TECO - Interim / Quarterly Report 2018

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIE

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

SEPTEMBER 30, 2018 AND 2017

For the convenience of readers and for information purpose only, the report of independent accountants and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report of independent accountants and financial statements shall prevail.

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To TECO Electric & Machinery Co., Ltd. and its subsidiaries

Introduction

We have reviewed the accompanying consolidated balance sheets of Teco Electric & Machinery Co., Ltd. and subsidiaries (the “Group”) as at September 30, 2018 and 2017, and the related consolidated statements of comprehensive income for the three-month and nine-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the nine-month periods then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standards No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity” in the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope

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than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As described in Note 4(3) to the consolidated financial statements, the financial statements of certain consolidated subsidiaries and investments accounted for under equity method were not reviewed by independent accountants. Those statements reflect total assets (including investments accounted for under the equity method) of NT$25,285,971 thousand and NT$31,913,282 thousand, constituting 27% and 34% of consolidated total assets, and total liabilities (including credit balance of investments accounted for under equity method) of NT$4,327,306 thousand and NT$4,627,440 thousand, constituting 12% and 13% of consolidated total liabilities as of September 30, 2018 and 2017, respectively, and total comprehensive income (including share of profit or loss and share of other comprehensive income of associates and joint ventures accounted for under the equity method) of NT$355,861 thousand and NT$598,504 thousand, constituting 36% and 71% of the consolidated total comprehensive income for the three-month periods ended September 30, 2018 and 2017, respectively, and NT$865,612 thousand and NT$1,210,878 thousand, constituting 28% and 32% of the consolidated comprehensive income for the nine-month periods ended September 30, 2018 and 2017, respectively. These amounts and the related information disclosed in Note 13 were based on the unreviewed financial statements of such consolidated subsidiaries and investee companies

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and investments accounted for using equity method been reviewed by independent accountants, that we

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might have become aware of had it not been for the situation described above, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at September 30, 2018 and 2017, and of its consolidated financial performance for the three-month and nine-month periods then ended and its consolidated cash flows for the nine-month periods then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Wu, Yu-Lung Chou, Chien-Hung

For and on behalf of PricewaterhouseCoopers, Taiwan November 13, 2018

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

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

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TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of September 30, 2018 and 2017 are reviewed, not audited)

Assets	Notes	September30,2018 AMOUNT % $ 17,764,515 19 525,950 1 1,069,450 1 - - 1,028,059 1 - - 1,277,549 1 8,028 - 9,285,556 10 174,719 - - - 405,374 1 147,388 - 11,890,120 13 464,798 1 - - 1,311,912 1 45,353,418 49 1,977,271 2 11,098,998 12 - - 150,000 - 4,104,711 4 17,338,165 19 2,756,754 3 5,583,654 6 1,248,205 1 3,243,312 4 47,501,070 51 $ 92,854,488 100	December31,2017 AMOUNT % $ 14,129,330 16 254,003 - - - 871,041 1 - - 3,794,570 4 1,188,761 1 931 - 9,439,077 10 183,701 - 1,030,504 1 601,279 1 34,844 - 11,336,492 12 422,892 1 - - 975,343 1 44,262,768 48 - - - - 12,925,119 14 - - 4,022,455 4 17,922,299 20 2,883,477 3 5,612,315 6 1,382,884 2 3,005,640 3 47,754,189 52 $ 92,016,957 100	September30,2017	September30,2017
		AMOUNT $ 17,764,515 525,950 1,069,450 - 1,028,059 - 1,277,549 8,028 9,285,556 174,719 - 405,374 147,388 11,890,120 464,798 - 1,311,912 45,353,418 1,977,271 11,098,998 - 150,000 4,104,711 17,338,165 2,756,754 5,583,654 1,248,205 3,243,312 47,501,070 $ 92,854,488	AMOUNT $ 14,129,330 254,003 - 871,041 - 3,794,570 1,188,761 931 9,439,077 183,701 1,030,504 601,279 34,844 11,336,492 422,892 - 975,343 44,262,768 - - 12,925,119 - 4,022,455 17,922,299 2,883,477 5,612,315 1,382,884 3,005,640 47,754,189 $ 92,016,957	AMOUNT $ 13,412,258 148,485 - 900,808 - 4,167,115 1,312,421 7,081 9,269,493 206,397 973,979 458,865 397,739 11,578,226 547,917 345,530 1,211,504 44,937,818 - - 12,951,778 - 3,946,880 17,766,470 2,996,257 5,626,537 1,218,380 3,176,211 47,682,513 $ 92,620,331	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1120 Current financial assets at fair value through other comprehensive income 1125 Available-for-sale financial assets - current 1140 Current contract assets 1147 Bond investments without active markets - current 1150 Notes receivable, net 1160 Notes receivable - related parties 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1190 Receivables from customers on construction contracts 1200 Other receivables 1210 Other receivables - related parties 130X Inventories, net 1410 Prepayments 1460 Non-current assets held for sale - net 1470 Other current assets 11XX Total current assets Non-current assets 1510 Financial assets at fair value through profit or loss - non- current 1517 Non-current financial assets at fair value through other comprehensive income 1523 Available-for-sale financial assets - non-current 1535 Non-current financial assets at amortised cost, net 1550 Investments accounted for under the equity method 1600 Property, plant and equipment, net 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Total non-current assets 1XXX Total assets	6(1) and 8 6(2)(25) 6(3) 8 and 12(4) 6(23) 12 6(5) and 8 7 6(5) 7 12(5) 7 6(6) and 8 6(7) 6(1) and 8 6(2)(25) 6(3) and 8 8 and 12(4) 6(4) and 8 6(8) and 8 6(9) and 8 6(10) 6(11) 6(29) 6(12) and 8				15 - - 1 - 5 1 - 10 - 1 1 - 13 1 - 1
					49
					- - 14 - 4 19 3 6 1 4
					51
					100

(Continued)

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TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of September 30, 2018 and 2017 are reviewed, not audited)

				September30,2018	September30,2018			December31,2017	December31,2017			September30,2017	September30,2017
	Liabilities and Equity	Notes		AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(13) and 8	$	2,267,047		3	$	2,187,621		3	$	2,318,683	3
2120	Financial liabilities at fair value	6(14)(25)
	through profit or loss - current			-		-		2,528		-		77	-
2130	Current contract liabilities	6(23)		1,139,663		1		-		-		-	-
2150	Notes payable			70,894		-		195,407		-		161,373	-
2160	Notes payable - related parties	7		119,305		-		1,368		-		1,137	-
2170	Accounts payable			7,263,642		8		7,589,788		8		7,722,949	8
2180	Accounts payable - related	7
	parties			105,658		-		123,271		-		118,276	-
2190	Payables to customers on	12(5)
	construction contracts			-		-		178,165		-		254,392	-
2200	Other payables	6(15)		4,686,190		5		4,839,917		5		4,663,196	5
2230	Current income tax liabilities	6(29)		704,528		1		917,494		1		886,670	1
2250	Provisions for liabilities -
	current			300,584		-		308,744		-		400,353	1
2300	Other current liabilities	6(17) and 8		1,861,694		2		2,398,053		3		2,753,512	3
21XX	Total current liabilities			18,519,205	20			18,742,356	20			19,280,618	21
	Non-current liabilities
2530	Corporate bonds payable	6(16)		4,000,000		4		4,000,000		4		4,000,000	4
2540	Long-term borrowings	6(17) and 8		8,097,628		9		6,466,239		7		7,022,460	8
2550	Provisions for liabilities - non-
	current			109,322		-		179,189		-		189,551	-
2570	Deferred income tax liabilities	6(29)		2,212,734		3		2,423,023		3		2,351,351	2
2600	Other non-current liabilities	6(8)(18)		2,193,516		2		2,332,013		3		2,380,798	3
25XX	Total non-current
	liabilities			16,613,200	18			15,400,464	17			15,944,160	17
2XXX	Total liabilities			35,132,405	38			34,142,820	37			35,224,778	38
	Equity attributable to owners of
	parent
	Share capital	6(19)
3110	Common stock			20,026,929	22			20,026,929	22			20,026,929	22
	Capital surplus	6(20)
3200	Capital surplus			7,645,304		8		7,628,542		8		7,649,136	8
	Retained earnings	6(21)
3310	Legal reserve			6,387,454		7		6,078,219		6		6,078,219	7
3320	Special reserve			3,640,779		4		3,640,779		4		3,640,779	4
3350	Unappropriated retained
	earnings			15,221,103	16			12,750,338	14			12,185,300	13
	Other equity interest	6(22)
3400	Other equity interest			323,912		-		2,026,521		2		2,185,369	2
3500	Treasury stocks	6(19) and 8(		321,563)		- (		321,563)		- (		321,563)	-
31XX	Equity attributable to
	owners of the parent			52,923,918	57			51,829,765	56			51,444,169	56
36XX	Non-controlling interest	6(33)		4,798,165		5		6,044,372		7		5,951,384	6
3XXX	Total equity			57,722,083	62			57,874,137	63			57,395,553	62
	Commitments and contingent	9
	liabilities
3X2X	Total liabilities and equity		$	92,854,488	100		$	92,016,957	100		$	92,620,331	100

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

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TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (REVIEWED, NOT AUDITED)

					For the three-month periods	For the three-month periods	For the three-month periods	ended September	30		For the nine-month periods	For the nine-month periods	For the nine-month periods	ended September	30
					2018			2017			2018			2017
	Items	Notes			AMOUNT	%		AMOUNT	%		AMOUNT	%		AMOUNT	%
4000	Sales revenue	6(9)(23), 7 and 12(5)		$	12,064,362	100 $		12,677,880	100 $		37,109,837	100 $		37,667,308	100
5000	Operating costs	6(5)(18)(27)(28) and 7	(		9,240,125 ) (	77) (		9,762,733) (	77)(		28,163,333)(	76)(		28,473,483)(	76)
5900	Net operating margin				2,824,237	23		2,915,147	23		8,946,504	24		9,193,825	24
5910	Unrealized loss from sales		(		405 )		- (	1,329)		- (	9,765)		- (	8,778)	-
5920	Realized profit from sales				-		-	-		-	9,145		-	6,625	-
5950	Net operating margin				2,823,832	23		2,913,818	23		8,945,884	24		9,191,672	24
	Operating expenses	6(18)(27)(28)
6100	Selling expenses		(		1,074,419 ) (		9) (	1,076,686) (		8) (	3,434,660) (		9) (	3,351,642) (	9)
6200	General and administrative expenses		(		598,128 ) (		5) (	763,620) (		6) (	1,943,975) (		5) (	2,223,150) (	6)
6300	Research and development expenses		(		250,067 ) (		2) (	322,018) (		3) (	842,660) (		3) (	957,426) (	2)
6450	Impairment loss (impairment gain and reversal of impairment	12(2)
	loss) determined in accordance with IFRS 9		(		16,632 )		-	-		- (	55,181)		-	-	-
6000	Total operating expenses		(		1,939,246 ) (	16) (		2,162,324) (	17)(		6,276,476)(	17)(		6,532,218)(	17)
6900	Operating profit				884,586		7	751,494		6	2,669,408		7	2,659,454	7
	Non-operating income and expenses
7010	Other income	6(4)(10)(24) and 7			339,145		3	699,827		6	1,018,054		3	1,259,093	3
7020	Other gains and losses	6(2)(9)(14)(25)(31)(33
		)	(		171,518 ) (		2) (	215,456) (		2) (	315,404) (		1) (	422,233) (	1)
7050	Finance costs	6(26)	(		50,498 )		- (	81,654)		- (	164,378)		- (	196,047)	-
7060	Share of profit of associates and joint ventures accounted for	6(8)
	under the equity method				70,840		1	41,768		-	117,107		-	129,483	-
7000	Total non-operating income and expenses				187,969		2	444,485		4	655,379		2	770,296	2
7900	Profit before income tax				1,072,555		9	1,195,979	10		3,324,787		9	3,429,750	9
7950	Income tax expense	6(29)	(		168,355 ) (		2) (	248,149) (		2)(	621,297)(		2)(	632,939)(	2)
8200	Profit for the period			$	904,200		7$	947,830		8$	2,703,490		7$	2,796,811	7

(Continued)

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TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except as otherwise indicated) (REVIEWED, NOT AUDITED)

						For the three-month periods	For the three-month periods	ended September	30		For the nine-month periods	For the nine-month periods	ended September	30
						2018		2017			2018		2017
	Items		Notes			AMOUNT %		AMOUNT	%		AMOUNT %		AMOUNT	%
	Other comprehensive income
	Other comprehensive income that will not be reclassified to
	profit or loss
8311	Other comprehensive income, before tax, actuarial losses on	6(18)
	defined benefit plans				$	-	- $	-		- ($	3,488)	- $	2,713	-
8316	Unrealized gain on investments in equity instruments at fair	6(3) and	12(4)
	value through other comprehensive income					381,861	3	-		-	454,579	1	-	-
8349	Income tax related to components of other comprehensive	6(29)
	income that will not be reclassified to profit or loss					-	-	-		-	19,779	-	-	-
8310	Components of other comprehensive income that will not
	be reclassified to profit or loss					381,861	3	-		-	470,870	1	2,713	-
	Other comprehensive income that will be reclassified to profit
	or loss
8361	Currency translation differences of foreign operations	6(22)		(		307,412 ) (	2)	289,222		2 (	134,934)	- (	548,632) (	1)
8362	Unrealized gain (loss) on valuation of available-for-sale	12(4)
	financial assets					-	- (	351,265) (		3)	-	-	1,520,179	4
8370	Share of other comprehensive income (loss) of associates and	6(22)
	joint ventures accounted for under the equity method - other
	comprehensive income that will be reclassified to profit or loss			(		4,373 )	- (	2,128)		- (	11,999)	-	1,724	-
8399	Income tax relating to the components of other comprehensive	6(29)
	income that will be reclassified					16,328	- (	34,806)		-	34,041	-	35,159	-
8360	Components of other comprehensive income that will be
	reclassified to profit or loss			(		295,457) (	2) (	98,977) (		1)(	112,892)	-	1,008,430	3
8300	Other comprehensive income (loss) for the period				$	86,404	1($	98,977) (		1) $	357,978	1 $	1,011,143	3
8500	Total comprehensive income for the period				$	990,604	8 $	848,853		7 $	3,061,468	8 $	3,807,954	10
	Profit attributable to:
8610	Owners of the parent				$	820,436	6 $	849,994		7 $	2,460,690	6 $	2,476,416	6
8620	Non-controlling interest					83,764	1	97,836		1	242,800	1	320,395	1
					$	904,200	7 $	947,830		8 $	2,703,490	7 $	2,796,811	7
	Comprehensive income attributable to:
8710	Owners of the parent				$	893,331	7 $	756,101		6 $	2,799,707	7 $	3,497,725	9
8720	Non-controlling interest					97,273	1	92,752		1	261,761	1	310,229	1
					$	990,604	8 $	848,853		7 $	3,061,468	8 $	3,807,954	10
	Earnings per share (in dollars)	6(30)
9750	Basic earnings per share				$	0.41 $			0.43 $		1.24 $			1.25
9850	Diluted earnings per share				$	0.41 $			0.43 $		1.24 $			1.25

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

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TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars)

(REVIEWED, NOT AUDITED)

Notes						Equity attributable to	Equity attributable to	owners ofthe parent
	Share capital - common stock		Capital surplus		RetainedEarnings					Otherequityinterest			Treasurystocks		Total
				Legal reserve	Special reserve		Unappropriated retained earnings	Financial statements translation differences of foreign operations		Unrealized gains (losses) from financial assets measured at fair value through other comprehensive income	l	Unrealized gain or oss on available-for- sale financial assets
6(22) 6(21) 12(4) 6(22) 6(21) 6(3)(22)	$ 20,026,929 - - - - - - - $ 20,026,929 $ 20,026,929 - 20,026,929 - - - - - - - - $ 20,026,929	$7,671,889 - - - - - ( 22,753 ) - $7,649,136 $ 7,628,542 - 7,628,542 - - - - - 16,762 - - $7,645,304		$5,730,071 - - - 348,148 - - - $6,078,219 $ 6,078,219 - 6,078,219 - - - 309,235 - - - - $6,387,454	$3,640,779 - - - - - - - $3,640,779 $ 3,640,779 - 3,640,779 - - - - - - - - $3,640,779	$ 11,816,689 2,476,416 2,713 2,479,129 ( 348,148 ) ( 1,762,370 ) - - $ 12,185,300 $ 12,750,338 1,937,121 14,687,459 2,460,690 ( 3,538 ) 2,457,152 ( 309,235 ) ( 1,722,316 ) - - 108,043 $ 15,221,103		($1,051,753 ) - ( 491,239 ) ( 491,239 ) - - - - ($1,542,992 ) ($ 1,759,357 ) - ( 1,759,357 ) - ( 95,887 ) ( 95,887 ) - - - - - ($1,855,244 )	$ - - - - - - - - $ - $ - 1,848,757 1,848,757 - 438,442 438,442 - - - - ( 108,043 ) $ 2,179,156		$ 2,218,526 - 1,509,835 1,509,835 - - - - $ 3,728,361 $ 3,785,878 ( 3,785,878 ) - - - - - - - - - $ -		($321,563 ) - - - - - - - ($321,563 ) ($ 321,563 ) - ( 321,563 ) - - - - - - - - ($321,563 )	$ 49,731,567 2,476,416 1,021,309 3,497,725 - ( 1,762,370 ) ( 22,753 ) - $ 51,444,169 $ 51,829,765 - 51,829,765 2,460,690 339,017 2,799,707 - ( 1,722,316 ) 16,762 - - $ 52,923,918		$ 5,992,976 320,395 ( 10,166 ) 310,229 - - - ( 351,821 ) $ 5,951,384 $ 6,044,372 - 6,044,372 242,800 18,961 261,761 - - - ( 1,507,968 ) - $ 4,798,165	$ 55,724,543 2,796,811 1,011,143 3,807,954 - ( 1,762,370 ) ( 22,753 ) ( 351,821 ) $ 57,395,553 $ 57,874,137 - 57,874,137 2,703,490 357,978 3,061,468 - ( 1,722,316 ) 16,762 ( 1,507,968 ) - $ 57,722,083

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

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TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

(REVIEWED, NOT AUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Net loss on financial assets at fair value through profit or loss
Net (gain) loss on financial liabilities at fair value through profit or
loss
Provision for allowance for doubtful accounts
Impairment loss determined in accordance with IFRS 9
Interest income
Dividend income
Interest expense
Depreciation and amortization
Gain on disposal of investments
Loss (gain) on disposal of property, plant and equipment
Impairment loss
Share of profit of associates and joint ventures accounted for under the
equity method
Changes in operating assets and liabilities
Changes in operating assets
Financial assets at fair value through profit or loss - current
Current contract assets
Notes receivable
Notes receivable - related parties
Accounts receivable
Accounts receivable - related parties
Receivables from customers on construction contracts
Other receivables
Other receivables - related parties
Inventories
Prepayments
Other current assets
Financial assets at fair value through profit or loss - non-current
Changes in operating liabilities
Contract liabilities - current
Notes payable
Notes paypale - related parties
Accounts payable
Accounts payable - related parties
Payables to customers on construction contracts
Other payables
Provisions for liabilities
Other current liabilities
Other non-current liabilities
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Net cash flows from operating activities

For the nine-month periods
ended September 30
Notes
2018
2017
$ 3,324,787
$ 3,429,750
6(2)(23)(25)
47,085
17,428
6(14)(25)
(
2,528 )
167
6(5) and 12(4)
-
33,538
12(2)
55,181
-
6(24)
(
143,992 )
(
111,408 )
6(24)
(
553,149 )
(
508,256 )
6(26)
164,378
196,047
6(9)(10)(27)
1,155,822
1,148,228
6(23)(25)
(
80 )
(
282,082 )
6(25)
20,429
(
158,222 )
6(25)(31)
(
46,515 )
-
6(8)
(
117,107 )
(
129,483 )
91,319
67,595
(
41,797 )
-
(
253,791 )
(
108,550 )
(
94,094 )
(
1,682 )
(
405,336 )
1,136,433
(
15,910 )
28,358
-
261,977
188,233
(
216,561 )
(
112,544 )
44,986
(
1,101,699 )
(
401,185 )
(
127,188 )
(
76,717 )
248,559
85,512
(
40,159 )
-
410,382
-
(
56,232 )
(
1,788 )
119,412
(
6,474 )
12,114
211,596
(
17,420 )
19,159
-
52,371
115,366
(
364,567 )
(
8,229 )
67,353
201,252
528,003
(
44,815 )
(
154,762 )
2,971,734
4,806,764
6(24)
143,992
111,408
6(24)
730,973
640,641
6(26)
(
164,378 )
(
196,047 )
6(29)
(
833,421 )
(
419,781 )
2,848,900
4,942,985

(Continued)

~9~

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

(REVIEWED, NOT AUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in financial assets at fair value through other comprehensive
income - current
Decrease in available-for-sale financial assets - current
Decrease in other receivables-related parties
Decrease (increase) in bond investments without active market
(Increase) decrease in pledged demand and fixed deposits
Increase in financial assets at fair value through other comprehensive
income - non-current
Decrease in financial assets at fair value through other comprehensive
income - non-current
Proceeds from disposal of available-for-sale financial assets - non-current
Acquisition of available-for-sale financial assets - non-current
Increase in financial assets at amortised cost - non-current
Increase in investments accounted for under the equity method
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Acquisition of intangible assets
(Increase) decrease in other non-current assets
Net cash outflow on acquisitions of subsidiaries
Net cash flows from (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in short-term loans
Increase (decrease) in long-term loans
Proceeds from issuance of bonds payable
Cash dividends paid to non-controlling interest
Cash dividends paid
Net cash flows used in financing activities
Exchange rate effect
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

For the nine-month periods
ended September 30
Notes
2018
2017
( $ 393,881 )
$ -
-
453,339
7
-
55,071
3,794,570
(
1,336,543 )
8
(
255,106 )
53,590
(
52,924 )
-
171,874
-
-
696,680
-
(
122,937 )
6(4)
(
150,000 )
-
(
389,914 )
(
121,851 )
6(9)(31)
(
949,865 )
(
777,045 )
70,196
214,332
(
225,164 )
(
109,851 )
(
312,798 )
185,651
(
434,442 )
-
872,546
(
809,564 )
6(13)
151,221
(
759,678 )
6(17)
1,666,794
(
2,256,457 )
6(16)
-
1,000,000
(
156,477 )
(
265,099 )
6(21)
(
1,722,316 )
(
1,762,370 )
(
60,778 )
(
4,043,604 )
(
25,483 )
(
667,385 )
3,635,185
(
577,568 )
14,129,330
13,989,826
$ 17,764,515
$ 13,412,258

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

~10~

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

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

(REVIEWED, NOT AUDITED)

1. HISTORY AND ORGANIZATION

Teco Electric & Machinery Co., Ltd. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the manufacture, installation, wholesale, retail of various types of electronic equipment, telecommunication equipment, office equipment, and home appliances.

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

These consolidated financial statements were reported to the Board of Directors on November 13, 2018.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”) New standards, interpretations and amendments endorsed by the FSC effective from 2018 are as follows:

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

follows:

New Standards,Interpretations andAmendments

Effective date by
International Accounting
StandardsBoard

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’
Annual improvements to IFRSs 2014-2016 cycle-Amendments to
IFRS 12, ‘Disclosure of interests in other entities’
Annual improvements to IFRSs 2014-2016 cycle-Amendments to
IAS 28, ‘Investments in associates and joint ventures’

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

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

A. IFRS 9, ‘Financial instruments’

~11~

(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.
(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognize 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). 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.
(c) The Group has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018, please refer to Notes 12(4) and 12(4) C.
B. IFRS 15, ‘Revenue from contracts with customers’
(a)IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction contracts’, IAS 18 ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognized when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.
- 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.

