TECO — Interim / Quarterly Report 2019

Dec 18, 2019

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

MARCH 31, 2019 AND 2018

-----------------------------------------------------------------------------------------------------------------------------------For the convenience of readers and for information purpose only, the auditors’ report 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 and financial statements shall prevail.

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

To TECO Electric & Machinery Co., Ltd.

Introduction

We have reviewed the accompanying consolidated balance sheets of Teco Electric & Machinery Co., Ltd. and subsidiaries (the “Group”) as at March 31, 2019 and 2018, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three-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 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 Notes 4(3) and 6(7) to the consolidated financial statements, 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 NT$31,371,579 thousand and NT$28,632,967 thousand, constituting 32% and 31% of consolidated total assets as of March 31, 2019 and 2018, respectively, total liabilities (including credit balance of investments accounted for under equity method) of NT$4,305,633 thousand and NT$4,690,015 thousand, constituting 11% and 14% of consolidated total liabilities as of March 31,

~1~

2019 and 2018, 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 NT$198,374 thousand and NT$316,821 thousand, constituting 6% and 27% of the consolidated total comprehensive income for the three-month periods then ended, 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 investees accounted for using equity method been reviewed by independent accountants, that we 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 March 31, 2019 and 2018, and of its consolidated financial performance and its consolidated cash flows for the three-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 May 13, 2019

---

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.

~2~

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

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of March 31, 2019 and 2018 are reviewed, not audited)

Assets	Notes	March 31, 2019 AMOUNT % $ 17,519,287 18 323,631 - 1,119,460 1 1,326,622 1 1,016,665 1 10,898 - 8,937,506 9 226,644 - 419,726 1 94,148 - 11,492,629 12 557,939 1 1,075,959 1 44,121,114 45 2,229,874 2 13,517,552 14 183,428 - 3,896,048 4 17,162,909 17 7,394,241 8 2,799,482 3 5,333,841 5 1,344,429 1 890,131 1 54,751,935 55 $ 98,873,049 100	December 31, 2018 AMOUNT % $ 17,535,566 19 193,955 - 995,951 1 1,350,238 2 1,063,991 1 2,641 - 9,102,428 10 241,272 - 360,606 - 70,979 - 11,429,685 13 432,419 1 980,640 1 43,760,371 48 2,140,203 2 11,354,525 12 182,725 - 4,207,360 5 17,363,543 19 - - 2,783,774 3 5,557,343 6 1,250,743 1 3,380,699 4 48,220,915 52 $ 91,981,286 100	March 31, 2018
		AMOUNT $ 17,519,287 323,631 1,119,460 1,326,622 1,016,665 10,898 8,937,506 226,644 419,726 94,148 11,492,629 557,939 1,075,959 44,121,114 2,229,874 13,517,552 183,428 3,896,048 17,162,909 7,394,241 2,799,482 5,333,841 1,344,429 890,131 54,751,935 $ 98,873,049	AMOUNT $ 17,535,566 193,955 995,951 1,350,238 1,063,991 2,641 9,102,428 241,272 360,606 70,979 11,429,685 432,419 980,640 43,760,371 2,140,203 11,354,525 182,725 4,207,360 17,363,543 - 2,783,774 5,557,343 1,250,743 3,380,699 48,220,915 $ 91,981,286	AMOUNT % $ 18,166,969 19 703,418 1 789,892 1 1,066,962 1 1,024,656 1 7,767 - 9,149,051 10 213,547 - 627,504 1 62,809 - 11,813,647 13 728,871 1 1,064,710 1 45,419,803 49 2,005,130 2 11,184,948 12 - - 4,052,341 4 17,832,909 19 - - 2,868,646 3 5,639,097 6 1,354,745 2 3,019,065 3 47,956,881 51 $ 93,376,684 100
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 1140 Current contract assets 1150 Notes receivable, net 1160 Notes receivable - related parties 1170 Accounts receivable, net 1180 Accounts receivable - related parties 1200 Other receivables 1210 Other receivables - related parties 130X Inventories, net 1410 Prepayments 1470 Other current assets 11XX Total current assets Total non-current assets 1510 Financial assets at fair value through profit or loss - noncurrent 1517 Non-current financial assets at fair value through other comprehensive income 1535 Non-current financial assets at amortised cost, net 1550 Investments accounted for under the equity method 1600 Property, plant and equipment, net 1755 Right-of-use assets 1760 Investment property, net 1780 Intangible assets 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXX Total assets	6(1) and 8 6(2) 6(3) 6(23) 6(5) and 8 7 6(5) 7 7 6(6) 6(1) and 8 6(2) 6(3) and 8 6(4) and 8 6(7) and 8 6(8) and 8 6(9) and 8 6(10) 6(11) 6(28) 6(12) and 8

(Continued)

~3~

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

(Expressed in thousands of New Taiwan dollars)

(The balance sheets as of March 31, 2019 and 2018 are reviewed, not audited)

				March 31, 2019				December 31, 2018	December 31, 2018		March 31, 2018
	Liabilities and Equity	Notes		AMOUNT	%			AMOUNT	%		AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(13) and 8	$	1,947,764		2	$	1,994,360		2 $	2,710,538	3
2120	Financial liabilities at fair value	6(14)
	through profit or loss - current			-		-		-		-	1,601	-
2130	Current contract liabilities	6(23)		1,007,853		1		899,728		1	913,039	1
2150	Notes payable			60,094		-		73,105		-	131,056	-
2160	Notes payable - related parties	7		88,880		-		136,874		-	6,351	-
2170	Accounts payable			6,714,585		7		7,517,824		8	7,490,720	8
2180	Accounts payable - related	7
	parties			72,280		-		90,047		-	93,914	-
2200	Other payables	6(15)		4,368,642		4		4,720,360		5	4,615,046	5
2230	Current income tax liabilities	6(28)		774,787		1		690,853		1	1,102,715	1
2250	Provisions for liabilities -
	current			247,754		-		269,254		1	313,454	-
2280	Current lease liabilities			460,782		1		-		-	-	-
2300	Other current liabilities	6(17) and 8		1,981,670		2		1,748,975		2	1,548,567	2
21XX	Total current liabilities			17,725,091	18			18,141,380	20		18,927,001	20
	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		7,286,112		8		6,746,354		7	6,511,375	7
2550	Provisions for liabilities - non-
	current			110,208		-		113,947		-	124,649	-
2570	Deferred income tax liabilities	6(28)		2,275,239		2		2,254,076		3	2,358,244	3
2580	Non-current lease liabilities			4,856,007		5		-		-	-	-
2600	Other non-current liabilities	6(7)		2,083,323		2		2,234,614		2	2,365,558	3
25XX	Total non-current
	liabilities			20,610,889	21			15,348,991	16		15,359,826	17
2XXX	Total liabilities			38,335,980	39			33,490,371	36		34,286,827	37
	Equity attributable to owners of
	parent
	Share capital	6(19)
3110	Common stock			20,026,929	20			20,026,929	22		20,026,929	21
	Capital surplus	6(20)
3200	Capital surplus			7,647,223		7		7,647,215		8	7,628,698	8
	Retained earnings	6(21)
3310	Legal reserve			6,387,454		7		6,387,454		7	6,078,219	7
3320	Special reserve			3,640,779		4		3,640,779		4	3,640,779	4
3350	Unappropriated retained
	earnings			15,579,424	16			15,192,788	17		15,303,891	16
	Other equity interest	6(22)
3400	Other equity interest			3,514,348		3		1,105,058		1	602,256	1
3500	Treasury stocks	6(19) and 8 (		997,403 ) (		1) (		321,563)		- (	321,563)	-
31XX	Equity attributable to
	owners of the parent			55,798,754	56			53,678,660	59		52,959,209	57
36XX	Non-controlling interest	6(31)		4,738,315		5		4,812,255		5	6,130,648	6
3XXX	Total equity			60,537,069	61			58,490,915	64		59,089,857	63
	Significant contingent liabilities	9
	and unrecognized contract
	commitments
3X2X	Total liabilities and equity		$	98,873,049	100		$	91,981,286	100 $		93,376,684	100

