourable change	Unfavourable change
	Discount for lack of marketability	�5%	- $		- $	43,881 $	43,881) ($

(4) ��

��
i. ��

170

  - �������������������������������������������������������������������������������������� ���������������������

ii. ��
iii. ��
��
i. ��
ii. ��
iii. ��
��
i. ��
- ��
ii. ��
- (i) Investments in debt instrument without active market are loans and receivables not originated by the entity. They are bond investments with fixed or determinable payments that are not quoted in an active market, and also meet all of the following conditions:
  - a. Not designated on initial recognition as at fair value through profit or loss;
  - b. Not designated on initial recognition as available-for-sale;
  - c. Not for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.
- (ii) On a regular way purchase or sale basis, investments in debt instrument without active

171

market are recognized and derecognized using trade date accounting.

  - (iii) Investments in debt instruments without active market held by the Company are those time deposits with a short maturity period but do not qualify as cash equivalents, and they are measured at initial investment amount as the effect of discounting is immaterial.

��
i. ��
ii. ��
- (i) Significant financial difficulty of the issuer or debtor;
- (ii) A breach of contract, such as a default or delinquency in interest or principal payments;
- �� difficulty, granted the borrower a concession that a lender would not otherwise consider;
- (iv) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
- (v) The disappearance of an active market for that financial asset because of financial difficulties;
- (vi) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a Company of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the Company, including adverse changes in the payment status of borrowers in the Company or national or local economic conditions that correlate with defaults on the assets in the Company;
- (vii)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;
- (viii)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
iii. ��
- (i) Financial assets at amortized cost

172

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

  - (ii) Available-for-sale financial assets

     - ������������������������������������������������������������������������������������ acquisition cost (less any principal repayment and amortisation) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss, �������������������������������������������������������������������������������������� loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

��
i. ��
ii. ��
��
��

173

C. ��

IAS 39 Transferred into and measured at fair value through profit Transferred into and measured at fair value through other comprehensive income-equity Impairment loss adjustment IFRS 9	Measured at fair value through Available- for-sale- profit or loss equity - $ 6,609,115 $ 1,899,305 1,899,305) ( - 4,709,810) ( - - 1,899,305 $ - $	Measured at fair value through other comprehensive income-equity - $ - 4,709,810 - 4,709,810 $	Total 6,609,115 $ - $ - - 6,609,115 $	Retained Other earnings equity 12,750,338 $ 2,026,521 $ 689,725 689,725) ( 1,247,396 1,247,396) ( - - 14,687,459 $ 89,400 $	Other equity
					89,400 $

(a) Under IAS 39, because the equity instruments, which were classified as available-for-sale financial assets amounting to $4,709,810, were not held for the purpose of trading, they were reclassified as "financial assets at fair value through other comprehensive income (equity instruments)" amounting to $4,709,810, which resulted to a decrease in other equity interest and increase in retained earnings in the amounts of $1,247,396 and $1,247,396 on initial application of IFRS 9, respectively.
(b) Under IAS 39, the equity instruments, which were classified as available-for-sale financial assets amounting to $1,899,305, were reclassified as "financial assets at fair value through profit or loss (equity instruments)" amounting to $1,899,305, which resulted to a decrease in other equity interest and increase in retained earnings in the amounts of $689,725 and $689,725 under IFRS 9, respectively.
D. ��

��

Items Current items: Financial assets held for trading Financial assets not for hedging		December 31,2017
		2,529 $

i. ��

174

ii. ��

��
Financial instruments Forward foreign exchange contracts SELL USD/BUY JPY SELL EUR/BUY USD		December 31, 2017
		Maturity date Fair value 2018.02.02 JPY 300,000,000 213) ($ 2018.02.01 EUR 3,000,000 2,316) ( 2,529) ($ Contract amount (Notional principal)

iii. ��
��

Items Non-current items� Listed stocks Emerging stocks Unlisted shares Valuation adjustment of available- for-sale financial assets Accumulated impairment	December 31,2017 5,839,708 $ 407,234 596,469 6,843,411 3,280,754 394,039) ( 6,609,115 $

  - A. ������������������������1,133,547���������������������������������������������� �������������������������25,874����������������������������������������������������������� ���������

  - B. The Company has no ����������������������������������� pledged to others �

E. ��
��

175

��

Group 1 Group 2 Group 3 Group 4 Group 5	December 31,2017
	867,482 $ 220,456 145,746 111,588 71,119
	1,416,391 $

��

��

��

��

Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December 31,2017
	110,434 $ 41,644 13,060 275,339
	440,477 $

��

i. �� 27,484�

176

ii. ��

At January 1 Gains on doubtful debt recoveries during the period At December 31		2017	Total 31,222 $ (3,738) 27,484 $
	Individualprovision 25,250 $ - 25,250 $	Group provision 5,972 $ 3,738) ( 2,234 $

(5) ��

��
��
- i. ��
- ii. ��
��

��

��

��

177

��
��
��
��
i. ��
ii. ��
iii.��

178

��

��	��	��
	For the year ended
	December 31,2017
Sales of goods	$	18,316,697
Sales of services		329,645
Construction contract revenue		2,654,866
	$	21,301,208
��
��
	December	31,2017
Aggregate costs incurred plus
recognized profits (less
recognized losses)	$	12,838,960
Less: Progress billings	(	12,166,955)
Net balance sheet position for
construction in progress	$	672,005
Presented as:
Construction contracts receivable	$	836,338
Construction contracts payable	(	164,333)
	$	672,005

��

��
Balance sheet items Construction contracts receivable Contract assets Contract liabilities Construction contracts payable Sales revenue received in advance	Descripion		December 31,2018
		Balance by using IFRS15	Balance by using previous accounting policies	Effects from changes in accounting policies
		- $ 1,074,420 356,457) ( - -	1,074,420 $ - - 219,308) ( 137,149) (	1,074,420) ($ 1,074,420 356,457) ( 219,308 137,149

��

13. ��

(1) ��

��

179

��
��
��
��
��
��
��
��
��
(2) ��
��
(3) ��
��
��

14. ��

��

180

Item
Value
Amount of
transactions
with the
borrower
Reason for
short-term
financing
Allowance
for
doubtful
accounts
Borrower
General
ledger
account
Related
party
Interest
rate
(%)
Nature of
loans
Ceiling on
total loans
granted
Footnote
Collateral
Limit on
loans
granted to a
single party
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES
Loans to others
Expressed in thousands of NTD
For the year ended December 31, 2018
Table 1
(Except as otherwise indicated)
Maximum
outstanding
balance
during
the year
ended
December
31,
2018
Balance at
December
31,
2018
(Note 9)
Actual
amount
drawn down
Number
(Note 1)
Creditor

0
TECO
ELECTRIC &
MACHINERY
CO., LTD.
Xiamen An-Tai
Other
receivables
Yes
92,865
$ 92,145
$ 27,644
$ 2.3
Short-term
financing
-
$ For operating
capital
-
$ -
-
$ 1,610,360
$ 5,367,866
$ Note 2
0
TECO
ELECTRIC &
MACHINERY
CO LTD
QingDao Teco
�
�
139,971
133,579
133,579
3.5
Short-term
financing
-
For operating
capital
-
-
-
1,610,360
5,367,866
Note 2
1
U.V.G.
Teco
Netherlands
�
�
253,680
246,400
246,400
1.5
Short-term
financing
-
For operating
capital
-
-
-
450,722
751,203
Note 3
2
Tai-An Wuxi
Fujian Teco
�
�
11,715
-
-
-
Short-term
financing
-
For operating
capital
-
-
-
64,978
129,957
Note 4
3
Teco
Westinghouse
TWMM
�
�
67,012
67,012
43,922
2.51~
3.53
Short-term
financing
-
For operating
capital
-
-
-
768,918
1,537,837
Note 5
3
Teco
Westinghouse
TECO
ELECTRIC &
MACHINERY
CO., LTD.
�
�
309,550
309,550
307,150
1.1
Short-term
financing
-
For operating
capital
-
-
-
768,918
1,537,837
Note 5
4
Tong-An
Assets
TECO
ELECTRIC &
MACHINERY
CO., LTD.
�
�
280,000
200,000
200,000
1.05
Short-term
financing
-
For operating
capital
-
-
-
525,281
525,281
Note 6
5
Motovario
S.p.A.
Motovario S.A
(Spam)
�
�
162,536
-
-
-
Short-term
financing
-
For operating
capital
-
-
-
212,194
424,388
Note 7

181

Item
Value
Amount of
transactions
with the
borrower
Reason for
short-term
financing
Allowance
for
doubtful
accounts
Borrower
General
ledger
account
Related
party
Interest
rate
(%)
Nature of
loans
Ceiling on
total loans
granted
Footnote
Collateral
Limit on
loans
granted to a
single party
Maximum
outstanding
balance
during
the year
ended
December
31,
2018
Balance at
December
31,
2018
(Note 9)
Actual
amount
drawn down
Number
(Note 1)
Creditor

6
Baycom
Tecom
�
�
40,000
-
-
-
Short-term
financing
-
Repayments
of debt
-
-
-
46,182
92,365
Note 8
Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:
��
��
Note 2: In accordance with the Company's policy, limit on total loans shall not exceed 10% of the Company's net assets based on the latest financial statements (December 31, 2018), and limit on loans to a single
party shall not exceed 3% of the Company's net assets based on the latest financial statements (December 31, 2018).
Note 3: In accordance with U.V.G.' s policy, limit on total loans shall not exceed 10% of U.V.G.' s net assets based on the latest financial statements (December 31, 2018), and limit on loans to a single party shall
not exceed 6% of U.V.G.' s net assets based on the latest financial statements (December 31, 2018).
Note 4: In accordance with Tai-An Wuxi' s policy, limit on total loans shall not exceed 10% of Tai-An Wuxi' s net assets based on the latest financial statements (December 31, 2018), and limit on loans to a single
party shall not exceed 5% of Tai- An Wuxi' s net assets based on the latest financial statements (December 31, 2018).
Note 5: In accordance with Teco Westinghouse' s policy, limit on total loans shall not exceed 20% of Teco Westinghouse' s net assets based on the latest financial statements (December 31, 2018), and limit on loans
to a single party shall not 10% of Teco Westinghouse' s net assets based on the latest financial statements (December 31, 2018).
Note 6: In accordance with Tong-An Assets' policy, limit on total loans shall not exceed 10% of Tong-An Assets' net assets based on the latest audited financial statement (December 31, 2018), and limit on loans
to a single party shall not exceed 10% of Tong-An Assets' net assets based on the latest audited financial statement (December 31, 2018).
Note 9: The credit line approved by the Board of Directors.
Note 7: In accordance with Motovario S.p.A.' s policy, limit on total loans shall not exceed 10% of Motovario S.p.A.' s net assets based on the latest financial statements (December 31, 2018), and limit on loans to
a single party shall not exceed 5% of Motovario S.p.A.' s net assets based on the latest financial statements (December 31, 2018).
Note 8: According to the policy of the Tecom subsidiaries, limit on loans to Baycom is 20% of the granting company's net assets based on the latest audited financial statements (December 31, 2018); limit on
loans to a single party is 10% of the granting company's net assets based on the latest audited financial statements (December 31, 2018).

182

Company name
Relationship
with the
endorser/
guarantor
�Note 2�
Maximum
outstanding
endorsement/
guarantee
amount as of
December 31,
2018
Limit on
endorsements/
guarantees
provided for a
single party
(Note 3)
Provision of
endorsements
/
guarantees to
the party in
Mainland
China
Footnote
Amount of
endorsements/
guarantees
secured with
collateral
Ratio of
accumulated
endorsement/
guarantee
amount to net
asset value of
the endorser/
guarantor
company
(%)
Ceiling on
total amount of
endorsements/
guarantees
provided
Provision of
endorsements/
guarantees by
parent
company to
subsidiary
Provision of
endorsements/
guarantees by
subsidiary to
parent
company
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES
Provision of endorsements and guarantees to others
For the year ended December 31, 2018
Table 2
Expressed in thousands of NTD
(Except as otherwise indicated)
Outstanding
endorsement/
guarantee
amount at
December 31,
2018
Actual
amount
drawn down
Number
(Note 1)
Endorser/
guarantor
Party being
endorsed/guaranteed

0
TECO
ELECTRIC &
MACHINERY
CO., LTD.
TECO Smart
Technologies Co.,
Ltd.
(2)
10,735,732
$ 100,000
$ 100,000
$ 100,000
$ -
$ 0.19
32,207,196
$ Y
N
N
Note 3
0
TECO
Teco International
(2)
10,735,732
100,000
100,000
100,000
-
0.19
32,207,196
Y
N
N
�
0
TECO
ELECTRIC &
MACHINERY
CO., LTD.
Motovario S. P. A.
(2)
10,735,732
2,763,662
2,078,208
2,078,208
-
3.87
32,207,196
Y
N
N
�
0
TECO
ELECTRIC &
MACHINERY
CO., LTD.
Others
(2),(5),(6)
10,735,732
4,118,437
74,586
74,586
-
0.14
32,207,196
Y
N
N
�
1
Teco
Westinghouse
TWMM
(4)
768,918
26,193
7,320
7,320
-
0.10
1,537,837
Y
N
N
Note 4
2
Motovario
S.p.A.
TECNOFIB SRL
(1)
848,775
576
498
498
-
0.01
2,546,325
N
N
N
Note 5
3
Yatec
Engineering
Corporation
Yatec Engineering
(VN) Company
Limited
(4)
89,209
32,321
32,321
32,321
-
14.49
178,418
Y
N
N
Note 6
4
Century
Development
CDC
DEVELOPMENT
INDIA PRIVATE
LIMITED
(6)
436,241
211,291
211,291
-
-
4.84
872,481
Y
N
N
Note 7

183

184

Number of shares
Book value
Ownership (%)
Fair value
Footnote
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES
Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)
December 31, 2018
Table 3
Expressed in thousands of NTD
(Except as otherwise indicated)
Securities held by
Marketable securities
Relationship with the securities issuer
General ledger
account
As of December 31, 2018

TECO ELECTRIC &
MACHINERY CO., LTD.
Stock 1
The Company is a director of the investee
Note 1
190,061
5,806,351
$ 3.38
5,806,351
$ Stock 2
None
�
9,610
93,411
0.10
93,411
Stock 3,ect.
The Company is a director of the investee
�
5,098
83,700
-
83,700
Stock 4
None
Note 4
10,084
113,449
0.08
113,449
Stock 5
The Company is a director of the investee
�
11,527
288,762
1.96
288,762
Stock 6
None
�
47,839
382,711
1.98
382,711
Stock 7
�
�
2,710
18,699
0.06
18,699
Stock 8
The Company is a director of the investee
�
32,980
308,552
10.99
308,552
Stock 9,etc.
None
�
7,500
314,775
5.00
314,775
Stock 10,etc.
�
�
43,654
233,757
-
233,757
Fund 1,etc.
�
�
-
175,084
-
175,084
Teco International
Stock 11
�
Note 1
275
51,700
0.20
51,700
Stock 12,etc.
�
�
13,715
267,455
-
267,455
Stock 13,etc.
�
Note 3
4,589
197,350
-
197,350
Stock 10,etc.
�
Note 2
665
27,698
-
27,698
Tong-an Investment
Stock 14
An investee company accounted by the Company using
equity method
Note 1
19,540
340,974
0.98
340,974
Stock 15
Related party in substance
�
9,197
128,751
8.17
128,751
Stock 16
None
�
8,502
649,549
0.26
649,549
Stock 17
�
�
1,285
136,853
0.04
136,853
Stock 11
The Company is a director of the investee
�
14,050
2,641,400
10.03
2,641,400
Stock 18
None
�
555
78,243
2.25
78,243
Stock 19,etc
�
�
26,166
309,656
-
309,656
Stock 11,etc.
�
Note 2
5,228
387,460
-
387,460
Stock 20, etc.
�
Note 3
15,145
698,071
-
698,071
Fund 2, etc.
�
Note 2
-
14,494
-
14,494
Fund 3, etc
�
Note 4
-
37,453
-
37,453
U.V.G
Stock 21, etc.
�
Note 1
118
5,723
-
5,723
An-Tai International
Stock 14
An investee company accounted by the Company using
equity method
�
2,826
49,309
0.14
49,309
Stock 15
Related party in substance
�
1,270
17,782
1.13
17,782
Stock 19
�
�
2,756
178,568
8.51
178,568
Stock 22
None
�
195
8,986
-
8,986
Stock 23, etc.
�
Note 3
1,545
68,930
-
68,930
Stock 10,etc.
�
Note 2
170
7,990
-
7,990
Jie-Zheng Property
Fund 4, etc.
�
Note 2
-
30,811
-
30,811
Teco Electro
Stock 15
Related party in substance
Note 1
200
2,803
0.18
2,803
Information Technology
Stock 24, etc.
None
�
3,238
32,488
-
32,488

185

==> picture [195 x 697] intentionally omitted <==

186

Purchases
(sales)
Amount
Percentage of
total
purchases (sales)
Credit term
Unit price
Credit term
Balance
Percentage of
total notes/accounts
receivable (payable)
Footnote
Purchaser/seller
Counterparty
Relationship with the
counterparty
Transaction
Differences in transaction
terms compared to third
party transactions
Notes/accounts receivable (payable)
(Except as otherwise indicated)
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES
Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more
For the year ended December 31, 2018
Table 4
Expressed in thousands of NTD

TECO
ELECTRIC &
MACHINERY
Tesen
An investee accounted
for under the equity
method
Purchases
2,270,807
$ 14%
30 days
Note
Note
-
$ -
Taian Subic
�
�
189,986
1%
�
�
�
60,289)
(
(1%)
Kuen Ling
�
�
191,610
1%
�
�
�
152,966)
(
(3%)
Tai-An Wuxi
An indirect investee
accounted for
under the equity method
�
521,565
3%
�
�
�
36,917)
(
(1%)
Wuxi Teco
�
�
1,118,801
7%
�
�
�
406,218)
(
(9%)
Qing Dao Teco
�
�
670,305
4%
�
�
�
54,176)
(
(1%)
Teco Industrial (Malaysia)
Sdn. Bhd.
�
�
424,788
3%
�
�
�
75,318)
(
(2%)
Jiangxi Teco
�
�
146,972
1%
�
�
�
24,504)
(
(1%)
Genmao Electronics
(Suzhao)
�
�
121,540
1%
�
�
�
-
-
Taian Shen Electric Co.,
Ltd.
An investee accounted
for under the equity
method
Sales
206,950)
(
(1%)
90 days
�
�
25,409
1%
E-Joy International
�
�
169,524)
(
(1%)
�
�
�
-
-
Tong Dai
�
�
957,327)
(
(5%)
�
�
�
203,900
6%
Tong Tai Jung
�
�
697,700)
(
(3%)
�
�
�
179,604
5%
Teco Singapore
An indirect investee
accounted for
under the equity method
�
776,836)
(
(4%)
�
�
�
157,105
4%
Teco Westinghouse
�
�
3,479,182)
(
(17%)
�
�
�
374,166
11%
Teco Westinghouse Canada
�
�
806,834)
(
(4%)
�
�
�
71,701
2%
Teco Australia
�
�
1,110,099)
(
(5%)
�
�
�
210,585
6%
Top-Tower
�
�
312,742)
(
(1%)
�
�
�
75,357
2%
Motovario S.P.A.
�
�
206,672)
(
(1%)
�
�
�
129,778
4%
Note: Comparable with other types of transactions, trading conditions are handled in accordance with the agreement of the conditions.

187

Table 5
Amount
Action taken
Allowance for
doubtful accounts
Creditor
Amount collected
subsequent
to the balance sheet
date
December 31, 2018
Expressed in thousands of NTD
(Except as otherwise indicated)
Counterparty
Relationship
with the counterparty
Balance as at
December 31, 2018
Turnover rate
Overdue receivables

TECO ELECTRIC &
MACHINERY CO., LTD.
Tong Dai
An investee accounted for under
the
equity method
204,029
$ 4.59
-
$ -
83,748
$ �
Tong Tai Jung
�
180,115
3.85
-
-
63,827
�
Teco Singapore
�
157,446
5.95
-
-
139,288
�
Teco Westinghouse
An indirect investee accounted
for under the equity method
374,289
8.29
-
-
349,870
�
QingDao Teco
�
269,250
0.03
-
-
942
�
Wuxi Teco
�
103,173
0.36
-
-
6,312
�
Teco Australia
�
213,722
4.21
-
-
92,599
�
Sankyo
�
221,618
0.39
178,201
In the process of
collection
16,412
�
Teco Netherlands
�
327,132
0.20
280,930
�
8,762
�
Teco Westinghouse Canada
�
71,701
7.54
-
-
61,744
�
Motovario S. P. A.
�
172,814
1.96
-
-
24,653
Kuen Ling
TECO ELECTRIC &
MACHINERY CO., LTD.
An investee accounted for under
the equity method
152,966
2.11
-
-
19,541
Tong-An Assets
�
�
212,563
-
-
-
-
Teco Westinghouse
�
An indirect investee accounted
for under the equity method
307,150
-
-
-
12,953
Wuxi Teco
�
�
406,218
1.92
-
-
158,245
U.V.G.
Teco Netherlands
�
246,400
-
-
-
- Total amount was
$18,245

188

General ledger account
Amount
Transaction terms
Percentage of consolidated total operating revenues
or total assets (Note 3)
Transaction
(Except as otherwise indicated)
Number
(Note 1)
Company name
Counterparty
Relationship
(Note 2)
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES
Significant inter-company transactions during the reporting period
For the year ended December 31, 2018
Table 6
Expressed in thousands of NTD

0
TECO ELECTRIC &
MACHINERY CO., LTD.
Tong Dai
(1)
Notes receivable, accounts
receivable and other
receivables
204,029
$ Because there is no transaction in same type which
can be compared with, it is based on the condition
and the period specified in the agreement.
-
0
�
Tong Tai Jung
�
�
180,115
�
-
0
�
Teco Westinghouse
�
Accounts receivable and other
receivables
374,289
�
-
0
�
QingDao Teco
�
�
269,250
�
-
0
�
Teco Australia
�
�
213,722
�
-
0
�
Teco Netherlands
�
�
327,132
�
-
0
�
Sankyo
�
�
221,618
�
-
0
�
Teco Singapore
�
�
157,446
�
-
0
�
Wuxi Teco
�
�
103,173
�
-
0
�
Motovario S. P. A.
�
�
172,814
�
-
1
Wuxi Teco
TECO ELECTRIC &
MACHINERY CO., LTD.
(2)
Accounts receivable
406,218
�
-
2
Tong-An Assets
�
�
Other receivables
212,563
�
-
3
Teco Westinghouse
�
�
�
307,150
�
-
4
U.V.G
Teco Netherlands
(3)
�
246,400
�
-
0
TECO ELECTRIC &
MACHINERY CO., LTD.
Teco westinghouse
(1)
Sales
3,479,182
�
7%
0
�
Teco Westinghouse Canada
�
�
806,834
�
2%
0
�
Teco Singapore
�
�
776,836
�
2%
0
�
Tong Dai
�
�
957,327
�
2%
0
�
Tong Tai Jung
�
�
697,700
�
1%
0
TECO ELECTRIC &
MACHINERY CO., LTD.
Teco Australia
�
�
1,110,099
�
2%
0
�
Top-Tower
�
�
312,742
�
1%
0
�
E-Joy International
�
�
169,524
�
-
0
�
Motovario S. P. A.
�
�
206,672
�
-
5
Tesen
TECO ELECTRIC &
MACHINERY CO., LTD.
(2)
�
2,270,807
�
5%

189

Transaction	Percentage of consolidated total operating revenues Number Relationship	General ledger account Amount Transaction terms or total assets (Note 3) (Note 1) Company name Counterparty (Note 2)	6 Tai-An Wuxi TECO ELECTRIC & (2) Sales 521,565 $ Because there is no transaction in same type which 1%	MACHINERY CO., LTD. can be compared with, it is based on the condition	and the period specified in the agreement.	1 Wuxi Teco � � � 1,118,801 � 2%	2 QingDao Teco � � � 670,305 � 1%	7 Teco Malaysia � � � 424,788 � 1%	8 Taian Subic � � � 189,986 � -	9 Jiangxi Teco � � � 146,972 � -	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:	��	��	Note 2: Relationship with the transaction company:	(1) The parent company to the subsidiary.	(2) The subsidiary to the parent company.	(3)The subsidiary to another subsidiary.	Note 3: Regarding percentage of transaction amount to total operating revenues or total assets, it is computed based on period-end balance of transaction to total assets for balance sheet accounts and based on accumulated	transaction amount for the period to total operating revenues for income statement accounts.

190

			Expressed in thousands of NTD	Investment income	the	Company for the year	ended December 31,	2018 Footnote	174,843 $ None				29,068) ( None 1				34,280 None			576,350 None				137,869 None			181,547 None	16,704 None	247,200 None					27,195 None			17,823 None
					Net profit (loss)	of the investee for	the year ended	December 31, 2018	561,598 $				46,435) (				34,515			576,103				173,316			182,276	26,550	246,687					45,197			19,179
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES	Information on investees	For the year ended December 31, 2018		Initial investment amount Shares held as at December 31, 2018	Balance Balance	as at as at	December 31, December 31,	2018 2017 Number of shares Ownership (%) Book value Main business activities	Manufacturing of bearings 12,293 $ 12,293 $ 39,145,044 31.14 2,087,582 $				Manufacturing of key 431,109 631,410 200,301,025 63.52 209,755	telephone system and nonkey	service unit telephone	system	Investment holdings, investments 100,013 100,013 57,533,521 100 1,064,316	in securities and construction of	commercial buildings	Manufacturing and 726,428 726,428 1,680 100 9,858,588	distribution of motors and	generators, and investment	and trading in USA	Distribution of the 112,985 112,985 7,200,000 90 3,302,731	Company's motor products	in Singapore	Investment holdings 2,490,000 2,490,000 444,134,422 99.60 7,997,267	Manufacturing of Stepping 128,496 128,496 15,386,949 62.57 241,857	Manufacturing and 8,505,434 8,505,434 195,416,844 100 7,489,862	distribution of the	Company's motor products	and home appliances, and	investment holdings	E-business service, mailing 121,232 121,232 11,723,248 57.64 161,139	and data management		Manufacturing and sales of 200,000 200,000 20,000,000 100 216,783	home appliance
								Location	Taiwan				Taiwan				Taiwan			U.S.A				Singapore			Taiwan	Taiwan	Cayman	Islands				Taiwan			Taiwan
								Investee	Tung Pei				Tecom				Teco International			Teco Holdings and	its subsidiaries			Teco Singapore	and its subsidiaries		Tong-An	Teco Electro	UVG and its	subsidiaries				Information	Technology Total	Service	Tesen
			Table 7					Investor	TECO	ELECTRIC &	MACHINERY	CO., LTD.

191

					Footnote	None				None			None		None			None	None		None			None			None	None		None						None
Investment income	(loss) recognized by	the	Company for the year	ended December 31,	2018	64,244) ($				57,540			2,108		13,903			56,566	7,809		58,604			61,169			28,814	17,302		41,264						24,174
		Net profit (loss)	of the investee for	the year ended	December 31, 2018	189,823) ($				62,121			2,034		21,328			56,566	10,574		58,069			218,953			28,814	68,475		214,794						28,529
Shares held as at December 31, 2018					Number of shares Ownership (%) Book value	37,542,159 33.84 440,000 $				5,290,800 92.63 262,353			20,405,297 100 337,986		7,799,996 64.95 144,794			388,423,711 100 5,252,807	17,131,155 76.70 169,000		14,883,591 100 1,451,867			96,353,338 28.67 1,377,232			25,018,661 100 472,934	24,121,700 25.27 407,863		13,408,642 17.61 347,255						7,033,000 84.73 141,071
Initial investment amount		Balance Balance	as at as at	December 31, December 31,	2018 2017	117,744 $ 117,744 $				22,444 22,444			352,252 264,111		92,389 92,389			2,111,889 2,111,889	165,819 165,819		454,923 454,923			951,141 673,801			150,000 150,000	255,116 255,116		230,541 296,003						70,330 70,330
					Main business activities	Manufacturing of color	flybacks transformers, mono	flyback transformers and	mono deflection yokes	Distribution of the	Company's motor products	in Taichung	Manufacturing and sales of	motors	Development and	maintenance of various	electric appliances	Real estate business	Manufacturing and sales of	switches	Manufacturing and distribution of	optical fiber apparatus and	international trading	Development and	management of industrial	park	Investment holdings	Logistics and distribution	services	Manufacturing, installation,	repair, domestic and export	sales and leasing of	condenser, water cooling,	watercooled chiller and	freezer	Bus bar and manufacturing of its	components
					Location	Taiwan				Taiwan			Vietnam		Taiwan			Taiwan	Philippines		British	Virgin	Islands	Taiwan			Taiwan	Taiwan		Taiwan						Taiwan
					Investee	Lien Chang				Tong Dai			Teco Vietnam		Yatec			Tong-An Assets	Taian Subic		Micropac (BVI)	and its subsidiaries		Century	Development		An-Tai	Pelican		Kuen Ling						Taian-Etacom	Technology Co., Ltd.
					Investor	TECO	ELECTRIC &	MACHINERY	CO., LTD.