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.

~12~

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

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, ‘Construction Contracts’.
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.

~13~

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

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

ollows:
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

A. IFRS 16, ‘Leases’

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

In the first quarter of 2018, the Group reported to the Board of Directors that IFRS 16 has no material impact to the Group.

The Group expects to recognise the lease contract of lessees in line with IFRS 16. However, the Group intends not to restate the financial statements of prior period (collectively referred herein as the “modified retrospective approach”), and the effects will be adjusted on January 1, 2019.

B. IFRIC 23, ‘Uncertainty over income tax treatments’

This Interpretation clarifies when there is uncertainty over income tax treatments, an entity shall recognize and measure its current or deferred tax asset or liability applying the requirements in IAS 12 , ‘Income taxes’ based on taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined applying this Interpretation.

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

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

as endorsed by the FSC are as follows:
New Standards,Interpretations andAmendments 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 StandardsBoard
	January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

The above standards and interpretations have no significant impact to the Group’s financial

~14~

condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standards 34, ‘Interim financial reporting’ as endorsed by the FSC.

(2) Basis of preparation

A. Except for the following items, these consolidated financial statements have been prepared under the historical cost convention:
- (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (b) Financial assets at fair value through other comprehensive income / available-for-sale financial assets measured at fair value.
- (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply simple retrospective approach whereby the cumulative impact of the adoption was recognized as retained earnings or other equity as of January 1, 2018 and the financial statements for the third quarter of 2017 were not restated. The financial statements for the third quarter of 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’), International Accounting Standard 11 (‘IAS 11’), International Accounting Standard 18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies and details of significant accounts.
(3) Basis of consolidation
A. Basis for preparation of consolidated financial statements:
- (a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are all entities (including structured entities) controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- (b) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- (c) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.
- (d) Changes in a parent’s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transactions with non-controlling interests) are accounted for as

~15~

equity transactions, i.e. transactions with owners in their capacity as owners. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity.

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

~16~

B. Subsidiaries included in the consolidated financial statements:

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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., 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	100 100 - 100 100 100 100 92.63 60 64.08 64.95 100 76.7 84.73	Note 6 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Notes 1 and 8 Note 1 Note 1

~17~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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	66.85 100 98.5 86.67 63.52 71.3 100 100 100 73.54 100 32.15	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 2

~18~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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 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. Century Real Estate (International) Pet. Ltd.	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 Investment consultancy service for domestic and foreign industrial parks and land Construction industry Investments in other areas	100 86.83 18.06 - 100 52.75 60 100 100 100 100	100 86.83 19.98 70 100 52.75 - 100 100 - 100	100 86.83 19.98 70 100 52.75 - 100 100 - 100	Note 1 Note 1 Note 9 Notes 1 and 4 Note 1 Notes 1 and 6 Note 6 Note 8

~19~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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. Motovario S.p.A.	CDC Development India Private Limited TECO MOTOR B.V. Motovario S.p.A. Motovario S.A (Spain) Motovario Ltd. Motovario Scandinavia A/S Danimarca Motovario GMBH Motovario Corp. Motovario S.A (France) Motovario Int. Trading Co. Ltd. Motovario Power Transmission Co. Ltd.	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 Sales of motors and reducers	100 100 100 100 100 - 100 75 100 100 100	100 100 100 100 100 - 100 75 100 100 100	- 100 100 100 100 100 100 75 100 100 100	Note 8 Note 5 Note 7

~20~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
Motovario S.p.A. 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. Gear Solutions ES, SL 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 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	100 100 100 100 100 100 99.99 100 100 100	Note 5 Note 1 Note 1 Note 1 Note 1 Note 1

~21~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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	100 100 100 100 87.5 55 100 60 100 100 100	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

~22~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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	40 - 100 100 100 100 100 100 100 100 100	Notes 1 and 3 Notes 1 and 6 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

~23~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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	51.19 100 100 100 100 100 70 100	Note 10 Note 10 Note 10 Note 10

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Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)
			September 30,2018	December 31,2017	September 30,2017
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	82.35 98.07 87.60 100 100 100 100 100 100

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Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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	100 100 100 100 100 100 100 100 100 100	100 100 100 100 100 100 100 100 100 100	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

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Ownership (%)

Name of Investor	Name of Subsidiary	Main Business Activities	September 30,2018	December 31,2017	September 30,2017	Description
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	100 68.08 100 100 100	Note 1

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Ownership (%)

Name of Investor	Name of Subsidiary	Main Business Activities	September 30,2018	December 31,2017	September 30,2017	Description
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	100 100 100 100 70 100 100 100	Note 7 Note 1 Note 1 Note 1 Note 10 Note 10

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Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
K.A. Corp. K.A. Corp. Kuen Ling Machinery Refrigerating (Vietnam) Co., Ltd. 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., Kuen Ling Machinery Refrigerating (Indonesia) Co., Ltd. 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 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 99 1 100 100 100 100 100	100 - - 100 100 100 100 100	Note 10 Notes 8 and 10 Notes 8 and 10 Note 1 Note 1 Note 1 Note 1

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Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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	100 100 100	Note 1 Note 1 Note 1

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Note 1:The financial statements of the entity as of and for the nine-month periods ended September 30, 2018 and 2017 were not reviewed by the independent accountants as the entity did not meet the definition of a significant subsidiary.
Note 2: The Company sold part of its ownership in Taiwan Pelican Express Co., Ltd. in August, 2012, and accordingly, its ownership fell below 50% of the voting shares of Taiwan Pelican Express Co., Ltd.. However, the Company still has control over the finance, operations and personnel affairs of Taiwan Pelican Express Co., Ltd., thus Taiwan Pelican Express Co., Ltd. continues to be included in the consolidated financial statements.
Note 3: The Company has control over the Board of Directors of the subsidiary, and has absolute control over the subsidiary. Thus, the subsidiary was included in the consolidated financial statements.

Note 4:This company was liquidated in 2018.

Note 5:The Company’s subsidiary, Motovario S.A (Spain), merged with its associate, Gear Solutions ES, SL, and the merger was set effective on October 3, 2017. Motovario S.A (Spain) was the surviving company, while Gear Solutions ES, SL was the dissolved company.
Note 6:Newly established subsidiary in current year.

Note 7:This company was dissolved in 2017.

Note 8:Newly established subsidiary in 2017.

Note 9:The Group has lost control over the company since May 23, 2018 due to the company re-elected directors and supervisors. Therefore, the company is no longer included in the Group’s consolidated financial statements.
Note10:The Group has lost control over the parent company since May 23, 2018, and the Group lost control over the company at the same time.

The financial statements of certain consolidated subsidiaries and investees accounted for under equity method were not reviewed by independent accountants. Those statements reflect total assets (including investments accounted for under the equity method) of $25,285,971 and $31,913,282 as of September 30, 2018 and 2017, respectively, total liabilities (including credit balance of investments accounted for under equity method) of $4,327,306 and $4,627,440 as of September 30, 2018 and 2017, respectively, and comprehensive income (including share of profit or loss and share of other comprehensive income of associates and joint ventures accounted for under the equity method) of $355,861, $598,504, $865,612 and $1,210,878 for the three-month and nine-month periods then ended, respectively.

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C. Subsidiaries not included in the consolidated financial statements:

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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	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

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Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			September 30,2018	December 31,2017	September 30,2017
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	100 100 100 100	Note 1 Note 1 Note 1 Note 1

  - Note 1：The above subsidiaries were not included in the consolidated financial statements as their respective total assets and operating revenues did not exceed the materiality threshold of the Company’s total assets and operating revenues.

  - Note 2：On August 20, 2018, the Company acquired the entire shares of joint venture for business development purpose.

D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Details of significant non-controlling interests: Please refer to Note 6(33).
(4) Foreign currency translation

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

A. Foreign currency transactions and balances
(a) Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
(b) Monetary assets and liabilities denominated in foreign currencies at the period end are re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value

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

  - (d) All foreign exchange gains and losses are presented in the statement of comprehensive income within ‘other gains and losses’.

B. Translation of foreign operations
- (a) The operating results and financial position of all the group entities, associates and joint arrangements that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
  - i. Assets and liabilities for each balance sheet presented are translated at the closing exchange rate at the date of that balance sheet;
  - ii. Income and expenses for each statement of comprehensive income are translated at average exchange rates of that period; and
  - iii. All resulting exchange differences are recognized in other comprehensive income.
- (b) When the foreign operation partially disposed of or sold is an associate or jointly joint arrangements exchange differences that were recorded in other comprehensive income are proportionately reclassified to profit or loss as part of the gain or loss on sale. In addition, even the Group still retains partial interest in the former foreign associate or joint arrangements entity after losing significant influence over the former foreign associate, or losing joint control of the former joint arrangements such transactions should be accounted for as disposal of all interest in these foreign operations.
- (c) When the foreign operation is partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling in this foreign operation. In addition, even the Group still retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
- (d) Good will and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing exchange rates at balance sheet date.
(5) Classification of current and non-current items
A. Assets that meet one of the following criteria are classified as current assets; otherwise they are classified as non-current assets:
- (a) Assets arising from operating activities that are expected to be realized, or are intended to be sold or consumed within the normal operating cycle;
- (b) Assets held mainly for trading purposes;
- (c) Assets that are expected to be realized within twelve months from the balance sheet date;
- (d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to pay off liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (a) Liabilities that are expected to be paid off within the normal operating cycle;
- (b) Liabilities arising mainly from trading activities;

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  - (c) Liabilities that are to be paid off within twelve months from the balance sheet date;

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

(6) Cash equivalents
Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that meet the definition above and are held for the purpose of meeting short-term cash commitments in operations are classified as cash equivalents.
(7) Financial assets at fair value through profit or loss Effective 2018
A. 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.
B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.
D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(8) Financial assets at fair value through other comprehensive income
Effective 2018
A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income.
B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognized and derecognized using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value: The changes in fair value of equity investments that were recognized in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognized as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(9) Financial assets at amortised cost Effective 2018
A. Financial assets at amortised cost are those that meet all of the following criteria:
- (a) The objective of the Group’s business model is achieved by collecting contractual cash flows.
- (b) The assets’ contractual cash flows represent solely payments of principal and interest.
B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and derecognised using trade date accounting.
C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. Interest income from these financial assets is included in finance income using the effective interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or impaired.
D. The Group’s time deposits which do not fall under cash equivalents are those with a short

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maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

(10) Accounts and notes receivable
A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.
B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(11) Impairment of financial assets
Accounts receivable or contract assets that have a significant financing component, at each reporting date, the Group recognises the impairment provision for 12 months expected credit losses if there has not been a significant increase in credit risk since initial recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial recognition after taking into consideration all reasonable and verifiable information that includes forecasts. On the other hand, for accounts receivable or contract assets that do not contain a significant financing component, the Group recognises the impairment provision for lifetime ECLs.
(12) Derecognition of financial assets
The Group derecognizes a financial asset when one of the following conditions is met:
A. The contractual rights to receive cash flows from the financial asset expire.
B. The contractual rights to receive cash flows from the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.
C. The Group neither retains nor transfers substantially all risks and rewards of ownership of the financial asset; however, it has not retained control of the financial asset.
(13) Operating leases (lessor)
Lease income from an operating lease (net of any incentives given to the lessee) is recognized in profit or loss on a straight-line basis over the lease term.
(14) Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using weighted-average method. The cost of finished goods and work in process comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item by item approach is used in applying the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and applicable variable selling expenses.
(15) Non-current assets (or disposal groups) held for sale
Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction rather than through continuing use, and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.
(16) Investments accounted for under the equity method - associates
A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost. The Group’s investments in associates include goodwill identified on acquisition, net of any accumulated impairment loss arising through subsequent assessments.
B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or loss, and its share of post-acquisition movements in other comprehensive income is

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recognized in other comprehensive income. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred statutory/constructive obligations or made payments on behalf of the associate.

C. When changes in an associate’s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group’s ownership percentage of the associate, the Group recognizes the Group’s share of change in equity of the associate in ‘capital surplus’ in proportion to its ownership.
D. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
E. In the case that an associate issues new shares and the Group does not subscribe or acquire new shares proportionately, which results in a change in the Group’s ownership percentage of the associate but maintains significant influence on the associate, then ‘capital surplus’ and ‘investments accounted for under the equity method’ shall be adjusted for the increase or decrease of its share of equity interest. If the above condition causes a decrease in the Group’s ownership percentage of the associate, in addition to the above adjustment, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately on the same basis as would be required if the relevant assets or liabilities were disposed of.
F. When the Group disposes its investment in an associate and loses significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate, are reclassified to profit or loss, on the same basis as would be required if the relevant assets or liabilities were disposed of. If it retains significant influence over this associate, the amounts previously recognized in other comprehensive income in relation to the associate are reclassified to profit or loss proportionately in accordance with the aforementioned approach.
(17) Investment accounted for under the equity method joint ventures
The Group accounts for its interest in joint ventures under the equity method. Unrealized profits and losses arising from the transactions between the Group and its joint venture are eliminated to the extent of the Group’s interest in the joint venture. However, when the transaction provides evidence of a reduction in the net realizable value of current assets or an impairment loss, all such losses shall be recognized immediately. When the Group’s share of losses in joint venture equal or exceeds its interest in joint venture together with any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.
(18) Property, plant and equipment
A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the construction period are capitalized.
B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
C. Land is not depreciated. Other property, plant and equipment apply cost model and are depreciated using the straight-line method to allocate their cost over their estimated useful lives. Each part of an item of property, plant, and equipment with a cost that is significant

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in relation to the total cost of the item must be depreciated separately.

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

Buildings and structures	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

(19) Leased assets/ operating leases (lessee)
A. Based on the terms of a lease contract, a lease is classified as a finance lease if the Group assumes substantially all the risks and rewards incidental to ownership of the leased asset. (a) A finance lease is recognized as an asset and a liability at the lease’s commencement at the lower of the fair value of the leased asset or the present value of the minimum lease payments.
- (b) The minimum lease payments are apportioned between the finance charges and the reduction of the outstanding liability. The finance charges are allocated to each period over the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.
- (c) Property, plant and equipment held under finance leases are depreciated over their estimated useful lives. If there is no reasonable certainty that the Group will obtain ownership at the end of the lease, the asset shall be depreciated over the shorter of the lease term and its useful life.
B. Payments made under an operating lease (net of any incentives received from the lessor) are recognized in profit or loss on a straight-line basis over the lease term.
(20) Investment property
An investment property is stated initially at its cost and measured subsequently using the cost model. Except for land, investment property is depreciated on a straight-line basis over its estimated useful life of 15 to 60 years.
(21) Intangible assets
A. Goodwill arises in a business combination accounted for by applying the acquisition method.
B. Intangible assets except goodwill are mainly computer software, which is stated at cost and amortized on the straight-line basis over the estimated economic useful life.
(22) Impairment of non-financial assets
A. The Group assesses at each balance sheet date the recoverable amounts of those assets where there is an indication that they are impaired. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell or value in use. Except for goodwill, when the circumstances or reasons for recognizing impairment loss for an asset in prior years no longer exist or diminish, the impairment loss is reversed. The increased carrying amount due to reversal should not be more than what the depreciated or amortized historical cost would have been if the impairment had not been recognized.

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B. The recoverable amounts of goodwill and intangible assets with an indefinite useful life are evaluated periodically. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. Impairment loss of goodwill previously recognized in profit or loss shall not be reversed in the following years.
C. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units, or groups of cash-generating units, that is/are expected to benefit from the synergies of the business combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
(23) Borrowings
A. Borrowings comprise long-term and short-term bank borrowings. 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. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortized over the period of the facility to which it relates.
(24) Notes and accounts payable
A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.
B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
(25) Financial liabilities at fair value through profit or loss
A. 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.
B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognized in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognized in profit or loss.
(26) Bonds payable
Ordinary corporate bonds issued by the Group are initially recognized at fair value less transaction costs. Any difference between the proceeds (net of transaction costs) and the redemption value is presented as an addition to or deduction from bonds payable, which is amortized to profit or loss over the period of bond circulation using the effective interest method as an adjustment to ‘finance costs’.
(27) Derecognition of financial liabilities
A financial liability is derecognized when the obligation specified in the contract is either discharged or cancelled or expires.
(28) Offsetting financial instruments
Financial assets and liabilities are offset and reported in the net amount in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

(29) Financial guarantee contracts

A financial guarantee contract is a contract that requires the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment

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when due in accordance with the original or modified terms of a debt instrument. At initial recognition, the Group measures financial guarantee contracts at fair value and subsequently at the higher of the amount of provisions determined by the expected credit losses and the cumulative gains that were previously recognized.

(30) Provisions for other liabilities

Provisions (including product warranties, etc.) are recognized when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. When discounting is used, the increase in the provision due to passage of time is recognized as interest expense. Provisions are not recognized for future operating losses.

(31) Employee benefits
A. Short-term employee benefits

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

B. Pensions
(a) Defined contribution plans

For defined contribution plans, the Group pays fixed contributions to an independent, publicly or privately administered pension fund. The Group has no further legal or constructive obligations once the contributions have been paid. The contributions are recognized as pension expenses when they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior period. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognized past service costs. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to -
the terms of the related pension liability; when there is no deep market in high quality corporate bonds, the Group uses interest rates of government bonds (at the balance sheet date) instead.
ii. Remeasurements arising on defined benefit plans are recognized in other comprehensive income in the period in which they arise and are recorded as retained earnings.
iii. Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. And, the related information is disclosed accordingly.

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C. Termination benefits

  - Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Group’s decision to terminate an employee’s employment before the normal retirement date, or an employee’s decision to accept an offer of redundancy benefits in exchange for the termination of employment. The Group recognizes expense when it can no longer withdraw an offer of termination benefits or it recognizes related restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be discounted to their present value.

D. Employees’ compensation and directors’ and supervisors’ remuneration Employees’ compensation and directors’ and supervisors’ remuneration are recognized as expenses and liabilities, provided that such recognition is required under legal or constructive obligation and those amounts can be reliably estimated. Any difference between the resolved amounts and the subsequently actual distributed amounts is accounted for as changes in estimates. If employee compensation is paid by shares, the Group calculates the number of shares based on the closing price at the previous day of the board meeting resolution.
(32) Income tax
A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional 10% tax is levied on the inappropriate retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred income tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is provided on temporary differences arising on investments in subsidiaries, and associates except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
D. Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred income tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred income tax assets and liabilities are offset on the balance sheet

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when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.

F. Based on the “Income Basic Tax Act”, if the regular income tax is equal or more than the basic tax, the income tax payable shall be calculated in accordance with the Income Tax Act and other relevant laws. Whereas, if the regular income tax is less than basic tax, the income tax payable shall be equal to the basic tax. The difference between the regular income tax and basic tax shall not be subject to deductions of investment tax credits granted under the provisions of other laws.
G.The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pre-tax income of the interim period, and the related information is disclosed accordingly.
(33) Share capital

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

(34) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are resolved by the Company’s shareholders. Cash dividends are recorded as liabilities.

(35) Revenue recognition
A. Sales of goods—wholesale
- (a) The Group 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 unfulfilled obligation that could affect the wholesaler’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.
- (b) 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, As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Group does not adjust the transaction price to reflect the time value of money.
- (c) The Group’s obligation to provide a refund for faulty products under the standard warranty terms is recognized as a provision.
- (d) A receivable is recognized when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

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B. Installation and construction service of electrification products
- (a) The Group 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 Group are not distinct and are identified to be one performance obligation satisfied over time since the installation services involve significant customisation and modification. The Group recognises revenue on the basis of costs incurred relative to the total expected costs of that performance obligation. Conversely, the Group recognises revenue at an amount equal to the cost of a good if the good is not 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 Group procures the good from a third party and is not involved in designing and manufacturing the good by acting as a principal.
- (c) The Group’s estimate about revenue, costs and progress towards complete satisfaction of 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.
C. Incremental costs of obtaining a contract
- Given that the contractual period lasts less than one year, the Group recognises the incremental costs of obtaining a contract as an expense when incurred although the Group expects to recover those costs.
(36) Government grants

Government grants are recognized at their fair value only when there is reasonable assurance that the Group will comply with any conditions attached to the grants and the grants will be received. Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes expenses for the related costs for which the grants are intended to compensate.

(37) Business combinations

A. The Group uses the acquisition method to account for business combinations. The consideration transferred for an acquisition is measured as the fair value of the assets transferred, liabilities incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of any assets and liabilities resulting from a contingent consideration arrangement. All acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. For each business combination, the Group measures at the acquisition date components of noncontrolling interests in the acquire that are present ownership interests and entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation at either fair value or the present ownership instruments’ proportionate share in the recognized amounts of the acquirer’s identifiable net assets. All other non-controlling interests should be measured at the acquisition-date fair value.
B. The excess of the consideration transferred, the amount of any non-controlling interest in

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the acquire and the fair value of any previous equity interest in the acquire over the fair value of the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the acquisition date. If the total of consideration transferred, non-controlling interest in the acquire recognized and the fair value of previously held equity interest in the acquire is less than the fair value of the identifiable assets acquired and the liabilities assumed, the difference is recognized directly in profit or loss on the acquisition date.

(38) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

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

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

None.

(2) Critical accounting estimates and assumptions

Impairment assessment of goodwill

The impairment assessment of goodwill relies on the Group’s subjective judgment, including identifying cash-generating units, allocating assets and liabilities as well as goodwill to related cash-generating units, and determining the recoverable amounts of related cash-generating units.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and revolving funds Checking accounts and demand deposits Time deposits		September30,2018 16,167 $ 9,633,464 8,114,884 17,764,515 $	December31,2017 19,719 $ 9,544,248 4,565,363 14,129,330 $		September30,2017
					23,268 $ 10,376,178 3,012,812 13,412,258 $

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. As of September 30, 2018, December 31, 2017 and September 30, 2017, cash and cash equivalents amounting to $673,612, $418,506 and $373,763 as purchase loans were pledged to others as collateral (listed as‘1470 Other current assets’). Please refer to Note 8.

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

Financial assets at fair value through profit or loss
Items Current items: Financial assets mandatorily measured at fair value through profit or loss Listed and OTC stocks Emerging stocks Money Market Fund Valuation adjustment Non-current items: Financial assets mandatorily measured at fair value through profit or loss Listed and OTC stocks Non-listed and OTC stocks Privately-placed funds Valuation adjustment	September30,2018
	156,798 $ 17,136 119,790
	293,724 232,226
	525,950 $
	644,030 $ 412,504 233,253
	1,289,787 687,484
	1,977,271 $

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

profit or loss are listed below:
	For the three-month		For the nine-month
	period ended		period ended
	September30,2018		September30,2018
Financial assets mandatorily measured
at fair value through profit or loss
Equity instruments	112,310) ($	($	47,085)

B. As of September 30, 2018, for the transaction and contract of derivative instruments not held for hedge, please refer to Note 6(14).
C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).
D. The information on financial assets at fair value through profit or loss as of December 31, 2017 and September 30, 2017 is provided in Note 12(4).