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

~4~

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

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

(REVIEWED, NOT AUDITED)

Items

Three-month periods ended March 31 2019 2018 Notes AMOUNT % AMOUNT % 6(10)(23) and 7 $ 11,707,047 100 $ 12,155,711 100 6(6)(18)(27) and 7 ( 8,803,191 ) ( 75) ( 9,145,732) ( 75) 2,903,856 25 3,009,979 25 ( 8,305 ) - ( 9,046) - 9,160 - 9,145 - 2,904,711 25 3,010,078 25 6(18)(27) ( 1,099,614 ) ( 10) ( 1,132,358) ( 9) ( 603,410 ) ( 5) ( 677,630) ( 6) ( 275,751 ) ( 2) ( 301,989) ( 3) 12(2) 142 - 9,253 - ( 1,978,633 ) ( 17) ( 2,102,724) ( 18) 926,078 8 907,354 7 6(4)(10)(24) 180,897 2 164,966 1 6(2)(14)(25) ( 73,642 ) ( 1) ( 171,058) ( 1) 6(26) ( 72,031 ) ( 1) ( 58,737) - 6(7) 8,130 - 10,165 - 43,354 - ( 54,664) - 969,432 8 852,690 7 6(28) ( 263,010 ) ( 2) ( 261,124) ( 2) $ 706,422 6 $ 591,566 5

4000 Sales revenue 5000 Operating costs 5900 Net operating margin 5910 Unrealized loss from sales 5920 Realized profit from sales 5950 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6450 Impairment loss (impairment gain and reversal of impairment loss) determined in accordance with IFRS 9 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of profit of associates and joint ventures accounted for under the equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period

(Continued)

~5~

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

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

(REVIEWED, NOT AUDITED)

Items	Notes 6(3) 6(28) 6(22) 6(22) 6(28) 6(29)	Three-month periods ended March 31	Three-month periods ended March 31
		2019	2018
		AMOUNT $ - 2,282,569 7,113 - 2,289,682 200,309 - ( 1,773 ) 198,536 $ 2,488,218 $ 3,194,640 $ 634,584 71,838 $ 706,422 $ 3,065,154 129,486 $ 3,194,640 $
Other comprehensive income Other comprehensive income that will not be reclassified to profit or loss 8311 Other comprehensive income, before tax, actuarial losses on defined benefit plans 8316 Total expenses, by nature 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income that will not be reclassified to profit or loss Other comprehensive income that will be reclassified to profit or loss 8361 Currency translation differences of foreign operations 8370 Share of other comprehensive income of associates and joint ventures accounted for under the equity method - other comprehensive income that will be reclassified to profit or loss 8399 Income tax relating to the components of other comprehensive income that will be reclassified 8360 Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income for the period 8500 Total comprehensive income for the period Profit attributable to: 8610 Owners of the parent 8620 Non-controlling interest Comprehensive income attributable to: 8710 Owners of the parent 8720 Non-controlling interest Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share
		$

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

~6~

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

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

For the three-month period ended March 31, 2018 Balance at January 1, 2018 Effect of retrospective application Balance at January 1 after adjustments Profit Other comprehensive income for the period Total comprehensive income Effect of changes in net equity of associates and joint ventures amount for under the equity method Changes in non-controlling interests Disposal of investments in equity instruments at fair value through other comprehensive income Balance at March 31, 2018 For the three-month period ended March 31, 2019 Balance at January 1, 2019 Effect of retrospective application Balance at January 1 after adjustments Profit (loss) Other comprehensive income Total comprehensive income Reacquisition of treasury shares Effect of changes in net equity of associates and joint ventures accounted for under the equity method Changes in non-controlling interests Disposal of investment in equity instrument at fair value through other comprehensive income Balance at March 31, 2019	Notes	Equity attributable to o	Equity attributable to o	w	ners of the parent																		Non-controlling interest		Total equity
			Share capital - common stock		Capital surplus				Retained earnings						Other equity interest			Treasury stocks			Total
							Legal reserve		Special reserve		Unappropriated retained earnings		Financial statements translation differences of foreign operations		Unrealised 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(3)(22) 3(1) 6(22) 6(19) 6(3)(22)		$ 20,026,929 - 20,026,929 - - - - - - $ 20,026,929 $ 20,026,929 - 20,026,929 - - - - - - - $ 20,026,929		$ 7,628,542 - 7,628,542 - - - 156 - - $ 7,628,698 $ 7,647,215 - 7,647,215 - - - - 8 - - $ 7,647,223		$ 6,078,219 - 6,078,219 - - - - - - $ 6,078,219 $ 6,387,454 - 6,387,454 - - - - - - - $ 6,387,454		$ 3,640,779 - 3,640,779 - - - - - - $ 3,640,779 $ 3,640,779 - 3,640,779 - - - - - - - $ 3,640,779		$ 12,750,338 1,937,121 14,687,459 537,261 ( 3,625 ) 533,636 - - 82,796 $ 15,303,891 $ 15,192,788 ( 269,228 ) 14,923,560 634,584 - 634,584 - - - 21,280 $ 15,579,424		($ 1,759,357 ) - ( 1,759,357 ) - ( 90,292 ) ( 90,292 ) - - - ($ 1,849,649 ) ($ 1,901,724 ) - ( 1,901,724 ) - 196,003 196,003 - - - - ($ 1,705,721 )		$ - 1,848,757 1,848,757 - 685,944 685,944 - - ( 82,796 ) $ 2,451,905 $ 3,006,782 - 3,006,782 - 2,234,567 2,234,567 - - - ( 21,280 ) $ 5,220,069		$ 3,785,878 ( 3,785,878 ) - - - - - - - $ - $ - - - - - - - - - - $ -		($ 321,563 ) - ( 321,563 ) - - - - - - ($ 321,563 ) ($ 321,563 ) - ( 321,563 ) - - - ( 675,840 ) - - - ($ 997,403 )		$ 51,829,765 - 51,829,765 537,261 592,027 1,129,288 156 - - $ 52,959,209 $ 53,678,660 ( 269,228 ) 53,409,432 634,584 2,430,570 3,065,154 ( 675,840 ) 8 - - $ 55,798,754		$ 6,044,372 - 6,044,372 54,305 11,894 66,199 - 20,077 - $ 6,130,648 $ 4,812,255 ( 208,421 ) 4,603,834 71,838 57,648 129,486 - - 4,995 - $ 4,738,315		$ 57,874,137 - 57,874,137 591,566 603,921 1,195,487 156 20,077 - $ 59,089,857 $ 58,490,915 ( 477,649 ) 58,013,266 706,422 2,488,218 3,194,640 ( 675,840 ) 8 4,995 - $ 60,537,069