192

					Footnote	None				None		None		None			None		None		None		None		None		None		None	None	None		None		None			None
Investment income	(loss) recognized by	the	Company for the year	ended December 31,	2018	205,744 $				205,744		205,744		85,640			752) (		167) (		12,818		31,415		4,644		3,483) (		7,568) (	8,637	47,029		8,321		20,315) (			15,470
		Net profit (loss)	of the investee for	the year ended	December 31, 2018	205,744 $				205,744		205,744		85,640			752) (		582) (		205,800		218,953		68,475		12,191) (		25,227) (	8,637	67,051		67,051		21,555) (			30,817
Shares held as at December 31, 2018					Number of shares Ownership (%) Book value	1 100 4,311,420 $				1 100 4,311,420		18,010,000 100 4,311,420		23,031,065 100 1,529,147			12,000,000 100 241,425		9,619,819 28.64 121,532		7,913,289 6.23 201,681		44,266,526 13.17 669,137		6,474,468 6.78 109,474		20,000,000 28.57 196,517		9,120,000 30 261,579	11,720,000 100 133,786	27,502,354 84.97 714,974		4,866,045 15.03 126,459		10,000,000 100 121,237			1,512,500 50 66,838
Initial investment amount		Balance Balance	as at as at	December 31, December 31,	2018 2017	3,691,723 $ 3,691,723 $				3,691,723 3,691,723		3,989,850 3,989,850		646,343 646,343			100,000 100,000		359,656 359,656		87,464 87,464		420,646 420,646		54,874 54,874		200,000 -		274,856 -	92,000 92,000	582,246 582,246		91,079 91,079		98,170 98,170			13,750 13,750
					Location Main business activities	Cayman Investment holdings	Islands			Netherlands Investment holdings		Italy Production and sale of gear	reducers and motors	Samoa Investment holdings and	establishment of overseas	distribution channel	Taiwan Investment holdings		Taiwan Manufacturing and sales of	optical telecom products	Taiwan Manufacturing and sales of	electronic components	Taiwan Development and	management of industrial park	Taiwan Logistics and distribution	services	Taiwan Development and construction of	real estate	Singapore Investing in other areas	Taiwan Investment holdings	Singapore Investment holdings		Singapore Investment holdings		Taiwan Construction and sales of	related raw materials		Taiwan Building management servicing
					Investee	Eagle Holding Co.				TECO MOTOR B.V.		Motovario S.p.A		Tung Pei (SAMOA)	Industrial Co., Ltd.		Tecom	International	Baycom		Creative Sensor	Inc.	Century	Development	Pelican		Century Biotech	Development Corp.	Century Real Estate	Gen Mao	Gen Mao	(Singapore)	Gen Mao	(Singapore)	Centurytech	Construction and	Management Corp.	Jack Property Serrice	& Management
					Investor	TECO	ELECTRIC &	MACHINERY	CO., LTD.	Eagle Holding	Co.	TECO MOTOR	B.V.	Tung Pei			Tecom				Tong-An	Investments								Lien Chang			Gen Mao	International	Century	Development

193

					Footnote	None			None		None		None			None			None			None		None			None		None		None
Investment income	(loss) recognized by	the	Company for the year	ended December 31,	2018	3,377 $			5,225) (		11		10,091) (			18,248			14,416			7,008		579			11,534		3,483) (		7,568) (
		Net profit (loss)	of the investee for	the year ended	December 31, 2018	6,544 $			12,191) (		35		25,227) (			17,878			218,953			205,800		577			218,953		12,191) (		25,227) (
Shares held as at December 31, 2018					Number of shares Ownership (%) Book value	3,850,997 51.60 64,104 $			30,000,000 42.86 294,775		144,600 30.11 10,838		12,160,000 40.00 348,773			2,510 100 120,885			20,368,652 6.06 264,362			4,326,447 3.41 110,265		6,200,000 83 467,264			16,301,644 4.85 211,511		20,000,000 28.57 196,517		9,120,000 30 261,579
Initial investment amount		Balance Balance	as at as at	December 31, December 31,	2018 2017	25,536 $ 25,536 $			300,000 -		9,912 9,912		365,820 30,070			88,108 88,108			179,222 179,222			52,560 52,560		201,467 201,467			184,893 184,893		200,000 -		274,856 -
					Investor Investee Location Main business activities	Century United Development Taiwan Investment consultancy service for	Development domestic and foreign industrial	parks and land	Century Biotech Taiwan Development and construction of	Development Corp. real estate	Greyback Philippines Housing project in Subic	International Property	Century Century Real Estate Singapore Investing in other areas	Development (International) Pte.	Ltd.	Teco Electro Teco Electro Devices British Trading and investment	Co., Ltd. Virgin holdings	Islands	Teco Century Taiwan Development and	Singapore Development management of industrial	park	Teco Creative Sensor Taiwan Manufacturing and sales of	International Inc. electronic components	Kuen Ling CHING CHI British Investing in other areas	INTERNATIONAL Virgin	LIMITED Islands	Tong-An Assets Century Taiwan Leasing of real estate	Development	Century Biotech Taiwan Development and construction of	Development Corp. real estate	Century Real Estate Singapore Investing in other areas	(International) Pte.	Ltd.	Note 1:The Company has reduced capital by the ratio of 50% to offset losses.

194

			Expressed in thousands of NTD			Accumulated	amount	Book value of of investment	investments in income	Mainland remitted back to	China as of Taiwan as of	December 31, December 31,	2018 2018 Footnote	139,614 $ - $ Note 15			1,604,689 - Note 15		1,299,537 - Note 15		7,252) ( - Note 15		1,431,028 - Note 15		334,065 - Note 15		28,437 - Note 15		258,457 - Note 15
				Investment	income	(loss)	recognized	by the	Company	for the	year ended	December 31,	2018	5,486) ($			130,256		62,625		963		30,386		9,468) (		1,705		12,824) (
								Ownership	held by	the	Company	(direct or	indirect)(%)	100			82.35		100		100		98.07		87.6		100		100
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES	Information on investments in Mainland China	For the year ended December 31, 2018		Accumulated Amount remitted from Accumulated	amount of Taiwan to amount	remittance Mainland China/ of remittance	from Amount remitted back from Taiwan	Taiwan to to Taiwan for the to	Mainland year ended Mainland Net income of	China December 31, 2018 China investee for	Remitted to Remitted as of January as of the year ended	Mainland back 1, December 31, December 31,	China to Taiwan 2018 2018 2018	188,139 $ - $ - $ 188,139 $ 5,486) ($			768,259 - - 768,259 158,174		205,551 - - 205,551 62,625		456,293 - - 456,293 963		1,383,653 - - 1,383,653 34,095		1,648,510 - - 1,648,510 10,808) (		20,590 - - 20,590 1,705		467,577 - - 467,577 12,824) (
												Investment	method	Note 2			Note 1		Note 11		Note 3		Note 1		Note 1		Note 3		Note 3
													Paid-in capital	268,799 $			1,697,276		495,213		456,293		1,481,569		947,331		20,590		678,681
			Table 8									Investee in	Mainland China Main business activities	Teco Manufacturing and sales of air	(Dong Guang) conditioners mechanical	equipment	Wuxi Teco Manufacturing and sales of	motors	Taian (Wuxi) Manufacturing and sales of	optical fiber	Nanchang Teco Manufacturing and sales of	home appliances	Jiangxi Teco Manufacturing and sales of	motors	QingDao Teco Manufacturing and sales of	dyes	Xiamen Teco Sales of motors and home	appliances	Xiamen An-Tai Development, manufacturing and	sales of LCD monitors. Plant	rentals and related real estate

195

									Footnote	Note 15		Note 16		Note 16		Note 16		Note 15		Note 15			Note 15		Note 16		Note 16			Note 15	Note 15					Note 15				Note 15
		Accumulated	amount	of investment	income	remitted back to	Taiwan as of	December 31,	2018	- $		-		-		-		-		-			-		-		-			-	-					-				-
				Book value of	investments in	Mainland	China as of	December 31,	2018	29,381 $		30,450		73,394		5,414) (		14,799		126,712			7,408		971		33,337			23,464	158,099					119,819				799,052
Investment	income	(loss)	recognized	by the	Company	for the	year ended	December 31,	2018	2,127 $		513) (		11,051) (		9,355) (		88		7,150			768		2,566) (		510			67,946	2,476) (					8,498				10,144) (
				Ownership	held by	the	Company	(direct or	indirect)(%)	100		100		100		39.9		100		100			100		45		100			100	100					100				100
					Net income of	investee for	the year ended	December 31,	2018	3,103 $		2,137) (		11,051) (		23,447) (		88		7,150			768		1,184) (		510			67,946	2,476) (					8,498				10,144) (
Accumulated	amount	of remittance	from Taiwan	to	Mainland	China	as of	December 31,	2018	9,837 $		340,469		391,843		-		15,990		79,813			-		62,865		59,444			23,829	240,818					-				-
Amount remitted from	Taiwan to	Mainland China/	Amount remitted back	to Taiwan for the	year ended	December 31, 2018	Remitted to Remitted	Mainland back	China to Taiwan	- $ - $		- -		- -		- -		- -		- -			- -		- -		- -			- -	- -					- -				- -
Accumulated	amount of	remittance	from	Taiwan to	Mainland	China	as of January	1,	2018	9,837 $		340,469		391,843		-		15,990		79,813			-		62,865		59,444			23,829	240,818					-				-
								Investment	method	Note 1		Note 3		Note 1		Note 2		Note 3		Note 3			Note 11		Note 1		Note 13			Note 1	Note 11					Note 12				Note 14
									Paid-in capital	9,837 $		680,938		391,843		24,004		15,990		79,813			26,522		141,079		59,444			23,829	240,818					119,840				656,500
								Investee in	Mainland China Main business activities	Teco Han Zou Development and consulting	of device products	Teco Century Manufacturing and sales of	compressor	Fujian Teco Manufacturing and sales of	electronic components	Ecolectric Distribution of air conditioner	International	Teco (Tianjin) Central China area Operation	Innovation center	Teco (Jiang Xi) Manufacturing and sales of air	conditioning mechanical	equipment	Teco Sichuan Sales of home appliances	Trading	Jiangxi Teco- Manufacturing and sales of	Lead wind generator	Qingdao Teco Science Park development and	Innovation business operations and	consulting services	Shanghai Teco Sales of home appliances	Hunan TECO Manufacturing, sales and	Wind Energy technical services of 2.0	Limited megawatt and above	aerogenerator, wheel bay and	other components	Jiangxi TECO Manufacturing and sales of	Westinghouse motors, winding and related	Motor Coil Co., parts	Ltd.	Wuxi TECO Production and sale of	Precision industrial motors and	Industry Co. applications	Ltd.

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									Footnote	Note 15		Note	17,18			Note 15				Note 15					Note 20			Note 15								Note 15			Note 15				Note 15
		Accumulated	amount	of investment	income	remitted back to	Taiwan as of	December 31,	2018	- $		-				-				-					-			-								-			-				-
				Book value of	investments in	Mainland	China as of	December 31,	2018	2,756 $		-				2,560				3,089					-			221								15,496			132) (				597
Investment	income	(loss)	recognized	by the	Company	for the	year ended	December 31,	2018	2,395) ($		-				4,450) (				54) (					-			436								2,501) (			303) (				2,084) (
				Ownership	held by	the	Company	(direct or	indirect)(%)	100		1.63				100				100					100			100								100			100				100
					Net income of	investee for	the year ended	December 31,	2018	2,395) ($		-				4,450) (				54) (					-			436								2,501) (			303) (				2,084) (
Accumulated	amount	of remittance	from Taiwan	to	Mainland	China	as of	December 31,	2018	26,422 $		24,746				6,950				485,455					34,990			14,566								10,167			2,257				-
Amount remitted from	Taiwan to	Mainland China/	Amount remitted back	to Taiwan for the	year ended	December 31, 2018	Remitted to Remitted	Mainland back	China to Taiwan	- $ - $		- -				- -				- -					- -			- -								- -			- -				- -
Accumulated	amount of	remittance	from	Taiwan to	Mainland	China	as of January	1,	2018	26,422 $		24,746				6,950				485,455					34,990			14,566								10,167			2,257				-
								Investment	method	Note 4		Note 5				Note 6				Note 7					Note 8			Note 8								Note 9			Note 9				Note 9
									Paid-in capital	26,422 $		344,643				6,950				485,455					34,990			14,566								10,167			2,257				1,000
									Main business activities	Storage services		Merchandise wholesale				Communication network	information, technology	development, sales and	technology services business	R & D, manufacture of	broadband access network	communication system	equipment; sale of products	to provide technology services	Flat panel displays, IT	products, printed circuit board	assembly, manufacture, testing	Intelligent home systems and spare	parts of the Internet of things,	wholesale, import and export of	goods and technology import and	export, import and export agency,	to provide technical advice,	technical training and technical	services	ERP building, system maintenance	and purchases of information	appliance	ERP building, system maintenance	and purchases of information	appliance		ERP building, system maintenance	and purchases of information	appliance
								Investee in	Mainland China	Beijing Pelican	Express	Fubon Gehua	(Beijing)	Trading	Co., Ltd.	Wuhan Tecom				Tecom Tech	(Wuxi)				Tecom	Tech Investment	(BVI)	Beijing Tecom	Innovation	Technology Co.,	Ltd.					Information	Technology	(Wuxi)	Information	Technology	Total Service	(Hang Zhou)	Information	Technology	Total Service	(Xiamen)

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										Footnote	Note 15
Accumulated Investment Amount remitted from Accumulated	amount of income Taiwan to amount	remittance (loss) Accumulated Mainland China/ of remittance	from recognized amount Amount remitted back from Taiwan	Taiwan to Ownership by the Book value of of investment to Taiwan for the to	Mainland held by Company investments in income year ended Mainland Net income of	China the for the Mainland remitted back to December 31, 2018 China investee for		Remitted to Remitted as of January Company year ended China as of Taiwan as of as of the year ended	Mainland back Investment 1, (direct or December 31, December 31, December 31, December 31, December 31, Investee in	China to Taiwan method 2018 indirect)(%) 2018 2018 2018 2018 2018 Mainland China Main business activities Paid-in capital	Wuxi TECO R&D, manufacturing and sales of 115,125 $ Note 10 86,101 $ - $ - $ 86,101 $ 17,878 $ 100 17,878 $ 121,617 $ 43,266 $	Precision motors and provide products sales	Industry Co. skills	Ltd.	Note 1: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through United View Global Investment Co., Ltd. and Great Teco Motor (Pte) Ltd. and then invest	in Mainland China.	Note 2: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through United View Global Investment Co., Ltd. and Asia Air Tech Industrial (Pte) Ltd. and then	invest in Mainland China.	Note 3: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through United View Global Investment Co., Ltd. and Asia Electric & Machinery (Pte) Ltd. and then	invest in Mainland China.	Note 4: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Pelecanus Express Pte. Ltd., and then invest in Mainland China.	Note 5: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Asian Crown International Co., Ltd., Fortune Kingdom Corporation and Hong Kong Fubon	Multimedia Technology Co., Ltd. and then invest in Mainland China.	Note 6: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Tecom Global Tech Investment (B.V.I) Limited and then invest in Mainland China.	Note 7: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Tecom Global Tech Investment Pte Limited and then invest in Mainland China.	Note 8: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Tecom Tech Investment (B.V.I) Limited and then invest in Mainland China.	Note 9: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Information Technology Total Service (BVI) Co., Ltd. and then invest in Mainland China.	Note 10: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Teco Electro Devices Co., Ltd. and then invest in Mainland China.	Note 11: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invest through Micropac Worldwide (B.V.I) and then invest in Mainland China.	Note 12: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invest through Teco Holding USA Inc. and Teco Westinghouse Motor Company and then invest in Mainland China.	Note 13: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invested through Tecocapital Investment (Samoa) Co., Ltd. and then invest in Mainland China.	Note 14: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Great Teco Motor (Pte) Ltd., Teco Australia Pty. Ltd. and Teco Electric & Machinery (Pte)	Ltd. and then invest in Mainland China.	Note 15: The amount recognized was based on the financial statements that were audited by R.O.C. parent company's CPA firm.	Note 16: The amount recognized was based on the financial statements that were audited by the other CPA firm.	Note 17: Financial assets at fair value through other comprehensive income.	Note 18: As of December 31, 2018, accumulated impairment of $24,746 was accrued.

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Investment	amount	approved	Accumulated by the Ceiling on	amount of Investment investments in	remittance from Commission of Mainland China	Taiwan to the Ministry imposed by	Mainland China of Economic the Investment	as of December Affairs Commission	Company name 31, 2018 (MOEA) of MOEA	TECO Electric & Machinery Co., Ltd. 6,487,880 $ 8,713,487 $ 35,094,549 $	Taiwan Pelican Express Co., Ltd. 51,168 51,168 968,526	Tecom Co., Ltd. 541,961 754,000 359,405	Information Technology Total 12,424 12,424 167,723	Services Co., Ltd.	Teco Electro Devices Co., Ltd. 86,101 104,259 232,262	Note 1: The accounts of the Company are expressed in New Taiwan dollars. Income statement accounts denominated in foreigin currencies are translated into New Taiwan	dollars at the weighted average exchange rates prevailing at the transaction dates and balance sheet accounts at spot exchange rates prevailing at the transaction dates.	Note 2: The amount disclosed was based on Investment Commission, MOEA Regulation No. 09704604680 announced on August 29, 2008.	Note 3: Tecom completed the investment in Mainland China in the third quarter of 2010 and the ceiling on investments was $1,760,251 which was calculated based on Tecom's	net assets of $2,933,752 in the third quarter of 2010.

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			Expressed in thousands of NTD			Interest during the	year ended	December 31, 2018 Others	-	-	-	4,649	1,373	-	-	-	-	-	-	-	-	-	-	-	-
									$
								Interest rate	-	-	-	3.5%	2.3%	-	-	-	-	-	-	-	-	-	-	-	-
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES	Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas	For the year ended December 31, 2018		Property Accounts receivable Provision of endorsements and	transaction (payable) guarantees Financing	Maximum balance during the	Balance at Balance at year ended Balance at	Amount % December 31, 2018 % December 31, 2018 Purpose December 31, 2018 December 31, 2018	- - 13,902 - $ - - $ - $ -	- - 11,243 - - - - -	- - 19,031 - - - - -	- - 1,106 - - - 139,971 133,579	- - - - - - 92,985 92,145	- - - - - - - -	- - - - - - - -	- - - - - - - -	- - 149 - - - - -	- - ( 406,218) (9%) - - - -	- - ( 36,917) (1%) - - - -	- - ( 24,504) (1%) - - - -	- - ( 54,176) (1%) - - - -	- - - - - - - -	- - ( 12,489) - - - - -	- - - - - - - -	- - - - - - - -
									$
					Sale (purchase)			Amount %	$ 42,211 -	59,185 -	72,335 -	7,118 -	- -	3,176 -	161 -	345 -	757 -	( 1,118,801) (7%)	( 521,565) (3%)	( 146,972) -	( 670,305) (4%)	( 16,252) -	( 32,498) -	( 681) -	( 58,565) -
			Table 9				Investee in Mainland	China	Wuxi Teco	Taian (Wuxi)	Jiangxi Teco	QingDao Teco	Xiamen An-Tai	Shanghai Teco	Xiamen Teco	Teco (Jiang Xi)	Wuxi Teco Precision	Wuxi Teco	Taian (Wuxi)	Jiangxi Teco	QingDao Teco	Xiamen An-Tai	Teco (Jiang Xi)	Hunan TECO Wind	Wuxi Teco Precision

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To TECO Electric & Machinery Co., Ltd.

Opinion

We have audited the accompanying consolidated balance sheets of TECO Electric & Machinery Co., �� statements of comprehensive income, of changes in equity and of cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the audit reports of other independent accountants, as described in the Other matter section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then �� IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

Basis for opinion

�� der those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Professional Ethics for Certified Publi�� responsibilities in accordance with the Code. Based on our audits and audit reports of other independent accountants, we believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

202

Key audit matters

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

��ated financial statements of the current period are stated as follows:

Revenue recognition of export sales of heavy industrial products group

Description

Refer to Note 4(34) of the consolidated financial statements for the accounting policies on revenue recognition and Note 14 for the segment financial information. The Group disclosed the financial information of heavy industrial products group and home electric appliance division in the segment financial information. Heavy industrial products group handles the manufacturing and sales of various machinery, equipment and motors. The sales revenue of the heavy industrial products group amounted to NT$33,448,989 thousand, representing 66.76% of the consolidated total sales revenue for the year ended December 31, 2018. Aside from domestic sales in Taiwan, the customers of heavy industrial products group are from China, America, Southeast Asia and Europe and the sales terms vary for different customers. Thus, we consider the revenue recognition of export sales of heavy industrial products group as a key audit matter.

How our audit addressed the matter

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

Obtained an understanding of and validated the internal controls over revenue recognition of export sales of heavy industrial products group to assess the effectiveness of the internal control process.

203

Validated selected samples of export sales revenue transactions of heavy industrial products group to confirm the existence of export sales revenue transactions.

Impairment assessment of goodwill from the acquisition of Motovario S.p.A.

Description

Motovario S.p.A. is headquartered in Italy, and is engaged in the manufacturing and sales of gear reducers and other power transmission equipment. Motovario S.p.A. is considered a minor cashgenerating unit of the Group. As of December 31, 2018, the balance of goodwill was NT$5,207,755 thousand. Refer to Note 6(10) of the consolidated financial statements for information of goodwill, Note 4(21) for the accounting policies on the impairment of non-financial assets and Note 5(2) for the uncertainty of the accounting estimate regarding impairment of goodwill. The Group assesses the impairment of goodwill using the recoverable amount generated from the cash flow forecast discounted using a reasonable discount rate.

The aforesaid recoverable amount includes several assumptions such as the discount rate used and the preparation of financial projections to estimate the cash flows for the next three years. The discount rate and financial projections relating to the future operations of Motovario S.p.A. are subject to management judgement which have a significant impact on the measurement of the recoverable amount, thus affecting the results of the �� assessment of goodwill as a key audit matter.

How our audit addressed the matter

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

Obtained an un�� goodwill impairment assessment.
Assessed whether the future cash flows adopted in the valuation model was in accordance with ��results of the previous operating plans prepared by management.
Evaluated the reasonableness of major assumptions (including the expected growth rate and

204

discount rate) used in the model.

Reviewed the sensitivity analysis for the above significant assumptions and parameters prepared by management and confirmed whether management has adequately addressed the possible impact of the estimation uncertainty on the impairment assessment.

Reclassification from investments accounted for under equity method - subsidiaries into associates due to loss of control

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Other matter – Reports of other independent accountants

As described in Notes 4(3) and 6(7) of the consolidated financial statements, we did not audit the financial statements of certain subsidiaries and investments accounted for under the equity method. Those financial statements were audited by other independent accountants, whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included in the financial statements and the information on the investee disclosed in Note 13 was based solely on the reports of other independent accountants. Total assets amounted to NT$2,630,617 thousand and NT$2,363,784 thousand, both constituting 3% of the consolidated total assets as of December 31, 2018 and 2017, respectively, and total operating revenues amounted to NT$2,475,154 thousand and NT$2,156,230 thousand, constituting 5% and 4% of consolidated total operating revenues for the years then ended, respectively. The investments accounted for under the equity method amounted to NT$2,630,962 thousand and NT$2,490,857 thousand, both constituting 3% of consolidated total assets as of December 31, 2018 and 2017, respectively, the credit balance of investments accounted for under the equity method amounted to NT$83,459 thousand and NT$66,393 thousand, both constituting 0% of consolidated total assets as of December 31, 2018 and 2017, respectively, and the share of profit of associates and joint ventures accounted for under the equity method amounted to NT$143,935 thousand and NT$187,682 thousand, both constituting 4% of the consolidated total comprehensive income for the years then ended, respectively.

206

Other matter –Parent company only financial reports

We have audited and expressed an unqualified opinion with other matter section on the parent company only financial statements of TECO Electric & Machinery Co., Ltd. as of and for the years ended December 31, 2018 and 2017.

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 �� Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

�� ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the Audit Committee, are responsible for overseeing the ��porting process.

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

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

207

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal controls.
Obtain an understanding of internal controls 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 ��
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
�� and, based on the audit evidence obtained, whether a material uncertainty exists related to events or condition�� If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
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

208

209

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NewStandards,Interpretations and Amendments

Effective date by
International Accounting
Standards Board

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

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217

A. ��
��Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.
�� The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
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B. ��
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- The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps: Step 1: Identify contracts with customer.

Step 2: Identify separate performance obligations in the contract(s)

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price.

Step 5: Recognise revenue when the performance obligation is satisfied.

218

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Affected items January 1, 2018 Contract assets Construction contracts receivable Total affected assets Contract liabilities Construction contracts payable Other current liabilities Total affected liabilities	Book value under Adjustment previous for initial application revenue standard of IFRS15 - $ 1,030,504 $ 1,030,504 1,030,504) ( 1,030,504 $ - $ - $ 825,123 $ 178,165 178,165) ( 2,398,053 646,958) ( 2,576,218 $ - $	Adjusted amount after IFRS15 adoption 1,030,504 $ - 1,030,504 $ 825,123 $ - 1,751,095 2,576,218 $	Remark
			(a) (a) (a)(b) (a) (b)

i. Presentation of assets and liabilities in relation to contracts with customers In line with IFRS 15 requirements, the Group changed the presentation of certain accounts in the balance sheet as follows:
(a) Under IFRS 15, net outcome of contract revenue, received amount and receivables in relation to construction contracts are recognized in contract assets (liabilities). Progress billings on each construction contract and the net outcome of recognized cost and profit (loss) in previous reporting period are recognized in receivables from (payables to) customers on construction contracts in accordance with IAS 11, ��
As a result of above stated differences, receivables from customers on construction contracts and payables to customers on construction contracts were decreased by $1,030,504 and $178,165, respectively, and contract assets and contract liabilities were increased by $1,030,504 and $178,165, respectively, on January 1, 2018.
(b) Under IFRS 15, liabilities in relation to sales contracts are recognized as contract liabilities, but were previously presented as advance sales receipts in the balance sheet. As of January 1, 2018, the balance amounted to $646,958.
ii. Please refer to Note 12(4) for other disclosures in relation to the first application of IFRS 15.

219

(2) ��

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	Effective date by
	International Accounting
NewStandards,Interpretations and Amendments	Standards Board
Amendments to IFRS 9, �Prepayment features with negative	January 1, 2019
compensation�
IFRS 16, �Leases�	January 1, 2019
Amendments to IAS 19, �Plan amendment, curtailment or settlement�	January 1, 2019
Amendments to IAS 28, �Long-term interests in associates and joint ventures�	January 1, 2019
IFRIC 23, �Uncertainty over income tax treatments�	January 1, 2019
Annual improvements to IFRSs 2015-2017 cycle	January 1, 2019
Except for the following, the above standards and interpretations have no significant impact to the
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quantitative impact will be disclosed when the assessment is complete.

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

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220

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221

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222

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Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Yatec Engineering Corporation Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd.	Teco Holding USA Inc. United View Global Investment Co., Ltd. Temico International Pte.Ltd. Tesen Electric & Machinery Co., Ltd. Tong-An Assets Management & Development Co., Ltd. Teco Electric Europe Limited Teco Electric & Machinery (Pte) Ltd. Tong Dai Co., Ltd. Tong Tai Jung Co., Ltd. Teco Electro Devices Co., Ltd. Yatec Engineering Corporation Yatec Engineering (VN) Company Limited Taian (Subic) Electric Co., Inc. Taian-Etacom Technology Co., Ltd.	Holding company Holding company Holding company Manufacturing and sales of home appliances Real estate business Distribution of motors Distribution of motors Distribution of motors Expanding the distribution of motors Manufacturing and sales of step-servo motor Development and maintenance of various electric appliances Development of various electric appliances Manufacturing and sales of switches Manufacturing of busway and related components	100 100 60 100 100 100 100 92.63 60 64.08 64.95 100 76.7 84.73	100 100 - 100 100 100 100 92.63 60 64.08 64.95 100 76.7 84.73	Note 1

223

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd.	Taian (Malaysia) Electric Sdn. Bhd. Micropac Worldwide (BVI) E-Joy International Co., Ltd. A-Ok Technical Co., Ltd. Tecom Co., Ltd. Information Technology Total Services Co., Ltd. Teco Smart Technologies Co., Ltd. Teco International Investment Co., Ltd. Tong-An Investment Co., Ltd. Tecnos International Consultant Co., Ltd. An-Tai International Investment Co., Ltd. Taiwan Pelican Express Co., Ltd.	Manufacturing of switches International trading Wholesale and retail of electric appliances Repair of electric appliances Manufacturing and sales of touch-tone phone system and billing box Import sales, leases of franking machines and mail processing and delivery Commissioned sales of phone cards and IC cards, and production of data storage and processing equipment Various productions, investments in securities and construction of commercial buildings Various investments Business management consulting Various investments Delivery and logistics services	66.85 100 98.5 86.67 63.52 67.11 100 100 100 73.54 100 32.15	66.85 100 98.5 86.67 63.52 71.3 100 100 100 73.54 100 32.15	Note 2

224

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Century Development Corporation Century Development Corporation Century Development Corporation	Teco Technology (Vietnam) Co., Ltd. Teco Nanotech Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd. Yaskawa Teco Motor Engineering Co. Eagle Holding Co. Century Development Corporation Teco.Sun Energy Co., Ltd. Century Tech. C&M Corp. United Development Corporation Century Biotech Development Corp.	Manufacturing and sales of motors Manufacturing and sales of nanotech material products Manufacturing, installation, repair, domestic and export sales and leasing of condenser, water cooling, water-cooled chiller and freezer Manufacturing and sales of motors Holding company Real estate and industrial park management and development Energy technical services Construction industry as well as trades and related operation and investment of materials and sandstone used in construction and machinery Investment consultancy service for domestic and foreign industrial parks and land Consultacy service for domestic industrial parks and land	100 86.83 17.61 - 100 52.75 60 100 100 100	100 86.83 19.98 70 100 52.75 - 100 100 -	Note 3 Note 4 Note 1 Note 1

225

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Century Development Corporation Century Peal Estate (International) Pte Ltd. Eagle Holding Co. TECO MOTOR B.V. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A.	Century Real Estate (International) Pet. Ltd. CDC Development India Private Limited TECO MOTOR B.V. Motovario S.p.A. Motovario S.A (Spain) Motovario Ltd. Motovario GMBH Motovario Corp. Motovario S.A (France) Motovario Int. Trading Co. Ltd. Motovario Power Transmission Co. Ltd.	Investments in other areas Investment consultancy service for domestic and foreign industrial parks and land Holding company Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers	100 100 100 100 100 100 100 75 100 100 100	100 100 100 100 100 100 100 75 100 100 100

226

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Motovario S.p.A. Teco Holding USA Inc. Teco Holding USA Inc. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd.	Motovario Gear Solution Private Ltd. Teco Westinghouse Motor Company Company Teco Westinghouse Motor Industrial Canada Industrial Canada Great Teco Motor (Pte) Ltd. Asia Air Tech Industrial (Pte) Ltd. Teco Australia Pty. Ltd. P.T Teco Elektro Indonesia Teco Industrial (Malaysia) Sdn. Bhd. Tecoson Industrial Development (Pte) Ltd.	Sales of motors and reducers Manufacturing and sales of motors and generators Manufacturing and sales of motors and generators Holding company Holding company Manufacturing and sales of motors and home appliances Manufacturing and sales of motors and home appliances Manufacturing and sales of motors Investment in Southeast Asia and Hong Kong	100 100 100 100 100 99.99 100 100 100	100 100 100 100 100 99.99 100 100 100

227

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. Teco Electric & Machinery (Pte) Ltd. Teco Electric & Machinery (Pte) Ltd. Teco Electric & Machinery (Pte) Ltd. Teco Electric & Machinery (Pte) Ltd. Teco Electric & Machinery (Pte.) Ltd. Teco Electric & Machinery (Pte.) Ltd. Teco Electric & Machinery (Pte) Ltd.	Asia Electric & Machinery (Pte) Ltd. Great Teco, S.L. Teco Electric & Machinery B.V. Teco Elektrik Turkey A. S. P.T Teco Multiguna Electro Teco (Thai) Co. Teco Electric & Machinery Sdn. Bhd. Teco (Vietnam) Electric & Machinery Company Ltd. Teco Industrial System Private Limited Teco Electrical Industries Private Limited TYM Electric and Machinery Sdn. Bhd.	Holding company Sales of motors Sales of motors, green power and electric control products Sales of motors and home appliances Sales of motors in Singapore and neighbouring countries Sales of motors in Singapore and neighbouring countries Sales of motors in Singapore and neighbouring countries Manufacturing of motors Sales of motors in India and neighbouring countries Manufacturing of motors Distribution of motors	100 100 100 100 87.5 55 100 60 100 100 100	100 100 100 100 87.5 55 100 60 100 100 100