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

Items	September30,2018 1,099,072 $ 29,622) (	September30,2018 1,099,072 $ 29,622) (
Current items: Listed and OTC stocks Valuation adjustment Non-current items: Listed and OTC stocks Non-listed and OTC stocks Valuation adjustment
		1,069,450 $ 7,986,727 $ 323,315 8,310,042 2,788,956 11,098,998 $

A. The Group has elected to classify Taiwan High Speed Rail’s stocks that are considered to be steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $12,168,448 as at September 30, 2018.
B. For the three-month and nine-month periods ended September 30, 2018, the Group sold stocks with fair value of $2,408 and $279,917 to raise the capital expenditure for operations, and the cumulative gain on disposal is $($30) and $108,043 (shown as ‘8316 unrealized gain (loss) on valuation of equity instrument at fair value through other comprehensive income’), respectively.
C. Amounts recognized in other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

fair value through other comprehensive income are listed below:
For the three-month period ended September30,2018 Equity instruments at fair value through other comprehensive income Fair value change recognized in other comprehensive income 381,861 $ Cumulative gains (losses) reclassified to retained earnings due to derecognition 30) ($	For the nine-month period ended September30,2018
	454,579 $
	108,043 $

D. Details of the Group’s financial assets at fair value through other comprehensive income pledged to others as collateral are provided in Note 8.
E. Information relating to credit risk of financial assets at fair value through other comprehensive income is provided in Note 12(2).
(4) Financial assets at amortised cost

Effective 2018

comprehensive income is provided in Note 12(2). Financial assets at amortised cost Effective 2018
Items Non-current items: Time deposits	September30,2018
	$150,000

A. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed

~46~

below:

below:
Interest income	For the three-month period endedSeptember30,2018 509 $	For the nine-month period endedSeptember30,2017
		509 $

B. As at September 30, 2018, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the financial assets at amortised cost held by the Group was $150,000.
C. Details of the Group’s financial assets at amortised cost pledged to others as collateral are provided in Note 8.
D. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(4).

(5) Notes and accounts receivable

		September30,2018	September30,2018		December31,2017		September30,2017
Notes receivable		$	1,280,040	$	1,191,312	$	1,329,527
Less: Allowance for bad
debts	(		2,491)	(	2,551)	(	17,106)
		$	1,277,549	$	1,188,761	$	1,312,421
Accounts receivable			9,453,121		9,621,741		9,446,468
Less: Allowance for bad
debts	(		167,565)	(	182,664)	(	176,975)
		$	9,285,556	$	9,439,077	$	9,269,493
A. The ageing analysis of notes and accounts receivable that were past due						but not impaired is
as follows:
	September30,2018			December31,2017		September30,2017
Not past due	$		8,055,794	$	8,258,785	$	8,315,795
Up to 30 days			1,345,613		1,281,979		1,030,504
31 to 90 days			507,357		506,645		578,814
91 to 180 days			241,468		203,360		201,702
Over 180 days			412,873		377,069		455,099
	$		10,563,105	$	10,627,838	$	10,581,914

B. As at September 30, 2018, December 31, 2017 and September 30, 2017, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes receivable were $1,277,549, $1,188,761 and $1,312,421, and accounts receivable were $9,285,556, $9,439,077 and $9,269,493, respectively.
C. Details of the Group’s notes receivable pledged to others are provided in Note 8.
D. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

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(6) Inventories

Inventories
Raw materials Work in progress Finished goods Inventory in transit Merchandise inventories Raw materials Work in progress Finished goods Inventory in transit Merchandise inventories Raw materials Work in progress Finished goods Inventory in transit Merchandise inventories		September30,2018
	Cost 2,626,727 $ 1,519,437 6,425,958 785,098 1,288,457 12,645,677 $	Allowance for valuation loss 217,246) ($ 13,100) ( 505,330) ( - 19,881) ( ($755,557) December31,2017	Bookvalue
			2,409,481 $ 1,506,337 5,920,628 785,098 1,268,576
			11,890,120 $

	Cost 2,595,232 $ 1,263,854 6,563,685 709,757 1,093,438 12,225,966 $	Allowance for valuation loss 173,775) ($ 48,493) ( 656,148) ( - 11,058) ( ($ 889,474) September30,2017	Bookvalue
			2,421,457 $ 1,215,361 5,907,537 709,757 1,082,380
			11,336,492 $

	Cost 2,533,869 $ 1,559,517 6,344,691 651,194 1,462,378 12,551,649 $	Allowance for valuation loss 306,512) ($ 52,122) ( 600,962) ( - 13,827) ( 973,423) ($	Bookvalue
			2,227,357 $ 1,507,395 5,743,729 651,194 1,448,551
			11,578,226 $

A. The cost of inventories recognized as expense for the three-month and nine-month periods ended September 30, 2018 and 2017 was $6,791,627, $7,194,058, $21,094,027 and $21,382,960, respectively, including ($424) and $28,796 that the Group wrote down from cost to the net realizable value accounted for as cost of goods sold for the three-month and nine-month periods ended September 30, 2018, respectively, and $214,927 and $192,344 that the Group wrote down from cost to the net realizable value accounted for as cost of goods sold for the three-month and nine-month periods ended September 30, 2017, respectively
B. The Group has no inventory pledged to others.

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(7) Non-current assets held for sale and discontinued operations

On September 8, 2017, the Group’s subsidiary, Century Development Corporation, entered into a trading contract of its property. As of September 30, 2018, December 31, 2017 and September 30, 2017, the property qualified as assets of disposal groups held for sale is listed as follows:

(8)	Investments accounted for under the equity method September30,2018 December31,2017 Property, plant and equipment - $ - $ Intangible assets - - - $ - $ September30,2018 December31,2017 Associates: 1. Tung Pei Industrial Co., Ltd. 2,072,397 $ 2,045,704 $ 2. Creative Sensor Inc. 402,929 410,737 3. Lien Chang Electronic Enterprise Co., Ltd. 478,813 526,975 4. Kuen Ling Machinery Refrigerating Co., Ltd. 344,795 - 5. Others 805,777 863,457 4,104,711 3,846,873 Joint Venture: 1. Senergy Wind Power Co., Ltd. (Note 1) - 169,825 2. Others (Note 2) - 5,757 - 175,582 4,104,711 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) ( 79,746) (66,393) 4,024,965 $ 3,956,062 $	Investments accounted for under the equity method September30,2018 December31,2017 Property, plant and equipment - $ - $ Intangible assets - - - $ - $ September30,2018 December31,2017 Associates: 1. Tung Pei Industrial Co., Ltd. 2,072,397 $ 2,045,704 $ 2. Creative Sensor Inc. 402,929 410,737 3. Lien Chang Electronic Enterprise Co., Ltd. 478,813 526,975 4. Kuen Ling Machinery Refrigerating Co., Ltd. 344,795 - 5. Others 805,777 863,457 4,104,711 3,846,873 Joint Venture: 1. Senergy Wind Power Co., Ltd. (Note 1) - 169,825 2. Others (Note 2) - 5,757 - 175,582 4,104,711 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) ( 79,746) (66,393) 4,024,965 $ 3,956,062 $	September30,2017 129,976 $ 215,554 345,530 $ September30,2017 2,017,880 $ 410,437 540,736 - 791,085 3,760,138 177,678 9,064 186,742 3,946,880 64,722) ( 3,882,158 $
	Associates: 1. Tung Pei Industrial Co., Ltd. 2. Creative Sensor Inc. 3. Lien Chang Electronic Enterprise Co., Ltd. 4. Kuen Ling Machinery Refrigerating Co., Ltd. 5. Others Joint Venture: 1. Senergy Wind Power Co., Ltd. (Note 1) 2. Others (Note 2) 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)

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The share of profit/loss of associates and joint ventures accounted for under equity method for the three-month and nine-month periods ended September 30, 2018 and 2017 are as follows:

1. Tung Pei Industrial Co., Ltd. 2. Creative Sensor Inc. 3. Lien Chang Electronic Enterprise Co., Ltd. 4. Others Joint Venture: 1. Senergy Wind Power Co., Ltd. (Note 1) 2. Others (Note 2)	For the three-month period ended September30,2018	For the three-month period ended September30,2017
	54,593 $ 11,270 239) ( 5,216 - - $70,840	55,447 $ 13,022 3,193 31,214) ( 2,129 809) ( $41,768

Note 1: The Company was liquidated in 2018.

Note 2: In 2018, the Group acquired 50% shares of the company so that the company became a subsidiary of the Group. AS the amount of total assets and total operating revenue did not meet the criteria of significance to the Group, the company was not included in the Group’s consolidated financial statements.

1. Tung Pei Industrial Co., Ltd. 2. Creative Sensor Inc. 3. Lien Chang Electronic Enterprise Co., Ltd. 4. Others Joint Venture: 1. Senergy Wind Power Co., Ltd. 2. Others	For the nine-month period ended September30,2018	For the nine-month period ended September30,2017
	144,129 $ 17,681 30,918) ( 13,098) ( 1,758 2,445) ( $117,107	130,728 $ 22,223 5,234 26,664) ( 426 2,464) ( $129,483

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A. Associates

(a) The basic information of the associates that are material to the Group is as follows:

Shareholding ratio

Company name	Principal place of business	September 30, 2018	December 31,2017	September 30, 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% 18.06%	31.14% 11.50% 33.84% 19.98%	31.14% 11.50% 33.84% -	Financial investment ″ ″ ″	Equity method Equity method Equity method Equity method

Note: The company is no longer included in the Group’s consolidated entities as the Group lost control over it in the second quarter of 2018. However, the Group still has significant influence on the company, therefore, remaining shares will be accounted for using equity method.

(b) The summarized financial information of the associates that are material to the Group is shown below: Balance sheet

shown below: Balance sheet
		TungPei IndustrialCo.,Ltd.
	September30,2018		December31,2017		September30,2017
Current assets	$	3,793,089	$	5,420,336	$	3,501,232
Non-current assets		7,469,542		7,841,618		6,252,157
Current liabilities	(	2,407,786)	(	3,491,249)	(	2,140,355)
Non-current liabilities	(	2,198,477)	(	2,431,291)	(	1,132,078)
Total assets	$	6,656,368	$	7,339,414	$	6,480,956
Share in associate’s net
assets	$	2,072,397	$	2,045,704	$	2,017,880
Goodwill		-		-		-
Carrying amount of the
associate	$	2,072,397	$	2,045,704	$	2,017,880

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					Creative Sensor Inc.	Creative Sensor Inc.
	September		30,2018		December31,2017			September		30,2017
Current assets	$	3,455,533			$	3,168,989		$	3,134,191
Non-current assets		1,247,560				1,427,060			1,448,698
Current liabilities	(	1,363,540)		(		1,131,231)	(		1,133,163)
Non-current liabilities	(		117,770)	(		60,458)	(			48,298)
Total net assets	$	3,221,783			$	3,404,360		$	3,401,428
Share in associate’s
net assets	$		402,929		$	410,737		$		410,437
Goodwill			-			-				-
Carrying amount of the
associate	$		402,929	$		410,737		$		410,437
			LienChangElectronicEnterprise				Co.,Ltd.
	September		30,2018		December31,2017			September		30,2017
Current assets	$	1,692,533			$	1,687,297		$	1,752,512
Non-current assets			621,455			682,745				678,602
Current liabilities	(		860,047)	(		764,895)	(			784,329)
Non-current liabilities	(		39,175)	(		48,077)	(			40,991)
Total net assets	$	1,414,766			$	1,557,070		$	1,605,794
Share in associate's net
assets	$		478,813	$		526,975		$		540,736
Goodwill			-			-				-
Carrying amount of the
associate	$		478,813	$		526,975		$		540,736
		Kuen Ling		MachineryRefrigerating Co.,Ltd.
	September		30,2018		December31,2017			September		30,2017
Current assets	$	1,796,135			$	1,757,267		$	1,662,719
Non-current assets			624,553			630,524				620,228
Current liabilities	(		852,025)	(		816,774)	(			787,802)
Non-current liabilities	(		162,941)	(		152,935)	(			137,468)
Total net assets	$	1,405,722			$	1,418,082		$	1,357,677
Share in associate's net
assets	$		344,795		$	336,447		$		325,395
Goodwill			-			-				-
Carrying amount of the
associate	$		344,795	$		336,447		$		325,395

~52~

Statement of comprehensive income

Revenue

Profit for the period from continuing operations Other comprehensive loss, net of tax Total comprehensive income Dividends received from associates

Revenue

Profit for the period from continuing operations Other comprehensive loss, net of tax Total comprehensive income Dividends received from associates

Revenue

Profit for the period from continuing operations Other comprehensive (loss) income, net of tax Total comprehensive (loss) income Dividends received from associates

Revenue

Profit for the period from continuing operations Other comprehensive loss, net of tax Total comprehensive income Dividends received from associates

		TungPei IndustrialCo.,Ltd.	TungPei IndustrialCo.,Ltd.
	For the	three-month period	For the three-month period
	ended September30,2018		ended September30,2017
	$	1,460,410	$	1,371,201
	$	175,550	$	134,598
		-		-
	$	175,550	$	134,598
	$	-	$	-
		TungPei IndustrialCo.,Ltd.
	For the	nine-month period	For the nine-month period
	ended September30,2018		ended September30,2017
	$	4,171,476	$	3,911,240
	$	463,140	$	419,877
(		157,344)		-
	$	305,796	$	419,877
	$	117,435	$	78,290
		Creative Sensor Inc.
	For the	three-month period	For the three-month period
	ended September30,2018		ended September30,2017
	$	1,278,867	$	1,103,343
	$	97,955	$	99,215
(		101,924)		29,936
($		3,969)	$	129,151
	$	-	$	-
		Creative Sensor Inc.
	For the	nine-month period	For the nine-month period
	ended September30,2018		ended September30,2017
	$	3,409,336	$	3,033,298
	$	153,814	$	209,880
(		127,102)	(	19,604)
	$	26,712	$	190,276
	$	23,352	$	23,352

~53~

Revenue

Profit for the period from continuing operations Other comprehensive income, net of tax Total comprehensive income

Dividends received from associates

Revenue

(Loss) profit for the period from continuing operations Other comprehensive loss, net of tax Total comprehensive (loss) income Dividends received from associates

Revenue

Profit for the period from continuing operations Other comprehensive loss, net of tax Total comprehensive income Dividends received from associates

Revenue Profit for the period from continuing operations Other comprehensive loss, net of tax Total comprehensive income Dividends received from associates

		LienChangElectronicEnterprise Co.,Ltd.	LienChangElectronicEnterprise Co.,Ltd.
	For the three-month period		For the three-month period
	ended	September30,2018	ended September30,2017
$		665,955	$ 552,219
$		4,735	$ 7,277
		9,755	4,436
$		14,490	$11,713
	$	-	- $
		LienChangElectronicEnterprise Co.,Ltd.
	For the nine-month period		For the nine-month period
	ended	September30,2018	ended September30,2017
	$	1,810,769	$1,899,213
($		85,912)	$ 13,946
(		5,443)	(6,501)
($		91,355)	7,445 $
	$	-	28,907 $

Kuen LingMachineryRefrigerating Co.,Ltd	Kuen LingMachineryRefrigerating Co.,Ltd
For the three-month period For the three-month period ended September30,2018 ended September30,2017 843,647 $ - $ 71,161 $ - $ 20,052) ( - 51,109 $ - $ 30,223 $ - $ Kuen LingMachineryRefrigeratingCo.,Ltd	For the three-month period ended September30,2017
	- $
	- $ -
	- $
	- $
For the nine-month period ended September30,2018 2,181,818 $ 156,205 $ 15,057) ( 141,148 $ 30,223 $	For the nine-month period ended September30,2017
	- $
	- $ -
	- $
	- $

~54~

(c) The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below: As of September 30, 2018, December 31, 2017 and September 30, 2017, the carrying amount of the Group’s individually immaterial associates amounted to $1,158,289, $863,457 and $791,085, respectively.

		For the three-month period	For the three-month period	For the	three-month	period
		ended September	30,2018	ended September30,2017
Profit (loss) for the period
from continuing operations		$	529	($		31,214)
Total comprehensive income
(loss)		$	529	($		31,214)
		For the nine-month period		For the	nine-month	period
		ended September	30,2018	ended September30,2017
Loss for the period
from continuing operations		($	17,785)	($		26,664)
Total comprehensive loss		($	17,785)	($		26,664)
(d) The fair values of the Group’s		material associates	with quoted market prices are as
follows:
	September30,2018		December	31,2017	September30,2017
1.Lien Chang Electronic
Enterprise Co., Ltd.	$	390,438	$	583,781	$	690,776
2.Creative Sensor Inc.		313,788		378,005		362,681
3.Kuen Ling Machinery
Refrigerating Co., Ltd.		433,208		-		-
	$	1,137,434	$	961,786	$	1,053,457

B. Joint venture

(a) The basic information of the joint venture that is material to the Group is as follows:

Shareholding ratio

Company name	Principal place of business	September 30,2018	December 31,2017	September 30,2017	Nature of relationship	Method of measurement
Senergy Wind Power Co., Ltd. (Note)	R.O.C	-	50.00%	50.00%	Joint venture	Equity method

~55~

(b) The summarized financial information of the joint venture that is material to the Group is shown below:

Balance sheet

is shown below: Balance sheet
		Senergy WindPowerCo.,				Ltd.
	September 30, 2018			December 31, 2017			September	30, 2017
Cash and cash equivalents	$	-		$	339,587		$	378,489
Other current assets		-			1,004			508
Current assets		-			340,591			378,997
Non-current assets		-			53			111,130
Total assets		-			340,644			490,127
Current liabilities		-	(		1,000)	(		5,958)
Total liabilities		-	(		1,000)	(		5,958)
Total net assets	$	-	$		339,644	$		484,169
Share in joint venture’s
net assets	$	-		$	169,825		$	177,678
Goodwill		-			-			-
Carrying amount of the
joint venture	$	-	$		169,825	$		177,678
Note: The company was liquidated in 2018.
Statement of comprehensive income

		Senergy Wind	PowerCo.,Ltd.
	For the three-month period		For the three-month period
	ended September30,2018		ended September30,2017
Revenue	$	-	$	-
Depreciation and amortization	$	-	$	-
Interest income	$	-	$	1,474
Interest expense	$	-	$	-
Profit before income tax	$	-	$	-
Income tax	$	-	$	-
Profit-net of tax	$	-	$	4,257
Total comprehensive income	$	-	$	4,257
Dividends received from joint
venture	$	-	$	-

~56~

Senergy Wind Power Co., Ltd.

Revenue Depreciation and amortization Interest income Interest expense Profit before income tax Income tax Profit - net of tax Total comprehensive income Dividends received from joint venture	For the nine-month period ended September30,2018 - $ - $ 2,460 $ - $ - $ - $ 3,516 $ 3,516 $ - $	For the nine-month period ended September30,2017
		- $
		- $
		4,315 $
		- $
		- $
		- $
		851 $
		851 $
		- $

(c) The carrying amount of the Group’s interests in all individually immaterial associates and the Group’s share of the operating results are summarized below: As of September 30, 2018, December 31, 2017 and September 30, 2017, the carrying amount of the Group’s individually immaterial associates amounted to $0, $5,757 and $9,064, respectively.

$9,064, respectively.
	For the three-month period	For the three-month period
	ended September30,2018	ended September30,2017
Loss for the period from continuing operations	- $	809) ($
Total comprehensive loss	- $	809) ($
	For the nine-month period	For the nine-month period
	ended September30,2018	ended September30,2017
Loss for the period from continuing operations	2,445) ($	2,464) ($
Total comprehensive loss	2,445) ($	2,464) ($

C. On May 23, 2018, the shareholders of Kuen Ling Machinery Refrigerating Co., Ltd. (Kuen Ling) during their meeting re-elected directors and supervisors. The Group had 2 seats, and has lost control over the Board of Directors of Kuen Ling, therefore, Kuen Ling and its subsidiaries are no longer included in the Group’s consolidated financial statements. In addition, remaining shares were remeasured based on fair value, resulting to a gain on remeasurement amounting to $46,515. Kuen Ling will be assessed by using equity method subsequently as the Group still has significant influence over to it.
D. Details of the Group’s investments accounted for under the equity method pledged to others as collateral are provided in Note 8.

~57~

(9) Property, plant and equipment

Property, plant and equipment
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 10,546 Disposals 6,389) ( Effect of decrease in consolidated entities 110,783) ( Reclassifications - Depreciation charge - Net exchange differences 907) ( Closing net book amount 5,527,499 $ At September 30, 2018 Cost 5,562,196 $ Accumulated depreciation and impairment 34,697) ( 5,527,499 $	Buildings and structures	Machinery and equipment	Transportation equipment	Leased assets	Leasehold improvements	Miscellaneous equipment Rental assets Total 7,978,335 $ 870,543 $ 44,375,402 $ 6,538,067) ( 741,771) ( 26,453,103) ( 1,440,268 $ 128,772 $ 17,922,299 $ 1,440,268 $ 128,772 $ 17,922,299 $ 242,772 - 1,000,294 28,126) ( - 90,625) ( 6,091) ( - 502,229) ( 1,503) ( 20,965 74,368 303,611) ( 7,113) ( 986,996) ( 20,749) ( - 78,946) ( 1,322,960 $ 142,624 $ 17,338,165 $ 7,772,096 $ 891,508 $ 43,477,796 $ 6,443,136) ( 748,884) ( 26,139,631) ( 1,328,960 $ 142,624 $ 17,338,165 $
	8,903,839 $ 4,236,401) ( 4,667,438 $ 4,667,438 $ 280,057 - 295,697) ( 74,368 180,548) ( 44,251) ( 4,501,367 $ 8,726,797 $ 4,225,430) ( 4,501,367 $	14,015,941 $ 12,042,721) ( 1,973,220 $ 1,973,220 $ 374,293 52,985) ( 75,452) ( 19,468) ( 279,129) ( 11,444) ( 1,909,035 $ 13,600,103 $ 11,691,068) ( 1,909,035 $	1,080,293 $ 741,640) ( 338,653 $ 338,653 $ 71,849 2,495) ( 13,850) ( - 46,887) ( 1,555) ( 345,715 $ 1,056,873 $ 711,158) ( 345,715 $	5,275,736 $ 1,688,713) ( 3,587,023 $ 3,587,023 $ 229 - - - 139,278) ( - 3,447,974 $ 5,275,960 $ 1,827,986) ( 3,447,974 $	580,986 $ 429,093) ( 151,893 $ 151,893 $ 20,548 630) ( 356) ( 6 30,430) ( 40) ( 140,991 $ 592,263 $ 451,272) ( 140,991 $

~58~

Land At January 1, 2017 Cost 5,765,210 $ Accumulated depreciation and impairment 34,697) ( 5,730,513 $ 2017 Opening net book amount 5,730,513 $ Additions - Disposals - Reclassifications 90,146) ( Depreciation charge - Net exchange differences 3,230) ( Closing net book amount 5,637,137 $ At September 30, 2017 Cost 5,671,834 $ Accumulated depreciation and impairment 34,697) ( 5,637,137 $	Buildings and structures	Machinery and equipment	Transportation equipment	Leased assets	Leasehold improvements	Miscellaneous equipment Rental assets Total 7,048,564 $ 877,983 $ 44,825,242 $ 5,726,156) ( 748,295) ( 26,361,792) ( 1,322,408 $ 129,688 $ 18,463,450 $ 1,322,408 $ 129,688 $ 18,463,450 $ 251,790 - 806,118 3,335) ( - 66,331) ( 88,317 6,788 349,495) ( 291,578) ( 7,119) ( 966,389) ( 3,736) ( - 120,883) ( 1,363,866 $ 129,357 $ 17,766,470 $ 7,615,098 $ 868,756 $ 44,580,691 $ 6,251,232) ( 739,399) ( 26,814,221) ( 1,363,866 $ 129,357 $ 17,766,470 $
	9,547,990 $ 4,418,938) ( 5,129,052 $ 5,129,052 $ 45,950 29,336) ( 263,792) ( 175,454) ( 49,342) ( 4,657,078 $ 9,076,751 $ 4,419,673) ( 4,657,078 $	14,714,940 $ 12,810,915) ( 1,904,025 $ 1,904,025 $ 448,469 31,878) ( 117,342) ( 281,573) ( 56,621) ( 1,865,080 $ 14,408,134 $ 12,543,054) ( 1,865,080 $	1,015,168 $ 691,223) ( 323,945 $ 323,945 $ 24,914 683) ( 20,688 41,986) ( 791) ( 326,087 $ 1,063,739 $ 737,652) ( 326,087 $	5,260,389 $ 1,502,322) ( 3,758,067 $ 3,758,067 $ 2,754 - 6,139 138,847) ( - 3,628,113 $ 5,269,501 $ 1,641,388) ( 3,628,113 $	594,998 $ 429,246) ( 165,752 $ 165,752 $ 32,241 1,099) ( 147) ( 29,832) ( 7,163) ( 159,752 $ 606,878 $ 447,126) ( 159,752 $

A. For the nine-month periods ended September 30, 2018 and 2017, no borrowing cost was capitalized as part of property, plant and equipment.
B. Information about the property, plant and equipment that were pledged to others as collateral is provided in Note 8.
C. The Group was unable to transfer the title of certain farmland to the Group’s name due to legal restrictions. The land title was registered under an individual’s name. Accordingly, the Group entered into an agreement with the said individual to secure the title and the first mortgage right.
D. On September 8, 2017, the Company’s subsidiary, Century Development Corporation, entered into a trading contract of land and buildings in the phase II of Nankang Software Park with Bank Taiwan Life Insurance for a total contract price (before tax) of $426,500 (shown as 4000 Operating income) as described in Note 6. The transfer had been completed in 2017, and gain on disposal of $80,970 was recognized for the year ended December 31, 2017. All proceeds had been collected.