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

~7~

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 gain on financial assets at fair value through profit or loss Net loss on financial liabilities at fair value through profit or loss Reversal of allowance for doubtful accounts Interest income Interest expense Depreciation and amortization Loss on disposal of property, plant and equipment 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 Contract assets - current Notes receivable Notes receivable - related parties Accounts receivable Accounts receivable - related parties 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 - non-current Notes payable Notes paypable - related parties Accounts payable Accounts payable - related parties Other payables Provisions for liabilities Other current liabilities Other non-current liabilities Cash (outflow) inflow generated from operations Interest received Interest paid Income tax paid Net cash flows (used in) from operating activities

For thethree-monthperiods endedMarch 31 Notes 2019 2018 $ 969,432 $ 852,690 6(2)(23)(25) ( 93,455 ) ( 101,527 ) 6(14)(23)(25) - ( 927 ) 12(2) ( 142 ) ( 9,253 ) 6(24) ( 68,487 ) ( 39,559 ) 6(9)(26) 72,031 58,737 6(8)(9)(10)(27) 513,299 390,727 6(25) 551 2,875 6(7) ( 8,130 ) ( 10,165 ) ( 117,798 ) 34,210 23,616 ( 36,458 ) 47,290 164,344 ( 8,257 ) ( 6,836 ) 165,100 297,009 14,628 ( 29,846 ) ( 59,120 ) ( 26,225 ) ( 23,169 ) ( 27,965 ) ( 62,944 ) ( 477,155 ) ( 125,520 ) ( 305,979 ) ( 74,065 ) ( 17,503 ) ( 8,094 ) ( 39,765 ) 108,125 87,916 ( 13,011 ) ( 64,351 ) ( 47,994 ) 4,983 ( 803,239 ) ( 99,068 ) ( 17,767 ) ( 29,357 ) ( 428,514 ) ( 252,611 ) ( 25,239 ) ( 49,830 ) ( 9,612 ) 8,680 ( 154,535 ) 26,051 ( 235,020 ) 303,842 6(24) 68,487 39,559 6(26) ( 46,471 ) ( 58,737 ) 6(28) ( 60,531 ) ( 72,974 ) ( 273,535 ) 211,690

(Continued)

~8~

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) decrease in current financial assets at fair value through other comprehensive income Increase in pledged demand and fixed deposits Increase in non-current financial assets at fair value through other comprehensive income Decrease in financial assets at fair value through other comprehensive income - non-current Increase in non-current financial assets at amortized cost Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets Increase in other non-current assets Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in short-term loans Increase (decrease) in long-term loans Lease liabilities paid Treasury shares purchased Net cash flows (used in) from financing activities Exchange rate effect Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period

For thethree-monthperiods endedMarch 31 Notes 2019 2018 ($ 5,494 ) $ 37,938 6(1) and 8 ( 21,254 ) ( 71,864 ) - ( 1,043 ) 63,217 181,872 6(4) ( 703 ) - 6(8)(30) ( 83,347 ) ( 191,234 ) 6,537 12,778 ( 15,147 ) ( 23,984 ) ( 41,802 ) ( 13,425 ) ( 97,993 ) ( 68,962 ) ( 46,596 ) 522,917 782,065 ( 166,072 ) 6(9)(26) ( 134,265 ) - 6(19) ( 675,840 ) - ( 74,636 ) 356,845 429,885 ( 256,504 ) ( 16,279 ) 243,069 17,535,566 17,923,900 $ 17,519,287 $ 18,166,969

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

~9~

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND 2018

(REVIEWED, NOT AUDITED)

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

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.

1. 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 May 13, 2019.

1. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

2. (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 2019 are as follows:

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

• A. 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.

• B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as endorsed by the FSC. Accordingly, the Group increased ‘right-of-use asset’, ‘lease liability’ and ‘deferred tax asset’ by $7,435,645, $5,367,109 and $104,637 and decreased long-term prepaid rents, intangible assets, non-controlling interests and retained earnings by $2,532,370, $118,452, $208,421 and $269,228, respectively, with respect to the lease contracts of lessees on January 1, 2019.

~10~

The effects on current comprehensive income statement items for adopting IFRS 16 are as follows:

follows:
Comprehensive income statement items Operating costs and expenses Finance costs	For the three-monthperiod ended March 31,2019
	Balance by usingIFRS 16	Balance by using previous accounting policies(IAS 17)	Effects from changes in accounting policy
	$ 144,966 25,560	$ 180,774 -	($ 35,808) 25,560

• C. The Group has used the following practical expedients permitted by the standard at the date of initial application of IFRS 16:

• (a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the application of IFRS 16 depends on whether or not the contracts were previously identified as leases applying IAS 17 and IFRIC 4.

• (b) The use of a single discount rate to a portfolio of leases with reasonably similar characteristics.