228

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Tong Dai Co., Ltd. Tong-Dai Co., Ltd. Teco Electro Devices Co., Ltd. Micropac Worldwide (BVI) Teco International Investment Co., Ltd. Tong-An Investment Co., Ltd. Tong-An Investment Co., Ltd. Tong-An Investment Co., Ltd. Taiwan Pelican Express Co., Ltd. Teco Westinghouse Motor Company Tecom Co., Ltd.	Top-Tower Enterprises Co., Ltd. AM SMART Technology CO.,LTD. Teco Electro Devices Co., Ltd. An-Tai International Investment (Singapore) Co., Ltd. Tasia (Pte) Ltd. Jie-Zheng Property Service & Management Co., Ltd. Tecocapital Investment (Samoa) Co., Ltd. Co., Ltd. Tecocapital Investment Co., Ltd. Pelecanus Express Pte. Ltd. Teco Westinghouse Motor Company S. A. de C.V. Tecom International Investment Co., Ltd.	Sales of motors Sales of motors Trading and various investments Investment holdings Various investments Building management servicing Holding company Holding company Holding company Manufacturing and sales of motors and generators Investments in various undertakings	40 80 100 100 100 100 100 100 100 100 100	40 - 100 100 100 100 100 100 100 100 100	Note 5 Note 1

229

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Tecom Co., Ltd. Tecom Co., Ltd. Tecom Co., Ltd. Tecom Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd.	Baycom Opto-Electronics Technology Co., Ltd. Tecom Global Tech Investment (B.V.I.) Limited Tecom Global Tech Investment Pte Limited Tecom Tech Investment (B.V.I.) Limited Ching Chi International Limited K.A. Corp. I Chi Industrial Co., Ltd. Cozy Air-Conditioning Co., Ltd.	Manufacture of fiber optic communications products, providing a full range of fiber optical cables, interconnect, Transceiver/Media converter, patch cord, LC connectors & adapter Investments in various undertakings Investments in various undertakings Investments in various undertakings Investments in other areas Commodity sales and trading business General manufacturing General manufacturing	51.19 100 100 100 - - - -	51.19 100 100 100 100 100 70 100	Note 6 Note 6 Note 6 Note 6

230

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Great Teco Motor (Pte) Ltd. Great Teco Motor (Pte) Ltd. Great Teco Motor (Pte) Ltd. Great Teco Motor (Pte) Ltd. Great Teco Motor (Pte) Ltd. Great Teco Motor (Pte) Ltd. Asia Air Tech Industrial (Pte) Ltd. Teco Australia Pty. Ltd. Tecoson Industrial Development (Pte) Ltd.	Wuxi Teco Electric & Machinery Co., Ltd. Jiangxi Teco Electric & Machinery Co., Ltd. Qingdao Teco Precision Mechatronics Co., Ltd. Fujian Teco Precision Co., Ltd. Shanghai Teco Electric & Machinery Co., Ltd. Wuxi Teco Precision Machinery Co., Ltd. Teco (Dong Guang) Air Conditioning Equipment Co., Ltd. Teco (New Zealand) Limited Tecoson HK Co., Ltd.	Manufacturing and sales of motors and generators Coil-wound motors and hydroelectric power Manufacturing and sales of motors Manufacturing and sales of electric components Agents and sales of motors and electrical appliances Manufacturing and sales of motors and components Manufacturing and sales of air- conditioning mechanical equipment Manufacturing and sales of motors and home appliances Various investments	82.35 98.07 87.60 100 100 100 100 100 100	82.35 98.07 87.60 100 100 100 100 100 100

231

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Tecoson HK Co., Ltd. Asia Electric & Machinery (Pte) Ltd. Asia Electric & Machinery (Pte) Ltd. Asia Electric & Machinery (Pte) Ltd. Asia Electric & Machinery (Pte) Ltd. Asia Electric & Machinery (Pte) Ltd. Teco Electric & Machinery B.V. Teco Electro Devices Co., Ltd. Teco Westinghouse Motor Company An-Tai International Investment (Singapore) Co., Ltd.	Dongguan Tecoson Electric Co., Ltd Nanchang Teco Electric & Machinery Co., Ltd. Xiamen Teco Technology Co., Ltd. Asia Innovative Technology Co., Ltd. Tianjin Teco Technology Co., Ltd. Jiangxi TECO Air Conditioning Equipment Co., Ltd. Teco Electric & Machinery GmbH. Wuxi TECO Precision Industry Co., Ltd. Jiangxi TECO Westinghouse Motor Coil Co., Ltd. Tai-An Technology (Wuxi) Co., Ltd.	Distribution of home appliances Manufacturing and sales of air-conditioning equipment Distribution and research of motors and home appliances Research, development, manufacturing and sales of home appliances Operations center in Central China Manufacturing and sales of various air-conditioning units Manufacturing and sales of motors Manufacturing and sales of motors Manufacturing and sales of motors, winding and related parts Manufacturing and sales of fiber electric equipment	- 100 100 100 100 100 100 100 100 100	100 100 100 100 100 100 100 100 100 100	Note 4

232

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
An-Tai International Investment (Singapore) Co., Ltd. Tecom International Investment Co., Ltd. Tecom International Investment Co., Ltd. Tecom Global Tech Investment (B.V.I.) Limited Tecom Global Tech Investment Pte Limited	Hunan TECO Wind Energy Limited WondaLink Inc. MOCET Networks Inc. Wuhan Tecom Co., Ltd. Tecom Tech (Wuxi) Co., Ltd.	Manufacturing, sales and technical services of 2.0 megawatt and above aerogenerator, wheel bay and other components Wired communication equipment and apparatus, manufacturing of telecommunication equipment and apparatus, manufacturing of electronic parts and design of products Sale of phones and peripherals Communication network information technology development, sales and technology services business R & D, manufacture of broadband access network communication system equipment, asynchronous transfer mode, IP data communication systems, mobile communication handsets, base stations, switching equipment and digital trunking system equipment, high-end routers, Gigabit switch than the above network, program-controlled switchboards; sale of products to provide technology services	100 68.08 100 100 100	100 68.08 100 100 100

233

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Tecom Investment (B.V.I.) Limited Tecom Investment (B.V.I.) Limited Tasia (Pte) Ltd. Tecocapital Investment (Samoa) Co., Ltd. Tecocapital Investment Co., Ltd. Pelecanus Express Pte. Ltd. Ching Chi International Limited Ching Chi International Limited	Tecom Tech (Xiamen) Co., Ltd. Beijing Tecom Innovation Technology Co., Ltd. Sankyo Co., Ltd. Qingdao TECO Innovation Co., Ltd. Technical Information International Co., Ltd. Beijing Pelican Express Co., Ltd. Kuen Ling Machinery Refrigerating (Shanghai) Co., Ltd. Suzhou Kuen Yuan Refrigerating Equipment Co., Ltd.	Flat panel displays, IT products, printed circuit board assembly, manufacture, testing and communication products and equipment, R & D reproduction Wireless network communication system hardware and software, provide technical advice, technical training and technical services Sales of home appliances Science Park development and business operations consulting services Development and sales of software Storage services Manufacturing and sales of water-cooled chiller, etc. General manufacturing	- 100 100 100 70 100 - -	100 100 100 100 70 100 100 100	Note 4 Note 6 Note 6

234

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
K.A. Corp. K.A. Corp. Teco Westinghouse Motor Company S.A. de C.V. Tai-An Technology (Wuxi) Co., Ltd. Information Technology Total Services Co., Ltd. Information Technology Total Services Co., Ltd. Information Technology Total Services Co., Ltd.	Kuen Ling Machinery Refrigerating (Vietnam) Co., Ltd. Kuen Ling Machinery Refrigerating (Indonesia) Co., Teco Westinghouse Colombia S.A.S. Teco Sichuan Trading Co., Ltd. Information Technology Total Service (BVI) Co., Ltd. Universal Mail Service Ltd. Unison Service Corporation	General manufacturing Manufacturing and sales of motors and generators Manufacturing and sales of motors and generators Distribution of motors and home appliances Holding company Engaged in various business documents management, printing and other mail services Engaged in services related to information software, data processing and electronic information supply	- - 100 100 100 100 100	100 100 100 100 100 100 100	Note 6 Note 6

235

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Information Technology Total Service (BVI) Co., Ltd. Information Technology Total Service (BVI) Co., Ltd. Information Technology (Wuxi) Co., Ltd.	Information Technology Total Service (Hang Zhou) Co., Ltd. Information Technology (Wuxi) Co., Ltd. Information Technology Total Service (Xiamen) Co, Ltd.	Engaged in services related to information software, data processing and electronic information supply Engaged in services related to information software, data processing and electronic information supply Engaged in services related to information software, data processing and electronic information supply	100 100 100	100 100 100

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236

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Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Great Teco Motor (Pte) Ltd. An-Tai International Investment Co., Ltd.	Teco Appliance (HK) Co., Ltd. Taian Electric Co., Ltd. An-Sheng Travel Co., Ltd. Taian-Jaya Electric Sdn. Bhd. Teco (Philipines) 3C & Appliances, Inc. Ropali-TECO Corporation Teco Group Science-Technology (Hang Zhou) Co., Ltd. Hubbell-Taian Co., Ltd.	Sales of home appliances Manufacturing and sales of switches Travel agency services Manufacturing and sales of air- conditioning equipment Sales of air conditioning and electrical appliances Sales of vehicles Electrical machinery electric and automatic control technology development and consultation service Import, export and sales of electric wiring devices, lighting, explosion proofing and other accessory products	99.99 100 96 95 60 100 100 49.99	99.99 100 96 95 60 50 100 49.99	Note 1 Note 1 Note 1 Note 1 Note 1 Notes 1 and 2 Note 1 Note 1

237

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Description
			December 31,2018	December 31,2017
Hubbell-Taian Co., Ltd. Tong-An Assets Management & Development Co., Ltd. Tasia (Pte) Ltd. Jack Property Service & Management Company	Hubbell-Anmex International(s) Pte. Ltd. Grey Back International Property Inc. TTMC Co., Ltd. Qingdao Jie Zheng Property Service & Management Company	Distribution of electronic products Real estate management and development Engaged in a variety of investment businesses Property management and related services	100 100 100 100	100 100 100 100	Note 1 Note 1 Note 1 Note 1

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247

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Cash on hand and revolving funds Checking accounts and demand deposits Time deposits and notes issued under repurchase agreement	December 31,2018 21,153 $ 6,646,689 10,867,724 17,535,566 $	December 31,2017
		19,719 $ 9,544,248 4,565,363
		14,129,330 $

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249

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Items		December 31,2018
Current items:
Financial assets mandatorily measured at fair
value through profit or loss
Listed and OTC stocks	$	110,677
Emerging stocks		29,319
Money Market Fund		79,326
		219,322
Valuation adjustment	(	25,367)
	$	193,955
Non-current items:
Financial assets mandatorily measured at fair
value through profit or loss
Listed and OTC stocks	$	910,270
Non-listed and OTC stocks		811,773
Privately-placed funds		230,260
		1,952,303
Valuation adjustment		187,900
	$	2,140,203
A. Amounts recognized in profit or loss in relation to financial assets at fair value through
profit or loss are listed below:
		For the year ended
		December 31,2018
Financial assets mandatorily measured
at fair value through profit or loss
Equity instruments	($	160,975)
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for hedge, please refer to Note 6(13).

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250

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Items		December 31,2018
Current items:
Listed and OTC stocks	$	1,093,955
Valuation adjustment	(	98,004)
	$	995,951
Non-current items:
Listed and OTC stocks	$	7,993,650
Non-listed and OTC stocks		494,449
		8,488,099
Valuation adjustment		2,866,426
	$	11,354,525
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For the year ended
December 31,2018
Equity instruments at fair value through
other comprehensive income
Fair value change recognized in other
comprehensive income
635,424)
($ Cumulative gains (losses) reclassified to
retained earnings due to derecognition
572,647)
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413,891
$ Held at end of year
483
Derecognised during the year
414,374
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Items Non-current items: Time deposits	December 31,2018
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251

A. ��

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Notes receivable Less: Allowance for bad debts Accounts receivable Less: Allowance for bad debts	December 31,2018 1,066,484 $ ( 2,493) 1,063,991 $ 9,283,282 ( 180,854) 9,102,428 $	December 31,2017 1,191,312 $ ( 2,551) 1,188,761 $ 9,621,741 ( 182,664) 9,439,077 $

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

as follows:
Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December 31,2018 7,098,505 $ 1,476,443 952,553 267,598 371,320 10,166,419 $	December 31,2017
		8,258,785 $ 1,281,979 506,645 203,360 377,069
		10,627,838 $

The above ageing analysis was based on past due date.

B. As at December 31, 2018 and 2017, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that �� receivable were $9,102,428 and $9,439,077 respectively.
C. ��
D. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

252

(6) ��

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Raw materials Work in progress Finished goods Inventory in transit Merchandise inventories Raw materials Work in progress Finished goods Inventory in transit Merchandise inventories		December 31,2018
	Cost 2,553,819 $ 1,385,554 6,415,087 548,312 1,304,962 12,207,734 $	Allowance for valuation loss 193,552) ($ 48,969) ( 526,363) ( - 9,165) ( ($778,049) December 31,2017	Book value
			2,360,267 $ 1,336,585 5,888,724 548,312 1,295,797
			11,429,685 $

	Cost 2,595,232 $ 1,263,854 6,563,685 709,757 1,093,438 12,225,966 $		Book value
			2,421,457 $ 1,215,361 5,907,537 709,757 1,082,380
			11,336,492 $

A. ��

B. ��

253

(7) ��

			December 31,2018			December 31,2017
Associates:
1. Tung Pei Industrial Co., Ltd.		$	2,087,582		$	2,045,704
2. Creative Sensor Inc.			391,646			410,737
3. Lien Chang Electronic			440,000			526,975
Enterprise Co., Ltd.
4. Kuen Ling Machinery			347,255			-
Refrigerating Co., Ltd.
5. Others			940,877			863,457
			4,207,360			3,846,873
Joint Venture:
1. Senergy Wind Power Co.,
Ltd. (Note 1)			-			169,825
2. Others (Note 2)			-			5,757
			-			175,582
			4,207,360			4,022,455
Less: Credit balance of long-
term investments (gross
amount before offset of
notes receivable-related
parties, accounts receivable
-related parties, other
receivables-related parties
and other non-current
liabilities)	(		86,926)		(	66,393)
		$	4,120,434		$	3,956,062
��					��
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			For the year ended			For the year ended
			December 31,2018			December 31,2017
1. Tung Pei Industrial Co., Ltd.	$		174,843	$		193,260
2. Creative Sensor Inc.			23,640			24,129
3. Lien Chang Electronic Enterprise
Co., Ltd.	(		64,244)	(		13,165)
4.Kuen Ling Machinery
Refrigerating Co., Ltd.			27,931			-
5. Others	(		49,437)			42,897
Joint Venture:
1. Senergy Wind Power Co., Ltd.
(Note 1)			1,410	(		7,427)
2. Others (Note 2)			-	(		5,767)
	$		114,143	$		233,927
��		��	��

254

��
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Shareholding ratio

Company name	Principal place of business	December 31, 2018	December 31, 2017	Nature of relationship	Method of measurement
Tung Pei Industrial Co., Ltd. Creative Sensor Inc. Lien Chang Electronic Enterprise Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd. (Note)	R.O.C R.O.C R.O.C R.O.C	31.14% 11.50% 33.84% 17.61%	31.14% 11.50% 33.84% 19.98%	Financial investment � � �	Equity method Equity method Equity method Equity method

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		TungPei IndustrialCo.,Ltd.
		December 31,2018	December	31,2017
Current assets	$	5,460,372	$	5,420,336
Non-current assets		7,845,439		7,841,618
Current liabilities	(	3,716,167)	(	3,491,249)
Non-current liabilities	(	2,144,772)	(	2,431,291)
Total assets	$	7,444,872	$	7,339,414
Share in associate�s net
assets	$	2,087,582	$	2,045,704
Goodwill		-		-
Carrying amount of the
associate	$	2,087,582	$	2,045,704

255

		Creative Sensor Inc.	Creative Sensor Inc.
		December 31,2018	December	31,2017
Current assets	$	3,466,786	$	3,168,989
Non-current assets		1,167,518		1,427,060
Current liabilities	(	1,284,592)	(	1,131,231)
Non-current liabilities	(	111,553)	(	60,458)
Total net assets	$	3,238,159	$	3,404,360
Share in associate�s
net assets	$	391,646	$	410,737
Goodwill		-		-
Carrying amount of the
associate	$	391,646	$	410,737

256

Lien Chang Electronic Enterprise Co., Ltd.

			December 31,2018		December	31,2017
Current assets	$		1,684,611		$	1,687,297
Non-current assets			603,290			682,745
Current liabilities	(		948,730)	(		764,895)
Non-current liabilities	(		39,089)	(		48,077)
Total net assets	$		1,300,082		$	1,557,070
Share in associate's net
assets	$		440,000		$	526,975
Goodwill			-			-
Carrying amount of the
associate	$		440,000		$	526,975
			Kuen Ling Machinery	Refrigerating Co., Ltd.
			December 31,2018		December	31,2017
Current assets	$		1,972,061		$	1,757,267
Non-current assets			617,860			630,524
Current liabilities	(		955,868)	(		816,774)
Non-current liabilities	(		163,951)	(		152,935)
Total net assets	$		1,470,102		$	1,418,082
Share in associate's net
assets	$		241,171		$	262,887
Goodwill			106,084			73,560
Carrying amount of the
associate	$		347,255		$	336,447
��
			TungPei Industrial Co.,Ltd.
			For the year ended		For the year ended
			December 31,2018		December	31,2017
Revenue		$	7,913,408	$		7,173,122
Profit for the period from
continuing operations		$	564,485	$		629,397
Other comprehensive loss, net of tax	(		74,911)	(		157,344)
Total comprehensive income		$	489,574	$		472,053
Dividends received from associates		$	117,435	$		78,290

257

Creative Sensor Inc.

		For the year ended		For the year ended
		December 31,2018		December 31,2017
Revenue	$	4,576,761	$	3,957,862
Profit for the period from
continuing operations	$	205,800	$	210,020
Other comprehensive (loss) income,
net of tax	(	168,712)	(	16,812)
Total comprehensive (loss) income	$	37,088	$	193,208
Dividends received from associates	$	23,352	$	23,352
		LienChangElectronic EnterpriseCo.,Ltd.
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Revenue	$	2,428,431	$	2,303,239
(Loss) profit for the period from continuing operations	($	189,823)	($	38,262)
Other comprehensive loss, net of tax	(	67,165)	(	3,017)
Total comprehensive (loss) income	($	256,988)	($	41,279)

Dividends received from associates	$	-	$	28,907
		Kuen LingMachinery	Refrigerating Co.,Ltd
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Revenue	$	2,975,329	$	2,692,408
Profit for the period from continuing operations	$	214,794	$	196,063
Other comprehensive loss, net of tax	(	9,266)	(	27,554)
Total comprehensive income	$	205,528	$	168,509
Dividends received from associates	$	30,223	$	33,481

��
��
��
��
For the year ended For the year ended
December 31,2018 December 31,2017
(Loss) profit for the period
from continuing operations 49,437) ($ 42,897 $
Total comprehensive income
(loss) 49,437) ($ 42,897 $

258

(a) ��

��
1.Lien Chang Electronic Enterprise Co., Ltd. 2.Creative Sensor Inc. 3.Kuen Ling Machinery Refrigerating Co., Ltd.	December 31,2018 $ 334,125 290,437 410,304 1,034,866 $	December 31,2017
		$ 583,781 378,005 -
		961,786 $

��

�� Shareholding ratio

Company name	Principal place of business	December 31,2018	December 31,2017	Nature of relationship	Method of measurement
Senergy Wind Power Co.,	R.O.C	-	50.00%	Joint venture	Equity method

Ltd. (Note)

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		Senergy Wind	PowerCo.,Ltd.
		December 31,2018		December 31,2017
Cash and cash equivalents	$	-	$	339,587
Other current assets		-		1,004
Current assets		-		340,591
Non-current assets		-		53
Total assets		-		340,644
Current liabilities		-	(	1,000)
Total liabilities		-	(	1,000)
Total net assets	$	-	$	339,644
Share in joint venture�s
net assets	$	-	$	169,825
Goodwill		-		-
Carrying amount of the
joint venture	$	-	$	169,825
��

259

��

		Senergy Wind	PowerCo.,Ltd.	PowerCo.,Ltd.
		For the year ended		For the year ended
		December 31,2018		September 30,2017
Revenue	$	-	$	-
Depreciation and amortization	$	-	($	42)
Interest income	$	-	$	5,932
Interest expense	$	-	$	-
Profit before income tax	$	-	($	143,204)
Income tax	$	-	($	471)
Profit (loss)-net of tax	$	-	($	143,675)
Total comprehensive income	$	-	($	143,675)
Dividends received from joint
venture	$	-	$	-
��				��
��
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��		��
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Loss for the period from continuing operations	$	-	($	5,767)
Total comprehensive loss	$	-	($	5,767)

��
��
��

260

	Total		44,375,402 $			26,453,103) (	17,922,299 $		17,922,299 $	1,235,368	119,259) (		502,229) (		32,335	174,819	1,327,790) (		52,000) (	17,363,543 $		43,197,047 $			25,833,504) (	17,363,543 $
	Rental assets		870,543 $			741,771) (	128,772 $		128,772 $	-	-		-		-	79,870) (	9,483) (		-	39,419 $		656,849 $			617,430) (	39,419 $
Miscellaneous	equipment		7,978,335 $			6,538,067) (	1,440,268 $		1,440,268 $	386,588	54,284) (		6,091) (		-	92,221	413,666) (		5,007) (	1,440,029 $		7,828,161 $			6,388,132) (	1,440,029 $
Leasehold	improvements		580,986 $			429,093) (	151,893 $		151,893 $	24,817	300) (		356) (		-	45) (	40,065) (		254	136,198 $		578,721 $			442,523) (	136,198 $
	Leased assets		5,275,736 $			1,688,713) (	3,587,023 $		3,587,023 $	8,074	-		-		-	-	185,201) (		5) (	3,409,891 $		5,283,793 $			1,873,902) (	3,409,891 $
Transportation	equipment		1,080,293 $			741,640) (	338,653 $		338,653 $	148,933	2,893) (		13,850) (		-	42) (	63,750) (		1,569) (	405,482 $		1,116,937 $			711,455) (	405,482 $
Machinery and	equipment		14,015,941 $			12,042,721) (	1,973,220 $		1,973,220 $	382,834	60,974) (		75,452) (		32,335	129,251	382,486) (		21,535) (	1,977,193 $		13,572,413 $			11,595,220) (	1,977,193 $
Buildings and	structures		8,903,839 $			4,236,401) (	4,667,438 $		4,667,438 $	284,122	1) (		295,697) (		-	33,304	233,139) (		23,178) (	4,432,849 $		8,602,994 $			4,170,145) (	4,432,849 $
	Land	At January 1, 2018	Cost 5,669,729 $	Accumulated	depreciation and	impairment 34,697) (	5,635,032 $	2018	Opening net book amount 5,635,032 $	Additions -	Disposals 807) (	Effect of decrease in	consolidated entities 110,783) (	Reversal of impairment	loss -	Reclassifications -	Depreciation charge -	Net exchange	differences 960) (	Closing net book amount 5,522,482 $	At December 31, 2018	Cost 5,557,179 $	Accumulated	depreciation and	impairment 34,697) (	5,522,482 $

261

Buildings and Machinery and Transportation Leasehold Miscellaneous	Land structures equipment equipment Leased assets improvements equipment Rental assets Total	At January 1, 2017	Cost 5,765,210 $ 9,547,990 $ 14,714,940 $ 1,015,168 $ 5,260,389 $ 594,998 $ 7,048,564 $ 877,983 $ 44,825,242 $	Accumulated	depreciation and	impairment 34,697) ( 4,418,938) ( 12,810,915) ( 691,223) ( 1,502,322) ( 429,246) ( 5,726,156) ( 748,295) ( 26,361,792) (	5,730,513 $ 5,129,052 $ 1,904,025 $ 323,945 $ 3,758,067 $ 165,752 $ 1,322,408 $ 129,688 $ 18,463,450 $	2017	Opening net book amount 5,730,513 $ 5,129,052 $ 1,904,025 $ 323,945 $ 3,758,067 $ 165,752 $ 1,322,408 $ 129,688 $ 18,463,450 $	Additions - 55,727 490,403 55,491 7,690 37,637 359,907 - 1,006,855	Disposals 129,976) ( 265,039) ( 38,468) ( 887) ( - 9,796) ( 25,269) ( - 469,435) (	Reclassifications 39,543 35,773 39,298 18,671 6,621 6,493 194,516 8,575 349,490	Depreciation charge - 236,364) ( 363,514) ( 57,487) ( 185,372) ( 40,994) ( 409,733) ( 9,491) ( 1,302,955) (	Net exchange	differences 5,048) ( 51,711) ( 58,524) ( 1,080) ( 17 7,199) ( 1,561) ( - 125,106) (	Closing net book amount 5,635,032 $ 4,667,438 $ 1,973,220 $ 338,653 $ 3,587,023 $ 151,893 $ 1,440,268 $ 128,772 $ 17,922,299 $	At December 31, 2017	Cost 5,669,729 $ 8,903,839 $ 14,015,941 $ 1,080,293 $ 5,275,736 $ 580,986 $ 7,978,335 $ 870,543 $ 44,375,402 $	Accumulated	depreciation	and impairment 34,697) ( 4,236,401) ( 12,042,721) ( 741,640) ( 1,688,713) ( 429,093) ( 6,538,067) ( 741,771) ( 26,453,103) (	5,635,032 $ 4,667,438 $ 1,973,220 $ 338,653 $ 3,587,023 $ 151,893 $ 1,440,268 $ 128,772 $ 17,922,299 $	��	��Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.	��	��	��	��	��	��

262

(9) ��

At January 1, 2018 Cost Accumulated depreciation and impairment 2018 Opening net book amount Reclassifications (transfer during the year) Depreciation charge Net exchange differences Closing net book amount At December 31, 2018 Cost Accumulated depreciation and impairment At January 1, 2017 Cost Accumulated depreciation and impairment 2017 Opening net book amount Reclassifications Depreciation charge Net exchange differences ( Closing net book amount At December 31, 2017 Cost Accumulated depreciation and impairment	Land 1,429,333 $ - 1,429,333 $ 1,429,333 $ - - 5,845 1,435,178 $ 1,435,178 $ - 1,435,178 $ Land 1,444,572 $ - ( 1,444,572 $ 1,444,572 $ - ( - 15,239) ( 1,429,333 $ 1,429,333 $ - ( 1,429,333 $	Buildings and structures Total 2,626,469 $ 4,055,802 $ 1,172,325) ( 1,172,325) ( 1,454,144 $ 2,883,477 $ 1,454,144 $ 2,883,477 $ 33,304) ( 33,304) ( 64,894) ( 64,894) ( 7,350) ( 1,505) ( 1,348,596 $ 2,783,774 $ 2,705,183 $ 4,140,361 $ 1,356,587) ( 1,356,587) ( 1,348,596 $ 2,783,774 $ Buildings and structures Total 2,780,013 $ 4,224,585 $ 1,151,199) 1,151,199) ( 1,628,814 $ 3,073,386 $ 1,628,814 $ 3,073,386 $ 95,156) 95,156) ( 70,928) ( 70,928) ( 8,586) 23,825) ( 1,454,144 $ 2,883,477 $ 2,626,469 $ 4,055,802 $ 1,172,325) 1,172,325) ( 1,454,144 $ 2,883,477 $

263

��

Rental income from investment property Direct operating expenses arising from the investment property that generated rental income during the period Direct operating expenses arising from the investment property that did not generate rental income during the period	For the year ended December 31,2018 165,527 $ 34,543 $ - $	For the year ended December 31,2017
		155,147 $
		67,769 $
		- $

��

(10) ��

		2018			2017
At January 1
Cost	$		5,396,065		$	5,146,709
Accumulated amortization and
impairment			-			-
	$		5,396,065		$	5,146,709
Opening net book amount	$		5,396,065		$	5,146,709
Disposals	(		107,799)			-
Net exchange differences	(		54,640)			249,356
Closing net book amount	$		5,233,626		$	5,396,065
At December 31
Cost	$		5,233,626		$	5,420,066
Accumulated amortization and
impairment			-			-
	$		5,233,626		$	5,420,066
��					��
��
		December31,	2018		December31,	2017
Heavy industrial products
division	$	5,233,626		$	5,288,266
Home electric appliance
division			-			107,799
	$	5,233,626		$	5,396,065

��

264

��
(11) ��

�� ��	��
Long-term prepaid rent Refundable deposits Prepayment for property Prepayment for equipment Long-term notes and accounts receivable Deferred expenses Other assets	December 31,2018 2,532,370 $ 292,542 - 219,776 164,345 81,084 90,582 3,380,699 $	December 31,2017
		1,801,943 $ 307,023 162,834 321,884 197,373 93,473 121,110
		3,005,640 $

��
��
��

265

(12) ��

(13)

��
A. ��
��
B. Explanations of the transactions and contract information in respect of derivative financial
liabilities for which the Group does not adopt hedge accounting are as follows:
Type of borrowings
December 31,2018
Interest rate range
Collateral
Bank borrowings
The Company:
Unsecured borrowings
49,110
$ 0.89%~0.98%
None
Subsidiary:
Secured borrowings
529,306
0.92%~2.48%
Fnancial assets at fair value
through other comprehensive
income , notes receivable,
investments accounted for
under the equity method, land,
buildings, treasury stocks
Unsecured borrowings
1,415,944
0.65%~3.75%
None
1,994,360
$ Type of borrowings
December 31,2017
Interest rate range
Collateral
Bank borrowings
The Company:
Unsecured borrowings
477,670
$ 0.88%~1.46%
None
Subsidiary:
Secured borrowings
565,316
0.90%~4.57%
Available-for-sale financial
assets, notes receivable,
investments accounted for
under the equity method, land,
buildings, treasury stocks
Unsecured borrowings
1,144,635
0.65%~5.21%
None
2,187,621
$ Items
December 31,2018
December 31,2017
Current items:
Financial liabilities held
for trading
Non-hedging derivatives
-
$ 2,528
$ Financial instrument
Contractperiod
Fair value
Forward exchange contract
SELL USD/BUY JPY
Feb. 2, 2018
JPY
300,000,000
213)
($ SELL EUR/BUY USD
Feb. 1, 2018
EUR
3,000,000
2,315)
(
2,528)
($ December 31,2017
Contract amount
(notionalprincipal)

266

��
C. ��

(14) ��

(14)	��
(15)	�� Salary and wages payable Employees�compensation payable Dealers�bonus commission payable Equipment payable Directors�and supervisors�remuneration payable Dividends payable Others Issuance of bonds payable	December 31,2018 1,938,276 $ 569,487 226,860 181,192 135,793 25,711 1,643,041 4,720,360 $ December 31,2018 $ 4,000,000	December 31,2017
			1,831,013 $ 593,215 249,511 136,471 149,494 25,934 1,854,279
			4,839,917 $
			December 31,2017
			$4,000,000

A. ��
��
B. The terms of the first domestic unsecured ordinary corporate bonds issued by the Company in 2017 are as follows:

The Company issued $1,000,000, 1.02% first domestic unsecured ordinary corporation bonds, as approved by the regulatory authority on September 15, 2017. The bonds mature 5 years from the issue date (September 15, 2017 ~ September 15, 2022) and will be redeemed at face value at the maturity date.