~59~

(10) Investment property

Land
At January 1, 2018
Cost
1,429,333
$ Accumulated depreciation and
impairment
-

1,429,333
$ 2018
Opening net book amount
1,429,333
$ Reclassifications
(transfer during the period)
-

Depreciation charge
-
Net exchange differences
4,682

Closing net book amount
1,434,015
$ At September 30, 2018
Cost
1,434,015
$ Accumulated depreciation and
impairment
-

1,434,015
$ Land
At January 1, 2017
Cost
1,444,572
$ Accumulated depreciation and
impairment
-
(
1,444,572
$ 2017
Opening net book amount
1,444,572
$ Depreciation charge
-

Net exchange differences
12,179)
(
(
Closing net book amount
1,432,393
$ At September 30, 2017
Cost
1,432,394
$ Accumulated depreciation and
impairment
-
(
1,432,394
$

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
$ 74,368)
(
74,368)
(
47,878)
(
47,878)
(
9,159)
(
4,477)
(
1,322,739
$ 2,756,754
$ 2,545,075
$ 3,979,090
$ 1,222,336)
(
1,222,336)
(
1,322,739
$ 2,756,754
$ 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
$ 56,158)
(
56,158)
(
8,792)

20,971)
(
1,563,864
$ 2,996,257
$ 2,755,679
$ 4,188,073
$ 1,191,816)

1,191,816)
(
1,563,863
$ 2,996,257
$

~60~

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

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 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 three-month period ended September30,2018 38,359 $ 23,530 $ - $ For the nine-month period ended September30,2018 119,008 $ 73,491 $ - $	For the three-month period ended September30,2017
		44,478 $
		25,920 $
		- $
		For the nine-month period ended September30,2017
		121,874 $
		78,253 $
		- $

B. The fair value of the investment property held by the Group as at September 30, 2018, December 31, 2017 and September 30, 2017 was $4,373,683, $4,496,128 and $4,646,983, respectively, which is categorized within Level 3 in the fair value hierarchy.

~61~

(11) Goodwill (listed as‘1780 Intangible assets’)

Goodwill is allocated as follows operating segment: At January 1 Cost Accumulated amortization and impairment Opening net book amount Disposals Net exchange differences Closing net book amount At September 30 Cost Accumulated amortization and impairment Heavy industrial products division Home electric appliance division	Goodwill is allocated as follows operating segment: At January 1 Cost Accumulated amortization and impairment Opening net book amount Disposals Net exchange differences Closing net book amount At September 30 Cost Accumulated amortization and impairment Heavy industrial products division Home electric appliance division	to the Group’s cash-generating units identified according to 2018 2017 5,396,065 $ 5,146,709 $ - - 5,396,065 $ 5,146,709 $ 5,396,065 $ 5,146,709 $ 107,799) ( - 25,078) ( 273,357 5,263,188 $ 5,420,066 $ 5,263,188 $ 5,420,066 $ - - 5,263,188 $ 5,420,066 $ September30,2018 December31,2017 September30,2017 $ 5,263,188 $ 5,288,266 5,312,267 $ - 107,799 107,799 $ 5,263,188 $ 5,396,065 5,420,066 $	2017	2017
			5,146,709 $ -
			5,146,709 $
			5,146,709 $ - 273,357
			5,420,066 $
			5,420,066 $ -
			5,420,066 $
				5,312,267 $ 107,799
				5,420,066 $

The Group derecognized goodwill which was acquired before it lost control over Kuen Ling Machinery Refrigerating Co., Ltd. amounting to $107,799 as Kuen Ling Machinery Refrigerating Co., Ltd. was no longer included in the Group’s consolidated financial statements starting from May 23, 2018.

(12) Other non-current assets

May 23, 2018. Other non-current assets
Long-term prepaid rent Refundable deposits Prepayment for property Prepayment for equipment Long-term notes and accounts receivable Deferred expenses Other assets	September30,2018 2,501,317 $ 237,031 - 167,658 158,400 96,928 81,978 3,243,312 $	December31,2017 1,801,943 $ 307,023 162,834 321,884 197,373 93,473 121,110 3,005,640 $	September30,2017
			1,810,979 $ 279,293 157,616 490,415 230,947 99,500 107,461
			3,176,211 $

The Group signed a land use right contract for the use of land. The Group recognized rental expenses of $8,840, $9,221, $29,689 and $26,779 for the three-month and nine-month periods ended September 30, 2018 and 2017, respectively.
On January 14, 2005, the Group’s subsidiary, Century Development Corporation, completed the registration of right of superficies and paid royalties to Taipei City Government for acquiring land used for construction of the Nankang Software Park. The right of superficies is available

~62~

for 50 years from the registration date. Land and building shall be returned to Taipei City Government unconditionally upon expiry of the right of superficies. Century Development Corporation’s prepaid rents are amortized over the useful life of right of superficies of 50 years. 3. The Group’s subsidiary, CDC Development India Private Limited, acquired the land use right from the local government agency, KIADB, for India industrial park development, As of September 30, 2018, the total amount remitted for the land use right was INR $1,750,350. (13) Short-term borrowings

Type ofborrowings Bank borrowings The Company: Unsecured borrowings Subsidiary: Secured borrowings Unsecured borrowings Type ofborrowings Bank borrowings The Company: Unsecured borrowings Subsidiary: Secured borrowings Unsecured borrowings	September30,2018 84,420 $ 569,813 1,612,814 2,267,047 $ December31,2017 477,670 $ 565,316 1,144,635 2,187,621 $	Interestraterange Collateral 0.89%~0.98% None 0.92%~3.30% Fnancial assets at fair value through other comprehensive income , notes receivable, accounts receivable, investments accounted for under the equity method, land, buildings, treasury stocks 0.65%~5.37% None Interestraterange Collateral 0.88%~1.46% None 0.90%~4.57% Available-for-sale financial assets, notes receivable, accounts receivable, investments accounted for under the equity method, land, buildings, treasury stocks 0.65%~5.21% None

~63~

Type of borrowings September 30, 2017 Interest rate range

Collateral

Bank borrowings The Company: Unsecured borrowings $ 278,249 0.87%~0.98% None Subsidiary: Secured borrowings 758,539 0.9%~4.57% Available-for-sale financial assets, notes receivable, accounts receivable, investments accounted for under the equity method, land, buildings, treasury stocks

Unsecured borrowings 1,281,895 0.65%~5.58% None $ 2,318,683

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

Items September 30, 2018 December 31, 2017 September 30, 2017 Current items: Financial liabilities held for trading Non-hedging derivatives $ - $ 2,528 $ 77 A. The Group recognized net income (loss) of $0, $413, $2,528 and ($167) on financial liabilities held for trading for the three-month and nine-month periods ended September 30, 2018 and 2017, respectively.

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:

December 31, 2017

	December31,2017	December31,2017
On September 30, 2018 and 2017, the Group has no transaction. Financial instrument Contract period Forward exchange contract SELL USD/BUY JPY Feb. 2, 2018 SELL EUR/BUY USD Feb. 1, 2018 Financial instrument Contract period Forward exchange contract SELL USD/BUY JPY Oct. 3, 2017	Contract amount (notionalprincipal)
	JPY 300,000,000 EUR 3,000,000 September30,2017
	Contract amount (notionalprincipal)

C. The Group entered into forward foreign exchange contracts to sell to hedge exchange rate risk of export proceeds. However, these forward foreign exchange contracts and foreign currency loan are not accounted for under hedge accounting.

~64~

(15) Other payables

Other payables
Bonds payable 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	September30,2018 1,656,833 $ 596,981 208,416 186,900 110,685 25,774 1,900,601 4,686,190 $ September30,2018 $4,000,000	September30,2018	December31,2017 1,831,013 $ 593,215 249,511 136,471 149,494 25,934 1,854,279 4,839,917 $ December31,2017 $4,000,000	September30,2017 1,624,949 $ 626,785 245,018 180,506 118,826 26,029 1,841,083 4,663,196 $ September30,2017	September30,2017
		1,656,833 $ 596,981 208,416 186,900 110,685 25,774 1,900,601			1,624,949 $ 626,785 245,018 180,506 118,826 26,029 1,841,083
		4,686,190 $			4,663,196 $
				4,000,000 $

(16) Bonds payable

A. The terms of the first domestic unsecured ordinary corporate bonds issued by the Company in 2015 are as follows:
The Company issued $3,000,000, 1.45% first domestic unsecured ordinary corporation bonds, as approved by the regulatory authority on June 18, 2015. The bonds mature 5 years from the issue date (June 18, 2015 ~ June 18, 2020) and will be redeemed at face value at the maturity date.
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.

~65~

- (17) Long term borrowings

Long-term borrowings
Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral None None None None None None Note Note None Note	September 30, 2018
		0.89% 0.92% 0.78% 1.08% 0.80% Floating interest rate, EURIBOR plus 1.2% 1.53% 2.10% 1.50% 2.27%		1,000,000 $ 500,000 1,100,000 1,000,000 400,000 2,083,794 876,804 300,000 40,000 5,640 7,306,238 908,115) ( 6,398,123

~66~

Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	September 30, 2018
		0.36%~0.60% 0.48%~0.85% 0.60%~0.78% 0.44%~0.70% 1.15% 1.15%	None None None None None None	500,000 $ 200,000 400,000 500,000 50,000 50,000 1,700,000 495) ( 1,699,505 8,097,628 $

~67~

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 Long-term bank borrowings Less: Current portion (listed as “2300 other current liabilities”)		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%	None Note None None Note None None None Note Note Note	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

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Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	December 31, 2017
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 Less: Discount on commercial papers payable		0.33%~0.60% 0.36%~0.60% 0.48%~0.85% 0.60%~0.81% 0.61%	None None None None None	200,000 $ 500,000 200,000 400,000 50,000 1,300,000 236) ( 1,299,764 6,466,239 $

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Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral		September 30, 2017
		0.84% 0.86% 0.94% Floating interest rate, EURIBOR plus 1.2% 1.53% 1.32%~1.47% 2.00% 1.50% 1.575%~1.795% 1.50% 2.61% 2.68% 2.27%	None None None None Note Note Note None Note None Note Note Note	499,000 $ 880,000 300,000 2,504,974 1,267,258 232,183 150,000 90,000 26,833 40,000 16,200 1,000 7,605 6,015,053 992,239) ( 5,022,814

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Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral		September 30, 2017
		0.60%~0.70% 0.33%~0.58% 0.36%~0.60% 0.48%~0.85% 0.60%~0.78%	None None None None None	400,000 $ 500,000 500,000 200,000 400,000 2,000,000 354) ( 1,999,646 $ 7,022,460

A. Under the long-term contracts with certain financial institutions, the Group is required to maintain certain financial ratios and capital requirements as well as meet certain restrictions relative to significant asset acquisitions or disposals.
B. As of September 30, 2018, December 31, 2017 and September 30, 2017, the Group has undrawn borrowing facilities of $16,426,697, $19,571,220 and $18,499,337, respectively.
(18) Pensions
A.(a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company and its domestic subsidiaries would assess the balance in the aforementioned labor pension reserve account by December 31, every year. If the account balance is not enough to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company and its domestic subsidiaries will make contribution for the deficit by next March.
(b) The pension costs under the defined benefit pension plans of the Group for the three-month and nine-month periods ended September 30, 2018 and 2017 were $11,384, $12,194, $36,500 and $36,501, respectively.
(c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2019 are $151,116.
B.(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’

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monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

(b) The Company’s mainland subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. The contribution percentage for the three-month and nine-month periods ended September 30, 2018 and 2017 was 20%~21.5%. Other than the monthly contributions, the Group has no further obligations.
(c) Monthly contributions to an independent fund administered by the local pension managing agency are based on a certain percentage of monthly salaries and wages of the Group’s other overseas subsidiaries’ employees.
(d) The pension costs under the defined contribution pension plans of the Group for the threemonth and nine-month periods ended September 30, 2018 and 2017 were $98,081, $112,855, $305,692 and $304,689, respectively.
(19) Share capital
A. As of September 30, 2018, the Company’s authorized capital was $30,305,500, consisting of 3,030,550 thousand shares of ordinary stock, including 100 million shares reserved for employee stock options, and the paid-in capital was $20,026,929 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected. For the nine-month periods ended September 30, 2018 and 2017, there was no change to the Company’s outstanding ordinary shares.
B. On December 17, 1996, the Board of Directors of the Company adopted a resolution that allows certain stockholders to issue 5,540 thousand units of global depository receipts (GDRs), represented by 55,399 thousand shares of common stock. A unit of GDR represents 10 shares of common stock. After obtaining approval from SFB, these GDRs were listed on the Securities Exchange of London on March 28, 1997, with total proceeds of US$107,644,000. The issuance of GDRs was presented by issuing common shares, therefore, there is about 7% dilutive effect on the common shares’ equity. The main terms and conditions of the GDRs are as follows:
(a) Voting rights
- GDR holders may, pursuant to the Depositary Agreement and the relevant laws and regulations of the R.O.C., exercise the voting rights pertaining to the underlying common shares represented by the GDRs.
(b) Redemption of the underlying common shares represented by the GDRs 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.
(c) Distribution of dividends, preemptive rights and other rights GDR holders own the same rights as common shareholders.
(d) As of September 30, 2018, the Company has redeemed all depository receipts.
C. All of the shares of the Company held by the Company’s subsidiaries—Tong-An Investment Co., Ltd. and An-Tai International Investment Co., Ltd. were acquired in or before 2000 for the purpose of general investment. After a regulation of the Company Act was amended in 2000 wherein the shares of the holding company shall not be purchased nor be accepted as a security or pledge by its subsidiary, the two subsidiaries did not acquire additional shares of the Company. In addition, Top-Tower Enterprises Co., Ltd. also held the Company’s shares before

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the Company obtained control of Top-Tower Enterprises Co., Ltd. in August, 2013, and did not acquire additional shares of the Company again after the Company obtained its control. As of September 30, 2018, December 31, 2017 and September 30, 2017, book value of the shares of the Company held by the three subsidiaries amounted to $321,563. Details are as follows:

Details are as follows:
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. Tong-An Investment Co., Ltd. An-Tai International Investment Co., Ltd. Top-Tower Enterprises Co., Ltd.	September30,2018
	Shares Cost Market value (inthousands) (indollars) (indollars) 19,540 14.92 $ 22.15 $ 2,826 10.37 22.15 77 9.37 22.15 22,443 December31,2017
	Shares Cost Market value (inthousands) (indollars) (indollars) 19,540 14.92 $ 28.50 $ 2,826 10.37 28.50 77 9.37 28.50 22,443 September30,2017
	Shares (inthousands) 19,540 2,826 72 22,438	Cost (indollars) 14.92 $ 10.37 9.37	Market value (indollars) 27.40 $ 27.40 27.40

(20) Capital surplus

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

(21) Retained earnings and legal reserve

A. As stipulated in the Company’s Articles of Incorporation, the current earnings, if any, shall be distributed in the following order:
(a) Payment of taxes and duties.
(b) Covering prior years’ accumulated deficit, if any.
(c) After deducting items (a) and (b), set aside 10% of the remaining amount as legal reserve.
(d) Set aside a certain amount as special reserve, if any.
(e) Distributing the remaining amount plus prior years’ retained earnings to shareholders according to their shareholding percentage. The distribution rate is principally 80%, of which cash dividend shall account for 5% ~ 50% of the distributed amount.
(f) The Company may grant the employees of subsidiaries employee bonuses as described above if certain criteria prescribed by the Board of Directors are met.
B. The Company’s dividend policy is summarized below:

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The Company’s operating environment is in the stable growth stage. However, investee companies are still in the growth stage. In view of the future plant expansion and investment plans, the appropriations of earnings are based on the distributable earnings and appropriate principally 80% to shareholders as dividends. Cash dividends shall account for at least 5% up to maximum of 50% of total dividends distributed.

C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.
D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
(b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land, and reversed over the use period if the assets are investment property other than land.
E. The appropriations of the 2017 and 2016 net income as resolved by the stockholders on June 20, 2018 and September 16, 2017, respectively, were as follows:

Legal reserve Cash dividends	Dividend per share Dividend per share Amount (indollars) Amount (indollars) 309,235 $ 348,148 $ 1,722,316 0.86 $ 1,762,370 0.88 $ Years endedDecember31, 2017 2016
	Dividend per share Amount (indollars) 309,235 $ 1,722,316 0.86 $ 2017

F. For the information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6 (28).

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(22) Other equity items

(23)

Operating revenue
Unrealized gains
Currency
onvaluation
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
450,441
-
450,441
–Associates
11,999)
(
-
11,999)
(
Revaluation transferred to retained earnings
108,043)
(
-
108,043)
(
Currency translation differences:
–Group
-
95,887)
(
95,887)
(
At September 30, 2018
2,179,156
$ 1,855,244)
($ 323,912
$ Unrealized gains
Currency
onvaluation
translation
Total
At January 1, 2017
2,218,526
$ 1,051,753)
($ 1,166,773
$ Unrealized gains and losses on financial
assets:
–Group
1,508,111
-
1,508,111
–Associates
1,724
-
1,724
Currency translation differences:
–Group
-
491,239)
(
491,239)
(
At September 30, 2017
3,728,361
$ 1,542,992)
($ 2,185,369
$ For the three-month period ended
For the three-month period ended
September 30,2018
September 30,2017
Revenue from customers
11,864,419
$ 12,504,823
$ Others-rental revenue
196,927
202,144
Others-net gain (loss)
on financial assets at fair
value through profit or loss
3,016
29,087)
(
12,064,362
$ 12,677,880
$ For the nine-month period ended
For the nine-month period ended
September 30,2018
September 30,2017
Revenue from customers
36,495,553
$ 36,896,590
$ Others-rental revenue
589,621
601,088
Others-gain on financial assets
at fair value through profit or
loss
24,663
169,630
37,109,837
$ 37,667,308
$

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:

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Forthenine-monthperiod ended September30,2018		Revenue from external customer contracts
Sales of heavy industrial products Sales of home appliances Others Service revenue Consruction contract		$ 21,498,419 4,966,096 2,402,037 5,341,540 2,287,461 36,495,553 $

B. Contract assets and liabilities

The Group has recognized the following revenue-related contract assets and liabilities: (a) Contract assets

Contract assets
Contract assets: Contract assets – electromechanical engineering contracts Contract liabilities: Contract liabilities – electromechanical engineering contracts Contract liabilities – advance receipt Contract liabilities – royalty received in advance	September30,2018
	1,028,059 $
	237,005 899,588 3,070
	1,139,663 $

(b) Revenue recognized that was included in the contract liability balance at the beginning of the period

the period
	For the three-month period		For the nine-month period
	ended September30,2018		ended September30,2018
Revenue recognized that was included
in the contract liability balance at the
beginning of the period
Electromechanical engineering
contracts	$	-	$	-
Advance sales receipts		212,507		726,311
Royalty received in advance		484		1,284
	$	212,991	$	727,595

(c) As of September 30, 2018, cumulative (loss) gain recognized under the percentage of completion method for major contracts are summarized as follows:

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September 30, 2018

(24)	C. Related disclosures on operating revenue for 2017 are provided Other income Expected completion Contract Estimated Construction date price contract cost Construction A 2018.12.31 2,248,714 $ 2,129,548 $ Construction B 2018.12.31 2,118,095 2,006,377 Construction C 2018.12.31 1,561,406 1,510,953 Construction D 2018.12.31 1,065,297 1,029,856 Construction E 2018.12.31 1,064,122 924,244 Construction F 2018.12.31 941,452 1,536,563 Construction G 2018.12.31 920,994 828,894 Construction H 2018.12.31 621,282 678,300 Construction I 2018.12.31 611,485 619,366 Construction J 2019.11.19 576,190 541,619 Construction K 2018.12.31 576,431 539,310 For the three-month period ended September30,2018 Interest income from bank deposits 49,270 $ Rental revenue 46,907 Dividend income 177,282 Insurance claims income - Other non-operating income 65,686 339,145 $ For the nine-month period ended September30,2018 Interest income from bank deposits 143,992 $ Rental revenue 139,097 Dividend income 553,149 Insurance claims income - Other non-operating income 181,816 1,018,054 $	Construction	Expected completion date	Contract price	Estimated contract cost		Percentage of completion	Cumulative gain (loss) recognized

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(25) Other gains and losses

Other gains and losses
	For the three-month period			For the three-month period
	ended September30,2018			ended September30,2017
(Loss) gain on disposal of
property, plant and equipment	($	6,890)		$	168,443
Gain on disposal of investments		7,992			4,514
Net currency exchange gain (loss)		31,777	(		35,019)
Net loss on financial assets
at fair value through profit or
loss	(	115,326)	(		3,192)
Net gain on financial
liabilities at fair value through
profit or loss		-			413
Fire loss		-	(		245,888)
Miscellaneous disbursements	(	89,071)	(		104,727)
	($	171,518)	($		215,456)
		For the nine-month period			For the nine-month period
	ended September30,2018			ended September30,2017
(Loss) gain on disposal of
property, plant and equipment	($	20,429)		$	158,222
Gain on disposal of investments		80			112,452
Net currency exchange gain (loss)		64,934	(		146,170)
Net loss on financial assets
at fair value through profit or
loss	(	71,748)	(		17,428)
Net gain (loss) on financial
liabilities at fair value through
profit or loss		2,528	(		167)
Gain on remeasurement		46,515			-
Fire loss		-	(		245,888)
Miscellaneous disbursements	(	337,284)	(		283,254)
	($	315,404)	($		422,233)

Because the Group lost control over Kuen Ling Machinery Refrigerating Co. (Kuen Ling), the Group measured Kuen Ling’s shares which were held before the Group lost control over Kuen Ling based on fair value, and recognized the related gain on measurement. Please refer to Note 6(8) for more information.