• (c) The accounting for operating leases whose period will end before December 31, 2019 as short-term leases and accordingly, rent expense of $20,607 was recognised in the first quarter of 2019.

• (d) The exclusion of initial direct costs for the measurement of ‘right-of-use asset’.

• (e) The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

• D. The Group calculated the present value of lease liabilities by using weighted average incremental borrowing interest rate range from 1% to 10%.

• E. The Group recognised lease liabilities which had previously been classified as ‘operating leases’ under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments under IAS 17 measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as follows:

	under the principles of IAS 17, ‘Leases’. The reconciliation between operating leas commitments under IAS 17 measured at the present value of the remaining lease payments discounted using the lessee’s incremental borrowing rate and lease liabilities recognised as o January 1, 2019 is as follows:
(2)	Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted Operating lease commitments disclosed by applying IAS 17 as at December 31, 2018 8,059,483 $ Less: Short-term leases 206,559) ( Less: Low-value assets 3,187) ( Total lease contracts amount recognised as lease liabilities by applying IFRS 16 on January 1, 2019 7,849,737 $ Multiply: Incremental borrowing interest rate at the date of initial application 1%~10% Lease liabilities recognised as at January 1, 2019 by applying IFRS 16 5,367,109 $
	by the Group None.

(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:

~11~

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

• (1) Compliance statement

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

• (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.

  • (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.

• (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

~12~

to the owners of the parent and to the non-controlling interests even if this results in the noncontrolling interests having a deficit balance.

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

• (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.

~13~

B. Subsidiaries included in the consolidated financial statements:

Name of Investor Name of Subsidiary Main Business Activities Teco Electric & Machinery Co., Ltd. Teco Holding USA Inc. Holding company Teco Electric & Machinery Co., Ltd. United View Global Investment Co., Ltd. Holding company Teco Electric & Machinery Co., Ltd. Temico International Pte.Ltd. Holding company Teco Electric & Machinery Co., Ltd. Tesen Electric & Machinery Co., Ltd. Manufacturing and sales of home appliances Teco Electric & Machinery Co., Ltd. Tong-An Assets Management & Development Co., Real estate business Teco Electric & Machinery Co., Ltd. Teco Electric Europe Limited Distribution of motors Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery (Pte) Ltd. Distribution of motors Teco Electric & Machinery Co., Ltd. Tong Dai Co., Ltd. Distribution of motors Teco Electric & Machinery Co., Ltd. Tong Tai Jung Co., Ltd. Expanding the distribution of motors Teco Electric & Machinery Co., Ltd. Teco Electro Devices Co., Ltd. Manufacturing and sales of step-servo motor Teco Electric & Machinery Co., Ltd. Yatec Engineering Corporation Development and maintenance of various electric appliances Yatec Engineering Corporation Yatec Engineering (VN) Company Limited Development of various electric appliances Teco Electric & Machinery Co., Ltd. Taian (Subic) Electric Co., Inc. Manufacturing and sales of switches Teco Electric & Machinery Co., Ltd. Taian-Etacom Technology Co., Ltd. Manufacturing of busway and related components	March 31, 2019 December 31,2018 March 31, 2018 Description 100 100 100 100 100 100 60 60 - Notes 1 and 2 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Note 1 92.63 92.63 92.63 Note 1 60 60 60 Note 1 64.08 64.08 64.08 Note 1 64.95 64.95 64.95 Note 1 100 100 100 Note 1 76.7 76.7 76.7 Note 1 84.73 84.73 84.73 Note 1 Ownership (%)	March 31, 2019 December 31,2018 March 31, 2018 Description 100 100 100 100 100 100 60 60 - Notes 1 and 2 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Note 1 92.63 92.63 92.63 Note 1 60 60 60 Note 1 64.08 64.08 64.08 Note 1 64.95 64.95 64.95 Note 1 100 100 100 Note 1 76.7 76.7 76.7 Note 1 84.73 84.73 84.73 Note 1 Ownership (%)
	March 31, 2019	December 31,2018
	100 100 60 100 100 100 100 92.63 60 64.08 64.95 100 76.7 84.73	100 100 60 100 100 100 100 92.63 60 64.08 64.95 100 76.7 84.73

~14~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31, 2019	December 31,2018	March 31, 2018
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 67.11 100 100 100 73.54 100 32.15	66.85 100 98.5 86.67 63.52 71.3 100 100 100 73.54 100 32.15	Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1 Notes 1 and 3

~15~

Name of Investor	Name of Subsidiary	Main Business Activities		Ownership (%)	Ownership (%)	Description
			March 31,2019	December 31, 2018	March 31, 2018
Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Teco Electric & Machinery Co., Ltd. Century Development Corporation Century Development Corporation Century Development Corporation	Teco Technology (Vietnam) Co., Ltd. Teco Nanotech Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd. Yaskawa Teco Motor Engineering Co. Eagle Holding Co. Century Development Corporation Teco.Sun Energy Co., Ltd. Century Tech. C&M Corp. United Development Corporation Century Biotech Development Corp.	Manufacturing and sales of motors Manufacturing and sales of nanotech material products Manufacturing, installation, repair, domestic and export sales and leasing of condenser, water cooling, water- cooled chiller and freezer Manufacturing and sales of motors Holding company Real estate and industrial park management and development Energy technical services Construction industry as well as trades and related operation and investment of materials and sandstone used in construction and machinery Investment consultancy service for domestic and foreign industrial parks and land Consultacy service for domestic industrial parks and land	100 86.83 - - 100 52.75 60 100 100 100	100 86.83 17.61 - 100 52.75 60 100 100 100	100 86.83 19.98 70 100 52.75 - 100 100 100	Note 1 Note 1 Note 4 Notes 1 and 5 Notes 1 and 2 Note 2

~16~

Name of Investor	Name of Subsidiary	Main Business Activities		Ownership (%)	Ownership (%)	Description
			March 31,2019	December 31, 2018	March 31, 2018
Century Development Corporation Century Peal Estate (International) Pte Ltd. Eagle Holding Co. TECO MOTOR B.V. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A. Motovario S.p.A.	Century Real Estate (International) Pet. Ltd. CDC Development India Private Limited TECO MOTOR B.V. Motovario S.p.A. Motovario S.A (Spain) Motovario Ltd. Motovario GMBH Motovario Corp. Motovario S.A (France) Motovario Int. Trading Co. Ltd. Motovario Power Transmission Co. Ltd.	Investments in other areas Investment consultancy service for domestic and foreign industrial parks and land Holding company Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers Sales of motors and reducers	100 100 100 100 100 100 100 75 100 100 100	100 100 100 100 100 100 100 75 100 100 100	100 100 100 100 100 100 100 75 100 100 100