267

� (16) ��

��
Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	December 31, 2018
The Company: HSBC Bank Borrowing period is from Apr. 13, 2018 to Apr. 13, 2020; payable at maturity Mizuho Bank Borrowing period is from Oct. 25, 2018 to Oct. 25, 2020; payable at maturity Sumitomo Mitsui Banking Corporation Borrowing period is from Nov. 30, 2018 to Nov. 30, 2020; payable at maturity Hua Nan Commercial Bank Borrowing period is from Jul. 13, 2018 to Jul. 13, 2020; payable at maturity Bank of Taiwan Borrowing period is from Jun. 20, 2018 to Jun. 20, 2020; payable at maturity Subsidiary: Guaranteed syndicated loans Borrowing period is from Aug. 4, 2016 to Aug. 4, 2021; principal payable semi- Cathay United Bank Borrowing period is from March 16, 2011 to March 16, 2021; principal is payable every 6 months in 20 installments King's Town Bank Borrowing period is from Aug. 21, 2017 to Feb. 21, 2020; principal is payable in three installments from Aug. 21, 2018 Hua Nan Commercial Bank Borrowing period is from Dec. 28, 2018 to Dec. 27, 2020; payable at maturity E. Sun Bank Borrowing period is from Jun. 27, 2016 to Jun. 26, 2021; principal is payable monthly Less: Current portion (listed as �2300 other current liabilities�) Commercial papers payable The Company: International Bills Corporation Borrowing period is from Oct. 15, 2018 to Oct. 14, 2020; payable at maturity Grand Bills Finance Corporation Borrowing period is from Mar. 27, 2018 to Mar. 26, 2020; payable at maturity Subsidiary: International Bills Corporation Borrowing period is from Jan. 9, 2018 to Jan. 8, 2020; payable at maturity China Bills Finance Corporation Borrowing period is from Feb. 1, 2018 to Jan. 31, 2020; payable at maturity Less: Discount on commercial papers payable Long-term bank borrowings		0.94% 0.88% 0.92% 0.96% 0.80% Floating interest rate, EURIBOR plus 1.2% 1.53% 2.10% 1.50% 2.27% 0.35%~0.65% 0.62%~0.78% 0.64% 0.53%	None None None None None None Note Note None Note None None None None	1,000,000 $ 950,000 500,000 600,000 400,000 2,079,090 876,949 300,000 40,000 5,142
				6,751,181 904,492) ( 5,846,689 500,000 $ 300,000 50,000 50,000 900,000 335) ( 899,665 6,746,354 $

268

Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	December 31, 2017
The Company: Mizuho Bank Borrowing period is from Oct. 15, 2017 to Oct. 15, 2019; payable at maturity King's Town Bank Borrowing period is from Aug. 21, 2017 to Feb. 21, 2020; principal is payable in three installments from Aug. 21, 2018 Sumitomo Mitsui Banking Corporation Borrowing period is from Nov. 30, 2016 to Nov. 30, 2019; payable at maturity Subsidiary: Guaranteed syndicated loans Borrowing period is from Aug. 4, 2016 to Aug. 4, 2021; principal is payable semi- annually Cathay United Bank Borrowing period is from March 16, 2011 to March 16, 2021; principal is payable every 6 months in 20 installments HSBC Bank Borrowing period is from Apr. 18, 2017 to Apr. 18, 2019; payable at maturity Hua Nan Commercial Bank Borrowing period is from Dec. 28, 2017 to Dec. 28, 2019; payable at maturity Mizuho Bank Borrowing period is from Oct. 15, 2017 to Oct. 15, 2019; payable at maturity Taiwan Cooperative Bank Principal is payable from Dec. 2017 to Jan 2022; in accordance with mutual agreements Chailease Finance Bank Principal is payable monthly from Oct. 26, 2016 to Sep. 26, 2018 E. Sun Bank Principal is payable monthly from Jun 27, 2016 to Jun. 26, 2021 Commercial papers payable The Company: International Bills Finance Corporation Borrowing period is from May 16, 2017 to May 16, 2019; payable at maturity China Bills Finance Corporation Borrowing period is from Mar. 29, 2017 to Mar. 28, 2019; payable at maturity Taiwan Finance Corporation Borrowing period is from Jun. 23, 2017 to Jun. 22, 2019; payable at maturity Grand Bills Finance Corporation Borrowing period is from Mar. 27, 2017 to Mar. 26, 2019; payable at maturity Subsidiary: International Bills Finance Corporation Borrowing period is from Dec. 22, 2017 to Jan. 19, 2019; payable at maturity Long-term bank borrowings Less: Current portion (listed as �2300 other current liabilities�) Less: Discount on commercial papers payable		0.80% 2.00% 0.94% Floating interest rate, EURIBOR plus 1.2% 1.53% 0.93% 1.50% 0.80% 1.575%~1.795% 2.61% 2.27% 0.33%~0.60% 0.36%~0.60% 0.48%~0.85% 0.60%~0.81% 0.61%	None Note None None Note None None None Note Note Note None None None None None	452,000 $ 350,000 300,000 2,506,812 1,267,442 1,000,000 40,000 39,000 19,578 12,150 7,119 4,892,101 877,626) ( 4,014,475
				200,000 $ 500,000 200,000 400,000 50,000 1,300,000 236) ( 1,299,764 6,466,239 $

��

269

��
��
(17) ��
��
��

		December 31,2018		December 31,2017
Present value of defined benefit obligations	($	2,209,928)	($	2,421,192)
Fair value of plan assets		346,370		377,752
Net defined benefit liability	($	1,863,558)	($	2,043,440)

270

(c) ��

For the year ended December 31,2018 Balance at January 1 Current service cost Interest (expense) income Past service cost Remeasurements: Return on plan asset (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Paid from the account Effect of decrease in consolidated entities Others Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	2,421,192) ($ 56,242) ( 34,144) ( 2,089 2,509,489) ( - 472) ( 62,998) ( 14,485 48,985) ( - 184,419 7,841 121,942 34,344 2,209,928) ($	377,752 $ - 5,891 - 383,643 9,862 - - - 9,862 97,091 124,290) ( 4,168) ( 15,780) ( 12 346,370 $		2,043,440) ($ 56,242) ( 28,253) ( 2,089 2,125,846) ( 9,862 472) ( 62,998) ( 14,485 39,123) ( 97,091 60,129 3,673 106,162 34,356 1,863,558) ($

271

For the year ended December 31,2017 Balance at January 1 Current service cost Interest (expense) income Past service cost Others Remeasurements: Return on plan asset (excluding amounts included in interest income or expense) Change in demographic assumptions Change in financial assumptions Experience adjustments Pension fund contribution Paid pension Paid from the account Others Balance at December 31	Present value of defined benefit obligations	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	2,436,114) ($ 19,220) ( 36,141) ( 695 2,301 2,488,479) ( - 601) ( 2,095) ( 54,355) (		307,621 $ - 5,422 - - 313,043 1,817) ( - - - 1,817) ( 157,301 100,337) ( 520) ( 10,082 377,752 $		2,128,493) ($ 19,220) ( 30,719) ( 695 2,301 2,175,436) ( 1,817) ( 601) ( 2,095) ( 54,355) (
	( (	57,051) - 100,337 24,001 - 2,421,192) $			58,868) ( 157,301 - 23,481 10,082 2,043,440) ($

(d) ��

272

(e) ��

For the year ended For the year ended
December31,2018 December31,2017
Discount rate 0.80%~6.85% 0.90%~6.85%
Future salary increases 0.50%~8.16% 0%~8%
��
��
��
��

		Discount rate	Discount rate			Future salaryincreases	Future salaryincreases	Future salaryincreases
	Increase 0.5%		Decrease 0.5%		Increase 0.5%		Decrease 0.5%
December 31, 2018
Effect on present value
of defined benefit
obligation	($	80,367)	$	85,374	$	84,512	($	80,199)
December 31, 2017
Effect on present value
of defined benefit
obligation	($	85,912)	$	91,388	$	90,833	($	85,947)
��
��			��			��
��
��

  - ���������������������������������������������������������������������������������������� ���������������������������������������

(f) ��
��
��
��
��

273

(18) ��

��
�� outstanding ordinary shares.
��
��
- ��
��
- When the holders of the GDRs request the Depositary to redeem the GDRs in accordance with the relevant R.O.C. regulations and the provisions in the Depositary Agreement, the Depositary may (i) deliver the underlying common shares represented by the GDRs to the GDR holders, or (ii) sell the underlying common shares represented by the GDRs in the R.O.C. stock market on behalf of the GDR holder. The payment of proceeds from such sale shall be made subject to the relevant R.O.C. laws and regulations and the provisions in the Depositary Agreement.
��
��As of ��, 2018, the Company has redeemed all depository receipts.
��
��

274

Tong-An Investment Co., Ltd. An-Tai International Investment Co., Ltd. Top-Tower Enterprises Co., Ltd. Tong-An Investment Co., Ltd. An-Tai International Investment Co., Ltd. Top-Tower Enterprises Co., Ltd.		December 31,2018	December 31,2018	December 31,2018
		Shares Cost Market value (in thousands) (in dollars) (in dollars) 19,540 14.92 $ 17.45 2,826 10.37 17.45 77 9.37 17.45 22,443 December 31,2017
		Shares (in thousands) 19,540 2,826 77 22,443	Cost (in dollars) 14.92 $ 10.37 9.37	Market value (in dollars) 28.50 $ 28.50 28.50

(19) ��

��

(20) ��
��
- ��

��

��
��
��
��
��
��
��

275

��
E. ��
��

(21) ��

��
		Unrealized gains			Currency
			on valuation		translation			Total
At January 1, 2018		$	-	($	1,759,357)	($		1,759,357)
IFRS opening balance adjustment			1,848,757		-			1,848,757
Unrealized gains and losses on
financial assets:
�Group			605,558		-			605,558
�Associates	(		20,180)		-	(		20,180)
Revaluation transferred to retained
earnings			572,647		-			572,647
Currency translation differences:
�Group			-	(	142,367)	(		142,367)
At December 31, 2018		$	3,006,782	($	1,901,724)		$	1,105,058
		Unrealized gains			Currency
			on valuation		translation			Total
At January 1, 2017	$		2,218,526	($	1,051,753)		$	1,166,773
Unrealized gains and losses on
financial assets:
�Group			1,563,333		-			1,563,333
�Associates			4,019		-			4,019
Currency translation differences:
�Group			-	(	707,604)	(		707,604)
At December 31, 2017		$	3,785,878	($	1,759,357)		$	2,026,521

276

(22) ��

��
Revenue from customers Others-rental revenue Others-(loss) gain on financial assets at fair value through profit or loss	For the year ended December 31,2018 49,361,180 $ 794,813 51,066) ( 50,104,927 $	For the year ended December 31,2018
		50,104,927 $

A. Disaggregation of revenue from customers

The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines:

time in the following major product lines:
For theyear ended December 31,2018		Revenue from external customer contracts
Sales of heavy industrial products Sales of home appliances Others Service revenue Consruction contract		$ 29,684,770 5,940,812 2,866,510 7,520,090 3,348,998 49,361,180 $

B. Contract assets and liabilities

The Group has recognized the following revenue-related contract assets and liabilities: Revenue��

��
Revenue recognized that was included in the contract liability balance at the beginning of the period Electromechanical engineering contracts Advance sales receipts Royalty received in advance	For the year ended December 31,2018
	- $ 871,551 1,768
	873,319 $

C. Related��

277

(23) ��

(23)	��
(24)	�� �� �� �� �� For the year ended For the year ended December 31,2018 December 31,2017 Interest income from bank deposits 219,986 $ 150,197 $ Rental revenue 197,825 188,565 Dividend income 553,818 508,613 Insurance claims income - 346,186 Other non-operating income 292,454 313,375 1,264,083 $ 1,506,936 $ For theyear ended For theyear ended December 31,2018 December 31,2017 (Loss) gain on disposal of property, plant and equipment 29,086) ($ 150,541 $ Gain on disposal of investments 631 112,619 Net currency exchange gain (loss) 76,925 235,383) ( Net loss on financial assets at fair value through profit or loss 109,909) ( 4,573) ( Impairment loss on financial assets - 889) ( Net gain (loss) on financial liabilities at fair value through profit or loss 2,528 2,528) ( Gain on remeasurement 46,515 - Reversal of impairment loss recognized in profit or loss 32,335 - Fire loss - 262,216) ( Miscellaneous disbursements 409,823) ( 386,092) ( ($ 389,884) ($ 628,521)	For the year ended December 31,2018	For the year ended December 31,2017
		219,986 $ 197,825 553,818 - 292,454	150,197 $ 188,565 508,613 346,186 313,375
		1,264,083 $	1,506,936 $

(25) ��

�� ��
Interest expense Other finance expenses	For the year ended December 31,2018 218,005 $ 4,535 222,540 $	For the year ended December 31,2017
		239,427 $ 15,211
		254,638 $

278

(26) ��

Wages and salaries Employees�compensation and directors�and supervisors� remuneration Labor and health insurance fees Pension costs Other personnel expenses Depreciation charges on property, plant and equipment Amortization charges on intangible assets	For the year ended December 31,2018 8,850,328 $ 691,645 926,335 554,525 445,182 1,392,684 135,856 $ 12,996,555	For the year ended December 31,2017 $ 8,786,630 594,404 899,806 504,272 429,812 1,373,883 110,005
		$ 12,698,812

A. According��
B. For��
C. For��

The��

��

279

(27)

��
��
��
��
��
For the year ended
For the year ended
December 31,2018
December 31,2017
Current tax:
Current tax on profits for the
period
657,519
$ 843,869
$ Tax on undistributed surplus
earnings
102,786
137,354
Prior year income tax
under (over) estimation
4,498
203)
(
Effect from Alternative
Minimum tax
6,456
7,692
Total current tax
771,259
988,712
Deferred tax:
Origination and reversal of
temporary differences
135,392)
(
179,056)
(
Impact of change in tax rate
174,452
-
Total deferred tax
39,060
179,056)
(
Income tax expense
810,319
$ 809,656
$ For the year ended
For the year ended
December 31,2018
December 31,2017
Currency translation differences
4,532)
($ 68,969)
($ Remeasurement of defined
benefit obligations
1,534)
($ -
$ Impact of change in tax rate
(
60,449)
(
3,037)
($ 66,515)
($ 72,006)

280

��
For the year ended
December 31,2018
Tax calculated based on profit
before tax and statutory tax rate
1,388,411
$ Effects from items disallowed
by tax regulation
615,121)
(
Effect from investment tax credits
3,159)
(
Prior year income tax under
(over) estimation
4,498
Underestimation of prior
year�s net deferred tax assets
and liabilities earnings
172,071)
(
Additional 10% tax on
undistributed earnings
102,786
Effect from Alternative Minimum
Tax
6,456
Others
75,933)
(
Impact of change in tax rate
174,452
Income tax expense
810,319
$

For the year ended
December 31,2017
1,226,085
$ 422,809)
(
35,723)
(
203)
(
111,730)
(
137,354
7,692
8,990
-
809,656
$

281

��

��
Temporary differences �Deferred tax assets: Impairment loss Currency translation differences Difference resulting from different usefullives of property, plant and equipment between financial and tax basis Unrealized expenses Permanent loss on investments Loss on inventory Over provision of allowance for doubtful accounts Others Tax losses �Deferred tax liabilities: Investment income from foreign investments Land value incremental reserve Trademark right Others		For theyear ended December 31,2018
	January1 90,530 $ 231,223 50,602 375,724 29,817 126,258 33,166 311,034 134,530 1,382,884 829,815 1,050,369 347,341 195,498 2,423,023 1,040,139) ($	Recognized in profit or loss 3,804) ($ 790) ( 9,906 43,707) ( 5,263 39,931) ( 13,498) ( 63,291) ( 12,520) ( 162,372) ( 77,523) ( - 51,660) ( 5,871 123,312) ( 39,060) ($	Recognized in other comprehensive income 19,779 $ 45,073 - - - - - 1,663 - 66,515 - - - - - 66,515 $	Effect of decrease in consolidated entities - $ - - 12,059) ( - 3,070) ( 3,381) ( 17,774) ( - 36,284) ( 45,381) ( - - 254) ( 45,635) ( 9,351 $	December 31
					106,505 $ 275,506 60,508 319,958 35,080 83,257 16,287 231,632 122,010
					1,250,743
					706,911 1,050,369 295,681 201,115
					2,254,076
					1,003,333) ($

282

For the year ended December 31, 2017

Temporary differences �Deferred tax assets: Impairment loss Currency translation differences Difference resulting from different usefullives of property, plant and equipment between financial and tax basis Unrealized expenses Permanent loss on investments Loss on inventory Over provision of allowance for doubtful accounts Others Tax losses �Deferred tax liabilities: Investment income from foreign investments Land value incremental reserve Trademark right Others	January1 91,548 $ 161,971 56,322 342,575 29,817 142,317 35,206 209,040 125,446 1,194,242 929,393 1,050,369 331,034 174,647 2,485,443 1,291,201) ($	Recognized in profit or loss 1,018) ($ 283 5,720) ( 33,149 - 16,059) ( 2,040) ( 98,957 9,084 116,636 $ 99,578) ( - 16,307 20,851 62,420) ( 179,056 $	Recognized in other comprehensive income - $ 68,969 - - - - - 3,037 - 72,006 $ - - - - - 72,006 $	December 31
				90,530 $ 231,223 50,602 375,724 29,817 126,258 33,166 311,034 134,530
				1,382,884
				829,815 1,050,369 347,341 195,498 2,423,023
				1,040,139) ($

283

��

December 31, 2018

Year incurred 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017	Amount filed/ assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount filed Amount filed Amount filed Amount filed	Unused amount 124,261 $ 936,512 588,631 305,820 407,619 198,582 157,772 339,701 203,007 277,069 3,538,974 $ December 31,2017	Unrecognized deferred tax assets 82,620 $ 913,411 588,631 305,820 407,619 198,582 157,772 172,811 203,007 277,069 3,307,342 $	Usable until year
				2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Year incurred 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017	Amount filed/ assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount assessed Amount filed Amount filed Amount filed Amount filed	Unused amount 298,917 $ 970,642 585,213 335,411 361,498 199,182 135,719 347,093 303,404 225,643 3,762,722 $	Unrecognized deferred tax assets 279,502 $ 970,642 585,213 335,411 361,498 199,182 122,978 347,093 245,436 155,172 3,602,127 $	Usable until year
				2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

��

��
Deductible temporary differences	December 31,2018 1,949,343 $	December 31,2017
		1,911,927 $

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

284

�� (28) ��

(28)	��
			For the yearendedDecember31,			2018
				Weighted average
				number of ordinary
				shares outstanding		Earnings per
		Amount after tax		(in thousands)	share (indollars)
	Basic(Diluted) earnings per share
	Profit attributable to ordinary
	shareholders of the parent	$	3,150,089	1,980,250	$	1.59
			For the yearendedDecember31,			2017
				Weighted average
				number of ordinary
				shares outstanding		Earnings per
		Amount after tax		(in thousands)	share (indollars)
	Basic(Diluted) earnings per share
	Profit attributable to ordinary
	shareholders of the parent	$	3,092,358	1,980,250	$	1.56
(29)	��
	A. ��		��
			For the year ended For the year ended
			December 31,2018 December 31,2017
	Acquisition of property, plant and
	equipment		$	1,235,368 $		1,006,855
	Add:
	Payables at beginning of the period			136,471		151,433
	Less:
	Payables at end of the period		(	181,192) (		136,471)
	Cash paid		$	1,190,647 $		1,021,817

��

285

(30)	�� Consideration received Equity instruments Non-controlling interest Total consideration Carrying amount of the assets and liabilities of the subsidiary Cash Notes and accounts receivable Contract assets Inventories Other current assets Property, plant and equipment Other non-current assets Short-term borrowings Notes and accounts receivable Other current liabilities Long-term borrowings Other non-current liabilities Total net assets Gain on remeasurement Short-term borrowings January 1, 2018 2,187,621 $ Changes in cash flow from financing activities 121,466) ( Changes in loss of control in subsidiaries 71,795) ( December 31, 2018 1,994,360 $ Short-term borrowings January 1, 2017 3,078,361 $ Changes in cash flow from financing activities 890,740) ( December 31, 2017 2,187,621 $	$ $ ( ( ( ( ( $ Long-term borrowings(Note) 7,343,865 $ 311,897 4,916) ( 7,650,846 $ Long-term borrowings(Note) 10,271,156 $ 2,927,291) ( 7,343,865 $		May23,2018 392,186 1,100,697 1,492,883 434,442 782,661 44,242 548,071 108,104 502,229 227,677 71,795) 408,209) 563,431) 4,916) 152,707) 1,446,368 46,515 Liabilities from financing activities-gross 9,531,486 $ 190,431 76,711) ( 9,645,206 $ Liabilities from financing activities-gross 13,349,517 $ 3,818,031) ( 9,531,486 $
			$

��

� (31) ��

��

286

Name of subsidiary	Amount Ownership Amount Ownership $ 343,717 36.48% $ 316,178 36.48% 1,095,193 67.85% 1,128,238 67.85% - - 1,081,634 80.02% 2,122,394 47.25% 2,021,418 47.25% Non-ControllingInterest December 31,2018 December 31,2017	Amount Ownership Amount Ownership $ 343,717 36.48% $ 316,178 36.48% 1,095,193 67.85% 1,128,238 67.85% - - 1,081,634 80.02% 2,122,394 47.25% 2,021,418 47.25% Non-ControllingInterest December 31,2018 December 31,2017	Amount Ownership Amount Ownership $ 343,717 36.48% $ 316,178 36.48% 1,095,193 67.85% 1,128,238 67.85% - - 1,081,634 80.02% 2,122,394 47.25% 2,021,418 47.25% Non-ControllingInterest December 31,2018 December 31,2017
	Amount Ownership $ 343,717 36.48% 1,095,193 67.85% - - 2,122,394 47.25% December 31,2018
	Amount $ 343,717 1,095,193 - 2,122,394	Amount $ 316,178 1,128,238 1,081,634 2,021,418
Tecom Co., Ltd. Taiwan Pelican Express Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd.(Note) Century Development Corporation			36.48% 67.85% 80.02% 47.25%

��

287

��

��
			TecomCo.,		Ltd.
			December 31,2018		December 31,2017
Current assets		$	1,310,189	$	1,513,819
Non-current assets			794,441		724,220
Current liabilities	(		1,145,990)	(	1,245,590)
Non-current liabilities	(		359,631)	(	442,489)
Total net assets		$	599,009	$	549,960
			Taiwan Pelican ExpressCo.,Ltd.
			December 31,2018		December 31,2017
Current assets		$	1,638,107	$	1,787,139
Non-current assets			744,434		654,569
Current liabilities	(		741,776)	(	759,856)
Non-current liabilities	(		26,555)	(	19,010)
Total net assets		$	1,614,210	$	1,662,842
			Kuen LingMachinery	Refrigerating Co.,Ltd.
			December 31,2018		December 31,2017
Current assets		$	1,917,520	$	1,757,267
Non-current assets			622,107		630,524
Current liabilities	(		1,043,435)	(	816,774)
Non-current liabilities	(		157,623)	(	152,935)
Total net assets		$	1,338,569	$	1,418,082
			CenturyDevelopmentCorporation
			December 31,2018		December 31,2017
Current assets	$		901,156	$	1,139,718
Non-current assets			5,697,648		4,764,686
Current liabilities	(		588,627)	(	561,768)
Non-current liabilities	(		671,449)	(	1,062,833)
Total net assets	$		5,338,728	$	4,279,803

288

��

			TecomCo.,	TecomCo.,	TecomCo.,	Ltd.
			For the year ended			For the year ended
			ended December 31,2018			ended December 31,2017
Revenue	$		2,428,662	$		3,085,255
Loss before income tax	(		51,258)	(		67,057)
Income tax expense	(		4,248)	(		66)
Loss for the year	(		55,506)	(		67,123)
Other comprehensive
income (net of tax)			110,905			82,218
Total comprehensive
income for the year	$		55,399	$		15,095
Comprehensive income (loss)
attributable to non-
controlling interest	$		14,829	$		14,426
			Taiwan Pelican ExpressCo.,Ltd.
			For the year ended			For the year ended
			December 31,2018			December 31,2017
Revenue	$		3,360,947	$		3,059,610
Profit before income tax			78,919			134,661
Income tax expense	(		10,444)	(		16,250)
Profit for the year			68,475			118,411
Other comprehensive loss
(net of tax)	(		16,867)	(		36,608)
Total comprehensive income
for the year		$	51,608		$	81,803
Comprehensive income
attributable to non-controlling
interest		$	46,458		$	80,338
Dividends paid to non-
controlling interests		$	68,010		$	32,105

289

Kuen Ling Machinery Refrigerating Co., Ltd.

			For the period from		For the year ended
			January1 to May23,2018		December 31,2017
Revenue	$		1,087,532	$	2,692,408
Profit before income tax			87,655		253,110
Income tax expense	(		20,451)	(	57,047)
Profit for the period			67,204		196,063
Other comprehensive income
(loss) (net of tax)			5,984	(	27,554)
Total comprehensive income
for the period	$		73,188	$	168,509
Comprehensive income
attributable to non-controlling
interest		$	-	$	135,645
Dividends paid to non-
controlling interests	$		-	$	134,054
Note: The summarized financial information of Kuen Ling, which is				attributable to the Group, had
been disclosed up to the date that the Group lost control.
			CenturyDevelopment		Corporation
			For the year ended		For the year ended
			December 31,2018		December 31,2017
Revenue	$		1,050,641	$	1,310,846
Profit before income tax			287,386		379,464
Income tax expense	(		68,433)	(	64,590)
Profit for the year			218,953		314,874
Other comprehensive loss
(net of tax)	(		8,789)	(	10,089)
Total comprehensive income
for the year	$		210,164	$	304,785
Comprehensive income
attributable to non-controlling
interest	$		106,174	$	167,574
Dividends paid to non-controlling
interests	$		50,903	$	76,447

290

��

��
		TecomCo.,		Ltd.
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Net cash provided by
operating activities	$	171,452	$	442,105
Net cash used in investing
activities	(	149,562)	(	40,743)
Net cash used in
financing activities	(	146,222)	(	359,266)
(Decrease) increase in cash
and cash equivalents	(	124,332)		42,096
Cash and cash equivalents,
beginning of year		306,221		275,120
Cash and cash equivalents, end
of year	$	181,889	$	317,216
		Taiwan Pelican ExpressCo.,Ltd.
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Net cash provided by operating
activities	$	123,630	$	109,282
Net cash used in investing
activities	(	181,505)	(	73,672)
Net cash used in financing
activities	(	95,148)	(	42,907)
Effect of exchange rates on
cash and cash equivalents	(	30)	(	51)
Decrease in cash and cash
equivalents	(	153,053)	(	7,348)
Cash and cash equivalents,
beginning of year		1,041,321		1,048,669
Cash and cash equivalents,
end of year	$	888,268	$	1,041,321

291

		Kuen Ling Machinery	Refrigerating Co., Ltd.	Refrigerating Co., Ltd.
		For the period from		For the year ended
		January1 to May23,2018		December 31,2017
Net cash provided by
operating activities	$	116,389	$	229,941
Net cash provided by (used in)
investing activities		5,890	(	66,650)
Net cash used in financing
activities	(	48,898)	(	186,819)
Effect of exchange rates
on cash and cash equivalents		338	(	18,824)
Increase (decrease) in cash and
cash equivalents		73,719	(	42,352)
Cash and cash equivalents,
beginning of period		360,723		403,075
Cash and cash equivalents,
end of period	$	434,442	$	360,723
��
��
		CenturyDevelopment		Corporation
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Net cash provided by operating
activities	$	373,434	$	471,486
Net cash (used in) provided by
investing activities	(	1,074,898)		453,948
Net cash provided by (used in)
financing activities		457,951	(	739,282)
Effect of exchange rates on
cash and cash equivalents	(	14,048)	(	312)
(Decrease) increase in cash and
cash equivalents	(	257,561)		185,840
Cash and cash equivalents,
beginning of year		808,457		622,617
Cash and cash equivalents,
end of year	$	550,896	$	808,457

292

7. ��

(1) ��

Names of relatedparties	Relationship with the Group	Names of relatedparties	Relationship with the Group
Teco Middle East Electrical & Machinery Co., Ltd. (TME) Teco (PHILIPPINES) 3C & Appliances, Inc (Teco 3C) Jiangxi Teco - Lead PM Generator (Jiangxi Teco - Lead) Taian-Jaya Electric Sdn. Bhd. (Taian-Jaya) Nanchang Dong-Huan Management & Consulting Co., Ltd. (Nanchang Dong-Huan)(Note 1) Hubbell-Taian Co., Ltd. (Hubbell) An-Sheng Travel Co., Ltd. (An-Sheng) Le-Li Co., Ltd. (Le-Li) Lien Chang Electronic Enterprise Co., Ltd. (Lien Chang) Tung Pei Industrial Co., Ltd. (Tung Pei) Taian Electric Co., Ltd. (Taian Electric) Royal Host Taiwan Co., Ltd. (Royal Host) Taisan Electric Co.,Ltd. (Taisan Electric) Tension Envelope Taiwan Co., Ltd. (Tension) Creative Sensor Inc. (Creative Senso) Kogle Foods Co., Ltd. (Kogle) TG Teco Vacuum Insulated Glass (TG Teco Vacuum Insulated Glass) TA Associates International Pte Ltd. (TA Assotiates) (Note 1) Teco-Motech Co., Ltd. (Teco-Motech) Kuen Ling Machinery Refrigerating Co., Ltd. (Kuen Ling) (Note 3)	Associates � � � � � � � � � � � � � � � � � � �	Nano Bit Tech Co., Ltd. (Nano Bit) (Note 2) Shanghai Xiangseng Mechanical and Electrical Trading Co., Ltd. (Shanghai Xiangseng) Xianlaoman Food Services Co., Ltd. (Xianlaoman ) Teco Group Science Techology (Han Zou) Co., Ltd. (Teco Group) Shanghai Tungpei Enterprise Co., Ltd. (Shanghai Tungpei) Greyback Internatiomal Property, Inc. (Greyback) ABC Cooking Studio Taiwan Co., Ltd. Qingdao Teco Century Advanced High Tech Mechatronics Co., Ltd. (Teco Century) Senergy Wind Power Co., Ltd. (Senergy Wind Power) (Note 4) Ropali-Teco Corporation (ROTECO) Fujio Food System Taiwan Co., Ltd. (Fujio Food) Foremost International Food & Beverage Co., Ltd. (Foremost Food) Teco Technology & Marketing Center Co., Ltd. (TTMC) An-shin Food Service Co., Ltd. (An-shin) Teco Image System Co., Ltd. (Teco Image) Ming Full Ltd. (Ming Food) Taiwan Art & Bussiness Inyerdisplinary Fundation (Taiwan Art ) Xia Men An-Shin Food Management Co., Ltd. (Xia Men An-Shin) Teco Technology Foundation (Teco Found) Koryo Electronics Co., Ltd. (Koryo)	Associates � � � � � � � � � � � � Other related parties � � � � � �

293

��This company was dissolved in 2017.