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(26) Finance costs

(26)	Finance costs
(27) (28)	Expenses by nature Employee benefit expense Interest expense Other finance expenses Interest expense Other finance expenses Employee benefit expense Depreciation charges on property, plant and equipment Amortization charges on intangible assets Employee benefit expense Depreciation charges on property, plant and equipment Amortization charges on intangible assets Wages and salaries Employees’ compensation and directors’ and supervisors’ remuneration Labor and health insurance fees Pension costs Other personnel expenses	For the three-month period endedSeptember30,2018 47,765 $ 2,733 50,498 $ For the nine-month period endedSeptember30,2018 159,278 $ 5,100 164,378 $ For the three-month period ended September30,2018 2,797,479 $ 342,335 38,920 3,178,734 $ For the nine-month period ended September30,2018 8,260,812 $ 1,034,874 120,948 $ 9,416,634 For the three-month period ended September30,2018 2,141,142 $ 200,877 238,720 109,465 107,275 $2,797,479	For the three-month period endedSeptember30,2017 75,330 $ 6,324 81,654 $ For the nine-month period endedSeptember30,2017 186,481 $ 9,566 196,047 $ For the three-month period ended September30,2017 2,862,725 $ 336,295 49,356 3,248,376 $ For the nine-month period ended September30,2017 8,423,473 $ 1,022,547 125,681 $ 9,571,701 For the three-month period ended September30,2017
			2,207,566 $ 189,025 229,475 125,049 111,610
			$2,862,725

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Wages and salaries Employees’ compensation and directors’ and supervisors’ remuneration Labor and health insurance fees Pension costs Other personnel expenses	For the nine-month period ended September30,2018 6,409,972 $ 485,640 703,034 342,192 319,974 $ 8,260,812	For the nine-month period ended September30,2017
		6,645,207 $ 441,504 677,572 341,190 318,000
		$ 8,423,473

A. According to the Articles of Incorporation of the Company, a ratio of profit of the current year distributable, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall be 1%~10% for employees’ compensation and shall not be higher than 5% for directors’ and supervisors’ remuneration.
B. For the three-month and nine-month periods ended September 30, 2018 and 2017, employees’ compensation was accrued at $66,946, $69,721, $199,286 and $201,590, respectively; while directors’ and supervisors’ remuneration was accrued at $29,755, $31,270, $88,573 and $89,597, respectively. The aforementioned amounts were recognized in salary expenses.
C. For the nine-month periods ended September 30, 2018 and 2017, after considering each year’s earnings, the employee benefit expenses were accrued based on past experience and ratio. The employees’ remuneration and directors’ and supervisors’ remuneration for 2017 as resolved by the Board of Directors were in agreement with those amounts recognized in the 2017 financial statements.

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

(29) Income tax
A. Income tax expense
- (a) Components of income tax expense:

any as resolved by the Board of Directors will be posted in the ” at the website of the Taiwan Stock Exchange. e tax ome tax expense Components of income tax expense:	“Market Observation Post
For the three-month period ended September30,2018 Current tax: Current tax on profits for the period $258,980 Total current tax 258,980 Deferred tax: Origination and reversal of temporary differences 90,625) ( Total deferred tax 90,625) ( Income tax expense 168,355 $	For the three-month period ended September30,2017
	$232,475
	232,475
	15,674
	15,674
	248,149 $

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For the nine-month period For the nine-month period ended September 30, 2018 ended September 30, 2017

For the nine-month period For the nine-month period ended September30,2018 ended September30,2017	For the nine-month period For the nine-month period ended September30,2018 ended September30,2017	For the nine-month period For the nine-month period ended September30,2018 ended September30,2017	For the nine-month period For the nine-month period ended September30,2018 ended September30,2017
The income tax (charge)/credit relating to components of other comprehensive income is as follows: Current tax: Current tax on profits for the period 532,528 $ 638,013 $ Tax on undistributed surplus earnings 101,261 131,590 Prior year income tax under (over) estimation 9,298 13,593) ( Total current tax 643,087 756,010 Deferred tax: Origination and reversal of temporary differences 155,858) ( 123,071) ( Impact of change in tax rate 134,068 - Total deferred tax 21,790) ( 123,071) ( Income tax expense 621,297 $ 632,939 $ For the three-month period For the three-month period ended September30,2018 ended September30,2017 Currency translation differences 16,328) ($ 34,806) ($ Impact of change in tax rate - - ($16,328) ($ 34,806) For the nine-month period For the nine-month period ended September30,2018 ended September30,2017 Currency translation differences 6,412 $ 35,159 $ Impact of change in tax rate (60,232) - ($ 53,820) $ 35,159
	($16,328) For the nine-month period ended September30,2018 6,412 $ (60,232) ($ 53,820)	($ 34,806) For the nine-month period ended September30,2017 35,159 $ -
			$ 35,159

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:
B. As of September 30, 2018, the Company and its subsidiaries’ income tax returns through various years between 2013 and 2016, respectively, have been assessed and approved by the Tax Authority.
C. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China on February 7, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

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(30) Earnings per share

Earnings per share
Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic earnings per share Profit attributable to ordinary shareholders of the parent Diluted earnings per share Assumed conversion of all dilutive potential ordinary shares Employees’ compensation Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares	Forthe three-monthperiod ended September30,2018
	Weighted average number of ordinary shares outstanding Earnings per Amount aftertax (inthousands) share (indollars) $ 820,436 1,980,250 $ 0.41 - 2,951 $820,436 1,983,201 $0.41 Forthe three-monthperiod ended September30,2017		Earnings per share (indollars)
			$ 0.41
			$0.41
	Amount aftertax $ 849,994 - $ 849,994	Weighted average number of ordinary shares outstanding (inthousands) 1,980,250 2,444 1,982,694	Earnings per share (indollars)
			$ 0.43
			$ 0.43

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Forthenine-monthperiod ended September30,2018	Forthenine-monthperiod ended September30,2018	Forthenine-monthperiod ended September30,2018
Weighted average number of ordinary shares outstanding Earnings per Amount aftertax (inthousands) share (indollars) $ 2,460,690 1,980,250 $1.24 - 8,197 $2,460,690 1,988,447 $1.24 Forthenine-monthperiod ended September30,2017		Earnings per share (indollars)
		$1.24
		$1.24
Amount aftertax $ 2,476,416 - $2,476,416	Weighted average number of ordinary shares outstanding (inthousands) 1,980,255 6,966 1,987,221	Earnings per share (indollars)
		$1.25
		$1.25

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(31) Supplemental cash flow information

A. Investing activities with partial cash payments:

		For the nine-month period		For the nine-month period	For the nine-month period
		ended September30,2018		ended September30,2017
Acquisition of property, plant and
equipment		1,000,294 $		$	806,118
Add:
Payables at beginning of the period		136,471			151,433
Less:
Payables at end of the period	(	186,900)	(		180,506)
Cash paid		949,865 $		$	777,045
B. On May 23, 2018, Kuen Ling Machinery Refrigerating Co., Ltd. re-elected directors and
supervisors, and therefore the Group	lost control over the subsidiary (please refer to Note 10
and Note 11 of Note 4(3)). The details of the consideration received from the transaction
(including cash and cash equivalent)	and assets and liabilities relating to the				subsidiary are as
follows:

follows:
			May23,2018
Consideration received
Equity instruments		$	392,186
Non-controlling interest			1,100,697
Total consideration			1,492,883
Carrying amount of the assets
and liabilities of the subsidiary
Cash		$	434,442
Notes and accounts receivable			782,661
Contract assets			44,242
Inventories			548,071
Other current assets			108,104
Property, plant and equipment			502,229
Other non-current assets			227,677
Short-term borrowings	(		71,795)
Notes and accounts receivable	(		408,209)
Other current liabilities	(		563,431)
Long-term borrowings	(		4,916)
Other non-current liabilities	(		152,707)
Total net assets			1,446,368
Gain on remeasurement		$	46,515

~84~

(32) Changes in liabilities from financing activities

			Short-term		Long-term	Liabilities from financing	Liabilities from financing
			borrowings	borrowings (Note)			activities-gross
	January 1, 2018	$	2,187,621	$	7,343,865	$	9,531,486
	Changes in cash flow from financing activities		151,221		1,666,794		1,818,015
	Changes in loss of control in
	subsidiaries	(	71,795)	(	4,916)	(	76,711)
	September 30, 2018	$	2,267,047	$	9,005,743	$	11,272,790
			Short-term		Long-term	Liabilities from financing
			borrowings	borrowings(Note)			activities-gross
	January 1, 2017	$	3,078,361	$	10,271,156	$	13,349,517
	Changes in cash flow from
	financing activities	(	759,678)	(	2,256,457)	(	3,016,135)
	September 30, 2017	$	2,318,683	$	8,014,699	$	10,333,382
	Note: Including current portion
(33)	Details of significant non-controlling interests
	As of September 30, 2018, December 31, 2017 and				September 30,	2017,	the non-controlling
	interest amounted to $4,798,165,		$6,044,372 and	$5,951,384, respectively.			The information on
	non-controlling interest and respective subsidiaries is as follows:

					Non-ControllingInterest	Non-ControllingInterest	Non-ControllingInterest
			September		30,2018		December	31,2017
	Principal
Name of	place of
subsidiary	business		Amount		Ownership		Amount	Ownership
Tecom	R.O.C	$	339,751		36.48%	$	316,178	36.48%
Co., Ltd.
Taiwan	R.O.C		1,077,708		67.85%		1,128,238	67.85%
Pelican
Express
Co., Ltd.
Kuen Ling	R.O.C			-	-		1,081,634	80.02%
Machinery
Refrigerating
Co., Ltd.(Note)
Century	R.O.C		2,124,347		47.25%		2,021,418	47.25%
Development
Corporation

~85~

Name ofsubsidiary Tecom Co., Ltd. Taiwan Pelican Express Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd. Century Development Corporation	Principal place ofbusiness R.O.C R.O.C R.O.C R.O.C	Amount Ownership $ 334,819 36.48% 1,128,483 67.85% 1,032,280 80.02% 1,955,473 47.25% Non-ControllingInterest September30,2017
		September
		Amount $ 334,819 1,128,483 1,032,280 1,955,473

Note: On May 23, 2018, the shareholders of Kuen Ling Machinery Refrigerating Co., Ltd. (Kuen Ling) during their meeting re-elected directors and supervisors. The Group had 2 seats, and had lost control over the Board of Directors of Kuen Ling. Accordingly, Kuen Ling and its subsidiaries are no longer included in the Group’s consolidated financial statements. In addition, remaining shares were remeasured based on fair value, and the Group recognized gain on remeasurement amounting to $46,515. Kuen Ling will be assessed by using equity method subsequently as the Group still has significant control over it.

Summarized financial information of the subsidiaries: Balance sheets

Balance sheets
						TecomCo.,Ltd.
	September30,2018				December31,2017		September			30,2017
Current assets		$	1,482,112		$	1,513,819		$	1,518,442
Non-current assets			789,714			724,220				740,360
Current liabilities	(		1,298,948)	(		1,245,590)	(		1,418,727)
Non-current liabilities	(		372,287)	(		442,489)	(			248,412)
Total net assets		$	600,591		$	549,960		$		591,663
			Taiwan			Pelican Express Co.,		Ltd.
	September30,2018				December31,2017		September			30,2017
Current assets		$	1,617,991		$	1,787,139		$	1,859,026
Non-current assets			689,664			654,569				590,658
Current liabilities	(		695,618)	(		759,856)	(			770,958)
Non-current liabilities	(		23,668)	(		19,010)	(			15,525)
Total net assets		$	1,588,369		$	1,662,842		$	1,663,201
			Kuen Ling	MachineryRefrigerating Co.,					Ltd.
			May23,2018		December31,2017		September			30,2017
Current assets		$	1,917,520		$	1,757,267		$	1,662,719
Non-current assets			622,107			630,524				620,228
Current liabilities	(		1,043,435)	(		816,774)	(			787,802)
Non-current liabilities	(		157,623)	(		152,935)	(			137,468)
Total net assets		$	1,338,569		$	1,418,082		$	1,357,677

~86~

		CenturyDevelopmentCorporation	CenturyDevelopmentCorporation	CenturyDevelopmentCorporation	CenturyDevelopmentCorporation
	September30,2018		December31,2017		September30,2017
Current assets	$	913,570	$	1,139,718	$	1,248,204
Non-current assets		5,626,690		4,764,686		4,820,770
Current liabilities	(	624,538)	(	561,768)	(	623,427)
Non-current liabilities	(	670,763)	(	1,062,833)	(	1,284,283)
Total net assets	$	5,244,959	$	4,279,803	$	4,161,264

Statements of comprehensive income

			TecomCo.,Ltd.	TecomCo.,Ltd.	TecomCo.,Ltd.
			For the three-month period		For the three-month period
			ended September30,2018		ended September30,2017
Revenue		$	661,795	$	915,035
Loss before income tax	(		8,343)	(	11,540)
Income tax benefit (expense)			6	(	66)
Loss for the period	(		8,337)	(	11,606)
Other comprehensive
income (loss) (net of tax)			92,010	(	27,887)
Total comprehensive
income (loss) for the period		$	83,673	($	39,493)
Comprehensive income (loss)
attributable to non-
controlling interest		$	26,026	($	37,565)
			TecomCo.,Ltd.
			For the nine-month period		For the nine-month period
			ended September30,2018		ended September30,2017
Revenue		$	1,848,065	$	2,464,749
Loss before income tax	(		42,198)	(	40,309)
Income tax expense	(		665)	(	66)
Loss for the period	(		42,863)	(	40,375)
Other comprehensive
income (net of tax)			100,106		97,174
Total comprehensive
income for the period		$	57,243	$	56,799
Comprehensive income (loss)
attributable to non-
controlling interest		$	14,591	($	1,353)

~87~

Taiwan Pelican Express Co., Ltd.

		For the three-month period	For the three-month period	For the three-month period
		ended September30,2018	ended September	30,2017
Revenue	$	837,406	$	811,861
Profit before income tax		10,856		26,159
Income tax benefit (expense)		904	(	4,546)
Profit for the period		11,760		21,613
Other comprehensive (loss)
income (net of tax)	(	17,767)		2,053
Total comprehensive (loss)
income for the period	($	6,007)	$	23,666
Comprehensive income
attributable to non-controlling
interest	$	7,979	$	14,598
Dividends paid to non-
controlling interests	$	68,010	$	32,105
		Taiwan Pelican Express Co.,Ltd.
		For the nine-month period	For the nine-month period
		ended September30,2018	ended September	30,2017
Revenue	$	2,514,444	$	2,240,716
Profit before income tax		47,669		132,971
Income tax expense	(	3,879)	(	15,783)
Profit for the period		43,790		117,188
Other comprehensive loss
(net of tax)	(	18,023)	(	35,025)
Total comprehensive income
for the period	$	25,767	$	82,163
Comprehensive income
attributable to non-controlling
interest	$	29,993	$	79,509
Dividends paid to non-
controlling interests	$	68,010	$	32,105

~88~

		Kuen LingMachinery	Refrigerating Co.,Ltd.	Refrigerating Co.,Ltd.
		For the period from		For the three-month period
		April 1toMay23,2018		ended September30,2017
Revenue	$	449,611	$	677,832
Profit before income tax		41,456		58,040
Income tax expense	(	8,893)	(	9,131)
Profit for the period		32,563		48,909
Other comprehensive income
(net of tax)		-		6,126
Total comprehensive income
for the period	$	32,563	$	55,035
Comprehensive (loss) income
attributable to non-controlling
interest	($	32,076)	$	44,952
Dividends paid to non-
controlling interests	$	-	$	134,054
		Kuen LingMachinery	Refrigerating Co.,Ltd.
		For the period from		For the nine-month period
		January1toMay23,2018		ended September30,2017
Revenue	$	1,087,532	$	1,881,991
Profit before income tax		87,655		161,242
Income tax expense	(	20,451)	(	35,784)
Profit for the period		67,204		125,458
Other comprehensive income
(loss) (net of tax)		5,984	(	17,354)
Total comprehensive income
for the period	$	73,188	$	108,104
Comprehensive income
attributable to non-controlling
interest	$	-	$	82,155
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.

~89~

Century Development Corporation

			For the three-month period			For the three-month period
			ended September30,2018			ended September30,2017
Revenue	$		242,543		$	234,199
Profit before income tax			70,437			75,520
Income tax expense	(		14,524)	(		12,083)
Profit for the period			55,913			63,437
Other comprehensive income
(loss) (net of tax)	(		40,043)			454
Total comprehensive income
for the period		$	15,870		$	63,891
Comprehensive income
attributable to non-controlling
interest		$	29,929		$	34,646
Dividends paid to non-controlling
interests	$		100,396		$	76,447
			CenturyDevelopment Corporation
			For the nine-month period			For the nine-month period
			ended September30,2018			ended September30,2017
Revenue		$	782,000		$	638,911
Profit before income tax			206,733			230,591
Income tax expense	(		48,842)	(		36,705)
Profit for the period			157,891			193,886
Other comprehensive loss
(net of tax)	(		41,489)	(		7,640)
Total comprehensive income
for the period		$	116,402		$	186,246
Comprehensive income
attributable to non-controlling
interest		$	80,519		$	103,649
Dividends paid to non-controlling
interests		$	100,396		$	76,447

~90~

Statements of cash flows

Statements of cash flows
			TecomCo.,Ltd.
			For the nine-month period	For the nine-month period
			ended September30,2018	ended September	30,2017
Net cash provided by
operating activities		$	168,493	$	490,153
Net cash (used in) provided by
investing activities	(		130,524)		63,432
Net cash used in
financing activities	(		73,950)	(	444,787)
(Decrease) increase in cash
and cash equivalents	(		35,981)		108,798
Cash and cash equivalents,
beginning of period			306,221		275,120
Cash and cash equivalents, end
of period		$	270,240	$	383,918
			Taiwan Pelican Express Co.,Ltd.
			For the nine-month period	For the nine-month period
			ended September30,2018	ended September	30,2017
Net cash provided by operating
activities		$	47,380	$	104,958
Net cash (used in) provided by
investing activities	(		95,087)		13,308
Net cash used in financing
activities	(		94,959)	(	42,688)
Effect of exchange rates on
cash and cash equivalents	(		33)	(	202)
(Decrease) increase in cash
and cash equivalents	(		142,699)		75,376
Cash and cash equivalents,
beginning of period			1,041,321		1,048,669
Cash and cash equivalents,
end of period		$	898,622	$	1,124,045

~91~

		Kuen LingMachinery	Refrigerating Co.,Ltd.	Refrigerating Co.,Ltd.
		For the period from		For the nine-month period
		January1toMay23,2018		ended September30,2017
Net cash provided by
operating activities	$	116,389	$	103,150
Net cash provided by (used in)
investing activities		5,890	(	43,192)
Net cash used in financing
activities	(	48,898)	(	144,407)
Effect of exchange rates
on cash and cash equivalents		338	(	24,068)
Increase (decrease) in cash and
cash equivalents		73,719	(	108,517)
Cash and cash equivalents,
beginning of period		360,723		403,075
Cash and cash equivalents,
end of period	$	434,442	$	294,558
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 nine-month period		For the nine-month period
		ended September30,2018		ended September30,2017
Net cash provided by operating
activities	$	203,094	$	419,556
Net cash (used in) provided by
investing activities	(	1,202,562)		27,899
Net cash provided by (used in)
financing activities		555,620	(	505,753)
Effect of exchange rates on
cash and cash equivalents		34,351		191
Decrease in cash and cash
equivalents	(	409,497)	(	58,107)
Cash and cash equivalents,
beginning of period		808,457		622,617
Cash and cash equivalents,
end of period	$	398,960	$	564,510

~92~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of relatedparties	Relationship with theGroup	Names of relatedparties	Relationship with theGroup
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 〃〃〃〃〃〃

~93~

Note 1: This company was dissolved in 2017.

Note 2: The Group lost its significant control over the investee as a result of stock disposals during the second quarter of 2017. Since then, the investee became a non-related party.
Note 3: The Group had lost control over the company since May 23, 2018 as the company reelected directors and supervisors. Therefore, the company was no longer included in the Group’s consolidated financial statements. The investee became a related party.
Note 4: The Company has been liquidated in 2018.
(2) Significant related party transactions

A. Operating revenue:

nificant related party transactions Operating revenue:
Sales of goods and services: Associates Other related parties Sales of goods and services: Associates Other related parties	For the three-month period ended September30,2018 103,019 $ 97,641 200,660 $ For the nine-month period ended September30,2018 324,039 $ 294,206 618,245 $	For the three-month period ended September30,2017
		136,735 $ 109,535
		246,270 $
		For the nine-month period ended September30,2017
		344,557 $ 221,021
		565,578 $

Sales of goods and services: Associates 324,039 $ 344,557 $ Other related parties 294,206 221,021 618,245 $ 565,578 $	Sales of goods and services: Associates 324,039 $ 344,557 $ Other related parties 294,206 221,021 618,245 $ 565,578 $	Sales of goods and services: Associates 324,039 $ 344,557 $ Other related parties 294,206 221,021 618,245 $ 565,578 $	Sales of goods and services: Associates 324,039 $ 344,557 $ Other related parties 294,206 221,021 618,245 $ 565,578 $
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.
B. Purchases of goods:
	For the three-month period	For the three-month period
	ended September30,2018	ended September30,2017
Purchases of goods:
Associates	216,325 $	$	50,150
Other related parties	12		3
	216,337 $	$	50,153
	For the nine-month period	For the nine-month period
	ended September30,2018	ended September30,2017
Purchases of goods:
Associates	339,786 $	$	123,227
Other related parties	15		59
	339,801 $	$	123,286

The purchase terms, including pricing and payments, were based on mutual agreement and have no similar transaction to be compared with.

~94~

C. Receivables from related parties:

September 30, 2018 December 31, 2017 September 30, 2017

Receivables from related
parties:
Associates	$	88,142	$	101,112		$	150,727
Other related parties		99,588		88,859			68,360
Less: Reclassified to
other receivables	(	4,983)	(	5,339)	(		5,609)
		182,747		184,632			213,478
Other receivables -
transfer of accounts
receivable that were
past due
Associates		4,983		5,339			5,609
Other receivables - others
Associates
Le-Li Co., Ltd.	$	14,651	$	9,862		$	12,126
Others		123,129		14,510			373,789
Other related parties		4,625		5,133			6,215
		142,405		29,505			392,130
		147,388		34,844			397,739
	$	330,135	$	219,476		$	611,217

(a) The receivables from related parties arise mainly from sale transactions. The receivables are due 30 to 90 days after the date of sale, unsecured in nature and bear no interest. There are no provisions held against receivables from related parties.

(b) The aforementioned accounts receivable that were past due were $4,983, $5,339 and $5,609 as of September 30, 2018, December 31, 2017 and September 30 2017, respectively. The ageing of the past due accounts receivable is beyond 90 days.

D. Payables to related parties:

Payables to related parties:
Payables to related parties: Associates Other related parties		September30,2018		December31,2017	September30,2017
		$ 224,124 839 $224,963		$ 123,800 839 $124,639	118,574 $ 839 119,413 $

The payables to related parties arise mainly from purchase transactions and are due 180 days after the date of purchase. The payables bear no interest.