~17~

Name of Investor	Name of Subsidiary	Main Business Activities		Ownership (%)	Ownership (%)	Description
			March 31,2019	December 31, 2018	March 31, 2018
Motovario S.p.A. Teco Holding USA Inc. Teco Holding USA Inc. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd. United View Global Investment Co., Ltd.	Motovario Gear Solution Private Ltd. Teco Westinghouse Motor Company Company Teco Westinghouse Motor Industrial Canada Industrial Canada Great Teco Motor (Pte) Ltd. Asia Air Tech Industrial (Pte) Ltd. Teco Australia Pty. Ltd. P.T Teco Elektro Indonesia Teco Industrial (Malaysia) Sdn. Bhd. Tecoson Industrial Development (Pte) Ltd.	Sales of motors and reducers Manufacturing and sales of motors and generators Manufacturing and sales of motors and generators Holding company Holding company Manufacturing and sales of motors and home appliances Manufacturing and sales of motors and home appliances Manufacturing and sales of motors Investment in Southeast Asia and Hong Kong	100 100 100 100 100 99.99 100 100 100	100 100 100 100 100 99.99 100 100 100	100 100 100 100 100 99.99 100 100 100	Note 1 Note 1 Note 1 Note 1 Note 1

~18~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31, 2019	December 31,2018	March 31, 2018
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

~19~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31,2019	December 31,2018	March 31, 2018
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 80 100 100 100 100 100 100 100 100 100	40 - 100 100 100 100 100 100 100 100 100	Notes 1 and 6 Notes 1 and 2 Note 1 Note 1 Note 1 Note 1 Note 1 Note 1

~20~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31,2019	December 31,2018	March 31, 2018
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 - - - -	51.19 100 100 100 100 100 70 100	Note 7 Note 7 Note 7 Note 7

~21~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31, 2019	December 31,2018	March 31, 2018
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 82.35 82.35 100 100 100 100 100 100	Note 1 Note 1 Note 1

~22~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31, 2019	December 31,2018	March 31, 2018
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	Notes 1 and 5 Note 1 Note 1 Note 1 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
			March 31, 2019	December 31,2018	March 31, 2018
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 68.08 - 100 100	100 68.08 100 100 100	Note 1 Note 5

~24~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31, 2019	December 31,2018	March 31, 2018
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	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.	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 70 100 - -	100 100 100 70 100 100 100	Note 1 Note 1 Note 1 Note 7 Note 7

~25~

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31, 2019	December 31,2018	March 31, 2018
K.A. Corp. K.A. Corp. Teco Westinghouse Motor Company S.A. de C.V. Tai-An Technology (Wuxi) Co., Ltd. Information Technology Total Services Co., Ltd. Information Technology Total Services Co., Ltd. Information Technology Total Services Co., Ltd.	Kuen Ling Machinery Refrigerating (Vietnam) Co., Ltd. Kuen Ling Machinery Refrigerating (Indonesia) Co., Teco Westinghouse Colombia S.A.S. Teco Sichuan Trading Co., Ltd. Information Technology Total Service (BVI) Co., Ltd. Universal Mail Service Ltd. Unison Service Corporation	General manufacturing Manufacturing and sales of motors and generators Manufacturing and sales of motors and generators Distribution of motors and home appliances Holding company Engaged in various business documents management, printing and other mail Engaged in services related to information software, data processing and electronic information supply	- - 100 100 100 100 100	- - 100 100 100 100 100	100 100 100 100 100 100 100	Note 7 Note 7 Note 1 Note 1 Note 1 Note 1

~26~

Name of Investor Name of Subsidiary Main Business Activities Information Technology Total Service (BVI) Co., Ltd. Information Technology Total Service (Hang Zhou) Co., Ltd. Engaged in services related to information software, data processing and electronic information supply Information Technology Total Service (BVI) Co., Ltd. Information Technology (Wuxi) Co., Ltd. Engaged in services related to information software, data processing and electronic information supply 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	March 31, 2019 December 31,2018 March 31, 2018 Description 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Note 1 Ownership (%)	March 31, 2019 December 31,2018 March 31, 2018 Description 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Note 1 Ownership (%)
	March 31, 2019	December 31,2018
	100 100 100	100 100 100

• Note 1 The financial statements of the entity as of and for the three-month periods ended March 31, 2019 and 2018 were not reviewed by the independent accountants as the entity did not meet the definition of a significant subsidiary.

• Note 2:Newly established subsidiary in 2018.

• Note 3: 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 4: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.

• Note 5:This company was liquidated in 2018.

• Note 6: 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 7: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.

• Consolidated financial statements of certain consolidated subsidiaries and investees accounted for under equity method, which statements reflect total assets (including investments accounted for under the equity method) of NT$31,371,579 and $28,632,967 as

~27~

of March 31, 2019 and 2018, respectively, total liabilities (including credit balance of investments accounted for under equity method) of NT$4,305,633 and $4,690,015 as of March 31, 2019 and 2018, 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 NT$198,374 and $316,821 for the three-month periods then ended, respectively. These amounts were based on the unreviewed financial statements of such consolidated subsidiaries and investee companies.

C. Subsidiaries not included in the consolidated financial statements:

Name of Investor	Name of Subsidiary	Main Business Activities	Ownership (%)	Ownership (%)	Ownership (%)	Description
			March 31, 2019	December 31,2018	March 31, 2018
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 60 100 100 49.99	99.99 100 96 95 60 50 100 49.99	Note 1 Note 1 Note 1 Note 1 Note 1 Notes 1 and 2 Note 1 Note 1

~28~

Name of Investor Name of Subsidiary Main Business Activities Hubbell-Taian Co., Ltd. Hubbell-Anmex International(s) Pte. Ltd. Distribution of electronic products Tong-An Assets Management & Development Co., Ltd. Grey Back International Property Inc. Real estate management and development Tasia (Pte) Ltd. TTMC Co., Ltd. Engaged in a variety of investment businesses Jack Property Service & Management Company Qingdao Jie Zheng Property Service & Management Company Property management and related services Tong-An Investment Co., Ltd. Eurasia Food Senice Co., Ltd. Restaurant chain	March 31, 2019 December 31,2018 March 31, 2018 Description 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Notes 1 and 3 100 100 - Notes 1 and 3 Ownership (%)	March 31, 2019 December 31,2018 March 31, 2018 Description 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Note 1 100 100 100 Notes 1 and 3 100 100 - Notes 1 and 3 Ownership (%)
	March 31, 2019	December 31,2018
	100 100 100 100 100	100 100 100 100 100

  - 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.