��
��
��

��

(2) ��
��

�� ��
Sales of goods and services: Associates Other related parties	For the year ended December31,2018 433,304 $ 391,833 825,137 $	For the year ended December31,2017
		468,099 $ 321,382
		789,481 $

The Group sells commodities and services to related parties based on mutually agreed selling price and terms as there is no similar transaction to be compared with.

��

��
Purchases of goods: Associates Other related parties	For the year ended December 31,2018 461,603 $ 207 461,810 $	For the year ended December 31,2017
		163,057 $ 59
		163,116 $

��

294

��

��
Receivables from related parties: Associates Other related parties Less: Reclassified to other receivables Other receivables - transfer of accounts receivable that were past due Associates Associates Le-Li Co., Ltd. Others Other related parties Other receivables - others	December 31,2018 $ 154,346 94,273 ( 4,706) 243,913 4,706 $ 15,738 46,977 3,558 66,273 70,979 $ 314,892	December 31,2017
		$ 101,112 88,859 ( 5,339) 184,632 5,339 $ 9,862 14,510 5,133 29,505 34,844 $ 219,476

��
��

��
Payables to related parties: Associates Other related parties	December 31,2018 $ 225,882 1,039 $ 226,921	December 31,2017
		$ 123,800 839 $ 124,639

��

��	��
Associates	December 31,2018 $ 42,675	December 31,2017
		$ 41,051

295

(3) ��

��
Salaries and other short-term employee benefits Post-employment benefits	For the year ended December 31,2018 506,652 $ 5,745 512,397 $	For the year ended December 31,2017
		557,623 $ 6,363
		563,986 $

296

8. ��

��
Pledged asset	Book value	Purpose
	December 31,2018
Notes receivable Other current assets Demand deposits Time deposits Cash and bank deposits Financial assets at fair value through other comprehensive income - non-current Teco Image System Co., Ltd. Far Eastone Telecommunications Co., Ltd. Innolux Corporation Taiwan High Speed Rail Corporation Non-current financial assets at amortised cost Investments accounted for under the equity method Creative Sensor Inc. Property, plant, and equipment Land Buildings and structures Other non-current assets Refundable deposits Long-term prepaid rent Treasury stock	97,899 $ 71,965 208,485 339,879 16,800 21,144 495,585 150,000 110,710 96,184 3,406,348 5,886 923,078 247,091 6,420,255 $ 229,200	Short-term-borrowings Short-term borrowings, deposits for renting warehouses, deposits for acceptance bill, provisional seizure guarantee of compensation, exercise guarantee for construction, warranty margin, engineering bond, and tariff guarantee Engineering bond, merchandise loans, long-term and short-term borrowings, engineering guarantees, customs security deposit, warranty margin, exercise guarantee for construction and quality assurance for product sales Seizure guarantee Short-term borrowings and commercial papers payable Long-term borrowings � Performance guarantee Short-term borrowings Long-term borrowings, short-term borrowings � Exercise guarantee or warranty for construction and exercise guarantee for tender Short-term borrowings, long-term borrowings and endorsements and guarantees to others Short-term borrowings �

297

Pledged asset	Book value	Purpose
	December 31, 2017
Notes receivable Other current assets Demand deposits Time deposits Cash and bank deposits Available-for-sale financial assets - non-current Teco Image System Co., Ltd. Far Eastone Telecommunications Co., Ltd. Innolux Corporation Taiwan High Speed Rail Corporation Investments accounted for under the equity method Creative Sensor Inc. Property, plant, and equipment Land Buildings and structures Other non-current assets Refundable deposits Long-term prepaid rent Treasury stock	35,344 $ 111,359 51,627 255,520 19,920 220,500 26,973 381,219 144,090 119,377 3,819,104 62,947 964,200 247,091	Short-term borrowings Short-term borrowings, deposits for renting warehouses, deposits for acceptance bill, provisional seizure guarantee of compensation, exercise guarantee for construction, warranty margin, engineering bond, and tariff guarantee Merchandise loans, long-term and short-term borrowings, engineering guarantees, customs security deposit, warranty margin and exercise guarantee for construction Engineering bond, tariff guarantee, seizure guarantee, long guarantee and quality assurance for product sales Short-term borrowings and commercial papers payable � Long-term borrowings � Short-term borrowings Long-term borrowings, short-term borrowings � Exercise guarantee or warranty for construction and exercise guarantee for tender Short-term borrowings, long-term borrowings and endorsements and guarantees to others Short-term borrowings
	6,459,271 $

298

9. ��

��

(1) ��
��
(2) ��
A. ��

Property, plant and equipment Intangible assets The construction contract price Architect service fee		December 31,2018		December 31,2017
		62,957 $ 1,240 188,287 113,400 $ 365,884		167,204 $ - - - $ 167,204

B. ��

��

��
Not later than one year Later than one year but not later than five years Later than five years	December 31,2018	December 31,2017
	$ 699,882 1,546,135 5,813,466 $8,059,483	$ 495,499 1,073,832 2,450,472 $ 4,019,803

��

10. ��

��

11. ��

��

12. ��

��

299

�� ��Financial instruments by category Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets at fair value through other comprehensive income Designation of equity instrument Available-for-sale financial assets Financial assets at amortised cost /Loans and receivables Cash and cash equivalents Investments in debt instruments without active market Financial assets at amortised cost Notes receivable Accounts receivable Other receivables Guarantee deposits paid Financial liabilities Financial liabilities at fair value through profit or loss Financial liabilities held for trading Short-term borrowings Notes payable Accounts payable Other payables Bonds payable Long-term borrowings (including current portion)		December 31,2018		December 31,2017
		2,334,158 $ 12,350,476 $ - $ 17,535,566 $ - 182,725 1,066,632 9,343,700 431,585 292,542 28,852,750 $ - $ 1,994,360 209,979 7,607,871 4,720,360 4,000,000 7,650,846 26,183,416 $		254,003 $ - $ 13,796,160 $ 14,129,330 $ 3,794,570 - 1,189,692 9,622,778 636,123 307,023 29,679,516 $ 2,528 $ 2,187,621 196,775 7,713,059 4,839,917 4,000,000 7,343,865 26,283,765 $

300

��
�� To minimise any adverse effects on the financial performance of the Group, derivative financial instruments, such as foreign exchange forward contracts are used to hedge certain exchange rate risk. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.
��
��Information about derivative financial instruments that are used to hedge certain exchange rate risk are provided in Note 6(13).
��
��
- ��
- i. ��
- ii. �� Exchange rate risk is measured through a forecast of highly probable USD and RMB expenditures. Forward foreign exchange contracts are adopted to minimise the volatility of the exchange rate affecting cost of forecast inventory purchases�
- iii. The Group hedges foreign exchange rate by using forward exchange contracts. However, the Group does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(13).
- iv. ��

301

	Effect on other	comprehensive	income				- $	-	-	-	-	-	-	-	-	-	-									-	-	-	-	-	-
Sensitivity Analysis		Effect on profit or	Book value (NTD) Degree of variation loss				3,831,297 1% 38,313 $	11,581 1% 116	581,082 1% 5,811	1,208,881 1% 12,089	146,326 1% 1,463	262,569 1% 2,626	384,735 1% 3,847	99,793 1% 998	95,766 1% 958	93,766 1% 938	127,191 1% 1,272		18,980,249	4,311,420	3,302,731	337,986	145,076			1,661,897 1% 16,619	354,574 1% 3,546	255,242 1% 2,552	142,671 1% 1,427	74,835 1% 748	37,323 1% 373
							$
			Exchange rate				30.7150	1.1460	35.2000	6.8682	1.3663	0.2782	4.4720	4.1625	0.3282	21.6500	1.4177		30.7150	35.2000	22.4800	0.0013	7.3789			30.7150	6.8682	1.3663	1.4177	35.2000	0.2782
	Foreign currency	amount	(In thousands)				124,737 $	329	16,508	39,358	4,764	943,814	86,032	3,249	12,980	4,331	4,141		617,947	122,484	146,919	259,989,231	19,661			54,107	11,544	8,310	4,645	2,126	134,158
							USD	EUR	EUR	USD	USD	JPY	RMB	USD	MYR	AUD	USD		USD	EUR	SGD	VND	MYR			USD	USD	USD	USD	EUR	JPY
				(Foreign currency: functional currency)	Financial assets	Monetary items	USD:NTD	EUR:USD	EUR:NTD	USD:RMB	USD:SGD	JPY:NTD	RMB:NTD	USD:MYR	MYR:SGD	AUD:NTD	USD:AUD	Non-monetary items	USD:NTD	EUR:NTD	SGD:NTD	VND:NTD	MYR:NTD	Financial liabilities	Monetary items	USD:NTD	USD:RMB	USD:SGD	USD:AUD	EUR:NTD	JPY:NTD

302

	Effect on other	comprehensive	income				- $	-	-	-	-	-	-	-	-	-	-									-	-	-	-	-	-	-
Sensitivity Analysis		Effect on profit or	Book value (NTD) Degree of variation loss				3,120,396 $ 1% 31,204 $	259,768 1% 2,598	516,405 1% 5,164	1,696,707 1% 16,967	352,924 1% 3,529	384,868 1% 3,849	373,075 1% 3,731	68,150 1% 682	93,586 1% 936	104,982 1% 1,050	104,725 1% 1,047		18,241,096	4,131,154	3,159,088	164,897	128,993			2,391,276 1% 23,913	306,945 1% 3,069	257,811 1% 2,578	82,703 1% 827	211,980 1% 2,120	222,384 1% 2,224	108,134 1% 1,081
			Exchange rate				29.7600	1.1952	35.5700	6.5192	1.3369	0.2642	4.5650	4.0647	0.3289	23.1850	1.2836		29.7600	35.5700	22.2600	0.0013	7.3215			29.7600	6.5192	1.3369	22,892.3077	1.2836	35.5700	0.2642
	Foreign currency	amount	(In thousands)				104,852 $	7,303	14,518	57,013	11,859	1,456,730	81,725	2,290	12,975	4,528	3,519		612,940	14,490	141,918	126,843,846	17,618			80,352	10,314	8,663	2,779	7,123	6,252	409,287
							USD	EUR	EUR	USD	USD	JPY	RMB	USD	MYR	AUD	USD		USD	EUR	SGD	VND	MYR			USD	USD	USD	USD	USD	EUR	JPY
				(Foreign currency: functional currency)	Financial assets	Monetary items	USD:NTD	EUR:USD	EUR:NTD	USD:RMB	USD:SGD	JPY:NTD	RMB:NTD	USD:MYR	MYR:SGD	AUD:NTD	USD:AUD	Non-monetary items	USD:NTD	EUR:NTD	SGD:NTD	VND:NTD	MYR:NTD	Financial liabilities	Monetary items	USD:NTD	USD:RMB	USD:SGD	USD:VND	USD:AUD	EUR:NTD	JPY:NTD

303

v. ��
��
i. ��sed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. ��
��
i. ��terest rate risk arises from long-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. Group policy is to maintain at least 30% of its borrowings at fixed rate using interest rate swaps to achieve this when necessary. For the years ended �� at variable rate were mainly denominated in NTD, USD and RMB.
ii. �� periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.
iii. ��
��
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost.
ii. �� For banks and financial institutions, only independently rated parties with a minimum ��edit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilisation of credit limits is regularly monitored.
iii. �� If the contract payments were past due over 30 days based on the terms, there has been

304

a significant increase in credit risk on that instrument since initial recognition.
iv. The Group adopts the assumption under IFRS 9, whereby the default occurs when the contract payments are past due over 90 days.
v. The Group classifie�� receivable in accordance with credit rating of customer and credit risk on trade. The Group applies the simplified approach using loss rate methodology to estimate expected credit loss under the provision matrix basis.
vi. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:
(i) ��
(ii) ��
(iii) ��
(iv) ��
vii. The Group uses the forecastability of Taiwan Institute of Economic Research boom observation report to adjust historical and timely information to assess the default possibility of accounts receivable and contract assets. On December 31, 2018, the loss rate methodology is as follows:

te methodology is	as follows:	as follows:
Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days Individual Group A Group B Group C Group D Group E	December 31,2018		Loss allowance 2,293) ($ 931) ( 10,253) ( 68,220) ( 101,650) ( 183,347) ($ Loss allowance 27,347) ($ 5,788) ( 5,844) ( 5,103) ( 3,837) ( 135,428) ( 183,347) ($
	Expected credit loss rate Total book value 0%~1% 7,100,798 $ 0%~2% 1,477,374 1%~20% 962,806 1%~100% 335,818 1%~100% 472,970 10,349,766 $ December 31,2018
	Expected credit loss rate 100% 0%~5% 1%~10% 1%~20% 1%~40% 1%~100%	Total book value 32,126 $ 5,085,107 1,996,658 1,326,201 481,759 1,427,915 10,349,766 $

viii. ��

305

At January 1_IAS 39 Adjustments under new standards At January 1_IFRS 9 Provision for impairment Write-offs during the period Effect of decrease in consolidated entities Effect of foreign exchange At December 31			For the year ended 'December 31, 2018 Notes receivable and accounts receivable		For the year ended 'December 31, 2017 Notes receivable and accounts receivable
	185,215 $ 175,224 $ - - 185,215 175,224 40,998 39,339 19,772) ( 29,984) ( 57,616) ( - 34,522 636 183,347 $ 185,215 $

��
i. ��
ii. As of December 31, 2018 and 2017, the undrawn credit amounts are $18,253,982 and $19,571,220, respectively.
iii. ��

306

	-	-	-	-	-		-		-	-	-	-	-		-
Over 5 years								Over 5 years
	$								$
Between 3 and 5 years	- $	-	-	-	-		-	Between 3 and 5 years	- $	-	-	-	1,000,000		1,189,323
Between 2 and 3 years	- $	-	-	-	1,000,000		1,251,118	Between 2 and 3 years	- $	-	-	-	3,000,000		1,400,062
Between 1 and 2 years	- $	-	-	-	3,000,000		1,146,265	Between 1 and 2 years	- $	-	-	-	-		969,477
Up to 1 year	1,994,360 $	209,979	7,607,871	4,720,360	-		5,260,106	Up to 1 year	2,187,621 $	196,775	7,713,059	4,839,917	-		4,026,233
December 31, 2018	Short-term borrowings	Notes payable	Accounts payable	Other payables	Bonds payable	Long-term borrowings	(including current portion)	December 31, 2017	Short-term borrowings	Notes payable	Accounts payable	Other payables	Bonds payable	Long-term borrowings	(including current portion)

307

     - ���������������������������������������������������������������������������������� ���������������������������������������������������

(3) ��
��
B. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:
- Level 1: ��
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the �� investment in derivative instruments is included in Level 2.
- Level �� investment in derivative instruments is included in Level 3.
C. The related information of financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

follows:
December 31, 2018 Financial assets at fair value through profit or loss Equity securities Financial assets at fair value through other comprehensive income Equity securities Assets Recurring fair value measurements	Level 1 1,364,013 $ 12,041,947 13,405,960 $	Level 2 - $ - - $	Level 3 970,145 $ 308,529 1,278,674 $	Total
				2,334,158 $ 12,350,476
				14,684,634 $

308

December 31, 2017 Financial assets at fair value through profit or loss Equity securities Available-for-sale financial assets Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts Assets Recurring fair value measurements	Level 1 254,003 $ 12,633,285 12,887,288 $ - $	Level 2 - $ - - $ 2,528 $	Level 3 - $ 1,162,875 1,162,875 $ - $	Total
				254,003 $ 13,796,160
				14,050,163 $
				2,528 $

��

Listed shares Open-end fund Market quoted price Closing price Net asset value

��
��
��
��
��

309

��

Beginning balance Gains and losses recognized in profit or loss Gain and loss recognized in other comprehensive income (Note) Acquired during the year Sold during the year Ending balance	Non-derivative equity	Non-derivative equity
	For the years ended For the years ended December 31,2018 December 31,2017 $ 1,162,875 $ 1,250,106 10,938 - 32,530 ( 63,210) 80,108 53,648 ( 7,777) ( 77,669) $ 1,278,674 $ 1,162,875	For the years ended December 31,2017
		$ 1,162,875

��
��

310

Non-derivative equity: Unlisted shares Private equity fund Non-derivative equity: Unlisted shares Private equity fund	Fair value at December 31, 2018	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	1,278,674 $ Fair value at December 31,2017	Market comparable companies Valuation technique	Price to earnings ratio multiple Discount for lack of marketability Significant unobservable input	0.99~3.46 15%~20% Range (weighted average)	The higher the multiple and control premium, the higher the fair value The higher the discount for lack of marketability, the lower the fair value Relationship of inputs to fair value
	1,162,875 $	Market comparable companies	Price to earnings ratio multiple Discount for lack of marketability	1.13~3.42 15%~20%	The higher the multiple and control premium, the higher the fair value The higher the discount for lack of marketability, the lower the fair value

J. The Group has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in different measurement. The following is the effect of profit or loss or of other comprehensive income from financial assets and liabilities categorized within Level 3 if the inputs used to valuation models have changed: December 31, 2018

			December 31,2018	December 31,2018	December 31,2018
Financial assets Equity instrument	Input	Change	Recognizedinprofitor loss			Recognized in other comprehensiveincome
			Favourable change	Unfavourable change		Favourable change	Unfavourable change
	Discount for lack of marketability	±5%	$-		$ -	63,948 $	63,948) ($

311

December 31, 2017

Recognized in other Recognized in profit or loss comprehensive income Favourable Unfavourable Favourable Unfavourable Input Change change change change change Financial assets Equity Discount for instrument lack of marketability � 5% $ - $ - $ 58,144 ($ 58,144)

(4) ��

��
��
- i. ��
- ii. ��
- iii. ��
��
- i. ��
- ii. ��
- iii. ��
��
- i. ��
  - ��
- ii. ��
  - (i) Investments in debt instrument without active market are loans and receivables not originated by the entity. They are bond investments with fixed or determinable payments that are not quoted in an active market, and also meet all of the following conditions:

312

     - a. Not designated on initial recognition as at fair value through profit or loss; b. Not designated on initial recognition as available-for-sale;

     - c. Not for which the holder may not recover substantially all of its initial investment, other than because of credit deterioration.

  - (ii) On a regular way purchase or sale basis, investments in debt instrument without active market are recognized and derecognized using trade date accounting.

  - (iii) Investments in debt instruments without active market held by the Group are those time deposits with a short maturity period but do not qualify as cash equivalents, and they are measured at initial investment amount as the effect of discounting is immaterial.

��
i. ��
ii. ��
- (i) Significant financial difficulty of the issuer or debtor;
- (ii) A breach of contract, such as a default or delinquency in interest or principal payments;
- �� difficulty, granted the borrower a concession that a lender would not otherwise consider;
- (iv) It becomes probable that the borrower will enter bankruptcy or other financial reorganisation;
- (v) The disappearance of an active market for that financial asset because of financial difficulties;
- (vi) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions that correlate with defaults on the assets in the group;
- (vii)Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;
- (viii)A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
iii. ��
- (i) Financial assets at amortized cost

The amount of the impairment loss is measured as the difference between the �� recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event

313

occurring after the impairment loss was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the asset does not exceed its amortized cost that would have been at the date of reversal had the impairment loss not been recognized previously. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

     - (ii) Available-for-sale financial assets

        - The amount of the impairment loss is measured as the difference between the ����������������������������������������������������������������������������� current fair value, less any impairment loss on that financial asset previously ���������������������������������������������������������������������������� ��������������������������������������������������������������������������� instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

��
- i. ��
- ii. ��
��
- ��
B. ��

314

IAS 39 Transferred into and measured at fair value through profit Transferred into and measured at fair value through other comprehensive income-equity Impairment loss adjustment IFRS 9	Measured at fair value through Available- for-sale- profit or loss equity 254,003 $ 13,796,160 $ 2,347,463 2,347,463) ( - 11,448,697) ( - - 2,601,466 $ - $	Measured at fair value through other comprehensive income-equity - $ - 11,448,697 - 11,448,697 $	Total 14,050,163 $ - $ - - 14,050,163 $	Retained Other earnings equity 12,750,338 $ 2,026,521 $ 689,725 689,725) ( - - 1,247,396 1,247,396) ( 14,687,459 $ 89,400 $	Other equity
					89,400 $

(a) Under IAS 39, because the equity instruments, which were classified as available-forsale financial assets amounting to $11,448,697, were not held for the purpose of trading, they were reclassified as "financial assets at fair value through other comprehensive income (equity instruments)" amounting to $11,448,697, which resulted to a decrease in other equity interest and increase in retained earnings in the amounts of $1,247,396 and $1,247,396 on initial application of IFRS 9, respectively.
(b) Under IAS 39, the equity instruments, which were classified as available-for-sale financial assets amounting to $2,347,463, were reclassified as "financial assets at fair value through profit or loss (equity instruments)" amounting to $2,347,463, which resulted to a decrease in other equity interest and increase in retained earnings in the amounts of $689,725 and $689,725 under IFRS 9, respectively.
C. ��

��

i. �� �� Items December 31,2017 Current items: Financial assets held for trading Listed stocks 79,532 $ Money market funds 168,916 248,448 Valuation adjustment of financial assets held for trading 5,555 254,003 $		December 31,2017

ii. ��

315

Financial instruments Forward foreign exchange contracts SELL USD/BUY JPY SELL EUR/BUY USD		December 31, 2017
		Maturity date Fair value 2018.02.02 JPY 300,000,000 213) ($ 2018.02.01 EUR 3,000,000 2,315) ( 2,528) ($ Contract amount (Notional principal)

iii. ��
iv. ��
(i) The above reclassified assets that have not yet been disposed of are as follows:

Listed stocks

December 31, 2017 Book value/fair value $ 3,323

(ii) The changes in fair value of the above listed stocks that were recognized in profit or loss and other comprehensive income were $0 and $670, respectively, for the year ended December 31, 2017.
��-for-sale ��lue of these assets that should have been recognized in profit or loss is as follows:

For the year ended December 31, 2017 Listed stocks $ 670

316

��

��
Items		December 31,2017
Current items:
Listed stocks	$	730,135
Emerging stocks		21,423
Beneficiary certificates		14,046
		765,604
Valuation adjustment of available-
for-sale financial assets		105,437
	$	871,041
Non-current items�
Listed stocks	$	8,749,357
Emerging stocks		33,954
Unlisted shares		861,054
		9,644,365
Valuation adjustment of available-
for-sale financial assets		3,280,754
	$	12,925,119
��
��		��
��

��
Items		December 31,2017
Current items:
Time deposits	$	3,794,570
i. The Group recognized $48,472 in other comprehensive	income for amortized cost for
the year ended December 31, 2017.

ii. Investments in debt instruments without active market held by the Group all were the time deposit in bank with optimal credit rating.
iii. As of December 31, 2017 no investments in debt instruments without active markets held by the Group were pledged to others.
D. ��

��

317

��
��

Group 1 Group 2 Group 3 Group 4 Group 5	December 31,2017
	4,621,974 $ 1,380,744 1,345,100 383,907 527,060
	8,258,785 $

��
��
��
��
��
- ��
��

��
Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December 31,2017
	1,281,979 $ 506,645 203,360 377,069
	2,369,053 $

��

��
i. ��
ii. ��

			2017
	Individual	provision	Group	provision		Total
At January 1	$	41,724	$	133,500	$	175,224
Provision for impairment		11,023		28,316		39,339
Write-off during the period	(	3,865)	(	26,119)	(	29,984)
Effect of exchange rate changes		404		232		636
At December 31	$	49,286	$	135,929	$	185,215

(5) ��

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318

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i. ��
ii. ��
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i. ��

319

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ii. ��
iii.��
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		For the year ended
		December 31,2017
Sales of goods	$	40,243,212
Sales of services		7,004,090
Construction contract revenue		3,141,743
Revenue of sale of real estate		426,500
Net securities trading revenue		126,976
	$	50,942,521
��	��
��		��
		December 31,2017
Aggregate costs incurred plus
recognized profits (less
recognized losses)	$	14,263,866
Less: Progress billings	(	13,411,527)
Net balance sheet position for
construction in progress	$	852,339
Presented as:
Construction contracts receivable	$	1,030,504
Construction contracts payable	(	178,165)
	$	852,339

320

��

��
Balance sheet items Construction contracts receivable Contract assets Contract liabilities Construction contracts payable Sales revenue received in advance	Descripio	December 31,2018
		Balance by using IFRS15	Balance by using previous accounting policies	Effects from changes in accounting policies
		- $ 1,350,238 899,728) ( - -	1,350,238 $ - - 237,577) ( 662,151) (	1,350,238) ($ 1,350,238 899,728) ( 237,577 662,151

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13. ��

(6) ��

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14. ��

(1) ��

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321

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(2) ��

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322

(3) ��	��	��	For the year ended December 31, 2018	Heavy industrial Home appliances Adjustment and	products division division elimination Others Total	Operating revenues	Operating revenues from external customers 33,448,989 $ 6,298,530 $ 10,357,408 $ - $ 50,104,927 $	Operating revenues from internal segments 19,091,026 2,963,712 915,579 22,970,317) ( -	Total operating revenues 52,540,015 $ 9,262,242 $ 11,272,987 $ 22,970,317) ($ 50,104,927 $	Segment profits and losses 3,009,171 $ 219,752 $ 291,563 $ - $ 352,486 $	Segment profits and losses including:	Depreciation and amortization 895,000 $ 171,962 $ 461,578 $ - $ 1,528,540 $	Not included in segment profit, but regularly	provided to the chief operating decision-maker:	Segment assets	Identifiable assets 38,207,454 $ 3,716,368 $ 19,024,648 $ 6,828,212) ($ 54,120,258 $	Capital expenditures 734,090 $ 184,745 $ 316,533 $ - $ 1,235,368 $	Segment liabilities 17,252,838 $ 2,150,598 $ 4,840,303 $ 7,343,503) ($ 16,900,236 $

323

		Total		50,942,521 $	-	50,942,521 $	3,496,200 $		1,483,888 $				54,637,555 $	1,006,855 $	17,262,318 $
For the year ended December 31, 2017	Home appliance Adjustment and	division elimination Others		8,319,449 $ 10,891,324 $ - $	3,107,156 1,051,618 21,848,643) (	11,426,605 $ 11,942,942 $ 21,848,643) ($	414,245 $ 239,846 $ - $		194,129 $ 438,276 $ - $				5,417,893 $ 19,977,080 $ 7,762,656) ($	105,605 $ 162,061 $ - $	3,177,101 $ 7,209,181 $ 8,488,848) ($
	Heavy industrial	products division		31,731,748 $	17,689,869	49,421,617 $	2,842,109 $		851,483 $				37,005,238 $	739,189 $	15,364,884 $
			Operating revenues	Operating revenues from external customers	Operating revenues from internal segments	Total operating revenues	Segment profits and losses	Segment profits and losses including:	Depreciation and amortization	Not included in segment profit, but regularly	provided to the chief operating decision-maker:	Segment assets	Identifiable assets	Capital expenditures	Segment liabilities

324

(4) ��

��

��
		For the year ended		For the year ended
		December 31,2018		December 31,2017
Adjusted operating income of
reportable segments	$	3,228,923	$	3,256,354
Adjusted operating income of other
operating segments		291,563		239,846
Interest income		219,986		150,197
Losses on financial instruments	(	107,381)	(	7,101)
Financial cost	(	222,540)	(	254,638)
Associates�and joint ventures�
profit and loss accounted for under
the equity method		114,143		233,927
(Loss) gains on disposals of property,
plant and equipment	(	29,086)		150,541
Impairment loss		-	(	889)
Others		790,680		585,667
Income before income tax	$	4,286,288	$	4,353,904

��

Equity investments (classified as available-for-sale financial assets, bond investments without active markets, investments accounted for under equity method or financial assets at fair value through profit or loss) held by the Group are not considered to be segment assets but rather are managed by the financial function.