E. Endorsements and guarantees provided to related parties:

Associates	September 30,2018	December 31,2017	September 30,2017
	$42,348	$41,051	41,971 $

~95~

(3) Key management compensation

Key management compensation
Salaries and other short-term employee benefits Post-employment benefits Salaries and other short-term employee benefits Post-employment benefits	For the three-month period ended September30,2018 153,814 $ 1,957 155,771 $ For the nine-month period ended September30,2018 386,505 $ 4,933 391,438 $	For the three-month period ended September30,2018
		107,051 $ 3,130
		110,181 $
		For the nine-month period ended September30,2018
		358,732 $ 4,964
		363,696 $

~96~

8. PLEDGED ASSETS

PLEDGED ASSETS
Pledged asset	Book value	Purpose
	September 30,2018
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	63,448 $ 207,417 402,747 17,580 23,058 485,040 150,000 119,611 23,228 3,547,874 11,565 930,259 247,091 6,447,318 $ 218,400	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 〞

~97~

Pledged asset	Book value	Book value	Purpose
	December 31, 2017	September 30, 2017
Notes receivable Other current assets Demand deposits Time deposits Cash and bank deposits Current assets classified as held for sale Available-for-sale financial assets - non-current Teco Image System Co., Ltd. Far Eastone Telecommunications Co., Ltd. Innolux Corporation Baycom Opto-Electionics Technology Co., Ltd. Taiwan High Speed Rail Corporation Investments accounted for under the equity method Creative Sensor Inc. Century Development Corporation Baycom Opto-Electionics Technology Co., Ltd. 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 6,459,271 $	30,635 $ 94,625 19,484 259,654 345,530 19,200 217,800 30,780 153,454 390,952 138,248 109,281 153,454 119,378 3,912,963 55,084 971,303 247,091 7,268,916 $	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 Long-term and short-term borrowings 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

~98~

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

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

Property, plant and equipment		September30,2018		December31,2017	September30,2017
		$ 51,192		$167,204	239,994 $

B. Operating lease commitments

The Company leases offices, factory and warehouse under non-cancellable operating lease agreements. The lease terms are between 5 and 10 years, and the majority of lease agreements are renewable at the end of the lease period at market rate.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

follows:
Not later than one year Later than one year but not later than five years Later than five years		September30,2018		December31,2017		September30,2017
		$ 523,235 1,317,132 4,638,998 $ 6,479,365		$ 495,499 1,073,832 2,450,472 $4,019,803		477,018 $ 2,540,210 4,258,791 $ 1,241,563

C. As of September 30, 2018, the outstanding usance L/C used for acquiring raw materials and equipment was $471,847.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are based on the industrial scale, considering industrial future growth and product development, and setting appropriate market share, as well as plan of corresponding capital expenditure, calculation of operating capital needed for financial operations, and considering operating profit and cash inflows arising from product competitiveness, to determine appropriate capital structure.

~99~

(2) Financial instruments A. 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)		September 30, 2018		December 31, 2017		September 30, 2017
		2,503,221 $ 12,168,448 $ - $ 17,764,515 $ - 150,000 1,285,577 9,460,275 552,762 237,031 29,450,160 $ - $ 2,267,047 190,199 7,369,300 4,686,190 4,000,000 9,005,743 27,518,479 $		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 $		148,485 $ - $ 13,852,586 $ 13,412,258 $ 4,167,115 - 1,319,502 9,475,890 856,604 279,293 29,510,662 $ 77 $ 2,318,683 162,510 7,841,225 4,663,196 4,000,000 8,014,699 27,000,390 $

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B. Financial risk management policies
(a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. 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.
(b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
(c) Information about derivative financial instruments that are used to hedge certain exchange rate risk are provided in Note 6(14).
C. Significant financial risks and degrees of financial risks
(a) Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currency, primarily with respect to the USD and RMB. Foreign exchange risk arises from recognized assets and liabilities.
ii. Management has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. 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(14).
iv. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional currency: USD and RMB). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

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Foreign currency amount (In thousands)		September	30,2018	30,2018	Effect on other comprehensive income
	Exchange rate	Bookvalue(NTD)	Degree ofvariation Effect on profit or loss SensitivityAnalysis
				Effect on profit or loss
112,708 $ 311 17,011 43,920 3,910 1,022,181 85,086 4,440 12,322 5,920 1,192 611,976 121,266 145,626 171,235,385 19,468 57,794 12,442 9,879 4,012 2,865 144,960	30.5250 1.1623 35.4800 6.8812 1.3670 0.2692 4.4360 4.1351 0.3306 22.0350 1.3853 30.5250 35.4800 22.3300 0.0013 7.3820 30.5250 6.8812 1.3670 1.3853 35.4800 0.2692	3,440,412 $ 11,034 603,550 1,340,658 119,353 275,171 377,441 135,531 90,961 130,447 36,386 18,680,575 4,302,500 3,251,828 222,606 143,710 1,764,162 379,792 301,556 122,466 101,650 39,023	1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	34,404 $ 110 6,036 13,407 1,194 2,752 3,774 1,355 910 1,304 364 17,642 3,798 3,016 1,225 1,017 390	- $ - - - - - - - - - - - - - - - -

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Foreign currency amount (In thousands)		December	31,2017	31,2017	Effect on other comprehensive income
	Exchange rate	Bookvalue(NTD)	Degree ofvariation Effect on profit or loss SensitivityAnalysis
				Effect on profit or loss
104,852 $ 7,303 14,518 57,013 11,859 1,456,730 81,725 2,290 12,975 4,528 3,519 612,940 116,142 141,918 126,843,846 17,618 80,352 10,314 8,663 2,779 7,123 6,252 409,287	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	3,120,396 $ 259,768 516,405 1,696,707 352,924 384,868 373,075 68,150 93,586 104,982 104,725 18,241,096 4,131,154 3,159,088 164,897 128,993 2,391,276 306,945 257,811 82,703 211,980 222,384 108,134	1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	31,204 $ 2,598 5,164 16,967 3,529 3,849 3,731 682 936 1,050 1,047 23,913 3,069 2,578 827 2,120 2,224 1,081	- $ - - - - - - - - - - - - - - - - -

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Foreign currency amount (In thousands)		September	30,2017	30,2017	Effect on other comprehensive income
	Exchange rate	Bookvalue(NTD)	Degree ofvariation Effect on profit or loss SensitivityAnalysis
				Effect on profit or loss
97,411 $ 7,294 15,209 53,547 6,225 1,397,464 68,852 3,029 13,497 8,894 6,113 608,163 115,568 140,958 124,342,495 17,261 61,959 9,271 7,771 2,059 3,917 5,882 395,526	30.2600 1.1814 35.7500 6.6489 1.3570 0.2691 4.5511 4.2075 0.3225 23.7050 1.2765 30.2600 35.7500 22.3000 0.0013 7.1920 30.2600 6.6489 1.3570 23,276.9231 1.2765 35.7500 0.2691	2,947,648 $ 260,776 543,713 1,620,331 188,381 376,057 313,351 91,645 97,071 210,827 184,990 18,403,012 4,131,556 3,143,363 161,645 124,141 1,874,877 280,543 235,154 62,305 118,522 210,291 106,436	1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	29,476 $ 2,608 5,437 16,203 1,884 3,761 3,134 916 971 2,108 1,850 . 18,749 2,805 2,352 623 1,185 2,103 1,064	- $ - - - - - - - - - - - - - - - - -

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v. Total exchange gain (loss) including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and nine-month periods ended September 30, 2018 and 2017 amounted to $33,177, ($35,019), $64,934 and ($146,170), respectively.
Price risk
i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Group.
ii. The Group’s investments in equity securities comprise shares and open-end funds issued by domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 5% with all other variables held constant, post-tax profit for the nine-month periods ended September 30, 2018 and 2017 would have increased/decreased by $125,161 and $7,424, respectively, as a result of gains/losses on equity securities classified as at fair value through profit or loss. Other components of equity would have increased/decreased by $608,422 and $692,629, respectively, as a result of other comprenersive income classified as equity investment and available-forsale equity investment at fair value through other comprehensire income.
Cash flow and fair value interest rate risk
i. The Group’s main interest 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 nine-month periods ended September 30, 2018 and 2017, the Group’s borrowings at variable rate were mainly denominated in NTD, USD and RMB.
ii. The Group’s borrowings are measured at amortized cost. The borrowings are periodically contractually repriced and to that extent are also exposed to the risk of future changes in market interest rates.
iii. At September 30, 2018 and 2017, if interest rates at that date had been 0.25% higher/lower with all other variables held constant, post-tax profit for the nine-month periods ended September 30, 2018 and 2017 would have been $16,909 and $16,081 lower/higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.
(b) Credit risk
i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost.
ii. The Group manages their credit risk taking into consideration the entire group’s concern. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. 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. The Group adopts the following assumption under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition:

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If the contract payments were past due over 30 days based on the terms, there has been 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 classifies customer’s accounts receivable, contract assets and rents 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) It becomes probable that the issuer will enter bankruptcy or other financial reorganization due to their financial difficulties;
(ii) The disappearance of an active market for that financial asset because of financial difficulties;
(iii) Default or delinquency in interest or principal repayments;
(iv) Adverse changes in national or regional economic conditions that are expected to cause a default.
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 September 30, 2018, the loss rate methodology is as follows:

September30,2018	September30,2018
Expected creditlossrate Totalbookvalue 0%~1% 8,057,422 $ 0%~2% 1,346,979 1%~20% 513,240 1%~100% 315,401 1%~100% 500,119 10,733,161 $ September30,2018		Loss allowance
		1,628 $ 1,366 5,883 73,933 87,246
		170,056 $

Expected creditlossrate 100% 0%~5% 1%~10% 1%~20% 1%~40% 1%~100%	Totalbookvalue 173,147 $ 5,712,673 2,174,123 1,111,484 415,283 1,146,451 10,733,161 $	Loss allowance
		39,728 $ 6,104 1,838 5,192 4,712 112,482
		170,056 $

viii. Movements in relation to the Group applying the simplified approach to provide loss allowance for notes receivable and accounts receivable are as follows:

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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 September 30	For the nine-month period For the nine-month period ended September 30, 2018 ended September 30, 2017	For the nine-month period For the nine-month period ended September 30, 2018 ended September 30, 2017	For the nine-month period For the nine-month period ended September 30, 2018 ended September 30, 2017
		Notes receivable and accounts receivable	Notes receivable and accounts receivable
	185,215 $ 175,224 $ - - 185,215 175,224 55,181 48,122 14,817) ( 29,178) ( 57,616) ( - 2,093 87) ( 170,056 $ 194,081 $

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable, external regulatory or legal requirements, for example, currency restrictions.
ii. As of September 30, 2018, December 31, 2017 and September 30, 2017, the undrawn credit amounts are $16,426,697, $19,571,220 and $18,499,337, respectively.
iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

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Non-derivative financial liabilities:

September 30, 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)	Upto 1year	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 5 years	Over 5years
	2,267,047 $ 190,199 7,369,300 4,686,190 - 6,529,069 Up to1year	- $ - - - 3,000,000 1,197,634 Between 1 and 2 years	- $ - - - 1,000,000 562,646 Between 2 and 3 years	- $ - - - - 930,995 Between 3 and 5 years	- $ - - - - - Over5 years
	2,187,621 $ 196,775 7,713,059 4,839,917 - 4,026,233	- $ - - - - 969,477	- $ - - - 3,000,000 1,400,062	- $ - - - 1,000,000 1,189,323	- $ - - - - -

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September 30, 2017 Short-term borrowings Notes payable Accounts payable Other payables Bonds payable Long-term borrowings (including current portion)	Upto 1year	Between 1 and 2 years	Between 2 and 3 years	Between 3 and 5 years	Over 5years
	2,318,683 $ 162,510 7,841,225 4,663,196 - 4,658,671	- $ - - - - 965,877	- $ - - - - 928,304	- $ - - - 4,000,000 1,294,697	- $ - - - - 171,159

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  - iv. As of September 30, 2018, December 31, 2017 and September 30, 2017, the derivative financial liabilities which were executed by the Group were all due within one year.

(3) Fair value information
A. Details of the fair value of the Group’s financial assets and financial liabilities not measured at fair value are provided in Note 12(2)A. Details of the fair value of the Group’s investment property measured at cost are provided in Note 6(8).
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: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, beneficiary certificates and others is included in Level 1.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in derivative instruments is included in Level 2.
- Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s 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:

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September 30, 2018 Financial assets at fair value through profit or loss Equity securities Financial assets at fair value through other comprehensive income Equity securities 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 September 30, 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 Recurring fair value measurements Assets Recurring fair value measurements Assets Recurring fair value measurements Assets	Level 1 1,520,674 $ 11,854,398 13,375,072 $ Level 1 254,003 $ 12,633,285 12,887,288 $ - $ Level 1 147,814 $ 12,671,281 12,819,095 $ - $	Level 2 - $ - - $ Level 2 - $ - - $ 2,528 $ Level 2 671 $ - 671 $ 77 $	Level3 982,547 $ 314,050 1,296,597 $ Level3 - $ 1,162,875 1,162,875 $ - $ Level3 - $ 1,181,305 1,181,305 $ - $	Total
				2,503,221 $ 12,168,448
				14,671,669 $
				Total
				254,003 $ 13,796,160
				14,050,163 $
				2,528 $
				Total
				148,485 $ 13,852,586
				14,001,071 $
				77 $

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D. The methods and assumptions the Group used to measure fair value are as follows:
(a) The instruments the Group used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:
- Listed shares Open-end fund
- Market quoted price Closing price Net asset value
- (b) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes. The fair value of financial instruments measured by using valuation techniques method can be referred to current fair value of instruments with similar terms and characteristics in substance, discounted cash flow method or other valuation methods, including calculated by applying model using market information available at the consolidated balance sheet date (i.e. yield curves on the Taipei Exchange, average commercial paper interest rates quoted from Reuters).
(c) The valuation of derivative financial instruments is based on valuation model widely accepted by market participants, such as present value techniques and option pricing models. Forward exchange contracts are usually valued based on the current forward exchange rate.
(d) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Group’s financial and non-financial instruments. Therefore, the estimated value derived using valuation model is adjusted accordingly with additional inputs, for example, model risk or liquidity risk and etc. In accordance with the Group’s management policies and relevant control procedures relating to the valuation models used for fair value measurement, management believes adjustment to valuation is necessary in order to reasonably represent the fair value of financial and non-financial instruments at the consolidated balance sheet. The inputs and pricing information used during valuation are carefully assessed and adjusted based on current market conditions.
(e) The Group takes into account adjustments for credit risks to measure the fair value of financial and non-financial instruments to reflect credit risk of the counterparty and the Group’s credit quality.
E. For the nine-month periods ended September 30, 2018 and 2017, there was no transfer between Level 1 and Level 2.
F. The following table presents the changes in level 3 instruments.

Beginning balance Gain and loss recognized in other comprehensive income (Note) Acquired during the period Sold during the period Transfers out from Level 3 Ending balance	Non-derivative equity	Non-derivative equity
	For the nine-month period For the nine-month period ended September30,2018 ended September30,2017 $ 1,162,875 $ 1,250,106 95,344 ( 53,383) 40,160 26,824 ( 1,782) ( 42,242) - - $1,296,597 $1,181,305	For the nine-month period ended September30,2017
		$1,181,305

G. Finance and Accounting Department is in charge of valuation procedures for fair value measurements being categorized within Level 3, which is to verify independent fair value

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of financial instruments. Such assessment is to ensure the valuation results are reasonable by applying independent information to make results close to current market conditions, confirming the source of information is independent, reliable and in line with other resources and represented as the exercisable price, and frequently calibrating valuation model, performing back-testing, updating inputs used to the valuation model and making any other necessary adjustments to the fair value.

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

Non-derivative equity: Unlisted shares Private equity fund Non-derivative equity: Unlisted shares Private equity fund	Fair value at September 30,2018	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	1,296,597 $ Fair value at December 31,2017	Market comparable companies Valuation technique	Price to earnings ratio multiple Discount for lack of marketability Significant unobservable input	1.19~3.61 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

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Non-derivative equity: Unlisted shares Private equity fund	Fair value at September 30,2017	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	$ 1,181,305	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:

September 30, 2018

			September 30,2018	September 30,2018	September 30,2018
Financial assets Equity instrument Financial assets Equity instrument	Input	Change	Recognized inprofit or loss			Recognized in other comprehensive income
			Favourable change	Unfavourable change		Favourable change	Unfavourable change
	Discount for lack of marketability	±5%				64,830 $	64,830) ($
	Input	Change	Recognized inprofit or loss			Recognized in other comprehensive income
			Favourable change	Unfavourable change		Favourable change	Unfavourable change
	Discount for lack of marketability	±5%	- $		- $	58,144 $	58,144) ($

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September 30, 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 ± 5% $ - $ - $ 59,065 ($ 59,065) marketability

(4) Effects on initial application of IFRS 9, ‘Financial instruments’
A. Summary of significant accounting policies adopted in 2017 and the third quarter of 2017:
- (a) Financial assets at fair value through profit or loss
  - i. They are financial assets held for trading. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges.
  - ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
  - iii. Financial assets at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.
- (b) Available-for-sale financial assets
  - i. They are non-derivatives that are either designated in this category or not classified in any of the other categories.
  - ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.
  - iii. They are initially recognized at fair value plus transaction costs. These financial assets are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured or derivatives that are linked to and must be settled by delivery of such unquoted equity instruments are presented in ‘financial assets measured at cost’.
- (c) Loans and receivables
  - i. Accounts receivable
    - Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. They are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
  - ii. Investment in debt instrument without active market
    - (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:

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     - 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.

(d) Impairment of financial assets
i. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
ii. The criteria that the Group uses to determine whether there is objective evidence of an impairment loss is as follows:
- (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;
- (iii) The Group, for economic or legal reasons relating to the borrower’s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
- (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. When the Group assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:
- (i) Financial assets at amortized cost
  - The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate, and is recognized in profit or loss. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event

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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 asset’s 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, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. Impairment loss of an investment in an equity instrument recognized in profit or loss shall not be reversed through profit or loss. Impairment loss is recognized and reversed by adjusting the carrying amount of the asset through the use of an impairment allowance account.

(e) Financial liabilities at fair value through profit or loss
- i. Financial liabilities at fair value through profit or loss are financial liabilities held for trading or financial liabilities designated as at fair value through profit or loss on initial recognition. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorized as financial liabilities held for trading unless they are designated as hedges.
- ii. Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently remeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.
(f) Financial guarantee contracts
- Financial guarantee contract is a contract that requires the Group to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. A financial guarantee contract is initially recognized at its fair value adjusted for transaction costs on the trade date. After initial recognition, the financial guarantee is measured at the higher of the initial fair value less cumulative amortisation and the best estimate of the amount required to settle the present obligation on each balance sheet date.
B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, 2018, IFRS 9, were as follows:

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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 Measured at fair value fair value through Available- for-sale- through other comprehensive profit or loss equity income-equity 254,003 $ 13,796,160 $ - $ 2,347,463 2,347,463) ( - - 11,448,697) ( 11,448,697 - - - 2,601,466 $ - $ 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 $

(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. The significant accounts as of December 31, 2017 and September 30, 2017 and for the year ended December 31, 2017 are as follows:
(a) Financial assets at fair value through profit or loss

Items Current items: Financial assets held for trading Listed stocks Money market funds Non-hedging derivatives Valuation adjustment of financial assets held for trading		December31,2017		September30,2017
		79,532 $ 168,916 - 248,448 5,555 254,003 $		77,087 $ 69,674 671 147,432 1,053 148,485 $

i. The Group recognized net loss amounting to $4,573, $3,192 and $17,428 on financial assets held for trading for the year ended December 31, 2017 and the three-

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month and nine-month periods ended September 30, 2017, respectively.

ii. The non-hedging derivative instruments transaction and contract information are as follows:

follows:
Financial instruments Forward foreign exchange contracts SELL AUD/BUY USD SELL EUR/BUY USD		September 30, 2017
		Maturity date 2017.10.03 AUD 4,000,000 2017.10.31 EUR 2,000,000 Contract amount (Notional principal)	Fair value 609 $ 62 671 $

iii. The non-hedging derivative instruments transaction and contract information are as follows:

follows:
Financial instruments Forward foreign exchange contracts SELL USD/BUY JPY SELL EUR/BUY USD Financial instruments Forward foreign exchange contracts SELL USD/BUY JPY		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) September 30, 2017
		Maturity date Fair value 2017.09.27 ~2017.10.03 JPY 200,000,000 77) ($ Contract amount (Notional principal)

iv. The Group entered into forward foreign exchange contracts to hedge exchange rate risk of foreign currency financing and export proceeds. However, these forward foreign exchange contracts are not accounted for under hedge accounting.
v. Due to the global financial crisis in 2008, the Group, in accordance with IAS No. 39, paragraph 50 (c), reclassified certain listed stocks previously classified as financial assets at fair value through profit or loss into available-for-sale financial assets amounting to $110,010. The detailed information is set forth below:
(i) The above reclassified assets that have not yet been disposed of are as follows: December 31, 2017 Septemeber 30, 2017

Book value/fair value Book value/fair value Listed stocks $ 3,323 $ 3,203

(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. And, the accumulated total changes in fair value of the above listed stocks that were recognized in profit or loss and other comprehensive income before January 1, 2017 were $0 and $550, respectively.
(iii) If the above listed stocks had not been reclassified to ‘available-for-sale

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financial assets’ on July 1, 2008, the gain from changes in fair value of these assets that should have been recognized in profit or loss is as follows:

assets that should have been recognized in profit or loss is as follows:	it or loss is as follows:	it or loss is as follows:
(b) Available-for-sale financial assets For the year ended For the nine-month period December31,2017 endedSeptember30,2017 Listed stocks 670 $ 550 $ Items December31,2017 September30,2017 Current items: Listed stocks 730,135 $ 790,301 $ Emerging stocks 21,423 60,751 Beneficiary certificates 14,046 14,046 765,604 865,098 Valuation adjustment of available- for-sale financial assets 105,437 35,710 871,041 $ 900,808 $ Non-current items： Listed stocks 8,749,357 $ 8,740,880 $ Emerging stocks 33,954 40,377 Unlisted shares 861,054 867,172 9,644,365 9,648,429 Valuation adjustment of available- for-sale financial assets 3,280,754 3,303,349 12,925,119 $ 12,951,778 $	For the nine-month period endedSeptember30,2017
	$	550
		September30,2017
		790,301 $ 60,751 14,046
		865,098 35,710
		900,808 $
		8,740,880 $ 40,377 867,172
		9,648,429 3,303,349
		12,951,778 $

The Group recognized $1,570,454, ($351,265) and $1,520,179 in other comprehensive income for fair value change and reclassified $238,707, ($24,573) and $282,082 from equity to profit or loss for the year ended December 31, 2017 and the three-month and nine-month periods ended September 30, 2017, respectively.

Items Current items: Time deposits	December31,2017 3,794,570 $	September30,2017
		4,167,115 $

  - I. The Group recognized $48,472, $13,930 and $38,682 in other comprehensive income for amortized cost for the year ended December 31, 2017 and the three-month and nine-month periods ended September 30, 2017, respectively.

  - 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 and September 30, 2017, no investments in debt instruments without active markets held by the Group were pledged to others.

D. Credit risk information for the year ended December 2017 and the third quarter of 2017 are as follows:
(a) Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and

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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. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables. Only banks and financial institutions with optimal credit ratings are accepted.

(b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from nonperformance by these counterparties.
(c) The credit quality of accounts receivable that were neither past due nor impaired was in the following categories based on the Group’s Credit Quality Control Policy:

Group 1 Group 2 Group 3 Group 4 Group 5	December31,2017 4,621,974 $ 1,380,744 1,345,100 383,907 527,060 8,258,785 $	September30,2017
		4,532,766 $ 1,724,249 1,201,401 411,742 445,637
		8,315,795 $

Group 1: Clients without substantial risk, such as government institutions and listed Companies.
Group 2: Clients with extremely low risk, which have excellent reputation and prospect, as ratified by the director of credit management of the Group.
Group 3: Clients with low risk, which operate well and have had business relationships with the Group for many years with normal payment condition.
Group 4: Clients with risk at an acceptable level, where the Group shall monitor their credit condition regularly.
Group 5: Clients with fewer transactions with the Company, which have lower
- transaction amounts and their management shall be continuously monitored.
(d) The ageing analysis of accounts receivable that were past due but not impaired is as follows:

follows:
Up to 30 days 31 to 90 days 91 to 180 days Over 180 days	December31,2017 1,281,979 $ 506,645 203,360 377,069 2,369,053 $	September30,2017
		1,030,504 $ 578,814 201,702 455,099
		2,266,119 $

The above ageing analysis was based on past due date.