  - Note 3:  Established subsidiary in 2018.

• 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(31).

• (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

~29~

differences arising upon re-translation at the balance sheet date are recognized in profit or loss.

  - (c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, 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 when 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 when 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) Goodwill 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;

~30~

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;

  - (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

• 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

• 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

• 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

~31~

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

• For financial assets at amortized cost, 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) Leasing arrangements (lessor) operating leases

• 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) 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 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

~32~

  - 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.

• (16) 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.

• (17) 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 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,

~33~

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 improvements	3～5 years

(18) Leasing arrangements (lessee) - right-of-use assets/ lease liabilities Effective 2019

• A. Leases are recognised as a right-of-use asset and a corresponding lease liability at the date at which the leased asset is available for use by the Group. For short-term leases or leases of low-value assets, lease payments are recognised as an expense on a straight-line basis over the lease term.

• B. Lease liabilities include the net present value of the remaining lease payments at the commencement date, discounted using the incremental borrowing interest rate. Lease payments are comprised of the following:

• (a) Fixed payments, less any lease incentives receivable;

• (b) Variable lease payments that depend on an index or a rate;

• (c) Amounts expected to be payable by the lessee under residual value guarantees;

• (d) The exercise price of a purchase option, if the lessee is reasonably certain to exercise that option; and

• (e) Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The Group subsequently measures the lease liability at amortised cost using the interest method and recognises interest expense over the lease term. The lease liability is remeasured and the amount of remeasurement is recognised as an adjustment to the rightof-use asset when there are changes in the lease term or lease payments and such changes do not arise from contract modifications.

• C. At the commencement date, the right-of-use asset is stated at cost comprising the following:

• (a) The amount of the initial measurement of lease liability;

• (b) Any lease payments made at or before the commencement date;

• (c) Any initial direct costs incurred by the lessee; and

• (d) An estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.

The right-of-use asset is measured subsequently using the cost model and is depreciated from the commencement date to the earlier of the end of the asset’s useful life or the end of the lease term. When the lease liability is remeasured, the amount of remeasurement is recognised as an adjustment to the right-of-use asset.

(19) Leased assets/ operating leases (lessee)

Effective 2018

• 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

~34~

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.

• 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.

~35~

(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 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,

~36~

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 highquality 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.

• 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

~37~

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 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 recognised based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax 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, air-

~38~

conditioning 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.

• 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

~39~

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 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.

1. 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.

~40~

(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 and notes issued under repurchase agreement	March 31,2019 $ 23,876 8,707,959 8,787,452 $17,519,287	December 31,2018 21,153 $ 6,646,689 10,867,724 17,535,566 $		March 31,2018
				30,341 $ 10,904,637 7,231,991 18,166,969 $

• 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 March 31, 2019, December 31, 2018 and March 31, 2018, cash and cash equivalents amounting to $491,583, $470,329 and $490,370 as purchase loans were pledged to others as collateral (listed as‘1470 Other current assets’). Please refer to Note 8.

(2) 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	March 31,2019 112,339 $ 17,136 207,645 337,120 13,489) ( 323,631 $ 910,270 $ 811,774 223,858 1,945,902 283,972 2,229,874 $	December 31,2018 110,677 $ 29,319 79,326 219,322 25,367) (		March 31,2018
				163,645 $ 17,415 146,435 327,495 375,923 703,418 $ 644,030 $ 411,258 233,107 1,288,395 716,735 2,005,130 $
		193,955 $ 910,270 $ 811,773 230,260 1,952,303 187,900 2,140,203 $

~41~

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

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below:	A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss are listed below:	s at fair value through	s at fair value through	s at fair value through
B. As of March 31, 2019, December 31, 2018 and March 31, 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). Financial assets at fair value through other comprehensive income For the three- month period For the three- month period ended March 31,2019 ended March 31,2018 Financial assets mandatorily measured at fair value through profit or loss Equity instruments $ 93,455 101,527 $ Items March 31,2019 December 31,2018 March 31,2018 Current items: Listed and OTC stocks 1,099,449 $ 1,093,955 $ 725,486 $ Emerging stocks - - 2,180 1,099,449 1,093,955 727,666 Valuation adjustment 20,011 98,004) ( 62,226 1,119,460 $ 995,951 $ 789,892 $ Non-current items: Listed and OTC stocks 8,022,280 $ 7,993,650 $ 7,937,632 Non-listed and OTC stocks 299,806 494,449 319,689 8,322,086 8,488,099 8,257,321 Valuation adjustment 5,195,466 2,866,426 2,927,627 13,517,552 $ 11,354,525 $ 11,184,948 $		For the three- month period ended March 31,2018
		101,527 $
Items
Current items: Listed and OTC stocks Emerging stocks Valuation adjustment Non-current items: Listed and OTC stocks Non-listed and OTC stocks Valuation adjustment				725,486 $ 2,180 727,666 62,226 789,892 $ 7,937,632 319,689 8,257,321 2,927,627 11,184,948 $

• B. As of March 31, 2019, December 31, 2018 and March 31, 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).

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

• 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 $14,637,012, $12,350,476 and $11,974,840 as at March 31, 2019, December 31, 2018 and March 31, 2018,respectively.

• B. In the first quarter of 2019 and 2018, the Group sold stocks with fair value of $63,627 and $181,872 to raise the capital for operations, and the cumulative gains on disposal are $21,180 and 82,796 (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:

~42~

For the three-month period For the three-month period ended March 31, 2019 ended March 31, 2018

Equity instruments at fair value through other comprehensive income

• Fair value change recognized in other comprehensive income Cumulative gains (losses) reclassified to retained earnings due to derecognition Dividend income recognised in profit or loss Held at end of period Derecognised during the period

	$	2,282,569	($	635,424)
	$	21,180	($	572,647)
	$	-	$	413,891
		-		483
	$	-	$	414,374

• 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

Items	March 31,2019 December 31,2018	March 31,2018
Non-current items:
Time deposits	$183,428 $182,725	$-
. Amounts recognised in profit or loss in relation to financial assets at amortised cost are listed
below:
	For the three-month period For the three-month period
	ended March31,2019	ended March31,2018
Interest income	423 $ $		-

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

• B. As at March 31, 2019, December 31, 2018 and March 31, 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 $183,428, $182,725 and $0, respectively.