325

(5)

A reconciliation of assets of reportable segment and total assets is as follows:
The amounts provided to the Chief Operating Decision-Maker with respect to total liabilities
are measured in a manner consistent with that of the financial statements.
Interest-bearing liabilities of the Group are not considered to be segment liabilities but rather
are managed by the financial function.
A reconciliation of liabilities of reportable segment and total liabilities is as follows:
��
��
��
��
December 31,2018
December 31,2017
Assets of reportable segments
38,358,009
$ 39,776,025
$ Assets of other operating segments
15,762,249
14,861,530
Unamortized items:
Deferred income tax assets
1,250,743
1,382,884
Available-for-sale financial assets
-
13,796,160
Bond investments without active market
-
3,794,570
Investments accounted for using equity
method
4,207,360
4,022,455
Financial assets at fair value through
profit or loss
2,334,158
254,004
Financial asset measured at fair value
through other comprehensive income
21,350,476
-
General assets of the Group
8,718,291
14,129,329
Total assets
91,981,286
$ 92,016,957
$ For the year ended
For the year ended
December 31,2018
December 31,2017
Liabilities of reportable segments
14,599,469
$ 13,447,497
$ Liabilities of other operating segments
2,300,767
4,698,418
Unamortized items:
Financial liabilities at fair value
through profit or loss
-
2,528
Deferred income tax liabilities
2,254,076
2,423,023
Current income tax liabilities
690,853
917,494
Short-term borrowings (including
current portion)
2,898,852
2,187,621
Corporate bonds payable (including
current portion)
4,000,000
4,000,000
Long-term borrowings
6,746,354
6,466,239
Total liabilities
33,490,371
$ 34,142,820
$

326

Sales revenue Construction revenues Service revenue Revenue from disposal of land Others	For the year ended December 31,2018 38,492,093 $ 3,348,998 7,520,089 - 743,747 50,104,927 $	For the year ended December 31,2017
		40,243,212 $ 3,141,743 7,004,090 426,500 126,976
		50,942,521 $

(6) ��

��

Revenue Non-currentassets 26,585,159 $ 15,243,013 $ 7,992,870 623,061 5,300,514 2,828,171 10,226,384 1,753,932 $23,519,768 20,448,177 $ For the yearendedDecember31,2018	For the yearendedDecember31,2017	For the yearendedDecember31,2017
Revenue 26,585,159 $ 7,992,870 5,300,514 10,226,384 $23,519,768	Revenue 28,681,617 $ 7,592,882 4,330,891 10,337,131 50,942,521 $	Non-currentassets
		15,827,118 $ 575,255 3,122,937 1,858,658
		21,383,968 $

(7) ��

��

327

Item
Value
Amount of
transactions
with the
borrower
Reason for
short-term
financing
Allowance
for
doubtful
accounts
Borrower
General
ledger
account
Related
party
Interest
rate
(%)
Nature of
loans
Ceiling on
total loans
granted
Footnote
Collateral
Limit on
loans
granted to a
single party
Expressed in thousands of NTD
Table 1
(Except as otherwise indicated)
Maximum
outstanding
balance
during
the year
ended
December
31,
2018
Balance at
December
31,
2018
(Note 9)
Actual
amount
drawn down
Number
(Note 1)
Creditor

328

Item
Value
Amount of
transactions
with the
borrower
Reason for
short-term
financing
Allowance
for
doubtful
accounts
Borrower
General
ledger
account
Related
party
Interest
rate
(%)
Nature of
loans
Ceiling on
total loans
granted
Footnote
Collateral
Limit on
loans
granted to a
single party
Maximum
outstanding
balance
during
the year
ended
December
31,
2018
Balance at
December
31,
2018
(Note 9)
Actual
amount
drawn down
Number
(Note 1)
Creditor

329

			Expressed in thousands of NTD					Provision of	endorsements Provision of	/ endorsements/	guarantees to guarantees by	the party in subsidiary to	Mainland parent	China Footnote company	N N Note 3				N N �	N N �				N N �				N N Note 4		N N Note 5		N N Note 6			N N Note 7
									Provision of	endorsements/	guarantees by	parent	company to	subsidiary	Y				Y	Y				Y				Y		N		Y			Y
										Ceiling on	total amount of	endorsements/	guarantees	provided	32,207,196 $				32,207,196	32,207,196				32,207,196				1,537,837		2,546,325		178,418			872,481
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES	Provision of endorsements and guarantees to others	For the year ended December 31, 2018			Ratio of	accumulated	endorsement/	Maximum guarantee	outstanding amount to net Outstanding	endorsement/ Amount of asset value of endorsement/	guarantee endorsements/ the endorser/ guarantee	amount as of guarantees guarantor amount at Actual	December 31, secured with company December 31, amount	2018 collateral (%) 2018 drawn down	100,000 $ 100,000 $ 100,000 $ - $ 0.19				100,000 100,000 100,000 - 0.19	2,763,662 2,078,208 2,078,208 - 3.87				4,118,437 74,586 74,586 - 0.14				26,193 7,320 7,320 - 0.10		576 498 498 - 0.01		32,321 32,321 32,321 - 14.49			211,291 211,291 - - 4.84
									Limit on	endorsements/	guarantees	provided for a	single party	(Note 3)	10,735,732 $				10,735,732	10,735,732				10,735,732				768,918		848,775		89,209			436,241
				Party being	endorsed/guaranteed					Relationship	with the	endorser/	guarantor	Company name �Note 2�	TECO Smart (2)	Technologies Co.,	Ltd.		Teco International (2)	Motovario S. P. A. (2)				Others (2),(5),(6)				TWMM (4)		TECNOFIB SRL (1)		Yatec Engineering (4)	(VN) Company	Limited	CDC (6)	DEVELOPMENT	INDIA PRIVATE	LIMITED
													Endorser/	guarantor	TECO	ELECTRIC &	MACHINERY	CO., LTD.	TECO	TECO	ELECTRIC &	MACHINERY	CO., LTD.	TECO	ELECTRIC &	MACHINERY	CO., LTD.	Teco	Westinghouse	Motovario	S.p.A.	Yatec	Engineering	Corporation	Century	Development
			Table 2										Number	(Note 1)	0				0	0				0				1		2		3			4

330

331

332

==> picture [195 x 697] intentionally omitted <==

333

334

Table 5
Amount
Action taken
Allowance for
doubtful accounts
Creditor
Amount collected
subsequent
to the balance sheet
date
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES
Receivables from related parties reaching $100 million or 20% of paid-in capital or more
December 31, 2018
Expressed in thousands of NTD
(Except as otherwise indicated)
Counterparty
Relationship
with the counterparty
Balance as at
December 31, 2018
Turnover rate
Overdue receivables

335

			Expressed in thousands of NTD		Percentage of consolidated total operating revenues	or total assets (Note 3)	-			-	-		-	-	-	-	-	-	-	-		-	-	-	7%		2%	2%	2%	1%	2%		1%	-	-	5%
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES	Significant inter-company transactions during the reporting period	For the year ended December 31, 2018		Transaction		General ledger account Amount Transaction terms	Notes receivable, accounts 204,029 $ Because there is no transaction in same type which	receivable and other can be compared with, it is based on the condition	receivables and the period specified in the agreement.	� 180,115 �	Accounts receivable and other 374,289 �	receivables	� 269,250 �	� 213,722 �	� 327,132 �	� 221,618 �	� 157,446 �	� 103,173 �	� 172,814 �	Accounts receivable 406,218 �		Other receivables 212,563 �	� 307,150 �	� 246,400 �	Sales 3,479,182 �		� 806,834 �	� 776,836 �	� 957,327 �	� 697,700 �	� 1,110,099 �		� 312,742 �	� 169,524 �	� 206,672 �	� 2,270,807 �
					Relationship	(Note 2)	(1)			�	�		�	�	�	�	�	�	�	(2)		�	�	(3)	(1)		�	�	�	�	�		�	�	�	(2)
						Counterparty	Tong Dai			Tong Tai Jung	Teco Westinghouse		QingDao Teco	Teco Australia	Teco Netherlands	Sankyo	Teco Singapore	Wuxi Teco	Motovario S. P. A.	TECO ELECTRIC &	MACHINERY CO., LTD.	�	�	Teco Netherlands	Teco westinghouse		Teco Westinghouse Canada	Teco Singapore	Tong Dai	Tong Tai Jung	Teco Australia		Top-Tower	E-Joy International	Motovario S. P. A.	TECO ELECTRIC &	MACHINERY CO., LTD.
						Company name	TECO ELECTRIC &	MACHINERY CO., LTD.		�	�		�	�	�	�	�	�	�	Wuxi Teco		Tong-An Assets	Teco Westinghouse	U.V.G	TECO ELECTRIC &	MACHINERY CO., LTD.	�	�	�	�	TECO ELECTRIC &	MACHINERY CO., LTD.	�	�	�	Tesen
			able 6		Number	(Note 1)	0			0	0		0	0	0	0	0	0	0	1		2	3	4	0		0	0	0	0	0		0	0	0	5

336

Transaction	Percentage of consolidated total operating revenues Number Relationship	General ledger account Amount Transaction terms or total assets (Note 3) (Note 1) Company name Counterparty (Note 2)	6 Tai-An Wuxi TECO ELECTRIC & (2) Sales 521,565 $ Because there is no transaction in same type which 1%	MACHINERY CO., LTD. can be compared with, it is based on the condition	and the period specified in the agreement.	1 Wuxi Teco � � � 1,118,801 � 2%	2 QingDao Teco � � � 670,305 � 1%	7 Teco Malaysia � � � 424,788 � 1%	8 Taian Subic � � � 189,986 � -	9 Jiangxi Teco � � � 146,972 � -	Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:	��	��	Note 2: Relationship with the transaction company:	(1) The parent company to the subsidiary.	(2) The subsidiary to the parent company.	(3)The subsidiary to another subsidiary.	Note 3: Regarding percentage of transaction amount to total operating revenues or total assets, it is computed based on period-end balance of transaction to total assets for balance sheet accounts and based on accumulated	transaction amount for the period to total operating revenues for income statement accounts.

337

			Expressed in thousands of NTD	Investment income	the	Company for the year	ended December 31,	2018 Footnote	174,843 $ None				29,068) ( None 1				34,280 None			576,350 None				137,869 None			181,547 None	16,704 None	247,200 None					27,195 None			17,823 None
					Net profit (loss)	of the investee for	the year ended	December 31, 2018	561,598 $				46,435) (				34,515			576,103				173,316			182,276	26,550	246,687					45,197			19,179
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES	Information on investees	For the year ended December 31, 2018		Initial investment amount Shares held as at December 31, 2018	Balance Balance	as at as at	December 31, December 31,	2018 2017 Number of shares Ownership (%) Book value Main business activities	Manufacturing of bearings 12,293 $ 12,293 $ 39,145,044 31.14 2,087,582 $				Manufacturing of key 431,109 631,410 200,301,025 63.52 209,755	telephone system and nonkey	service unit telephone	system	Investment holdings, investments 100,013 100,013 57,533,521 100 1,064,316	in securities and construction of	commercial buildings	Manufacturing and 726,428 726,428 1,680 100 9,858,588	distribution of motors and	generators, and investment	and trading in USA	Distribution of the 112,985 112,985 7,200,000 90 3,302,731	Company's motor products	in Singapore	Investment holdings 2,490,000 2,490,000 444,134,422 99.60 7,997,267	Manufacturing of Stepping 128,496 128,496 15,386,949 62.57 241,857	Manufacturing and 8,505,434 8,505,434 195,416,844 100 7,489,862	distribution of the	Company's motor products	and home appliances, and	investment holdings	E-business service, mailing 121,232 121,232 11,723,248 57.64 161,139	and data management		Manufacturing and sales of 200,000 200,000 20,000,000 100 216,783	home appliance
								Location	Taiwan				Taiwan				Taiwan			U.S.A				Singapore			Taiwan	Taiwan	Cayman	Islands				Taiwan			Taiwan
								Investee	Tung Pei				Tecom				Teco International			Teco Holdings and	its subsidiaries			Teco Singapore	and its subsidiaries		Tong-An	Teco Electro	UVG and its	subsidiaries				Information	Technology Total	Service	Tesen
			Table 7					Investor	TECO	ELECTRIC &	MACHINERY	CO., LTD.

338

					Footnote	None				None			None		None			None	None		None			None			None	None		None						None
Investment income	(loss) recognized by	the	Company for the year	ended December 31,	2018	64,244) ($				57,540			2,108		13,903			56,566	7,809		58,604			61,169			28,814	17,302		41,264						24,174
		Net profit (loss)	of the investee for	the year ended	December 31, 2018	189,823) ($				62,121			2,034		21,328			56,566	10,574		58,069			218,953			28,814	68,475		214,794						28,529
Shares held as at December 31, 2018					Number of shares Ownership (%) Book value	37,542,159 33.84 440,000 $				5,290,800 92.63 262,353			20,405,297 100 337,986		7,799,996 64.95 144,794			388,423,711 100 5,252,807	17,131,155 76.70 169,000		14,883,591 100 1,451,867			96,353,338 28.67 1,377,232			25,018,661 100 472,934	24,121,700 25.27 407,863		13,408,642 17.61 347,255						7,033,000 84.73 141,071
Initial investment amount		Balance Balance	as at as at	December 31, December 31,	2018 2017	117,744 $ 117,744 $				22,444 22,444			352,252 264,111		92,389 92,389			2,111,889 2,111,889	165,819 165,819		454,923 454,923			951,141 673,801			150,000 150,000	255,116 255,116		230,541 296,003						70,330 70,330
					Main business activities	Manufacturing of color	flybacks transformers, mono	flyback transformers and	mono deflection yokes	Distribution of the	Company's motor products	in Taichung	Manufacturing and sales of	motors	Development and	maintenance of various	electric appliances	Real estate business	Manufacturing and sales of	switches	Manufacturing and distribution of	optical fiber apparatus and	international trading	Development and	management of industrial	park	Investment holdings	Logistics and distribution	services	Manufacturing, installation,	repair, domestic and export	sales and leasing of	condenser, water cooling,	watercooled chiller and	freezer	Bus bar and manufacturing of its	components
					Location	Taiwan				Taiwan			Vietnam		Taiwan			Taiwan	Philippines		British	Virgin	Islands	Taiwan			Taiwan	Taiwan		Taiwan						Taiwan
					Investee	Lien Chang				Tong Dai			Teco Vietnam		Yatec			Tong-An Assets	Taian Subic		Micropac (BVI)	and its subsidiaries		Century	Development		An-Tai	Pelican		Kuen Ling						Taian-Etacom	Technology Co., Ltd.
					Investor	TECO	ELECTRIC &	MACHINERY	CO., LTD.

339

					Footnote	None				None		None		None			None		None		None		None		None		None		None	None	None		None		None			None
Investment income	(loss) recognized by	the	Company for the year	ended December 31,	2018	205,744 $				205,744		205,744		85,640			752) (		167) (		12,818		31,415		4,644		3,483) (		7,568) (	8,637	47,029		8,321		20,315) (			15,470
		Net profit (loss)	of the investee for	the year ended	December 31, 2018	205,744 $				205,744		205,744		85,640			752) (		582) (		205,800		218,953		68,475		12,191) (		25,227) (	8,637	67,051		67,051		21,555) (			30,817
Shares held as at December 31, 2018					Number of shares Ownership (%) Book value	1 100 4,311,420 $				1 100 4,311,420		18,010,000 100 4,311,420		23,031,065 100 1,529,147			12,000,000 100 241,425		9,619,819 28.64 121,532		7,913,289 6.23 201,681		44,266,526 13.17 669,137		6,474,468 6.78 109,474		20,000,000 28.57 196,517		9,120,000 30 261,579	11,720,000 100 133,786	27,502,354 84.97 714,974		4,866,045 15.03 126,459		10,000,000 100 121,237			1,512,500 50 66,838
Initial investment amount		Balance Balance	as at as at	December 31, December 31,	2018 2017	3,691,723 $ 3,691,723 $				3,691,723 3,691,723		3,989,850 3,989,850		646,343 646,343			100,000 100,000		359,656 359,656		87,464 87,464		420,646 420,646		54,874 54,874		200,000 -		274,856 -	92,000 92,000	582,246 582,246		91,079 91,079		98,170 98,170			13,750 13,750
					Location Main business activities	Cayman Investment holdings	Islands			Netherlands Investment holdings		Italy Production and sale of gear	reducers and motors	Samoa Investment holdings and	establishment of overseas	distribution channel	Taiwan Investment holdings		Taiwan Manufacturing and sales of	optical telecom products	Taiwan Manufacturing and sales of	electronic components	Taiwan Development and	management of industrial park	Taiwan Logistics and distribution	services	Taiwan Development and construction of	real estate	Singapore Investing in other areas	Taiwan Investment holdings	Singapore Investment holdings		Singapore Investment holdings		Taiwan Construction and sales of	related raw materials		Taiwan Building management servicing
					Investee	Eagle Holding Co.				TECO MOTOR B.V.		Motovario S.p.A		Tung Pei (SAMOA)	Industrial Co., Ltd.		Tecom	International	Baycom		Creative Sensor	Inc.	Century	Development	Pelican		Century Biotech	Development Corp.	Century Real Estate	Gen Mao	Gen Mao	(Singapore)	Gen Mao	(Singapore)	Centurytech	Construction and	Management Corp.	Jack Property Serrice	& Management
					Investor	TECO	ELECTRIC &	MACHINERY	CO., LTD.	Eagle Holding	Co.	TECO MOTOR	B.V.	Tung Pei			Tecom				Tong-An	Investments								Lien Chang			Gen Mao	International	Century	Development

340

					Footnote	None			None		None		None			None			None			None		None			None		None		None
Investment income	(loss) recognized by	the	Company for the year	ended December 31,	2018	3,377 $			5,225) (		11		10,091) (			18,248			14,416			7,008		579			11,534		3,483) (		7,568) (
		Net profit (loss)	of the investee for	the year ended	December 31, 2018	6,544 $			12,191) (		35		25,227) (			17,878			218,953			205,800		577			218,953		12,191) (		25,227) (
Shares held as at December 31, 2018					Number of shares Ownership (%) Book value	3,850,997 51.60 64,104 $			30,000,000 42.86 294,775		144,600 30.11 10,838		12,160,000 40.00 348,773			2,510 100 120,885			20,368,652 6.06 264,362			4,326,447 3.41 110,265		6,200,000 83 467,264			16,301,644 4.85 211,511		20,000,000 28.57 196,517		9,120,000 30 261,579
Initial investment amount		Balance Balance	as at as at	December 31, December 31,	2018 2017	25,536 $ 25,536 $			300,000 -		9,912 9,912		365,820 30,070			88,108 88,108			179,222 179,222			52,560 52,560		201,467 201,467			184,893 184,893		200,000 -		274,856 -
					Investor Investee Location Main business activities	Century United Development Taiwan Investment consultancy service for	Development domestic and foreign industrial	parks and land	Century Biotech Taiwan Development and construction of	Development Corp. real estate	Greyback Philippines Housing project in Subic	International Property	Century Century Real Estate Singapore Investing in other areas	Development (International) Pte.	Ltd.	Teco Electro Teco Electro Devices British Trading and investment	Co., Ltd. Virgin holdings	Islands	Teco Century Taiwan Development and	Singapore Development management of industrial	park	Teco Creative Sensor Taiwan Manufacturing and sales of	International Inc. electronic components	Kuen Ling CHING CHI British Investing in other areas	INTERNATIONAL Virgin	LIMITED Islands	Tong-An Assets Century Taiwan Leasing of real estate	Development	Century Biotech Taiwan Development and construction of	Development Corp. real estate	Century Real Estate Singapore Investing in other areas	(International) Pte.	Ltd.	Note 1:The Company has reduced capital by the ratio of 50% to offset losses.

341

			Expressed in thousands of NTD			Accumulated	amount	Book value of of investment	investments in income	Mainland remitted back to	China as of Taiwan as of	December 31, December 31,	2018 2018 Footnote	139,614 $ - $ Note 15			1,604,689 - Note 15		1,299,537 - Note 15		7,252) ( - Note 15		1,431,028 - Note 15		334,065 - Note 15		28,437 - Note 15		258,457 - Note 15
				Investment	income	(loss)	recognized	by the	Company	for the	year ended	December 31,	2018	5,486) ($			130,256		62,625		963		30,386		9,468) (		1,705		12,824) (
								Ownership	held by	the	Company	(direct or	indirect)(%)	100			82.35		100		100		98.07		87.6		100		100
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES	Information on investments in Mainland China	For the year ended December 31, 2018		Accumulated Amount remitted from Accumulated	amount of Taiwan to amount	remittance Mainland China/ of remittance	from Amount remitted back from Taiwan	Taiwan to to Taiwan for the to	Mainland year ended Mainland Net income of	China December 31, 2018 China investee for	Remitted to Remitted as of January as of the year ended	Mainland back 1, December 31, December 31,	China to Taiwan 2018 2018 2018	188,139 $ - $ - $ 188,139 $ 5,486) ($			768,259 - - 768,259 158,174		205,551 - - 205,551 62,625		456,293 - - 456,293 963		1,383,653 - - 1,383,653 34,095		1,648,510 - - 1,648,510 10,808) (		20,590 - - 20,590 1,705		467,577 - - 467,577 12,824) (
												Investment	method	Note 2			Note 1		Note 11		Note 3		Note 1		Note 1		Note 3		Note 3
													Paid-in capital	268,799 $			1,697,276		495,213		456,293		1,481,569		947,331		20,590		678,681
			Table 8									Investee in	Mainland China Main business activities	Teco Manufacturing and sales of air	(Dong Guang) conditioners mechanical	equipment	Wuxi Teco Manufacturing and sales of	motors	Taian (Wuxi) Manufacturing and sales of	optical fiber	Nanchang Teco Manufacturing and sales of	home appliances	Jiangxi Teco Manufacturing and sales of	motors	QingDao Teco Manufacturing and sales of	dyes	Xiamen Teco Sales of motors and home	appliances	Xiamen An-Tai Development, manufacturing and	sales of LCD monitors. Plant	rentals and related real estate

342

									Footnote	Note 15		Note 16		Note 16		Note 16		Note 15		Note 15			Note 15		Note 16		Note 16			Note 15	Note 15					Note 15				Note 15
		Accumulated	amount	of investment	income	remitted back to	Taiwan as of	December 31,	2018	- $		-		-		-		-		-			-		-		-			-	-					-				-
				Book value of	investments in	Mainland	China as of	December 31,	2018	29,381 $		30,450		73,394		5,414) (		14,799		126,712			7,408		971		33,337			23,464	158,099					119,819				799,052
Investment	income	(loss)	recognized	by the	Company	for the	year ended	December 31,	2018	2,127 $		513) (		11,051) (		9,355) (		88		7,150			768		2,566) (		510			67,946	2,476) (					8,498				10,144) (
				Ownership	held by	the	Company	(direct or	indirect)(%)	100		100		100		39.9		100		100			100		45		100			100	100					100				100
					Net income of	investee for	the year ended	December 31,	2018	3,103 $		2,137) (		11,051) (		23,447) (		88		7,150			768		1,184) (		510			67,946	2,476) (					8,498				10,144) (
Accumulated	amount	of remittance	from Taiwan	to	Mainland	China	as of	December 31,	2018	9,837 $		340,469		391,843		-		15,990		79,813			-		62,865		59,444			23,829	240,818					-				-
Amount remitted from	Taiwan to	Mainland China/	Amount remitted back	to Taiwan for the	year ended	December 31, 2018	Remitted to Remitted	Mainland back	China to Taiwan	- $ - $		- -		- -		- -		- -		- -			- -		- -		- -			- -	- -					- -				- -
Accumulated	amount of	remittance	from	Taiwan to	Mainland	China	as of January	1,	2018	9,837 $		340,469		391,843		-		15,990		79,813			-		62,865		59,444			23,829	240,818					-				-
								Investment	method	Note 1		Note 3		Note 1		Note 2		Note 3		Note 3			Note 11		Note 1		Note 13			Note 1	Note 11					Note 12				Note 14
									Paid-in capital	9,837 $		680,938		391,843		24,004		15,990		79,813			26,522		141,079		59,444			23,829	240,818					119,840				656,500
								Investee in	Mainland China Main business activities	Teco Han Zou Development and consulting	of device products	Teco Century Manufacturing and sales of	compressor	Fujian Teco Manufacturing and sales of	electronic components	Ecolectric Distribution of air conditioner	International	Teco (Tianjin) Central China area Operation	Innovation center	Teco (Jiang Xi) Manufacturing and sales of air	conditioning mechanical	equipment	Teco Sichuan Sales of home appliances	Trading	Jiangxi Teco- Manufacturing and sales of	Lead wind generator	Qingdao Teco Science Park development and	Innovation business operations and	consulting services	Shanghai Teco Sales of home appliances	Hunan TECO Manufacturing, sales and	Wind Energy technical services of 2.0	Limited megawatt and above	aerogenerator, wheel bay and	other components	Jiangxi TECO Manufacturing and sales of	Westinghouse motors, winding and related	Motor Coil Co., parts	Ltd.	Wuxi TECO Production and sale of	Precision industrial motors and	Industry Co. applications	Ltd.

343

									Footnote	Note 15		Note	17,18			Note 15				Note 15					Note 20			Note 15								Note 15			Note 15				Note 15
		Accumulated	amount	of investment	income	remitted back to	Taiwan as of	December 31,	2018	- $		-				-				-					-			-								-			-				-
				Book value of	investments in	Mainland	China as of	December 31,	2018	2,756 $		-				2,560				3,089					-			221								15,496			132) (				597
Investment	income	(loss)	recognized	by the	Company	for the	year ended	December 31,	2018	2,395) ($		-				4,450) (				54) (					-			436								2,501) (			303) (				2,084) (
				Ownership	held by	the	Company	(direct or	indirect)(%)	100		1.63				100				100					100			100								100			100				100
					Net income of	investee for	the year ended	December 31,	2018	2,395) ($		-				4,450) (				54) (					-			436								2,501) (			303) (				2,084) (
Accumulated	amount	of remittance	from Taiwan	to	Mainland	China	as of	December 31,	2018	26,422 $		24,746				6,950				485,455					34,990			14,566								10,167			2,257				-
Amount remitted from	Taiwan to	Mainland China/	Amount remitted back	to Taiwan for the	year ended	December 31, 2018	Remitted to Remitted	Mainland back	China to Taiwan	- $ - $		- -				- -				- -					- -			- -								- -			- -				- -
Accumulated	amount of	remittance	from	Taiwan to	Mainland	China	as of January	1,	2018	26,422 $		24,746				6,950				485,455					34,990			14,566								10,167			2,257				-
								Investment	method	Note 4		Note 5				Note 6				Note 7					Note 8			Note 8								Note 9			Note 9				Note 9
									Paid-in capital	26,422 $		344,643				6,950				485,455					34,990			14,566								10,167			2,257				1,000
									Main business activities	Storage services		Merchandise wholesale				Communication network	information, technology	development, sales and	technology services business	R & D, manufacture of	broadband access network	communication system	equipment; sale of products	to provide technology services	Flat panel displays, IT	products, printed circuit board	assembly, manufacture, testing	Intelligent home systems and spare	parts of the Internet of things,	wholesale, import and export of	goods and technology import and	export, import and export agency,	to provide technical advice,	technical training and technical	services	ERP building, system maintenance	and purchases of information	appliance	ERP building, system maintenance	and purchases of information	appliance		ERP building, system maintenance	and purchases of information	appliance
								Investee in	Mainland China	Beijing Pelican	Express	Fubon Gehua	(Beijing)	Trading	Co., Ltd.	Wuhan Tecom				Tecom Tech	(Wuxi)				Tecom	Tech Investment	(BVI)	Beijing Tecom	Innovation	Technology Co.,	Ltd.					Information	Technology	(Wuxi)	Information	Technology	Total Service	(Hang Zhou)	Information	Technology	Total Service	(Xiamen)

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										Footnote	Note 15
Accumulated Investment Amount remitted from Accumulated	amount of income Taiwan to amount	remittance (loss) Accumulated Mainland China/ of remittance	from recognized amount Amount remitted back from Taiwan	Taiwan to Ownership by the Book value of of investment to Taiwan for the to	Mainland held by Company investments in income year ended Mainland Net income of	China the for the Mainland remitted back to December 31, 2018 China investee for		Remitted to Remitted as of January Company year ended China as of Taiwan as of as of the year ended	Mainland back Investment 1, (direct or December 31, December 31, December 31, December 31, December 31, Investee in	China to Taiwan method 2018 indirect)(%) 2018 2018 2018 2018 2018 Mainland China Main business activities Paid-in capital	Wuxi TECO R&D, manufacturing and sales of 115,125 $ Note 10 86,101 $ - $ - $ 86,101 $ 17,878 $ 100 17,878 $ 121,617 $ 43,266 $	Precision motors and provide products sales	Industry Co. skills	Ltd.	Note 1: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through United View Global Investment Co., Ltd. and Great Teco Motor (Pte) Ltd. and then invest	in Mainland China.	Note 2: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through United View Global Investment Co., Ltd. and Asia Air Tech Industrial (Pte) Ltd. and then	invest in Mainland China.	Note 3: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through United View Global Investment Co., Ltd. and Asia Electric & Machinery (Pte) Ltd. and then	invest in Mainland China.	Note 4: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Pelecanus Express Pte. Ltd., and then invest in Mainland China.	Note 5: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Asian Crown International Co., Ltd., Fortune Kingdom Corporation and Hong Kong Fubon	Multimedia Technology Co., Ltd. and then invest in Mainland China.	Note 6: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Tecom Global Tech Investment (B.V.I) Limited and then invest in Mainland China.	Note 7: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Tecom Global Tech Investment Pte Limited and then invest in Mainland China.	Note 8: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Tecom Tech Investment (B.V.I) Limited and then invest in Mainland China.	Note 9: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Information Technology Total Service (BVI) Co., Ltd. and then invest in Mainland China.	Note 10: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Teco Electro Devices Co., Ltd. and then invest in Mainland China.	Note 11: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invest through Micropac Worldwide (B.V.I) and then invest in Mainland China.	Note 12: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invest through Teco Holding USA Inc. and Teco Westinghouse Motor Company and then invest in Mainland China.	Note 13: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invested through Tecocapital Investment (Samoa) Co., Ltd. and then invest in Mainland China.	Note 14: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Great Teco Motor (Pte) Ltd., Teco Australia Pty. Ltd. and Teco Electric & Machinery (Pte)	Ltd. and then invest in Mainland China.	Note 15: The amount recognized was based on the financial statements that were audited by R.O.C. parent company's CPA firm.	Note 16: The amount recognized was based on the financial statements that were audited by the other CPA firm.	Note 17: Financial assets at fair value through other comprehensive income.	Note 18: As of December 31, 2018, accumulated impairment of $24,746 was accrued.

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Investment	amount	approved	Accumulated by the Ceiling on	amount of Investment investments in	remittance from Commission of Mainland China	Taiwan to the Ministry imposed by	Mainland China of Economic the Investment	as of December Affairs Commission	Company name 31, 2018 (MOEA) of MOEA	TECO Electric & Machinery Co., Ltd. 6,487,880 $ 8,713,487 $ 35,094,549 $	Taiwan Pelican Express Co., Ltd. 51,168 51,168 968,526	Tecom Co., Ltd. 541,961 754,000 359,405	Information Technology Total 12,424 12,424 167,723	Services Co., Ltd.	Teco Electro Devices Co., Ltd. 86,101 104,259 232,262	Note 1: The accounts of the Company are expressed in New Taiwan dollars. Income statement accounts denominated in foreigin currencies are translated into New Taiwan	dollars at the weighted average exchange rates prevailing at the transaction dates and balance sheet accounts at spot exchange rates prevailing at the transaction dates.	Note 2: The amount disclosed was based on Investment Commission, MOEA Regulation No. 09704604680 announced on August 29, 2008.	Note 3: Tecom completed the investment in Mainland China in the third quarter of 2010 and the ceiling on investments was $1,760,251 which was calculated based on Tecom's	net assets of $2,933,752 in the third quarter of 2010.

346

			Expressed in thousands of NTD			Interest during the	year ended	December 31, 2018 Others	-	-	-	4,649	1,373	-	-	-	-	-	-	-	-	-	-	-	-
									$
								Interest rate	-	-	-	3.5%	2.3%	-	-	-	-	-	-	-	-	-	-	-	-
TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES	Significant transactions conducted with investees in Mainland China directly or indirectly through other companies in the third areas	For the year ended December 31, 2018		Property Accounts receivable Provision of endorsements and	transaction (payable) guarantees Financing	Maximum balance during the	Balance at Balance at year ended Balance at	Amount % December 31, 2018 % December 31, 2018 Purpose December 31, 2018 December 31, 2018	- - 13,902 - $ - - $ - $ -	- - 11,243 - - - - -	- - 19,031 - - - - -	- - 1,106 - - - 139,971 133,579	- - - - - - 92,985 92,145	- - - - - - - -	- - - - - - - -	- - - - - - - -	- - 149 - - - - -	- - ( 406,218) (9%) - - - -	- - ( 36,917) (1%) - - - -	- - ( 24,504) (1%) - - - -	- - ( 54,176) (1%) - - - -	- - - - - - - -	- - ( 12,489) - - - - -	- - - - - - - -	- - - - - - - -
									$
					Sale (purchase)			Amount %	$ 42,211 -	59,185 -	72,335 -	7,118 -	- -	3,176 -	161 -	345 -	757 -	( 1,118,801) (7%)	( 521,565) (3%)	( 146,972) -	( 670,305) (4%)	( 16,252) -	( 32,498) -	( 681) -	( 58,565) -
			Table 9				Investee in Mainland	China	Wuxi Teco	Taian (Wuxi)	Jiangxi Teco	QingDao Teco	Xiamen An-Tai	Shanghai Teco	Xiamen Teco	Teco (Jiang Xi)	Wuxi Teco Precision	Wuxi Teco	Taian (Wuxi)	Jiangxi Teco	QingDao Teco	Xiamen An-Tai	Teco (Jiang Xi)	Hunan TECO Wind	Wuxi Teco Precision

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VII. Review of Financial Status, Operating Results, and Risk Management

7.1 Analysis of Financial Status

Unit: NT$thousand

			Unit:	Unit:	NT$thousand
Year Item	2018/12/31	2017/12/31	Difference		Remark
			Amount	%
Current Assets	43,760,371	$44,262,768	(502,397)	(1)
Fixed Assets	17,363,543	17,922,299	(558,756)	(3)
Intangible Assets	5,557,343	5,612,315	(54,972)	(1)
Other Assets	25,300,029	24,219,575	1,080,454	4
Total Assets	91,981,286	92,016,957	(35,671)	0
Current Liabilities	18,141,380	18,742,356	(600,976)	(3)
Non Current Liabilities	15,348,991	15,400,464	(51,473)	0
Total Liabilities	33,490,371	34,142,820	(652,449)	(2)
Equity attriubutable to owners of parent	53,678,660	51,829,765	1,848,895	4
Capital stock	20,026,929	20,026,929	0	0
Capital surplus	7,647,215	7,628,542	18,673	0
Retained Earnings	25,221,021	22,469,336	2,751,685	12
Other equity	783,495	1,704,958	-921,463	(54)	Note 1
Non ControllingInterest	4,812,255	6,044,372	-1,232,117	(20)	Note 2
Total Stockholders' Equity	58,490,915	57,874,137	616,778	1
Note 1: Reasons for reduction of other equity interests: mainly due to the application of IFRS 9 for the first time, leading to the transfer of the increased benefits, based on fair value, of financial assets avaialable for sale from other equity interests to retained earnings. Note 2: Reason for reduction of non-controlling interest, due mainly to loss of control of Kunling Freezing Machinery Co., Ltd. by the business group, following reelection of the subsidiary's board of directors and supervisors.