(e) Movement analysis of financial assets that were impaired is as follows:
i. As of December 31, 2017 and September 30, 2017, the Group’s impaired notes and accounts receivable amounted to $185,215 and $194,081, respectively.
ii. Movements on allowance for uncollectible accounts are as follows:

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						2017
		Individual	provision		Group provision			Total
At January 1		$	41,724		$	133,500		175,224 $
Provision for impairment			16,447			17,091		33,538
Write-off during the period	(		4,478)	(		24,700)	(	29,178)
Reclassifications			14,584			-		14,584
Effect of exchange rate changes			148	(		235)	(	87)
At September 30		$	68,425		$	125,656		194,081 $

(5) Effects of initial application of IFRS 15

A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017 and the third quarter of 2017 are set out below:
(a) Sales of goods
- i. The Group manufactures and sells various types of mechanical equipment, airconditioning units and electronic equipment products. Revenue is measured at the fair value of the consideration received or receivable taking into account of business tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Group’s activities. Revenue arising from the sales of goods is recognized when the Group has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been transferred to the customer, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.
- ii. The Group offers customers volume discounts and right of return for defective products. The Group estimates such discounts and returns based on historical experience. Provisions for such liabilities are recorded when the sales are recognized. The volume discounts are estimated based on the anticipated annual sales quantities.
(b) Sales of services

The Group provides products repair services. Revenue from delivering services is recognized under the percentage-of-completion method when the outcome of services provided can be estimated reliably. The stage of completion of a service contract is measured by the percentage of the actual services performed as of the financial reporting date to the total services to be performed. If the outcome of a service contract cannot be estimated reliably, contract revenue should be recognized only to the extent that contract costs incurred are likely to be recoverable.

If the result of a construction contract can be estimated reliably and it is probable that this contract would make a profit, contract revenue and cost should be recognized by reference to the stage of completion of the contract activity in the end of the reporting period in revenue and expense.

(d) A sale agreement comprising of multiple components
A sale agreement offered by the the Group might comprise of multiple components, including sale of goods and subsequent maintenance services, etc. If a sale agreement comprises of multiple identifiable components, the fair value of the consideration

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received or receivable in respect of the sale agreement is allocated among those components based on the relative fair value of each component. The amount of proceeds allocated to each component is recognized as revenue in profit or loss following the revenue recognition criteria applied to each component. The fair value of each component is determined by its market value when it is sold separately.

(e) Construction contracts
i. IAS 11, ‘Construction Contracts’, defines a construction contract as a contract specifically negotiated for the construction of an asset. If the outcome of a construction contract can be estimated reliably and it is probable that this contract would make a profit, contract revenue is recognized by reference to the stage of completion of the contract activity, using the percentage-of-completion method of accounting, over the contract term. Contract costs are expensed as incurred. The stage of completion of a contract is measured by the proportion of contract costs incurred for work performed up to the balance date to the estimated total costs for the contract. An expected loss where total contract costs will exceed total contract revenue on a construction contract should be recognized as an expense as soon as such loss is probable. If the outcome of a construction contract cannot be estimated reliably, contract revenue should be recognized only to the extent of contract costs incurred that are likely to be recoverable.
ii. Contract revenue should include the revenue arising from variations from the original contract work, claims and incentive payments that are agreed by the customer and can be measured reliably.
iii.The excess of the cumulative costs incurred plus recognized profits (less recognized losses) over the progress billings on each construction contract is presented as an asset within ‘receivables from customers on construction contracts’. While, the excess of the progress billings over the cumulative costs incurred plus recognized profits (less recognized losses) on each construction contract is presented as a liability within ‘payables to customers on construction contracts’.

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B. The revenue recognized by using above accounting policies for the year ended December 31 and for the nine-month period ended September 30, 2017 are as follows:

Sales of goods Sales of services Construction contract revenue Revenue of sale of real estate Net securities trading revenue Sales of goods Sales of services Construction contract revenue Revenue of sale of real estate Net securities trading revenue	For the year ended December31,2017 40,243,212 $ 7,004,090 3,141,743 426,500 126,976 50,942,521 $	For the three-month period ended September30,2017
		10,008,132 $ 2,021,867 676,968 - 29,087) ( 12,677,880 $ For the nine-month period ended September30,2017
		29,764,064 $ 5,458,736 2,274,878 - 169,630 37,667,308 $

C. The construction contract receivable/payable recognized by using above construction contract accounting policies for the year ended December 31, 2017 and the third quarter of 2017 are as follows:

2017 are as follows:
Aggregate costs incurred plus recognized profits (less recognized losses) Less: Progress billings Net balance sheet position for construction in progress Presented as: Construction contracts receivable Construction contracts payable	December31,2017	September30,2017
	14,263,866 $ 13,411,527) ( 852,339 $ 1,030,504 $ 178,165) ( 852,339 $	15,549,883 $ 14,830,296) ( 719,587 $ 973,979 $ 254,392) ( 719,587 $

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As of December 31, 2017 and September 30, 2017, cumulative gain (loss) recognized under the percentage of completion method for major contracts are summarized as follows: December 31, 2017

			December	31,2017
	Construction items Construction A Construction B Construction C Construction D Construction E Construction F Construction G Construction H Construction I Construction J Construction K	Expected completion date 2018.12 2018.06 2018.09 2018.12 2018.08 2018.12 2018.06 2018.12 2018.12 2019.11 2018.03	Contract price	Estimated contract cost 2,124,822 $ 1,774,577 1,511,047 1,029,856 924,244 1,536,563 818,761 674,470 619,366 541,619 539,262 30,2017	Percentage of completion 99% 78% 98% 99% 99% 96% 68% 99% 97% - 99%	Cumulative gain (loss) recognised
			2,243,988 $ 1,864,762 1,561,500 1,065,297 1,064,122 941,452 909,734 621,282 611,485 576,190 576,381 September			118,901 $ 70,140 49,565 35,019 138,108 595,111) ( 61,544 53,188) ( 7,881) ( 34 37,099
Construction items Construction A Construction B Construction C Construction D Construction E Construction F Construction G Construction H Construction I Construction J Construction K		Expected completion date	Contract price	Estimated contract cost 2,124,822 $ 1,774,577 1,224,575 1,511,079 1,029,856 924,244 1,536,563 818,761 674,470 619,366 539,260	Percentage of completion 99% 71% 99% 98% 99% 99% 96% 63% 99% 97% 99%	Cumulative gain (loss) recognised
		2017.12 2018.06 2017.11 2018.09 2017.12 2017.10 2017.12 2018.02 2017.12 2017.12 2017.12	2,243,988 $ 1,864,762 1,393,987 1,561,532 1,065,297 1,064,122 941,452 909,734 621,282 611,485 576,381			118,893 $ 64,247 169,367 49,520 35,019 137,786 595,111) ( 57,120 53,188) ( 7,881) ( 37,096

D. The effects and description of current balance sheet and comprehensive income statement if the Group continues adopting above accounting policies in the third quarter of 2018 are as follows:

s follows:
Balance sheet items Construction contracts receivable Contract assets Contract liabilities Construction contracts payable Sales revenue received in advance	Descripion	September 30,2018
		Balance by using IFRS15 - $ 1,028,059 1,139,663) ( - -	Balance by using previous accounting policies	Effects from changes in accounting policies
			1,028,059 $ - - 237,004) ( 902,659) (	1,028,059) ($ 1,028,059 1,139,663) ( 237,004 902,659

There is no significant impact to the comprehensive income statement if the Group continues adopting above accounting policies in the third quarter of 2018.

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13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: Please refer to table 2.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 3.
D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: None.
E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.
G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paidin capital or more: Please refer to table 4.
H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: Please refer to table 5.
I. Trading in derivative financial instruments undertaken during the reporting periods ended: Please refer to Notes 6(14).
J. Significant inter-company transactions during the reporting periods: Please refer to table 6.
(2) Information on investees
Names, locations and other information of investee companies (not including investees in Mainland China): Please refer to table 7.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 8.
B. Significant transactions, either directly or indirectly through a third party, transactions with the investee companies in Mainland Area: Please refer to table 9.

14. SEGMENT FINANCIAL INFORMATION

(1) General information

The Group operates and makes decisions on the basis of products and service line, which the Group uses to identify reportable segments.

The Group’s reportable segments include motor division and the home appliance division. The motor division primarily engages in the manufacturing and sales of motors and generators. The home appliance division primarily engages in the manufacturing, installation, sales and service of home appliances.

(2) Segment performance

The Group uses the operating income as the basis for segment performance assessment. The operating income excludes non-recurring expenditures, unrealized gain or loss on financial instruments, interest income and interest expense.

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(3) Financial information by industry

The segment information of the reportable segments provided to the chief operating decision-maker for the nine-month periods ended September 30, 2018 and 2017 is as follows:

30, 2018 and 2017 is as follows:
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		Forthenine-monthperiod ended September30,2018
	Heavy industrial products division 24,172,282 $ 14,617,734 38,790,016 $ 2,274,340 $ 696,686 $ 39,515,291 $ 534,528 $ 17,234,761 $	Home appliances division 5,261,717 $ 2,621,021 7,882,738 $ 128,705 $ 134,081 $ 4,053,674 $ 177,380 $ 2,443,573 $	Adjustment and elimination 7,675,838 $ - $ 776,921 18,015,676) ( 8,452,759 $ 18,015,676) ($ 266,363 $ - $ 325,055 $ - $ 19,237,140 $ 7,890,717) ($ 288,385 $ - $ 5,659,706 $ 8,395,686) ($ Others	Total
				37,109,837 $ -
				37,109,837 $
				2,669,408 $
				1,155,822 $
				54,915,388 $
				1,000,293 $
				16,942,354 $

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Forthenine-month	Forthenine-month	period ended September30,2017
Heavy industrial products division 23,261,317 $ 12,826,975 36,088,292 $ 1,772,644 $ 666,954 $ 38,975,031 $ 632,219 $ 15,433,422 $	Home appliance division 6,432,657 $ 2,699,684 9,132,341 $ 118,638 $ 151,310 $ 5,900,816 $ 89,535 $ 3,459,129 $	Adjustment and elimination 7,973,334 $ - $ 857,245 16,383,904) ( 8,830,579 $ 16,383,904) ($ 768,172 $ - $ 329,946 $ - $ 18,844,309 $ 7,845,529) ($ 84,364 $ - $ 7,188,139 $ 8,427,392) ($ Others	Total
			37,667,308 $ -
			37,667,308 $
			2,659,454 $
			1,148,228 $
			55,874,627 $
			806,118 $
			17,653,298 $

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(4) Reconciliation for segment profit (loss)

Sales between segments are carried out at arm’s length. The revenue from external parties reported to the chief operating decision-maker is measured in a manner consistent with that in the statement of comprehensive income. A reconciliation of reportable segment profit or loss to the profit before tax and discontinued operations for the nine-month periods ended September 30, 2018 and 2017 is provided as follows:

		For the nine-month period	For the nine-month period		For the nine-month period	For the nine-month period
		ended	September30,2018		ended	September30,2017
Adjusted operating income of
reportable segments		$	2,403,045		$	1,891,282
Adjusted operating income of other
operating segments			266,363			768,172
Total segments			2,669,408			2,659,454
Interest income			143,992			111,408
Unrealized loss on financial
instruments	(		71,748)	(		17,595)
Financial cost	(		164,378)	(		196,047)
Associates’ and joint ventures’
profit and loss accounted for under
the equity method			117,107			129,483
Others			630,406			743,047
Income before income tax		$	3,324,787		$	3,429,750

The total assets amount reported to the chief operating decision-maker is measured in a manner consistent with that in the financial statements.

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TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Loans to others

For the nine-month period ended September 30, 2018

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

Maximum outstanding balance during the nine- month period ended September 30, 2018 Balance at September 30, 2018 (Note 9) Actual amount drawn down Number (Note 1) Creditor 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	Collateral	Limit on loans granted to a singleparty	Ceiling on total loans granted	Footnote
	Item Value
0 TECO ELECTRIC & MACHINERY CO., LTD. Xiamen An-Tai Other receivables Yes 92,145 $ 91,575 $ 54,946 $ 2.3 Short-term financing - $ For operating capital - $ 0 TECO ELECTRIC & MACHINERY CO., LTD. QingDao Teco `〃` `〃` 139,971 132,503 132,503 3.5 Short-term financing - For operating capital - 1 U.V.G. Teco Netherlands `〃` `〃` 253,680 248,360 248,360 1.5 Short-term financing - For operating capital - 2 Tai-An Wuxi Fujian Teco `〃` `〃` 11,715 - - - Short-term financing - For operating capital - 3 Teco Westinghouse TWMM `〃` `〃` 67,012 67,012 43,651 2.51~ 3.53 Short-term financing - For operating capital - 3 Teco Westinghouse TECO ELECTRIC & MACHINERY CO., LTD. `〃` `〃` 307,150 305,250 305,250 1.1 Short-term financing - For operating capital - 4 Tong-An Assets TECO ELECTRIC & MACHINERY CO., LTD. `〃` `〃` 280,000 200,000 200,000 1.05 Short-term financing - For operating capital - 5 Motovario S.p.A. GEAR SOLUTIONS ES `〃` `〃` 162,536 - - - Short-term financing - For operating capital -	- - $ - - - - - - - - - - - - - -	1,587,718 $ 1,587,718 442,306 64,184 747,037 747,037 524,484 215,125	5,292,392 $ 5,292,392 737,176 128,369 1,494,074 1,494,074 524,484 430,250	Note 2 Note 2 Note 3 Note 4 Note 5 Note 5 Note 6 Note 7

Table 1, Page 1

Maximum outstanding balance during the nine- month period ended September 30, 2018 Balance at September 30, 2018 (Note 9) Actual amount drawn down Number (Note 1) Creditor 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	Collateral	Limit on loans granted to a singleparty	Ceiling on total loans granted	Footnote
	Item Value
6 Baycom Tecom `〃` `〃` 40,000 - - - Short-term financing - Repayments of debt -	- -	47,556	95,112	Note 8

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

(1)The Company is ‘0’.

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

Note 2: 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 (September 30, 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 (September 30, 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 (September 30, 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 (September 30, 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 (September 30, 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 (September 30, 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 (September 30, 2018), and limit on loans to a single party shall not 10% of Teco Westinghouse' s net assets based on the latest financial statements (September 30, 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 (September 30, 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 (September 30, 2018).

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 (September30, 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 (September 30, 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 (September 30, 2018); limit on loans to a single party is 10% of the granting company's net assets based on the latest audited financial statements (September 30, 2018). Note 9: The credit line approved by the Board of Directors.

Table 1, Page 2

Table 2

(Except as otherwise indicated)

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Provision of endorsements and guarantees to others For the nine-month period ended September 30, 2018

Expressed in thousands of NTD

Number (Note 1)	Endorser/ guarantor	Party being endorsed/guaranteed	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/ guarantee amount as of September 30, 2018	Outstanding endorsement/ guarantee amount at September 30, 2018	Actual amount drawn down	Amount of endorsements/ guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided (Note 3)	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsement s/ guarantees to the party in Mainland China	Footnote
		Companyname	Relationship with the endorser/ guarantor `（`Note 2`）`
0 0 0 0 1 2	TECO ELECTRIC & MACHINERY CO., LTD. TECO TECO ELECTRIC & MACHINERY CO., LTD. TECO ELECTRIC & MACHINERY CO., LTD. Teco Westinghouse Motovario S.p.A.	TECO Smart Technologies Co., Ltd. Teco International Motovario Others TWMM TECNOFIB SRL	(4) (4) (4) (4),(5),(6) (4) (1)	10,584,784 $ 10,584,784 10,584,784 10,584,784 747,037 860,500	100,000 $ 100,000 2,763,662 4,118,029 19,047 576	100,000 $ 100,000 2,094,739 73,722 12,270 502	100,000 $ 100,000 2,094,739 73,722 12,270 502	- $ - - - - -	0.19 0.19 4.03 0.14 0.04 0.01	31,754,351 $ 31,754,351 31,754,351 31,754,351 1,494,074 2,581,500	Y Y Y Y Y N	N N N N N N	N N N N N N	Note 3 `〃` `〃` `〃` Note 4 Note 5

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

(1) The Company is ‘0’.

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

Table 2, Page 1

Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following seven categories:

(1) Having business relationship.
(2) The endorser/guarantor parent company owns directly and indirectly more than 50% voting shares of the endorsed/guaranteed subsidiary.
(3) The endorsed/guaranteed company owns directly and indirectly more than 50% voting shares of the endorser/guarantor parent company.
(4)The endorser/guarantor parent company owns directly and indirectly more than 90% voting shares of the endorsed/guaranteed company.
(5) Mutual guarantee of the trade made by the endorsed/guaranteed company or joint contractor as required under the construction contract.
(6) Due to joint venture, all shareholders provide endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.
(7) Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.

Note 3: In accordance with the Company's policy, the total guarantee amount shall not exceed 60% of Company's net assets based on the latest financial statements (September 30, 2018), and the guarantee to a single party shall not exceed Note 4: In accordance with the Teco Westinghouse's policy, the total guarantee amount shall not exceed 20% of Teco Westinghouse's net assets based on the latest financial statements (September 30, 2018), and the guarantee to a single party Note 5: In accordance with Motovario S.p.A.' s policy, the total guarantee amount shall not exceed 60% of Motovario S.p.A.' s net assets based on the latest financial statements (September 30, 2018), and the guarantee to a single party shall

Table 2, Page 2

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

September 30, 2018

Table 3

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by Marketable securities Relationshipwith the securities issuer General ledger account		As ofSeptember30,2018	As ofSeptember30,2018	Footnote
	Number of shares	Bookvalue	Ownership (%) Fairvalue
TECO ELECTRIC & MACHINERY CO., LTD. Stock 1 The Company is a director of the investee Note 1 Stock 2 None 〃 Stock 3,ect. The Company is a director of the investee 〃 Stock 4 None Note 4 Stock 5 The Company is a director of the investee 〃 Stock 6 None 〃 Stock 7 `〃` 〃 Stock 8 The Company is a director of the investee 〃 Stock 9,etc. None 〃 Stock 10,etc. `〃` 〃 Fund 1,etc. `〃` 〃 Teco International Stock 11 `〃` Note 1 Stock 12,etc. `〃` 〃 Stock 13,etc. `〃` Note 3 Stock 10,etc. `〃` Note 2 Tong-an Investment Stock 14 An investee company accounted by the Company using equity method Note 1 Stock 15 Related party in substance 〃 Stock 16 None 〃 Stock 17 `〃` 〃 Stock 11 The Company is a director of the investee 〃 Stock 18 None 〃 Stock 19,etc `〃` 〃 Stock 11,etc. `〃` Note 2 Stock 20, etc. `〃` Note 3 Fund 2, etc. `〃` Note 2 Fund 3, etc `〃` Note 4 U.V.G Stock 21, etc. `〃` Note 1 An-Tai International Stock 14 An investee company accounted by the Company using equity method 〃 Stock 15 Related party in substance 〃 Stock 19 `〃` 〃 Stock 22 None 〃 Stock 23, etc. `〃` Note 3 Stock 10,etc. `〃` Note 2 Jie-Zheng Property Fund 4, etc. `〃` Note 2 Teco Electro Stock 15 Related party in substance Note 1 Information Technology Stock 24, etc. None 〃	190,061 9,610 5,098 10,084 11,527 47,839 2,710 32,980 7,500 43,654 - 275 13,875 3,654 970 19,540 9,197 8,502 1,285 14,050 508 15,032 4,116 14,624 - - 118 2,826 1,270 2,756 195 1,074 171 - 200 3,238	5,682,811 $ 101,868 97,779 162,862 308,935 395,627 18,835 308,552 314,775 204,706 222,533 48,813 284,109 196,210 36,037 432,812 134,729 618,942 140,708 2,493,875 66,283 364,252 356,336 761,014 16,901 40,446 5,760 62,590 18,608 192,898 9,201 62,489 8,946 49,937 2,933 32,343	3.38 5,682,811 $ 0.10 101,868 - 97,779 0.08 162,862 1.96 308,935 1.98 395,627 0.06 18,835 10.99 308,552 5.00 314,775 - 204,706 - 222,533 0.19 48,813 - 284,109 - 196,210 - 36,037 0.98 432,812 8.17 134,729 0.26 618,942 0.04 140,708 9.89 2,493,875 2.06 66,283 - 364,252 - 356,336 - 761,014 - 16,901 - 40,446 - 5,760 0.14 62,590 1.13 18,608 8.51 192,898 - 9,201 - 62,489 - 8,946 - 49,937 0.18 2,933 - 32,343

Table 3, Page 1

Securities held by Marketable securities Relationshipwith the securities issuer General ledger account		As ofSeptember30,2018	As ofSeptember30,2018	Footnote
	Number of shares	Bookvalue	Ownership (%) Fairvalue
Teco Singapore Stock 11,etc. `〃` 〃 Taiwan Pelican express Stock 11, etc. `〃` 〃 Teco Australia Stock 11 `〃` 〃 Teco Nanotech Stock 15 Related party in substance 〃 Fund 5 None Note 2 Sankyo Stock 25 `〃` Note 1 Tecom Stock 2 `〃` 〃 Stock 1 The Company is a corporate director of the investee 〃 Tecom International Stock 29 None Note 3 Stock 30,etc. `〃` Note 1 Fund 6 `〃` Note 2 Top-Tower Stock 14 An investee company accounted by the Company using equity method Note 3 Stock 31, etc. None 〃	304 459 460 81 62 68 2,175 16,222 3,354 758 3,177 77 3	54,442 81,473 81,407 1,288 $ 11,023 7,597 23,058 485,040 32,834 680 14,877 1,710 49	- 54,442 - 81,473 0.32 81,407 0.07 1,288 $ - 11,023 - 7,597 0.02 23,058 0.29 485,040 1.69 32,834 - 680 - 14,877 - 1,710 - 49

Note 1: Available-for-sale financial assets - non-current.

Note 2: Financial assets at fair value through profit or loss - current.

Note 3: Available-for-sale financial assets - current.

Note 4: Financial assets at fair value through profit or loss - non-current.