• 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

Notes receivable Less: Allowance for bad debts Accounts receivable Less: Allowance for bad debts	March 31,2019 December 31,2018 1,019,194 $ 1,066,484 $ (2,529) (2,493) 1,016,665 $ 1,063,991 $ 9,116,844 $ 9,283,282 $ (179,338) (180,854) 8,937,506 $ 9,102,428 $	March 31,2018
		1,026,968 $ (2,312) 1,024,656 $ 9,324,732 $ (175,681) 9,149,051 $

~43~

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

as follows:
Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days		March31,2019 6,623,933 $ 1,522,130 1,052,845 206,589 548,674 9,954,171 $	December31,2018 7,098,505 $ 1,476,443 952,553 267,598 371,320 10,166,419 $		March31,2018
					8,077,534 $ 1,013,737 485,866 222,312 374,258 10,173,707 $

The above ageing analysis was based on past due date.

• B. As at March 31, 2019, December 31, 2018 and March 31, 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 Group’s notes receivable were $1,016,665, $1,063,991 and $1,024,656 and accounts receivable were $8,937,506, $9,102,428 and $9,149,051 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).

(6) Inventories

Note 12(2). 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		March 31,2019
	Cost 2,883,549 $ 1,796,971 6,031,434 618,058 942,852 12,272,864 $	Allowance for valuation loss 140,692) ($ 52,047) ( 563,239) ( - 24,257) ( ($780,235) December 31,2018	Book value
			2,742,857 $ 1,744,924 5,468,195 618,058 918,595
			11,492,629 $
	Cost 2,553,819 $ 1,385,554 6,415,087 548,312 1,304,962 12,207,734 $	Allowance for valuation loss 193,552) ($ 48,969) ( 526,363) ( - 9,165) ( ($778,049)	Book value
			2,360,267 $ 1,336,585 5,888,724 548,312 1,295,797
			11,429,685 $

~44~

Raw materials Work in progress Finished goods Inventory in transit Merchandise inventories		March 31,2018
	Cost 2,849,408 $ 1,361,249 6,383,100 1,369,805 653,478 12,617,040 $	Allowance for valuation loss 208,064) ($ 12,601) ( 576,279) ( - 6,449) ( ($803,393)	Book value
			2,641,344 $ 1,348,648 5,806,821 1,369,805 647,029
			11,813,647 $

A. The cost of inventories recognized as expense for the three-month periods ended March 31, 2019 and 2018 was $6,602,561 and $6,880,451, respectively, including $44,356 that the Group wrote down from cost to the net realizable value accounted for as cost of goods sold for the three-month period ended March 31, 2019 and including $15,824 that the Group reversed provisioned inventory valuation losses for selling obsolete inventories accounted for as a reduction of cost of goods sold for the three-month period ended March 31, 2018.

B. The Group has no inventory pledged to others.

(7) Investments accounted for under the equity method

		March 31,2019	December	31,2018		March 31,2018
Associates:
1. Tung Pei Industrial Co., Ltd.	$	2,116,423	$	2,087,582	$	2,088,712
2. Creative Sensor Inc.		397,344		391,646		411,146
3. Lien Chang Electronic		440,254		440,000		507,892
Enterprise Co., Ltd.
4. Kuen Ling Machinery		313,119		347,255		-
Refrigerating Co., Ltd.
5. Others		628,908		940,877		868,341
		3,896,048		4,207,360		3,876,091
Joint Venture:
1. Senergy Wind Power Co.,
Ltd. (Note)		-		-		172,033
2. Others		-		-		4,217
		-		-		176,250
		3,896,048		4,207,360		4,052,341
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)	(	90,170)	(	86,926)	(	70,262)
	$	3,805,878	$	4,120,434	$	3,982,079

~45~

The share of profit/loss of associates and joint ventures accounted for under equity method for the three-month periods ended March 31, 2019 and 2018 are as follows:

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) 2. Others	For the three-month period ended March 31,2019	For the three-month period ended March 31,2018
	28,841 $ 4,108 11,205) ( 3,262 16,876) ( - - $8,130	43,008 $ 522 18,046) ( - 16,333) ( 2,207 1,193) ( $10,165

Note : The Company was liquidated in 2018.

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	March 31, 2019	December 31, 2018	March 31, 2018	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% 15.63%	31.14% 11.50% 33.84% 17.61%	31.14% 11.50% 33.84% 19.98%	Financial investment ″ ″ ″	Equity method Equity method Equity method Equity method

• 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

~46~

			TungPei Industrial Co.,Ltd.	TungPei Industrial Co.,Ltd.	TungPei Industrial Co.,Ltd.	TungPei Industrial Co.,Ltd.	TungPei Industrial Co.,Ltd.
			March 31,2019	December 31,2018				March 31,2018
Current assets		$	3,889,113	$	5,460,372		$	3,741,976
Non-current assets			7,423,528		7,845,439			7,501,252
Current liabilities	(		2,409,586)	(	3,716,167)	(		2,216,525)
Non-current liabilities	(		2,105,581)	(	2,144,772)	(		2,318,149)
Total assets		$	6,797,474	$	7,444,872		$	6,708,554
Share in associate’s net
assets	$		2,116,423	$	2,087,582		$	2,088,712
Goodwill			-		-			-
Carrying amount of the
associate	$		2,116,423	$	2,087,582		$	2,088,712
				Creative Sensor Inc.
			March 31,2019	December 31,2018			March 31,2018
Current assets	$		3,301,789	$	3,466,786	$		3,183,791
Non-current assets			1,211,395		1,167,518			1,384,488
Current liabilities	(		1,028,751)	(	1,284,592)	(		1,081,324)
Non-current liabilities	(		112,908)	(	111,553)	(		84,667)
Total net assets	$		3,371,525	$	3,238,159	$		3,402,288
Share in associate’s
net assets	$		397,344	$	391,646	$		411,146
Goodwill			-		-			-
Carrying amount of the
associate	$		397,344	$	391,646	$		411,146