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7.2 Analysis of Operating Results

7.2.1 Operating Results

Unit: NT$thousand

7.2.1 Operating Results			Unit:	Unit:	NT$thousand
Year Item	2018	2017	Difference		Remark
			Amount	%
Sales Revenue	50,104,927	50,942,521
Operating Costs	(38,052,253)	(38,743,733)
Gross Profit	12,052,674	12,198,788	(146,114)	(1)
Realized(Unrealized) Profit from Sales	(15)	(2,520)	(2,505)	(99)	Remark1
Gross Profit - Net	12,052,659	12,196,268	(143,609)	(1)
Operating Expenses	(8,532,173)	(8,700,068)	167,895	(2)
Operating Profit	3,520,486	3,496,200	24,286	1
Non-operating Income and Gains	765,802	857,704	(91,902)	(11)
Profit before income tax	4,286,288	4,353,904	(67,616)	(2)
Tax Expense	(810,319)	(809,656)	(663)	0
Net Income	3,475,969	3,544,248	(68,279)	(2)
Other comprehensive income	433,011	781,789	(348,778)	(45)	Remark2
Total comprehensive income	3,908,980	4,326,037	(417,057)	(10)	Remark3
Analysis and explanation for changes: 1.Due mainly to the lack of the situation in 2017, when share of inventories unsold which was sold to affiliates increased at the end of the period. 2. Due mainly to the reduction of unrealized gain on valuation of financial assets in the year, leading to reduction of other comprehensive income. 3. In sum,total comprehensive income of theyear dropped.

7.2.2 Change in gross profit: No need of analysis since the change is less than 20%.

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7.3 Analysis of Cash Flow

7.3.1 Cash Flow Analysis for the Current Two Years

Cash and Cash Equivalents, Beginning of Year(1)	Net Cash Flow from Operating Activities (2)	Cash Outflow (Inflow) (3)	Cash Surplus (Deficit) (1)+(2)-(3)	Remedyfor Cash Deficit	Remedyfor Cash Deficit
				Investment Plans	Financing Plans
14,129,330	4,328,692	922,456	17,535,566	-	-
A.Analysis of change in cash flow: a. Operating activities: Contributed by overseas profits, Profit of the year became major source of net cash flow for operating activities. b. Investing activities: Reduction in investments in debt instruments for enlivening market is the main reason for decine in investments-related cash inflow c. Financing activities: Cash dividend payout is the main reason of cash outflow. B.Remedyand liquidityanalysis for insufficient cash: not applicable.

7.3.2 Cash Flow Analysis for the Coming Year

Unit: NT$thousand

				Unit: NT$thousand	Unit: NT$thousand
Cash and Cash Equivalents, Beginning of Year (1)	Estimated Net Cash Flow from Operating Activities (2)	Estimated Cash Outflow (Inflow) (3)	Cash Surplus (Deficit) (1)+(2)-(3)	Remedy for Cash Deficit
				Investment Plans	Financing Plans
17,535,566	4,545,126	2,522,316	19,558,376	-	-
A. Analysis of change in cash flow in the current year: a. Operating activities: Despite global economic slowdown and increased uncertainties for economic growth, the company's core business is expected to maintain steady growth in the year, thanks to actively sales campaign, as a result of which operating activities will continue generating cash inflow b. Investing activities: There will be net cash outflow for funding in the coming year, thanks to potential financial injection into expansion of core business and adjustment on non core long term investment. c. Financing activities: Since cash inflow from operation and self-owned capital will be used to repay bank borrowings, it is expected that financing activities in the coming year will generate net cash outflow. B. Remedyfor Cash Deficit and LiquidityAnalysis: Not Applicable

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7.4 Major Capital Expenditure Items

7.4.1 Major Capital Expenditure Items and Source of Capital

Unit: NT$thousand

				Unit: NT$thousand	Unit: NT$thousand	Unit: NT$thousand
Project	Actual or Planned Source of Capital	Actual or Planned Date of Completion	Total Capital	Actual or Expected Capital Expenditure
				2018	2019	2020
2018 Capital Expenditure – new equipment and equipment renewal	Working Capital	2018/12/31	970,000	970,000
2019 Capital Expenditure – new equipment, equipment renewal and capacity expansion	Working Capital	2019/12/31	2,841,412		1,546,000	1,295,412

7.4.2 Expected Benefits

In addition to increasing the output of industrial products and home appliances, the above equipment renewal projects are expected to help reduce production costs and improve the quality of products.

7.5 Investment Policy in Last Year, Main Causes for Profits or Losses, Improvement Plans and the Investment Plans for the Coming Year

7.5.1 Equity Investment Policy

In response to economic development trend and increasing competition, both on domestic and overseas fronts, investments are mainly for vertical or horizontal integration of the company's core businesses, including electric machinery, energy engineering, and home appliances, on top of offshore wind power and green energy-related engineering, for materialization of the corporate vision of "energy conservation, emission reduction, smart application, and automation," thereby gradually increasing overseas profits and market share, via global deployment for both production and sale.

7.5.2 Major reasons for profits or loss:

The company recognized NT$114,143,000 of investment income based on equity method in 2018, less than 2017's NT$233,927,000, due to decreased income from investments in TPI Bearings, Lien Chang Electronic Enterprises, and some foodstuff companies.

7.5.3 Investment plan for the next year

Investment plan for the coming year still focuses on energy conservation, emission reduction, intelligence and automation, both on domestic and overseas fronts, all related to the company's core business. For investments in National Biotechnology Research Park in Nangang, Taipei, and Bengaluru International Technology Park in India, construction for the park's infrastructural facilities and service

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center will break ground in 2019 and 2020, including R&D and incubation facilities and automated factory buildings.

7.6 Analysis of Risk Management

7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

A Effects of Changes in Interest Rates on Corporate Finance, and Future Response Measures

2018 Unit: NT$Thousand

Interest Income or Loss(1)	(2,554)
Sales Revenus(2)	50,104,927
Operating Income(3)	3,520,486
(1)/(2)	(0.0051%)
(1)/(3)	(0.072%)

The company’s net interest expense amounted to NT$12,544 thousands in 2018, equivalent to -0.0051% and -0.072%, respectively, of the revenues and operating profits, similar to 2017 level.

In 2019, led by rather loose monetary policy of the U.S., Europe, Japan, and China, global credit supply will be sufficient, with interest hike rather unlikely.

To offset the effect of change in interest rate, the company will adjust forex-denominated loan position timely or increase investments in fixed-rate corporate bonds.

B.Effects of Changes in Foreign Exchange Rates and Inflation on Corporate Finance, and Future Response Measures

2018 Unit: NT$thousand

	2018 Unit: NT$thousand
Exchange Gain or Loss(1)	76,925
Sales Revenus(2)	50,104,927
Operating Income(3)	3,520,486
(1)/(2)	(0.15%)
(1)/(3)	(2.19%)

The company raked in NT$76,925,000 of exchange-rate income in 2018, due mainly to exchange benefits from U.S.-dollar position of overseas affiliates, caused by appreciation of greenback. In 2019, despite interest-rate hike appears to stall, basic economic figures remain robust, as a result of which exchange rate of U.S. dollar may fluctuate within a range. However, due to emergence of protectionism sparked by Donald Trump's trade policy, outlook for the currencies of the major trade partners of the U.S. is precarious, posing major challenge to forex management:

a. In addition to natural risk hedging associated with positions of assets and liabilities, the company will undertake substantial risk hedging via forward forex transactions.
b. The financial department will maintain close contact with the forex department of corresponding financial

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institutions and constantly collect information on change in exchange rate, so as firmly grasp trend and change in international exchange rates and respond actively, in forward forex transactions and foreign exchange settlement, to offset the adverse influence of exchange-rate swings.

c. The financial department regularly do internal evaluation reports for hedge on net asset and liability of foreign currency, so that the management team can determine if the company do the hedge or not.
C. The impact on company’s performance reselted from inflation and counter measures

The main material that the company mainly used are steel, copper and alumni. It affets purchase cost to a certain extent, however, it is expected that the recovery of world economy and oil&gas, mining exploring will raise the company’s operarion.

TECO purchases materials using contract to negotiate prices. When the price grows, TECO can negotiate with the suppliers. In this case, there is no significant disadvantage torward company’s performance based upon price vibration. However, the compny will still evaluate cautiously the trend of metal price and match up the operation drafting the appropriate strategy.

7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions

A. The company abstains from high-risk and high leveraged investments.
B. At the end of 2018, outstanding loans extended by the company amounted to NT$161,223 thousands.
C. In 2018, the outstanding amount of the endorsement and guarantee extended by the company reached NT$2,352,749 thousand, for the company’s subsidiaries, affiliates, and business partners. Since the company retains majority seats on the board of directors of its subsidiaries and appoints their management, it has absolute control and grasp of their operations, slashing the risk of endorsement and guarantee for them. In addition, the company regularly gets hold of its subsidiaries’ financial statement and business status data for analysis of its profit level and evaluation of the risk for endorsement and guarantee, enabling it to embrace measures to cut risk in advance. In recent years, these subsidiaries gained steady profit growth, gradually lowering the risk of endorsement and guarantee extended by the company.
D. In 2018, derivatives held by the company was forward exchange trading, whose corresponding traders were mainly international financial institutions with outstanding credit. In addition, the company traded with many financial institutions to diversify risks, minimizing the possibility for default. Therefore, credit risk for the company in derivatives trading is very low. Moreover, derivatives held by the company are mainly for the purpose of risk hedging and the ensuing income/loss can be offset by the income/loss in the risk-hedging category, minimizing the market risk.
E. The company has formulated a number of investment guidelines for cutting risk, including “Procedure for the Acquisition and Disposal of Assets,” “Procedure for Lending Capital to the Others”, “Procedure for the Endorsement and Guarantee,” and “Procedure for the Trading and Disposal of Derivatives.”

7.6.3 Future Research & Development Projects and Corresponding Budget

TECO derives its growth momentum from R&D. In recent years, the company pooled the R&D strength and marketing experience of its R&D units all over the world, and cooperated with industrial, government, and academic units in strengthening its core businesses and stepping into the sector of green energy. The company has initiated a number of key R&D projects in the aspects of wind-power generation, PV inverter, rare-earth

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permanent magnet motor, power components of electric vehicle, drive motor for robotic arm, medium voltage inverter, and permanent magnet motor drive with free sensor, delicate servo motor, IE5 reluctance motor drive, high level algorithm and IOT.

For the R&D of new technologies and new products in the medium- and long-term and the short-term business need of the improvement in price-performance ratio, the TECO R&D team has been actively cultivating its technological strength via the search of external resources, such as technological consultation, cooperation, and transfer.

On the basis of existing core technologies, such as rotated machinery and generator design, machinery drive and design, power/electronic control and design, and internet-related technology, integrate new market needs, industrial specifications, new-materials application, sensor-application technology, wireless-network technology, and green-industry technology, thereby coordinating overall R&D strategy and technological planning.

The company formulates its future R&D plan on the following bases:

A. Grasp and analysis of industrial development, government policy, and market trend;
B. The establishment and rooting of key technologies;
C. Competitiveness relative to rivals in Europe, the U.S., and Japan;
D. Global market positioning and technological integration;
E. Grasp of R&D progress and quality.

Therefore, in 2017 TECO will dedicate to the R&D of:

(a) Forward-looking technology consulting committee
(b) Very high power density induction motor and servo motor
(c) Development of pump motor for North America
(d) Development of high-speed permanent-magnet motor and driver
(e) Development of ring-shape motor for steel plant
(f) Reluctive motor and drive
(g) Low power consumption inverter duty refrigerator
(h) EV motor and drive as well as joint development of whole vehicle
(i) R&D on generator and drive for offshore wind turbine
(j) R&D on four-phase control for medium-voltage inverter and switch between industrial network and inverter
(k) High end AEF and controller products
(l) R&D on KW-grade four-phase wind-power converter
(m) Development of high IPLV electromagnetic-suspension centrifugal machine
(n) Development of HVAC air-conditioner energy conservation solution
(o) Multiple commercial air-conditioners systems and smart air-conditioners
(p) development of VRF whole direct-current variable-frequency multiple-connection main pipe/connection-in-parallel air conditioner
(q) Development of VRF whole direct-current four-unit split air conditioner
(r) Development of air-cooled sideward- and upward-blowing chiller
(s) Development of air-cooled modularized chiller
(t) Development of high-sensible/constant-temperature constant-humidity water-cooled packaged air conditioner

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(u) R&D on inverter air conditioner related products for specific occasion

(v) Development of high-performance energy saving centrifugal icy-water machine

(w) Direct current inverter duty packaged air conditioner

(x) Development of whole series R32 one-to-one variable-frequency large split air conditioner

(y) Development of whole series R32 variable-frequency window type air conditioner

(z) Development of multiple TECO-Select premium air conditioner

(aa) Development of multi-option air conditioners

(bb)Development of variable-frequency air-conditioning air-cleaning/voice-control technology

(cc) Development of high energy-performance variable-frequency commercial refrigerator

(dd)Development of high energy-performance variable-frequency produce/freezing change-over refrigerator

(ee) Development of high-performance compact servo motor

(ff) Development of IE5 comparable-grade magnetic-resistance motor drive

(gg)Development voice technology for meal-delivery robot

(hh)Development of image recognition technology for meal-delivery robot

(ii) Development of management technology for multiple AGVs

(jj) Development of Matrix converter prototype

(kk)Development of next-generation high-performance servo driver

(ll) Development of multi-axis server technology

(mm) Development of direct-current compact server

(nn)Development of simplified EtherCat alternating-current server

(oo)Development of ultra-thin simplified alternating-current server

(pp)Development of integrated permanent-magnet motor and driver machine

The goal is to develop products conforming to European specifications in the existing market, seek high value-added innovative applications in existing sales channels, and strive for commercialization of emerging technologies and new market opportunities. TECO Group expects to invest NT$1.24 Billions as R&D expense in 2018.

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The company’s general research institute oversees the overall R&D strategy, technology deployment and ongoing product R&D, with an eye on technological deployment and product development in short-, medium-, and long-term, including:

Term of R&D	Focus	Major R&D items
Short-term	Develop new-product application market, Enhance performance of existing products & Enhance product profitability and market share	High-performance servo motor and drive
		Inverter DD washingmachine
		Superpremium motor
		Permanent magnet motor drive with free sensor
		Control for servo system
		High rotational-speed motor
		Development of highpower-densitymotor series
		Multi-unit commercial-usepackage air conditioningunit
		High energy-performance variable-frequencycommercial refrigerator
		Technologyof sinusoidal sensorless drive
		Servoparameter automatic adjustingtechnology
		Electric vehiclepowerpackage
		Intelligence batteryand batterymanagement system
		Break energyrecharge technology
		Energy–savingelectric vehicle certification technology
		Electric vehicle batterycertification technology
		Single-axis high-performance servo driver
		Development of matrix converter technology
		Development of AGV
Mid-term	Accumulation of core technological strength & Development of new technological strength	Medium- and high-voltage inverter
		Advanced inverter technology
		Large high-efficiencymotor(FSR)
		Hydraulic motor for hybrid injection moldingmachine
		R&D of wind-power technology
		Application technologyof digital home in smartphone
		Remote monitoringtechnologyof motor andgenerator
		Internet-related technologyfor system automationproducts
		Commercial air-conditioningfor train
		Development of high IPLV electromagnet-suspension centrifugal machine
		Development of energy-conservation solution for HVAC air-conditioningsystem
		Development of multi-axis servo driver technology
		Development of next-generation frequencyconverterprototype
		Development ofproducts derivingfrom indoor service machines
Long-term	Deployment in new business scope	Integration of Internet of Machine
		Integration of micro smartgrid system
		Precise servo system focusingon market
		R&D for new-generation digital home appliances systems
		Micro-electric system in large high-efficiency power system
		R&D for new-generation industrial servo system
		Regional market oriented R&D for industrial technology
		R&D for integrated and innovative technology
		Development of multi-axis server system integration
		Development of outdoor AGV
		Next-generation frequencyconverter series

356

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7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales

None

7.6.5 Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance and Sales

Given the trend of shrinking workforce and green energy, the company takes into account global development trend, the government's industrial policy, own technological level, and growth potential of related industries. In addition to consolidating the company's technological edge in high-performance motive-force motor, application of environment-friendly refrigerant in home applications, and variable-frequency energy conservation, the company will intensively study international technological development and market trend for introduction of innovative methodology. In response to the trend of shrinking employment population, the company will plan biotechnology forum, long-term technological development roadmap, and strategy and timetable for completion of development plan. In line with the need of green energy, the company will develop electric-car motor, wind turbine, peripherals of smart grid, energy-saving home appliances, and split air conditioning systems.

The company has set up forward-looking technology consulting committee in 2017, to track cutting-edge forward-looking technologies. Add R&D on gateway technology for electric-control product series, R&D on remote-monitoring technology for motor and generator, R&D on high-end servo motor drive, and R&D on reluctance motor and drive, and R&D on digital-home and mobile communications-linked security products. In addition, the company will associate various business air conditioners with applications of the Internet of things, intensify intensity and depth of technological detection, further strengthen horizontal technological cooperation among affiliates, and actively seek foreign technological cooperation, so as to enrich R&D contents and meet long-term needs of the society.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s Response Measures

The company has been pursuing sustained growth via “pluralized management” and “global deployment,” and has been striving to project a quality corporate image for a globalized group by manifesting in-depth social care via TECO Technology Foundation and rigorous demand for quality and service. The company’s crisis management plan covers its production bases worldwide and has helped the company respond properly to the ordeal of major incidents in recent years, thanks to the company’ constant effort in fostering crisis-management capability. In the future, the company will continue simulating the outbreak of major incidents and formulate response plans, in order to safeguard the interests of shareholders.

7.6.7 Expected Benefits from Risks Relating to and Response to Merger and Acquisition Plans

None

357

==> picture [612 x 86] intentionally omitted <==

7.6.8 Expected Benefits from Risks Relating to and Response to Factory Expansion Plans

None

7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive Customer Concentration

None

7.6.10 Effects of Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, Supervisors, or Shareholders with Shareholdings of over 10%

The company doesn’t have a shareholder with over 10% of shareholding and there is no massive share transfer or swap among the company’s directors and supervisors in the latest year.

7.6.11 Effects of Risks Relating to and Response to Changes in Control over the Company

None

7.6.12 For litigation and non-litigation cases, specify the company and directors, supervisors, president, chief executive, and major shareholders with over 10% of shareholding, as well as affiliates. For major litigation, non-litigation, or administrative disputes with major effects on the interests of shareholders or stock prices, disclose the facts, target value, starting dates for litigation, major parties involved, and the status of the cases up to the publication of the yearbook

None.

7.6.13 Other Major Risks

None

358

==> picture [612 x 86] intentionally omitted <==

VIII. Special Disclosure

8.1 Summary of Affiliated Companies

8.1.1 Chart of Affiliated Companies

==> picture [291 x 603] intentionally omitted <==

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

92.63% Tong Tai Co., Ltd. 40% Top Tower Enterprise Co.,Ltd
100% Tasia (PET) 100% Sankyo Co., Ltd.
Ltd.
100% TECO Technology 100% Yatec Engineering (VN) 100% Teco Technology &
(Vietnam) Co., Ltd. Company Limited Marketing Center
64.95% Yatec Engineering Corp. 68.03% Taiwan Pei Li Tone Co., Ltd. 100% Qingdao Jie Zheng Property
Service & Management Company
100% TECO Electric Europe Ltd. 100% Tecocapital Investment 70% Technical Information
Co., Ltd. International Co., Ltd.
100% TECO International 100% Tecocapital Investment 100% Qingdao TECO
Investment Co., Ltd. (SAMOA) Co., Ltd Innovative Co., Ltd.
0.20%
TECO 99.60% Tong An Investment 50% Jack Property Service & 100% Teco Electric & Machinery
MachineryElectric&Co.,Ltd Co., Ltd. 0.20% 530%0% Management CompanyTecoson Industrial Development 100% GmbH.Tecoson HK Co., Ltd. 100% Dongguan Tecoson Electric
86.67% A-Ok Technical Co., Ltd. 70% (Singapore) Co., Ltd
100% Asia Air Tech 100% TECO (Dong Guang) Air 25% Shanghai Xiangseng
Industrial (PTE) Ltd. Conditioning Equipment
100% U.V.G.Investment
Co.,Ltd 100% Great Teco, S.L.
100% Teco Elektrik Turkey A.S 100% LimitedTECO (New Zealand)
100% Tesen Electric & Machinery 99.99% TECO Australia Pty. Ltd.
16.67% Wuxi TECO Precision
50.00% Mechatronics Co., Ltd
76.70% Taian (Subic) Electric 100% Great Teco Motor 100% Shanghai TECO Electric 33.33%
(PTE) Ltd. & Machinery Co., Ltd
84.73% Taian-Etacom Technology 100% TECO Industrial ( Malaysia) 82.35% Wuxi TECO Electric &
Co., Ltd. Sdn. Bhd. Machinery Co., Ltd.
100% GD TECO Taiwan Co., Ltd. 100% P.T TECO Elektro Indonesia 94.60% Jiangxi TECO Electric & 3.47%
Machinery Co., Ltd.
60% Tong Tai Jung Co., Ltd. 100% Teco Electric & 87.60% QingDao TECO Precision
Machinery B.V. Mechatronics Co., Ltd.
100% Taian Electric Co., Ltd. 100% Asia Electric & Machinery 100% Fujian TECO Precision
(PTE) LTD. Co., Ltd.
10%
100% Teco Electrical Industries 100% TECO Group Science-
Private Limited Technology (Hang Zhou)
TECO Electric & Machinery
(Pte) Ltd. Singapore 100% Teco Industrial System 100% Nasnchang Dong-Huan
Private Limited Management & Consulting
90% 100% TECO Electronic
& Machinery Sdn. Bhd.
100.00% An Tai International (STE Marketing SDN. BHD.) 100% NanchangTECO Electric &
Investmet Co., Ltd. Machinery Co., Ltd.
55% Teco Electric & Machinery 100% Xiamen TECO Technology
5.26% (THAI) Co., Ltd. Co., Ltd.
57.52% Tecnos International 10.76% 87.50% P.T Teco 100% Asia Innovative
Consultant Co., Ltd. Multiguna Electro Technology (Xiamen)
20.17%
16.00% An-Sheng Travel Co., Ltd. 21.42%16.00% 60% [Teco (Vietnam) Electronic & ] Machinery Co., Ltd. 100% Co., Ltd.Tianjin Teco Technology
66.85% Taian (Malaysia) Electric 16.00% 100% [TYM Electric and ] 45.60% Jiangxi Teco Air 54.40%
Sdn. Bhd. 10% Machinery Sdn. Bhd.
99.99% TECO Appliance (HK)
Co., Ltd.
95% Taian-Jaya Electric Sdn. Bhd. 49.99% Hubbell-Taian Co., Ltd. 100% Hubbell-Anmex International(s)
Pte. Ltd.
60% TECO (PHILIPINES)
3C & APPLIANCES, INC.
Jiangxi TECO
100% TECO Holding USA Inc. 100% TECO Westinghouse Motor 100% Westinghouse Motor
Industrial Canada Coil Co., Ltd
100% TECO Westinghouse Motor 100% Teco Westinghouse Motor 100% Teco Westinghouse
Company Company S. A. de C. V. Colombia S.A.S.
0.81%
86.01% TECO Nanotech Co., Ltd.
0.01%
62.57% TECO Electro Devices 1.51% 100% Teco Electronic Devices 100% Wuxi Teco Electro
Co., Ltd. Co., Ltd. Devices Co,.LTD.
93.60% E-Joy International Co., Ltd. 4.93%
100% Micropac(BVI)Worldwide 100% An-Tai International Investment 100% Tai-An Technology
Investment Co.,Ltd. (Singapore) Co., Ltd. (Wuxi) Co., Ltd. 100% Wuxi TECO Precision
Mechatronics Co., Ltd
100% Universal Mail 100% Hunan TECO Electric &
Service Ltd Machinery Co., Ltd.
0.42%
60.62% Information Technology 10.26% 100% Unison Service 100% [Information Technology Total]
Total Service Co., Ltd. Corporation Service (Hang Zhou) Co., Ltd.
100% Information Technology 100% Information Technology 100% Information Technology
100% Tong-An Asset Management Total Service (BVI) Co., Ltd. (Wuxi) Co., Ltd. Total Service (Xiamen)
& Develoement Co., Ltd.
'0.10% 54.83% Grey Back International
25.27% Taiwan Pelican Express Co., '6.78% 30.11% Property Inc.
Ltd Pelecanus Express 100% Beijing Pelican Express
100% Pte. Ltd. Co., Ltd.
63.52% Tecom Co., Ltd. 100.00% Tecom International 80% WondaLink Inc.
Investment Co., Ltd.
28.64% Baycom Opto-Electronics 15.13%
7.42% Technology Co., Ltd.
100.00% Tecom Global Tech Investment 100% Wuhan Tecom Co., Ltd.
(B.V.I ) Limited
100.00% Tecom Global Tech Investment 100% Tecom Tech (Wuxi) Co., Ltd.
Pte Limited
100.00% Tecom Tech Investment 100% Tecom Tech Investment
(B.V.I ) Limited (BVI) Limited.
19.98% Kuenling Machinery 70.00% Yi-Chi Enterprise CO., LTD. 100% Beijing Tecom Innovative
Refrigerating Co., LTD. Technology Co., Ltd.
100.00% KuenYuan Machinery Air 99% PT KUEN LING INDONESIA 1%
Condioning Co.,LTD 100% Motovario SA (Spain)
100.00% K. A. Corp. 100% Kuenling Machinery Refrigerating
(Vietnam) Co., LTD. 100% Motovario Ltd
83.00% Ching Chi International 100% Kuenling Machinery Refrigerating
70.00% YASKAWA TECO MOTOR 17.00% Limited (Shanghai) Co., LTD. 100% Motovario Gmbh
ENGINEERING CO. 100% Air Condionining(Suzhou) Co.,LTD [KuenYuan Machinery] 75% Motovario Corp.
'13.17%
'4.85% United Development Corporation
28.67% Century Development Corp. '6.06% 51.60% 100% Motovario SA (France)
Century Tech C&M Corporation
100.00% 100% Motovario Int. Trading
Co. Ltd
Century Real Estate 100% CDC Development
100.00% Property Inc. India Private 100% Motovario Power Transmission
Co. Ltd.
100.00% Eagle Holding Co. 100% TECO MOTOR B.V. 100% Motovario S.p.A
100% Motovario Gear Solution
Private Ltd
----- End of picture text -----

359

8.1.2 Information Regarding Affiliated Companies

Unit: NT$thousand

			Unit: NT$thousand
Company	Date of Incorporation	Paid-in Capital	Major Business
TongDai Co.,Ltd.	1972.06	57,120	Sales of Motors
TECO International Investment Co.,Ltd.	1989.06	575,335	Investment Activity
TECO HoldingUSA Inc.	1995.03	820,306	Investment and Tradingin USA
TECO Electric & Machinery (Pte)Ltd. Singapore	1972.09	178,080	Sales of Motors in Singapore and Other Countries Nearby
TECO Electric Europe Limited	1992.03	174,960	Sales of Motors in Europe
Tong-An Assets Management & Development Co.,Ltd.	1997.07	3,884,237	Real Estate Business
Tong-An Investment Co.,Ltd.	1998.08	4,459,181	Investment Activity
TECO Electro Devices Co.,Ltd.	1998.03	245,926	Manufacture of SteppingMotors
Tecnos International Consultant Co.,Ltd.	1998.06	97,375	Business Consultingand Human Resource Services
TongTai JungCo.,Ltd.	1996.04	66,000	Sales of Motors
United View Global Investment Co.,Ltd.(UVG)	1999.08	7,230,724	Investment HoldingCompany
Information TechnologyTotal Services Co.,Ltd.	1990.12	203,724	Sales of Software
Tesen Electric & MachineryCo.,Ltd.	2001.03	200,000	Manufacture of Home Appliance
GD TECO Taiwan Co.,Ltd.	2002.02	54,000	Manufacture of IC Projects
Yatec EngineeringCorporation	1993.01	120,100	Electric System Development and Service
Taian(Subic)Electric Co.,Inc.	1997.03	205,514	Manufacture and Sales of Tools and Equipment
Taian(Malaysia)Electric Sdn. Bhd.	1989.03	184,834	Manufacture and Sales of Tools and Equipment
An-Tai International Investment Co.,Ltd.	1990.09	250,187	Investment Activity
Micropac(BVI)Worldwide Investment Co.,Ltd.	1993.03	457,162	International Trading
Taian-Etacom TechnologyCo.,Ltd.	1999.12	83,000	Manufacture of Bus WayComponents
E-JoyInternational Co.,Ltd.	2004.06.25	101,500	Distributor of Home Appliance
A-Ok Technical Co.,Ltd.	2004.10.07	22,500	Repair of Home Appliance
Taiwan Pelican Express Co.,Ltd.	1999.09.10	954,670	Home DeliveryService
Tasia(Pte)Ltd.	1995.12	23,874	Investment Activity
Tecoson Industrial Development(Singapore)	1993.02	37,134	Investment and TradingActivities
Tecoson HK Co.,Ltd.	1993.06	15,634	Investment Activity
Asia Air Tech Industrial(Pte)Ltd.	1999.06	261,078	Investment Activity
TECO(DongGuang)Air ConditioningEquipment Co.,Ltd.	1999.11.09	314,637	Manufacture of Air ConditioningEquipment
TECO Australia Pty. Ltd.	1993.04	649,950	Sales of Motors and Home Appliance in Australia
TECO New Zealand Ltd.	1983.04	61,569	Sales of Home Appliances
Great Teco Motor Ltd.	2000.01.27	3,748,036	Investment Activity