Table 3, Page 2

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 nine-month period ended Sepetmber 30, 2018

Table 4

Expressed in thousands of NTD

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Transaction	Transaction		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/accounts receivable(payable)	Notes/accounts receivable(payable)	Footnote
			Purchases (sales)	Amount	Percentage of total purchases(sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable(payable)
TECO ELECTRIC & MACHINERY	Tesen Taian Subic Kuen Ling Tai-An Wuxi Wuxi Teco Qing Dao Teco Teco Industrial (Malaysia) Sdn. Bhd. Jiangxi Teco Genmao Electronics (Suzhao) Taian Shen Electric Co., Ltd. E-Joy International Tong Dai Tong Tai Jung Teco Singapore Teco Westinghouse Teco Westinghouse Canada Teco Australia Top-Tower Motovario	An investee accounted for under the equity method 〃〃 An indirect investee accounted for under the equity method `〃` `〃` `〃` `〃` `〃` An investee accounted for under the equity method 〃 `〃` `〃` An indirect investee accounted for under the equity method `〃` `〃` `〃` `〃` 〃	Purchases `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` Sales `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` 〃	2,035,885 $ 126,487 141,030 420,135 844,641 575,745 294,800 116,628 112,619 164,473) ( 139,221) ( 714,353) ( 519,979) ( 648,073) ( 2,536,159) ( 613,395) ( 815,868) ( 235,768) ( 139,760) (	16% 1% 1% 3% 7% 5% 2% 1% 1% (1%) (1%) (5%) (3%) (4%) (16%) (4%) (5%) (2%) (1%)	30 days 〃〃 `〃` `〃` `〃` 〃〃〃 90 days 〃 `〃` `〃` `〃` `〃` `〃` `〃` `〃` 〃	Note 〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃〃	Note 〃〃 `〃` `〃` `〃` 〃〃〃〃〃 `〃` `〃` `〃` `〃` `〃` `〃` `〃` 〃	- $ 45,667) ( 132,492) ( 73,585) ( 552,254) ( 173,282) ( 97,861) ( 27,268) ( - 28,732 53,032 239,821 174,295 141,953 575,988 134,319 203,953 75,599 120,605	- (1%) (3%) (2%) (12%) (4%) (2%) (1%) 0% 1% 1% 6% 4% 3% 14% 3% 5% 2% 3%

Table 4, Page 1

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Table 5

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

For the nine-month period ended September 30, 2018

Expressed in thousands of NTD

(Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at September 30,2018	Turnover rate	Overdue receivables	Overdue receivables	Allowance for doubtful accounts Amount collected subsequent to the balance sheet date
					Amount	Action taken
TECO ELECTRIC & MACHINERY CO., LTD. `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` 〃 Kuen Ling Teco Westinghouse Wuxi Teco Qing Dao Teco U.V.G.	Tong Dai Tong Tai Jung Teco Singapore Teco Westinghouse QingDao Teco Wuxi Teco Teco Australia Sankyo Teco Netherlands Teco Westinghouse Canada Motovario TECO ELECTRIC & MACHINERY CO., LTD. 〃 `〃` `〃` Teco Netherlands	An investee accounted for under the equity method `〃` `〃` An indirect investee accounted for under the equity method `〃` `〃` `〃` `〃` `〃` `〃` 〃 An investee accounted for under the equity method An indirect investee accounted for under the equity method `〃` `〃` `〃`	273,474 $ 175,046 142,240 576,417 267,042 131,865 204,840 221,104 367,402 134,319 156,767 132,492 305,250 552,254 173,282 248,360	3.92 3.88 7.03 6.50 0.02 0.28 4.19 0.42 0.23 5.91 1.91 2.33 - 1.71 6.70 -	- $ - - - - - - 178,201 360,985 - - - - - - -	- - - - - - - In the process of collection `〃` - - - - - - -	87,730 $ 58,944 21,077 281,113 - - - 8 34,020 7,323 9,960 12,915 7,972 152,368 98,904 - Total amount was $18,273

Table 5, Page 1

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES Significant inter-company transactions during the reporting period For the nine-month period ended September 30, 2018

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)			Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note3)
0 0 0 0 0 0 0 0 0 0 0 1 2 3 4 0 0 0 0 0 0 0 0 0 0 5	TECO ELECTRIC & MACHINERY CO., LTD. `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` 〃 Wuxi Teco QingDao Teco Teco Westinghouse U.V.G TECO ELECTRIC & MACHINERY CO., LTD. `〃` `〃` `〃` `〃` TECO ELECTRIC & MACHINERY CO., LTD. 〃〃〃〃 Tesen	Tong Dai Tong Tai Jung Teco Westinghouse QingDao Teco Teco Australia Teco Netherlands Sankyo Teco Singapore Teco Westinghouse Canada Wuxi Teco Motovario TECO ELECTRIC & MACHINERY CO., LTD. `〃` `〃` Teco Netherlands Teco westinghouse Teco Westinghouse Canada Teco Singapore Tong Dai Tong Tai Jung Teco Australia Taian Shen Electric Co., Top-Tower E-Joy International Motovario TECO ELECTRIC & MACHINERY CO., LTD.	(1) `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` 〃 (2) `〃` `〃` (3) (1) `〃` `〃` `〃` `〃` (1) 〃〃〃〃 (2)	Notes receivable, accounts receivable and other receivables `〃` Accounts receivable and other receivables `〃` `〃` `〃` `〃` `〃` `〃` `〃` 〃 Accounts receivable `〃` Other receivables `〃` Sales `〃` `〃` `〃` `〃` Sales 〃〃〃〃 `〃`	273,474 $ 175,046 576,417 267,042 204,840 367,402 221,104 142,240 134,319 131,865 156,767 552,254 173,282 305,250 248,360 2,536,159 613,395 648,073 714,353 519,979 815,868 $ 164,473 235,768 139,221 139,760 2,035,885	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. `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` 〃 `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` `〃` 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. 〃〃〃〃 `〃`	- - 1% - - - - - - - - 1% - - - 7% 2% 2% 2% 1% 2% - 1% - - 5%

Table 6, Page 1

Transaction

						Transaction
Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)	General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note3)
6 1 2 7 8 9	Tai-An Wuxi Wuxi Teco QingDao Teco Teco Malaysia Taian Subic Jiangxi Teco	`〃` `〃` `〃` 〃〃〃	`〃` `〃` `〃` 〃〃〃	`〃` `〃` `〃` 〃〃〃	420,135 $ 844,641 575,745 294,800 126,487 116,628	`〃` `〃` `〃` 〃〃〃	1% 2% 2% 1% - -

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

(1) Parent company is ‘0’.

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

Note 2: Relationship 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.

Table 6, Page 2

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Information on investees

For the nine-month ended September 30, 2018

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as atSeptember30,2018	as atSeptember30,2018	Net profit (loss) of the investee for the nine-month period ended September 30,2018	Investment income (loss) recognized by the Company for the nine- month period ended September 30, 2018	Footnote
				Balance as at September 30, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
TECO ELECTRIC & MACHINERY CO., LTD.	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	Taiwan Taiwan Taiwan U.S.A Singapore Taiwan Taiwan Cayman Islands Taiwan Taiwan	Manufacturing of bearings Manufacturing of key telephone system and nonkey service unit telephone system Investment holdings, investments in securities and construction of commercial buildings Manufacturing and distribution of motors and generators, and investment and trading in USA Distribution of the Company's motor products in Singapore Investment holdings Manufacturing of Stepping Manufacturing and distribution of the Company's motor products and home appliances, and investment holdings E-business service, mailing and data management Manufacturing and sales of home appliance	12,293 $ 631,410 100,013 726,428 112,985 2,490,000 128,496 8,505,434 121,232 200,000	12,293 $ 631,410 100,013 726,428 112,985 2,490,000 128,496 8,505,434 121,232 200,000	39,145,044 200,301,025 57,533,521 1,680 7,200,000 444,134,422 15,386,949 195,416,844 11,723,248 20,000,000	31.14 63.52 100 100 90 99.60 62.57 100 57.64 100	2,072,397 $ 207,005 1,100,415 9,700,345 3,251,828 7,913,293 238,625 7,375,687 156,539 221,423	463,140 $ 39,936) ( 29,122 372,272 127,524 181,877 21,774 158,317 40,885 29,736	144,129 $ 25,047) ( 29,099 373,070 114,647 181,324 13,771 163,182 23,261 22,462	None None 1 None None None None None None None None

Table 7, Page 1

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as atSeptember30,2018	as atSeptember30,2018	Net profit (loss) of the investee for the nine-month period ended September 30,2018	Investment income (loss) recognized by the Company for the nine- month period ended September 30, 2018	Footnote
				Balance as at September 30, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
TECO ELECTRIC & MACHINERY CO., LTD.	Lien Chang Tong Dai Teco Vietnam Yatec Tong-An Assets Taian Subic Micropac (BVI) and its subsidiaries Century Development An-Tai Pelican Kuen Ling Senergy Wind Power Taian-Etacom Technology Co., Ltd.	Taiwan Taiwan Vietnam Taiwan Taiwan Philippines British Virgin Islands Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan	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 Manufacturing machinery for electricity generation, transmission and distribution Bus bar and manufacturing of its components	117,744 $ 22,444 352,252 92,389 2,111,889 165,819 454,923 951,141 150,000 255,116 230,541 - 70,330	117,744 $ 22,444 264,111 92,389 2,111,889 165,819 454,923 673,801 150,000 255,116 296,003 249,990 70,330	37,542,159 5,290,800 20,405,297 7,799,996 388,423,711 17,131,155 14,883,591 96,353,338 25,018,661 24,121,700 13,752,642 - 7,033,000	33.84 92.63 100 64.95 100 76.70 100 28.67 100 25.27 18.06 - 84.73	478,813 $ 249,240 222,606 135,589 5,244,838 165,287 1,438,181 1,354,821 491,479 401,334 344,795 - 127,472	91,355) ($ 47,544 1,208) ( 7,471 60,165 5,945 54,682 164,869 24,548 43,790 155,845 - 12,226	30,918) ($ 44,038 1,363) ( 4,921 45,497 4,260 56,464 41,993 24,567 11,160 31,048 1,410 10,402	None None None None None None None None None None None None 2 None

Table 7, Page 2

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as atSeptember30,2018	as atSeptember30,2018	Net profit (loss) of the investee for the nine-month period ended September 30,2018	Investment income (loss) recognized by the Company for the nine- month period ended September 30, 2018	Footnote
				Balance as at September 30, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
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	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	Cayman Islands Netherlands Italy Samoa Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Singapore Taiwan Singapore Singapore Taiwan Taiwan	Investment holdings Investment holdings Production and sale of gear reducers and motors Investment holdings and establishment of overseas distribution channel Investment holdings Manufacturing and sales of optical telecom products Manufacturing and sales of electronic components Development and management of industrial park Logistics and distribution services Development and construction of real estate Investing in other areas Investment holdings Investment holdings Investment holdings Construction and sales of related raw materials Building management servicing	3,691,723 $ 3,691,723 3,989,850 646,343 100,000 359,656 87,464 420,646 54,874 200,000 274,856 92,000 582,246 91,079 98,170 13,750	3,691,723 $ 3,691,723 3,989,850 646,343 100,000 359,656 87,464 420,646 54,874 - - 92,000 582,246 91,079 98,170 13,750	1 1 18,010,000 23,031,065 12,000,000 9,619,819 7,913,289 44,266,526 6,474,468 20,000,000 9,120,000 11,720,000 27,502,354 4,866,045 10,000,000 1,512,500	100 100 100 100 100 28.64 6.23 13.17 6.78 28.57 30 100 84.97 15.03 100 50	4,302,500 $ 4,302,500 4,302,500 1,518,790 237,893 121,933 208,951 659,754 108,944 198,783 255,577 130,674 697,453 122,882 117,799 62,982	154,859 $ 154,859 154,859 75,283 5,559) ( 336 153,814 164,869 43,790 4,225) ( 10,230) ( 6,481 31,005 31,005 24,446) ( 23,026	154,859 $ 154,859 154,859 75,283 5,559) ( 96 9,580 21,633 2,970 1,207) ( 3,069) ( 6,481 34,687 6,136 23,519) ( 11,559	None None None None None None None None None None None None None None None None

Table 7, Page 3

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held	as atSeptember30,2018	as atSeptember30,2018	Net profit (loss) of the investee for the nine-month period ended September 30,2018	Investment income (loss) recognized by the Company for the nine- month period ended September 30, 2018	Footnote
				Balance as at September 30, 2018	Balance as at December 31, 2017	Number of shares	Ownership (%)	Bookvalue
Century Development Century Development Teco Electro Teco Singapore Teco International Kuen Ling Tong-An Assets	United Development Century Biotech Development Corp. Greyback International Property Century Real Estate (International) Pte. Ltd. Teco Electro Devices Co., Ltd. Century Development Creative Sensor Inc. CHING CHI INTERNATIONAL LIMITED Century Development Century Biotech Development Corp. Century Real Estate (International) Pte. Ltd.	Taiwan Taiwan Philippines Singapore British Virgin Islands Taiwan Taiwan British Virgin Islands Taiwan Taiwan Singapore	Investment consultancy service for domestic and foreign industrial parks and land Development and construction of real estate Housing project in Subic Investing in other areas Trading and investment holdings Development and management of industrial park Manufacturing and sales of electronic components Investing in other areas Leasing of real estate Development and construction of real estate Investing in other areas	25,536 $ 300,000 9,912 365,820 88,108 179,222 52,560 201,467 184,893 200,000 274,856	25,536 $ - 9,912 30,070 88,108 179,222 52,560 201,467 184,893 - -	3,850,997 30,000,000 144,600 12,160,000 2,510,000 20,368,652 4,326,447 6,200,000 16,301,644 20,000,000 9,120,000	51.60 42.86 30.11 40.00 100 6.06 3.41 83 4.85 28.57 30	61,981 $ 298,189 10,768 340,770 119,824 259,253 114,240 461,961 207,800 198,783 255,577	3,285 $ 4,225) ( 26 10,230) ( 17,844 164,869 153,814 507) ( 164,869 4,225) ( 10,230) (	1,695 $ 1,811) ( 8 4,092) ( 17,844 9,991 5,238 421) ( 7,702 1,207) ( 3,069) (	None None None None None None None None None None None

Note 1:The Company has reduced capital by the ratio of 50% to offset losses.

Note 2:The Company has been liquidated.

Table 7, Page 4

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China

For the nine-month period ended September 30, 2018

Table 8 Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Accumulated amount of remittance from Taiwan to Mainland China as of September 30, 2018	Net income of investee for the nine-month period ended September 30 2018	Ownership held by the Company (direct or indirect)(%)	Investment income (loss) recognized by the Company for the nine-month period ended September 30, 2018	Book value of investments in Mainland China as of September 30, 2018 Accumulated amount of investment income remitted back to Taiwan as of September 30, 2018 Expressed in thousands of NTD (Except as otherwise indicated) Footnote	Book value of investments in Mainland China as of September 30, 2018 Accumulated amount of investment income remitted back to Taiwan as of September 30, 2018 Expressed in thousands of NTD (Except as otherwise indicated) Footnote	Book value of investments in Mainland China as of September 30, 2018 Accumulated amount of investment income remitted back to Taiwan as of September 30, 2018 Expressed in thousands of NTD (Except as otherwise indicated) Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Teco (Dong Guang) Wuxi Teco Taian (Wuxi) Nanchang Teco Hang Zhou Xizi-Iuk Jiangxi Teco QingDao Teco Xiamen Teco Xiamen An-Tai	Manufacturing and sales of air conditioners mechanical equipment Manufacturing and sales of motors Manufacturing and sales of optical fiber Manufacturing and sales of home appliances Operating, manufacturing and designing of mechanical parking Manufacturing and sales of motors Manufacturing and sales of dyes Sales of motors and home appliances Development, manufacturing and sales of LCD monitors. Plant rentals and related real estate	268,799 $ 1,697,276 495,213 456,293 129,840 1,481,569 947,331 20,590 678,681	Note 2 Note 1 Note 11 Note 3 Note 1 Note 1 Note 1 Note 3 Note 3	188,139 $ 768,259 205,551 456,293 19,117 1,383,653 1,648,510 20,590 467,577	- $ - - - - - - - -	- $ - - - - - - - -	188,139 $ 768,259 205,551 456,293 - 1,383,653 1,648,510 20,590 467,577	6,034) ($ 110,627 57,521 760 - 23,031 19,281) ( 2,790 10,615) (	100 82.35 100 100 15 98.07 88 100 100	6,034) ($ 91,102 57,521 760 - 19,906 16,890) ( 2,790 10,615) (	137,999 $ 1,589,668 1,283,688 7,397) ( - 1,409,148 324,260 29,246 258,606	- $ - - - - - - - -	Note 16 Note 15 Note 16 Note 16 None Note 15 Note 15,19 Note 16 Note 15

Table 8, Page 1

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Accumulated amount of remittance from Taiwan to Mainland China as of September 30, 2018	Net income of investee for the nine-month period ended September 30 2018	Ownership held by the Company (direct or indirect)(%)	Investment income (loss) recognized by the Company for the nine-month period ended September 30, 2018	Book value of investments in Mainland China as of September 30, 2018	Accumulated amount of investment income remitted back to Taiwan as of September 30, 2018	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Teco Han Zou Nanchang Dong-Huan Teco Century Fujian Teco Ecolectric International Teco (Tianjin) Innovation Teco (Jiang Xi) Teco Sichuan Trading Jiangxi Teco- Lead Qingdao Teco Innovation Shanghai Teco Hunan TECO Wind Energy Limited Jiangxi TECO Westinghouse Motor Coil Co., Ltd. Wuxi TECO Precision Industry Co. Ltd.	Development and consulting of device products Business management consulting Manufacturing and sales of compressor Manufacturing and sales of electronic components Distribution of air conditioner Central China area Operation center Manufacturing and sales of air conditioning mechanical equipment Sales of home appliances Manufacturing and sales of wind generator Science Park development and business operations and consulting services Sales of home appliances Manufacturing, sales and technical services of 2.0 megawatt and above aerogenerator, wheel bay and other components Manufacturing and sales of motors, winding and related parts Production and sale of industrial motors and applications	9,837 $ 3,222 680,938 391,843 24,004 15,990 79,813 26,522 141,079 59,444 23,829 240,818 119,840 656,500	Note 1 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	9,837 $ 3,222 340,469 391,843 - 15,990 79,813 - 62,865 59,444 23,829 240,818 - -	- $ - - - - - - - - - - - - -	- $ 3,222 - - - - - - - - - - - -	9,837 $ - 340,469 391,843 - 15,990 79,813 - 62,865 59,444 23,829 240,818 - -	1,339 $ - 1,900) ( 7,524) ( 15,544) ( 77 4,067 405 1,111) ( 203) ( 52,392 791) ( 5,665 17,844	100 - 24 100 40 100 100 100 45 100 100 100 100 100	355 $ - 456) ( 7,524) ( 6,202) ( 77 4,067 405 2,548) ( 203) ( 52,392 791) ( 5,665 17,844	27,416 $ - 30,263 76,297 2,251) ( 14,669 122,658 6,991 999 32,374 7,735 158,475 115,993 790,008	- $ - - - - - - - - - - - - -	Note 16 Note 20 Note 16 Note 16 Note 16 Note 16 Note 16 Note 16 Note 16 Note 16 Note 15 Note 16 Note 16 Note 15

Table 8, Page 2

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Accumulated amount of remittance from Taiwan to Mainland China as of September 30, 2018	Net income of investee for the nine-month period ended September 30 2018	Ownership held by the Company (direct or indirect)(%)	Investment income (loss) recognized by the Company for the nine-month period ended September 30, 2018	Book value of investments in Mainland China as of September 30, 2018	Accumulated amount of investment income remitted back to Taiwan as of September 30, 2018	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
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)	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	26,422 $ 1,152,070 6,950 485,455 34,990 14,566 10,167 2,257 1,000 $	Note 4 Note 5 Note 6 Note 7 Note 8 Note 8 Note 9 Note 9 Note 9	26,422 $ 24,746 6,950 485,455 34,990 14,566 10,167 2,257 - $	- $ - - - - - - - - $	- $ - - - - - - - - $	26,422 $ 24,746 6,950 485,455 34,990 14,566 10,167 2,257 - $	2,295) ($ - 3,952 81) ( - 290 2,328 203) ( 136) ($	100 1.59 100 100 100 100 100 100 100	2,295) ($ - 3,952 81) ( - 290 2,328 203) ( 136) ($	2,756 $ - 10,501 3,062 - 8,109) ( 19,770 1,696 2,602 $	- $ - - - - - - - - $	Note 15 Note 17,18 Note 15 Note 15 Note 20 Note 15 Note 16 Note 16 Note 16

Table 8, Page 3

Investee in Mainland China	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2017	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the nine-month period ended September 30,2018	Accumulated amount of remittance from Taiwan to Mainland China as of September 30, 2018	Net income of investee for the nine-month period ended September 30 2018	Ownership held by the Company (direct or indirect)(%)	Investment income (loss) recognized by the Company for the nine-month period ended September 30, 2018	Book value of investments in Mainland China as of September 30, 2018	Accumulated amount of investment income remitted back to Taiwan as of September 30, 2018	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Wuxi TECO Precision Industry Co. Ltd.	R&D, manufacturing and sales of motors and provide products sales skills	$ 115,125	Note 10	86,101	-	-	86,101	17,844	100	17,844	120,479	43,266	Note 16

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 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 reviewed by R.O.C. parent company's CPA firm. Note 16: The amount was recognized based on the financial statements that were not reviewed by the independent accountants.

Note 17: Financial assets at fair value through other comprehensive income.

Note 18: As of September 30, 2018, accumulated impairment of $24,746 was accrued.

Note 19: The investee company, Suzhou Teco was merged with Qingdao Teco as resolved by the Board of Directors, and Suzhou Teco was the dissolved company. Under the merger, Qingdao Teco will be the surviving company. Note 20: The company had been liquidated.

Table 8, Page 4

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of September 30,2018	Investment amount approved by the Investment Commission of the Ministry of Economic Affairs (MOEA)	Ceiling on investments in Mainland China imposed by the Investment Commission of MOEA
TECO Electric & Machinery Co., Ltd. Taiwan Pelican Express Co., Ltd. Tecom Co., Ltd. Information Technology Total Services Co., Ltd. Teco Electro Devices Co., Ltd.	6,487,880 $ 51,168 541,961 12,424 86,101	8,713,487 $ 51,168 754,000 12,424 104,259	34,633,250 $ 953,021 360,355 162,935 229,109

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.
Note 4: The amount disclosed was based on Investment Commission, MOEA Regulation No. 09704604680 announced on August 29, 2008.
Note 5: 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

Table 8, Page 6

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 nine-month period ended September 30, 2018

Table 9

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Sale(purchase)	Sale(purchase)	Property transaction	Property transaction	Accounts receivable (payable)	Accounts receivable (payable)	Provision of endorsements and guarantees	Provision of endorsements and guarantees		Financing			Others
	Amount	%	Amount	%	Balance at September30,2018	%	Balance at September30,2018	Purpose	Maximum balance during the nine-month period ended September30,2018	Balance at September30,2018	Interest rate	Interest during the nine-month period ended September30,2018
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	$ 27,153 46,027 45,734 4,668 - 3,176 149 345 623 ( 844,641) ( 420,135) ( 116,628) ( 575,745) ( 13,808) ( 15,751) ( 681) ( 36,523)	- - - - - - - - - (7%) (3%) - (5%) - - - -	$ - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - -	6,567 14,659 8,616 1,372 - 3,222 - - 258 ( 552,254) ( 73,585) ( 27,268) ( 173,282) - ( 3,084) - -	- - - - - - - - - (12%) (2%) (1%) (4%) - - - -	$ - - - - - - - - - - - - - - - - -	- - - - - - - - - - - - - - - - -	$ - - - 139,971 92,145 - - - - - - - - - - - -	$ - - - 132,503 91,575 - - - - - - - - - - - -	- - - 3.50% 2.30% - - - - - - - - - - - -	$ - - - 3,490 1,103 - - - - - - - - - - - -

Table 9, Page 1

AI assistant

TECO — Interim / Quarterly Report 2018

51836_rns_2018-11-26_bd8ac2f9-d13e-4d4f-aa28-24bfbe8a886f.pdf

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIE

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

SEPTEMBER 30, 2018 AND 2017

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2018 AND 2017

1. HISTORY AND ORGANIZATION

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

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Compliance statement

(2) Basis of preparation

B. Subsidiaries included in the consolidated financial statements:

C. Subsidiaries not included in the consolidated financial statements:

(29) Financial guarantee contracts

C. Termination benefits

(37) Business combinations

(38) Operating segments

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

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

(2) Critical accounting estimates and assumptions

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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

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

(6) Inventories

(7) Non-current assets held for sale and discontinued operations

A. Associates

Statement of comprehensive income

Revenue

Revenue

Revenue

Revenue

B. Joint venture

Balance sheet

(9) Property, plant and equipment

(10) Investment property

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

(15) Other payables

(16) Bonds payable

- (17) Long term borrowings

(20) Capital surplus

(22) Other equity items

B. Contract assets and liabilities

(25) Other gains and losses

(26) Finance costs

(30) Earnings per share

(31) Supplemental cash flow information

A. Investing activities with partial cash payments:

(32) Changes in liabilities from financing activities

Statements of comprehensive income

Taiwan Pelican Express Co., Ltd.

Century Development Corporation

Statements of cash flows

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

C. Receivables from related parties:

(3) Key management compensation

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

TECO Interim / Quarterly Report 2018