==> picture [84 x 612] intentionally omitted <==

Company	Date of Incorporation	Paid-in Capital	Major Business
Wuxi TECO Electric & MachineryCo.,Ltd.	2002	1,498,567	Manufacture and Sales of Motors
TECO Industrial(Malaysia)Sdn. Bhd.	1989.06	556,000	Manufacture and Sales of Motors in Malaysia
P.T TECO Elektro,Indonesia	1997.08.14	781,697	Sales of Home Appliances
P.T TECO Multiguna Electro	1983.06	15,758	Investment and TradingActivities
TECO Electronic & Machinery (Thai)Co.,Ltd.	1987.04	56,754	Investment and TradingActivities
TECO Westinghouse Motor Company	1988.01	633,497	Sales of Motors in USA
TECO Westinghouse Motor Industrial,Canada	1995.12	24,928	Sales of Motors
TECO Electro Devices Co.,Ltd.	1998.03	104,738	International Trading
Wuxi Teco Electro Devices Co,.Ltd.	2001.12	123,128	Manufacture and Sales of SteppingMotors
An-Tai International Investment(Singapore)Co.,Ltd.	1993.03	498,464	Investment Activity
Tai-An Technology (Wuxi)Co.,Ltd.	2000.07	530,402	Manufacture and Sales of Optical Fiber
Asia Electric & MachineryPte Ltd.	2000.06.05	1,707,293	Investments in Home Appliances Business
Jack PropertyService & Management Company	2000.04.13	30,250	Asset Management
Great Teco,S.L.	2003.01	21,120	Sales of Home Appliances
NanchangTECO Electric & MachineryCo.,Ltd.	2003.11.10	510,260	Manufacture and Sales of Air Conditioning
Sankyo Co,Ltd.	1992.02.14	8,346	Sales of Home Appliances
TECO Electronic & MachineryB.V.	2005.04.18	23,232	Sales of Motors and LCD TV in Europe
STE MarketingSdn. Bhd.	1987.12	65,082	Investment and Trading
Jiangxi TECO Electric & MachineryCo.,Ltd.	2005.06.01	1,498,097	Manufacture and Sales of Motors
Qingdao TECO Precision Mechatronics Co.,Ltd	2006.12	837,440	Manufacture and Sales of Compressors
TECO Westinghouse Motor CompanyS.A. de C.V	2005.12	56,159	Manufacture and Sales of Motors
Xiaman TECO TechnologyCo.,Ltd.	2006.11	21,981	Sales of Motors and Home Appliances
TYM Electric & MachinerySdn. Bhd.	2006.06	3,689	Sales of Motors
TECO(Vietnam)Electric & MachineryCompany	2005.04	188,817	Manufacture and Sales of Motors
TECO Technology (Vietnam)Co.,Ltd.	2006.08	377,178	Manufacture and Sales of Tools and Equipment
Asia Innovative Technology (Xiamen)Co.,Ltd.	2006.12	834,130	R&D and Manufacture of LCD TV
TECO GroupScience-Technology (HangZhou)Co.,Ltd.	2007.06	10,160	R&D of Electronic Devices and System Automation
Tianjin TECO TechnologyCo.,Ltd	2010.01.22	15,272	Operation Center in Central China
Jiangxi TECO Air ConditioningEquipment Co.,Ltd.	2010.02.05	165,764	Sales of Air Conditioners
TECO Sichuan TradingCo.,Ltd.	2010.08.25	26,832	Sales of Home Appliances
Fujian TECO Precision Co.,Ltd.	2008.05	376,117	Sales and Production of Motors and Generators
Teco Appliance(HK)Co.,Ltd.	1991.02.12	5,863	Sales of Home Appliances
Taian Electric Co.,Ltd.	2004.03.17	1,000	Manufacture and Sales of electric equipment
An-ShengTravel Co.,Ltd.	2005.03.15	30,000	Travel Business

==> picture [84 x 612] intentionally omitted <==

Company	Date of Incorporation	Paid-in Capital	Major Business
Hubbell-Taian Co., Ltd.	1991.08.22	27,200	Import, export and sales of power distributors, lighting and explosion-proof tools
Hubbel-Anmex International(s)Pte. Letd.	2006.01.26	24,324	Sales of Electronic Products
Universal Mail Service Ltd.	1989.12	13,000	Business Docunment Processing
Unison Service Corporation	2001.08	17,000	Software,Data Processingand Information Provision
Information TechnologyTotal Service(BVI)Co.,Ltd.	2001.03	47,332	Investment Acitivities
Teco GroupScience-Technology (HangZhou)Co.,Ltd.	2002.10	2,406	Software,Data Processingand Information Provision
Information Technology (Wuxi)Co.,Ltd.	2004.08	11,104	Software,Data Processingand Information Provision
Information TechnologyTotal Service(Xiamen)Ltd.	2007.12	4,472	Software,Data Processingand Information Provision
GreyBack International PropertyInc.	2007.02.28	30,718	Real Estate Business
Taian-Jaya Electric Sdn. Bhd.	1988.06.07	7,379	Manufacture and Sales of Motors
TECO CAPITAL INC.	2008.04.15	20,215	Investment Activities
TECO(PHILIPINES)3C & APPLIANCES,INC.	2008.08.22	30,141	Sales of Home Appliance and Air Conditioners
Pelecanus Express Pte,Ltd	2010.04.19	27,644	Investment Activities
Qingdao TECO Innovation Co., Ltd.	2010.08.11	58,516	Merchant and Management Service for Science Park’s Development and Operation
TECO Technology& MarketingCenter Co.,Ltd.	2011.04.01	8,346	Investment Activities
TECO Capital Investment(SAMOA)Co.,Ltd.	2011.01.18	61,430	HoldingCompany
BeijingPelican Express Co.,Ltd.	2010.10.13	24,372	Storge Services
TECO Nanotech Co.,Ltd.	1989.06.01	250,000	Production & Sales of Nano-applied ingredients andproducts
Technical Information International Co.,Ltd.	2008.07.28	44,720	Development & Sales of Software
Shanghai TECO Electric & MachineryCo.,Ltd.	2012.08.04	22,665	Agencyof Machineryand Electric Products
TECO Electric and MachineryGmbH.	2012.09.01	880	Production & Sales of Machinery
Tecom Co.,Ltd.	1980.09.25	3,153,326	Production ans Sales of Business Communication Products
Tecom International Investment Co.,Ltd.	1980.02.22	120,000	Investment Activites
Baycom Opto-Electronics TechnologyCo.,Ltd.	1980.04.16	335,913	Research,Production & Sales of Fiber and Fiber Cables
Tecom Global Tech Investment(B.V.I)	2002.08.13	33,156	Investment Activites
Tecom Global Tech Investment Pte Limited	2004.07.19	487,166	Investment Activites
Tecom Tech Investment(B.V. I)	2008.09.25	49,556	Investment Activities
WondaLink Inc.	2010.03.18	47,422	Telecommunication and Production and Design of Electronic Components
Wuhan Tecom Co., Ltd.	2003.02.24	7,403	Internet Telecommunication Technnolgy Development and Related Services
Tecom Tech(Wuxi)Co.,Ltd.	2004.09.06	505,967	R&D and Production of Telecommunication System

==> picture [84 x 612] intentionally omitted <==

Company	Date of Incorporation	Paid-in Capital	Major Business
BeijingTecom Innovative TechnologyCo.,Ltd.	2010.12.07	14,460	The Internet of Intelligent Home System and Related Services
Qingdao Jie ZhengPropertyService & Management Company	2012.08.20	5,831	PropertyManagement and Related Services
Donghua Enterprise Co.,Ltd.	1968.07.30	18,000	Franchise of FA/GE Product
Hunan TECO Electric & MachineryCo.,Ltd.	2013.06.20	219,835	Manufacture of Related Component of 200 MGW Wind Turbine
TECO Elektrik TurkeyA.S	2013.08.01	35,834	Franchise of Home Appliance and FA/GE Product
Jiangxi TECO Westinghouse Motor Coil Co., Ltd	2014.07.24	110,333	Manufacture and Sales of electric machinery, coil and merchandise
Teco Westinghouse Colombia S.A.S.	2014.05.02	0	Manufacture and Sales of motor andgenerator
Motovario S.p.A.	1965.10.05	633,952	Manufacture and Sales of motor andgear reducer
Motovario S.A(Spain)	2001.2.14	33,824	Manufacture and Sales of motor andgear reducer
Motovario Ltd	1999.3.26	15,836	Manufacture and Sales of motor andgear reducer
Motovario GMBH	1997.2.28	11,338	Manufacture and Sales of motor andgear reducer
Motovario Corp.	1997.10.06	8,316	Manufacture and Sales of motor andgear reducer
Motovario S.A(France)	1995.2.09	11,380	Manufacture and Sales of motor andgear reducer
Motovario Int. TradingCo. Ltd	2004.7.22	940	Manufacture and Sales of motor andgear reducer
Motovario Power Transmission Co. Ltd.	2008.3.14	788	Manufacture and Sales of motor andgear reducer
Motovario Gear Solution Private Ltd	2011.7.15	5,519	Manufacture and Sales of motor andgear reducer
Eagle HoldingCo.	2010.8	3,413,991	HoldingCompany
TECO MOTOR B.V.	2015.7	3,520,352	HoldingCompany
Wuxi TECO Precision Mechatronics Co.,Ltd	2015.7	880,143	Manufacture and Sales of electric machineryand component
CenturyDevelopment Corporation	1993.2.9	3,361,164	Managemnet ofpropertyand industrialpark development
CenturyTech. C&M Corporation	1975.10.4	100,000	Construction industry
United Development Corporation	1994.3.8	80,002	Consultant service for industrialpark and land investment
Teco Industrial System Private Limited	2012.6	6,919	Sales and marketingfor motors in India
Teco Electrical Industries Private Limited	2016.6	30,199	Dealer for motors
Yatec Engineering (VN)CompanyLimited	2016.12	18,548	Design and maintenance of electrical systems
CenturyReal Estate(International)Pte. Ltd.	2017.8	933,736	Investment in other regions
CDC Development India Private	2017.10	882,740	Consultingservice for industrial zone and land investment
CenturyBiotech Development Corporation	2018.3.23	700,000	Consultingservice for industrial zone and land investment
Teco Sun Energy	2018.6.15	70,000	Production of equipment for power generation, transmission and distribution
Am Smart Technology	2018.3.31	10,000	Dealer of heavyelectricproducts

==> picture [84 x 612] intentionally omitted <==

8.1.3 Operational Highlights of Affiliated Companies

Unit: NT$thousand

Company	Capital	Total Assets	Total Liabilities	Net Worth	Net Sales	Operating Income	Net Profit / Loss	EPS (NT$)
TongDai Co.,Ltd.	57,120	602,534	317,840	284,694	1,145,519	57,228	62,121	10.88
Tecnos International Consultant Co.,Ltd.	97,375	355,740	227,273	128,467	1,875,768	21,583	17,142	1.76
TECO Electric Europe Limited	174,960	40,673	117,009	-76,336	96,938	7,903	11,050	2.46
TECO International Investment Co.,Ltd.	575,335	1,239,206	174,630	1,064,576	39,392	32,414	34,515	0.60
TECO Electro Devices Co.,Ltd.	245,926	564,160	177,057	387,103	595,761	20,303	26,550	1.08
TECO Electric & Machinery (Pte)Ltd. Singapore	179,840	3,303,054	241,413	3,061,641	1,325,856	24,014	101,891	12.74
TongTai JungCo.,Ltd.	66,000	460,271	307,792	152,479	809,592	29,589	23,126	3.50
Information TechnologyTotal Services Co.,Ltd.	203,371	907,995	631,133	276,862	1,184,279	61,321	45,033	2.21
UVG Investment Co.,Ltd.	7,230,724	8,029,014	538,728	7,490,286	0	253,666	246,687	1.05
Tong-An Investment Co.,Ltd.	4,459,181	8,437,238	65,510	8,371,728	221,946	177,235	182,101	0.41
TECO HoldingUSA Inc.	820,306	11,552,649	1,692,243	9,860,406	8,285,091	643,836	390,100	14.61
TECO Westinghouse Motor Company	633,497	9,172,267	1,561,827	7,610,440	6,993,559	502,436	446,419	21.64
An-Tai International Investment Co.,Ltd.	250,187	523,405	1,162	522,243	29,074	27,804	28,795	1.15
Taian(Subic)Electric Co.,Inc	205,514	281,227	58,943	222,284	364,504	11,246	10,462	1.56
Taian(Malaysia)Electric Sdn. Bhd.	184,834	12,315	538	11,777	0	239	239	0.01
Taian-Etacom TechnologyCo.,Ltd.	83,000	595,446	428,961	166,485	580,038	37,094	28,528	3.44
Tasia(PTE)Ltd.	23,874	1,369	134	1,235	0	-142	-142	-0.13
Teco Electronic & Machinery (THAI)Co.,Ltd.	56,754	229,093	30,691	198,402	248,840	2,431	4,203	0.07
TECO Australia Pty. Ltd.	649,950	1,709,087	468,484	1,240,603	2,014,864	50,422	26,952	0.90
TECO Industrial Malaysia Sdn. Bhd.	556,000	889,535	115,533	774,002	640,061	-7,978	12,615	0.17
P.T TECO Elektro,Indonesia	781,697	426,631	5,436	421,195	17,969	5,336	5,336	0.21
Asia Air Tech Industrial(PTE)Ltd.	261,078	140,696	7,438	133,258	0	-5,677	-5,672	-0.67
Tecoson Industrial Development(Singapore)	37,134	18,839	133	18,706	0	-4,598	-4,598	-2.78
TECO Westinghouse Motor Industrial,Canada	24,928	2,454,762	234,629	2,220,133	1,569,605	141,583	126,610	114.68
Jiangxi TECO Westinghouse Motor Coil Co.,Ltd	110,333	144,209	24,744	119,465	137,192	9,814	8,199	不適用
Teco Westinghouse Colombia S.A.S.	0	0	0	0	0	0	0	0.00
An-Tai International Investment(Singapore)Co.,Ltd.	498,464	444,938	647	444,291	0	-25,204	-25,204	-1.14
Tecoson HK Co.,Ltd.	15,634	10,920	1,540	9,380	3,027	-3,554	-4,670	-1.17
TECO(DongGuang)Air ConditioningEquipment Co.,Ltd.	314,637	144,955	5,344	139,611	7,193	-4,586	-5,487	NA
Micropac(BVI)Worldwide	457,162	1,457,457	737	1,456,720	0	-60	58,067	3.90

==> picture [84 x 612] intentionally omitted <==

Company	Capital	Total Assets	Total Liabilities	Net Worth	Net Sales	Operating Income	Net Profit / Loss	EPS (NT$)
Taian Technology (Wuxi)Co.,Ltd	530,402	1,781,979	482,442	1,299,537	1,911,267	18,493	62,625	NA
Great Teco Motor Ltd.	3,748,036	4,243,527	932	4,242,595	0	202,318	204,076	1.67
Jack PropertyService & Management Company	30,250	231,765	97,518	134,247	362,374	41,213	30,817	10.19
Universal Mail Service Ltd.	13,000	33,084	25,126	7,958	77,939	-1,274	-1,262	-0.97
INFORMATION TECHNOLOGY TOTAL SERVICE(BVI) Co. Ltd.	47,332	49,774	57	49,717	0	-805	-403	-0.26
Tong-An Assets Management & Development Co.,Ltd.	3,884,237	6,226,357	973,550	5,252,807	179,845	64,439	71,234	0.18
P.T. TECO Multiguna Electro	15,758	427,957	76,051	351,906	650,295	71,330	52,274	0.01
Yatec EngineeringCorporation	120,100	344,391	121,369	223,022	508,150	22,630	21,328	1.78
TECO New Zealand Limited	61,569	66,183	97,118	-30,935	77,643	8,453	8,453	2.82
Asia Electric & Machinery	1,707,293	389,935	11,219	378,716	0	-7,534	-7,535	-0.14
Wuxi TECO Electric & MachineryCo.,Ltd	1,498,567	3,278,304	1,329,683	1,948,621	4,389,587	118,788	158,175	NA
GD TECO Taiwan Co.,Ltd.	54,000	223,400	155,317	68,083	407,356	14,915	14,756	2.73
Tesen Electric & MachineryCo.,Ltd.	200,000	324,822	101,654	223,168	2,271,598	19,536	19,179	0.96
Teco Electronic Devices Co.,Ltd.	104,738	121,631	0	121,631	0	0	17,878	5.24
Wuxi Teco Electro Devices Co,.Ltd.	123,128	215,027	93,411	121,616	307,646	16,661	17,876	NA
Unison Service Corporation	17,000	25,662	37,495	-11,833	85,111	3,565	2,702	1.59
Information TechnologyTotal Service(HangZhu)Ltd.	2,406	296	428	-132	0	-102	-303	NA
Taian Electric Co.,Ltd.	1,000	820	0	820	0	-12	-11	-0.11
E-JoyInternational Co.,Ltd.	101,500	117,580	51,259	66,321	208,595	3,236	3,429	0.34
A-Ok Technical Co.,Ltd.	22,500	137,011	81,992	55,019	365,058	24,179	19,978	8.88
Great Teco,S.L.	21,120	13,112	0	13,112	0	-4	342	0.57
NanchangTECO Electric & MachineryCo.,Ltd.	510,260	32,817	40,069	-7,252	16,752	-139	519,126	NA
Sankyo Co.,Ltd.	8,346	134,410	263,396	-128,986	211,480	-428	1,070	0.04
Teco Electric & MachineryB.V.	23,232	141,559	630,857	-489,298	246,169	22,475	18,505	28.04
STE MarketingSDN. BHD	65,082	432,684	79,198	353,486	549,934	47,190	37,068	42.03
Jiangxi TECO Electric & MachineryCo.,Ltd.	1,498,097	1,768,887	256,172	1,512,715	657,665	-754	34,095	NA
Qingdao TECO Precision Mechatronics Co.,Ltd	837,440	996,579	615,226	381,353	1,028,448	-12,816	-10,808	NA
Teco Westinghouse Motor CompanyS. A. de C. V.	56,159	164,344	155,935	8,409	261,561	1,756	4,937	0.14
Xiaman TECO TechnologyCo.,Ltd.	21,981	88,340	59,903	28,437	244,391	1,486	1,378	NA
TYM Electric & MachinerySdn. Bhd.	3,689	98,339	19,724	78,615	113,033	5,521	5,192	103.84
Teco(Vietnam)Electronic & MachineryCompanyLtd.	188,817	289,788	74,493	215,295	273,026	34,552	26,479	0.00
TECO Technology (Vietnam)Co.,Ltd.	377,178	424,177	86,091	338,086	151,926	3,937	2,281	0.00

==> picture [84 x 612] intentionally omitted <==

Company	Capital	Total Assets	Total Liabilities	Net Worth	Net Sales	Operating Income	Net Profit / Loss	EPS (NT$)
Asia Innovative Technology (Xiamen)Co.,Ltd.	834,130	369,190	78,993	290,197	53,036	-11,579	-12,826	NA
Fujian TECO Precision Co.,Ltd.	376,117	159,815	86,421	73,394	0	-17,730	-11,051	NA
Teco Appliance(HK)Co.,Ltd.	5,863	2,841	0	2,841	0	0	0	0.00
An-ShengTravel Co.,Ltd.	30,000	16,445	2,692	13,753	40,901	854	-619	-0.21
Hubbell-Taian Co.,Ltd.	27,200	139,181	50,435	88,746	169,905	19,497	18,669	6.86
Hubbel-Anmex International(s)Pte. Letd.	24,324	36,406	4,452	31,954	9,674	4,724	3,548	4.48
Information Technology (Wuxi)Co.,Ltd.	11,104	52,500	37,009	15,491	65,654	504	-2,496	NA
Information TechnologyTotal Service(Xiamen)Ltd.	4,472	2,857	2,260	597	3,708	-2,152	-2,081	NA
GreyBack International PropertyInc.	30,718	37,081	1,137	35,944	0	-33	-17	-0.02
Teco GroupScience-Technology (HangZhou)Co.,Ltd.	10,160	30,937	1,529	29,408	29,377	3,321	3,212	NA
Taian-Jaya Electric Sdn. Bhd.	7,379	199,370	58,374	140,996	93,580	10,122	9,002	9.04
TECO CAPITAL INC.	20,215	9,616	0	9,616	0	-38	1,344	2.04
TECO(PHILIPINES)3C & APPLIANCES,INC.	30,141	35,599	41,373	-5,774	54,329	1,085	814	0.83
Taiwan Pelican Express Co.,Ltd.	954,670	2,382,541	768,331	1,614,210	3,360,947	73,847	68,475	0.72
Tianjin TECO TechnologyCo.,Ltd.	15,272	14,793	-5	14,798	0	-737	86	NA
Jiangxi TECO Air ConditioningEquipment Co.,Ltd.	165,764	231,815	105,105	126,710	392,211	5,601	7,148	NA
TECO Sichuan TradingCO.,LTD.	26,832	22,494	15,086	7,408	13,777	-2,337	768	NA
Pelecanus Express Pte. Ltd.	27,644	3,102	123	2,979	0	-121	-2,502	-2.78
Qingdao TECO Innovation Co.,Ltd.	58,516	86,256	52,922	33,334	0	-5,464	510	NA
TECO Technology& MarketingCenter Co.,Ltd.	8,346	11,465	51,975	-40,510	2,126	-171	-139	0.00
TECOCAPITAL INVESTMENT(SAMOA)Co.,Ltd.	61,430	32,801	0	32,801	0	0	473	0.24
BeijingPelican Express Co.,Ltd.	24,372	2,679	14	2,665	0	-2,034	-11,470	NA
TECO Nanotech Co.,Ltd.	250,000	43,856	17,730	26,126	4,013	-4,260	8,537	0.34
Technical Information International Co.,Ltd.	44,720	14,834	2,643	12,191	24,646	1,415	1,401	NA
Shanghai TECO Electric & MachineryCo.,Ltd.	22,665	1,585,673	1,551,059	34,614	4,808,070	82,558	67,946	NA
TECO Electric and MachineryGmbH.	880	7,626	1,761	5,865	25,105	-180	-175	-6.98
Tecom Co.,Ltd.	3,153,326	2,104,482	1,505,473	599,009	2,428,662	-99,017	-46,896	-0.15
Tecom International Investment Co.,Ltd.	120,000	243,210	1,785	241,425	0	-333	-752	-0.06
MOCET Networks Inc.	0	0	0	0	0	-22,592	-22,592	#DIV/0!
Baycom Opto-Electronics TechnologyCo.,Ltd.	335,913	492,130	40,572	451,558	228,065	-4,497	-582	-0.02
Tecom Global Tech Investment(B.V.I)	33,156	2,146	0	2,146	0	0	-4,451	-0.13
Tecom Global Tech Investment Pte Limited	487,166	3,113	0	3,113	339	0	-54	0.00
Tecom Tech Investment(B.V. I)	49,556	3,110	-221	3,331	24	0	371	0.01

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Company	Capital	Total Assets	Total Liabilities	Net Worth	Net Sales	Operating Income	Net Profit / Loss	EPS (NT$)
WondaLink Inc.	47,422	33,666	33,334	332	75,806	-25,085	-25,348	-5.35
Wuhan Tecom Co.,Ltd.	7,403	31,276	29,183	2,093	105,508	-3,556	-4,399	NA
Tecom Tech(Wuxi)Co.,Ltd.	505,967	3,268	179	3,089	0	0	10	NA
Tecom Tech Investment(BVI)Limited.	14,460	306	85	221	152	41	270	NA
BeijingTecom Innovative TechnologyCo.,Ltd.	5,831	3,209	590	2,619	0	72	72	NA
Donghua Enterprise Co.,Ltd.	18,000	197,059	114,636	82,423	413,031	55,354	44,651	24.81
Hunan TECO Electric & MachineryCo.,Ltd.	219,835	160,934	2,835	158,099	205	-6,174	-2,475	NA
Teco Elektrik TurkeyA.S	35,834	17,287	252	17,035	2,324	-3,307	47	0.01
Motovario S.p.A.	633,952	8,064,194	4,545,236	3,518,958	4,068,314	113,198	13,997	0.78
Motovario SAU(Spain)	33,824	324,650	375,658	-51,008	613,528	-79,004	-81,683	NA
Motovario Ltd	15,836	165,257	147,170	18,087	292,387	-14,391	-16,714	NA
Motovario GMBH	11,338	58,578	98,610	-40,032	159,705	-3,752	-4,250	NA
Motovario Corp.	8,316	441,524	48,868	392,656	512,454	86,219	64,138	236.90
Motovario S.A(France)	11,380	158,437	145,887	12,550	356,692	-2,731	4,821	NA
Motovario Int. TradingCo. Ltd	940	3,057	3,720	-663	7,989	209	156	NA
Motovario Power Transmission Co. Ltd.	788	2,215	2,729	-514	515	-25	-87	NA
Motovario Gear Solution Private Ltd	5,519	122,858	210,734	-87,876	119,961	-14,682	-13,701	NA
Eagle HoldingCo.	3,413,991	4,311,342	0	4,311,342	0	0	210,110	1.89
TECO MOTOR B.V.	3,520,352	4,311,437	0	4,311,437	0	0	205,744	2.06
Wuxi TECO Precision Mechatronics Co.,Ltd	880,143	986,774	187,722	799,052	553,410	-11,158	-10,144	NA
CenturyDevelopment Corporation	3,361,164	5,510,781	1,148,373	4,362,408	776,819	332,677	237,888	0.71
CenturyTech. C&M Corporation	100,000	245,039	79,473	165,566	293,024	-23,511	-21,555	-2.16
United Development Corporation	80,002	148,220	23,987	124,233	2,640	-521	6,544	0.82
Teco Industrial System Private Limited	6,919	6,448	3,098	3,350	3,098	-2,020	-2,241	-0.15
Teco Electrical Industries Private Limited	30,199	32,300	22,143	10,157	63,120	-6,269	-7,240	-0.11
Yatec Engineering (VN)CompanyLimited	18,548	56,269	39,041	17,228	43,006	644	644	0.00
CenturyReal Estate(International)Pte. Ltd.	933,736	872,060	123	871,937	0	-121	-25,235	-0.83
CDC Development India Private	882,740	868,311	13,252	855,059	0	-26,917	-26,937	-0.01
CenturyBiotech Development Corporation	700,000	708,302	20,493	687,809	0	-14,299	-12,191	-0.02
Teco Sun Energy	70,000	69,932	0	69,932	0	-79	-68	0.00
Am Smart Technology	10,000	19,896	13,210	6,686	14,406	-3,319	-3,319	-0.33
Temico International Pte.Ltd.	17,148	16,821	101	16,720	209	-420	-420	-0.75
TECO EV Philippines Corporation	31,401	17,718	15,740	1,978	0	0	-670	-0.01

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8.2 Private Placement Securities in the Most Recent Years

None

8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Years

Unit: NT$ thousand; Shares; %

Name of subsidiary	Stock capital collected	Fund source	Shareholding ratio of the company	Date of acquisition or disposition	Shares and amount acquired	Shares and amount disposed of	Investment gain (loss)	Shareholdings & amount in the most recentyear	Mortgage	Endorsement amount made for the subsidiary	Amount loaned to the subsidiary
Tong An Investment Co.,Ltd.	4,459,181	Working Capital	99.60%	Successive Acquisition	19,540,052Shares $232,969	-	-	19,540,052Shares $451,375	16,561,052Shares	-	-
An Tai International Investment Co.,Ltd.	250,187	Working Capital	100.00%	Successive Acquisition	2,825,748Shares $26,308	-	-	2,825,748Shares $65,275	None	-	-
Donghua Enterprise Co.,Ltd.	18,000		0.00%	Successive Acquisition	77,222 shares $724	-	-	77,222 shares $1,784	None

==> picture [84 x 612] intentionally omitted <==

Address: 5F., No. 19-9, San Chong Rd., Nan Kang, Taipei, Taiwan, R.O.C. Tel: 886-2-2655-3333

AI assistant

TECO — Annual Report 2018

51836_rns_2019-06-26_ecf529b1-3c25-4f21-b734-951aad86c18d.pdf

Spokesperson

Auditors

Deputy Spokesperson

Corporate Website

Stock Transfer Agent

Headquarters, Branches and Plant

Headquarter

Plant Chung-Li

Plant Hu-Kou

Plant Kuan-Yin I

I.Letter to Shareholders

Dear Shareholders,

A. Review of Business Performance in 2018

b.Consolidated Financial Statements

B.Outline of 2019 Business Plan

C.External Competition, Legal and Microeconomy

II.Company Profi le

Date of Incorporation: June, 1956

Company History

III.Corporate Governance Report

3.1 Organization

3.1.1 Organization Chart

3.1.2 Major Corporate Functions

3.2 Directors and Management Team

3.2.1 Directors

Data for Directors

3.2.2 Management Team

3.2.3 Remuneration of Directors, President and Vice President

Remuneration of Directors (Including Independent Directors)

Compensation of President and Vice President

Employee Bonus to Executive Officers

3.2.4 Comparison of Remuneration for Directors, Presidents and Vice

Presidents in the Most Recent Two Fiscal Years and Remuneration Policy for Directors, Supervisors, Presidents and Vice Presidents

3.3 Implementation of Corporate Governance

3.3.1 Board of Directors

3.3.2 Audit Committee

3.3.3 Corporate Governance Execution Status and Deviations from “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies”

Note 3: Evaluation for CPA

3.3.4 Compensations Committee

3.3.5 Social Responsibility

3.3.6 Adherence to the Ethical Corporate Management and Measures

3.3.7 Corporate Governance Guidelines and Regulations

3.3.8 Other Important Information Regarding Corporate Governance

D. The situation of resignation in the Company: None

3.3.9 Internal Control System

3.3.11 Major Resolutions of Shareholders’ Meeting and Board Meetings

A. Major Resolutions of Shareholders’ Meeting and Board Meetings in the recent two years

B. Implemntation of Resolutions made in Annual Shareholders’ Meeting on June 15, 2018.

3.3.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors

3.3.13 Resignation or Dismissal of Personnel Involved in Preparation of Financial Reports

3.4 Information on CPA fee

3.4.1 Accountant Information

3.4.2 Table of Brackets for CPA Fees

3.4.3 Non-inspection fees for CPAs, accounting firms, and its affiliates account for over one quarter of inspection fee: Nil

3.4.4 Replacement of accounting firm and auditing fee for the replacement year is lower than amount in the year prior to the replacement: Nil

3.4.5 Auditing fee decreases by over 15% from the previous year: Nil

3.5 Information on replacement of CPA: Not applicable

3.6 Information on service of the company’s chairman, president, and financial or accounting managers at the accounting firm or its affiliates: Nil

3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

3.7.1 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders

3.7.2 Shares Transfer with Related Parties

3.7.3 Shares Pledged with Related Parties

3.8 Information Disclosing the Relationship between any of the Company’s Top Ten Shareholders

3.9 Long-Term Investments Ownership

IV. Capital Overview

4.1 Capital and Shares

4.1.1 Source of Capital

4.1.2 Status of Shareholders

4.1.3 Shareholding Distribution Status

4.1.4 List of Major Shareholders

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

4.1.6 Dividend Policy and Implementation Status

A. Dividend Policy

4.1.7 Impact on Company’s business performance, EPS and ROI from the stock

grant proposed by Shareholders Meeting:

4.1.8 Employee and Directors' Remuneration

4.1.9 Buyback of Treasury Stock

TECO Annual Report 2018

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