~47~

		Lien ChangElectronic Enterprise Co.,Ltd.	Lien ChangElectronic Enterprise Co.,Ltd.	Lien ChangElectronic Enterprise Co.,Ltd.	Lien ChangElectronic Enterprise Co.,Ltd.	Lien ChangElectronic Enterprise Co.,Ltd.	Lien ChangElectronic Enterprise Co.,Ltd.	Lien ChangElectronic Enterprise Co.,Ltd.	Lien ChangElectronic Enterprise Co.,Ltd.
	March 31,2019				December		31,2018		March	31,2018
Current assets	$	1,753,188		$		1,684,611		$		1,791,567
Non-current assets		653,542					603,290				679,399
Current liabilities	(	1,037,971)		(			948,730)	(			919,115)
Non-current liabilities	(	67,925)		(			39,089)	(			51,167)
Total net assets	$	1,300,834		$		1,300,082		$		1,500,684
Share in associate's net
assets	$	440,254		$			440,000	$			507,892
Goodwill		-					-				-
Carrying amount of the
associate	$	440,254		$			440,000	$			507,892
		Kuen LingMachineryRefrigeratingCo.,Ltd.
	March 31,2019				December		31,2018		March	31,2018
Current assets	$	1,827,741		$		1,972,061		$		1,730,617
Non-current assets		699,103					617,860				618,043
Current liabilities	(	796,440)		(			955,868)	(			732,728)
Non-current liabilities	(	228,548)		(			163,951)	(			157,225)
Total net assets	$	1,501,856		$		1,470,102		$		1,458,707
Share in associate's net
assets	$	313,119		$			241,171	$			262,887
Goodwill		-					106,084				73,560
Carrying amount of the
associate	$	313,119		$			347,255	$			336,447
Statement of comprehensive income
			TungPei Industrial Co.,Ltd.
	For the three-month period						For the three-month period
		ended March		31,		2019	ended	March 31,2018
Revenue	$				1,208,230		$			1,287,727
Profit for the period from
continuing operations	$					92,527	$				138,159
Other comprehensive loss,
net of tax						-	(				157,344)
Total comprehensive income
(loss)	$					92,527	($				19,185)
Dividends received from
associates	$					-	$				-

~48~

		Creative	Sensor Inc.	Sensor Inc.
	For the three-month period		For the three-month period
		ended March 31,2019		ended March 31,2018
Revenue	$	1,020,669	$	971,325
Profit for the period from
continuing operations	$	38,779	$	4,629
Other comprehensive (loss)
income,		94,587	(	6,700)
Total comprehensive (loss)
income	$	133,366	($	2,071)
Dividends received from
associates	$	-	$	-
		Lien ChangElectronic		Enterprise Co.,Ltd.
	For the three-month period		For the three-month period
		ended March 31,2019		ended March 31,2018
Revenue	$	711,789	$	523,915
(Loss) profit for the period from continuing operations	($	33,108)	($	53,321)
Other comprehensive (loss) income, net of tax		33,860	(	3,065)
Total comprehensive (loss)
income	$	752	($	56,386)
Dividends received from
associates	$	-	$	56,386
		Kuen LingMachineryRefrigeratingCo.,Ltd
	For the three-month period		For the three-month period
		ended March 31,2019		ended March 31,2018
Revenue	$	561,181	$	637,921
Profit for the period from continuing operations	$	18,725	$	34,641
Other comprehensive income, net of tax		13,029		5,984
Total comprehensive income	$	31,754	$	40,625
Dividends received from
associates	$	-	$	-

• (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 March 31, 2019, December 31, 2018 and March 31, 2018, the carrying amount of the Group’s individually immaterial associates amounted to $628,908, $940,877 and $868,341, respectively.

~49~

		For the three-month period		For the three-month period
		ended March 31,2019		ended March 31,2018
Loss for the period
from continuing operations	($	16,876)	($	16,333)
Total comprehensive loss	($	16,876)	($	16,333)

• (d) The fair values of the Group’s material associates with quoted market prices are as follows:

follows:
1.Lien Chang Electronic Enterprise Co., Ltd. 2.Creative Sensor Inc. 3.Kuen Ling Machinery Refrigerating Co., Ltd.	March 31,2019 $ 427,981 324,734 359,994 1,112,709 $	December 31,2018 $ 334,125 290,437 410,304 1,034,866 $	March 31,2018
			$ 563,132 396,978 -
			960,110 $

• 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	March 31,2019	December 31,2018	March 31,2018	Nature of relationship	Method of measurement
Senergy Wind Power Co.,	R.O.C	-	-	50%	Joint venture	Equity method

Ltd. (Note)

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

~50~

Cash and cash equivalents Other current assets Current assets Non-current assets Total assets Current liabilities Total liabilities Total net assets Share in joint venture’s net assets Goodwill Carrying amount of the joint venture	March 31,2019 December 31,2018 March 31,2018 - $ - $ 342,934 $ - - 1,083 - - 344,017 - - 42 - - 344,059 - - 5,958) ( - - 5,958) ( - $ - $ $338,101 - $ - $ 172,033 $ - - - - $ - $ $172,033 SenergyWind Power Co.,Ltd.
	March 31,2019 - $ - - - - - - - $ - $ - - $

Note: The company was liquidated in 2018.

Statement of comprehensive income

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	SenergyWind Power Co.,Ltd.	SenergyWind Power Co.,Ltd.
	For the three-month period ended March 31,2019 - $ - $ - $ - $ - $ - $ - $ - $ - $	For the three-month period ended March 31,2018
		- $
		- $
		1,233 $
		- $
		- $
		- $
		4,415 $
		4,415 $
		- $

(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 March 31, 2019, December 31, 2018 and March 31, 2018, the carrying amount of the Group’s individually immaterial associates amounted to $0, $0 and $4,217, respectively.

~51~

Loss for the period from continuing operations Total comprehensive loss	For the three-month period For the three-month period ended March31,2019 ended March31,2018 - $ 1,193) ($ - $ 1,193) ($

• 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 on unreviewed investments accounted for under equity method are provided in Note 4(3).

• E. Details of the Group’s investments accounted for under the equity method pledged to others as collateral are provided in Note 8.

~52~

(8) Property, plant and equipment

Property, plant and equipment
Land At January 1, 2019 (after adjustments) Cost 5,557,179 $ Accumulated depreciation and impairment 34,697) ( 5,522,482 $ 2019 Opening net book amount 5,522,482 $ Additions - Disposals - Reclassifications 12,545) ( Depreciation charge - Net exchange differences 21) ( Closing net book amount 5,509,916 $ At March 31, 2019 Cost 5,544,613 $ Accumulated depreciation and impairment 34,697) ( 5,509,916 $	Buildings and structures	Leased assets - buildings and sttuctuies	Machinery and equipment	Leased assets - machinery and equipment	Transportation equipment	Leasehold improvements	Miscellaneous equipment Total 7,828,161 $ 43,197,047 $ 6,388,132) ( 25,833,504) ( 1,440,029 $ 17,363,543 $ 1,440,029 $ 17,363,543 $ 40,001 71,939 470) ( 7,088) ( 1,171 18,174) ( 101,567) ( 318,550) ( 8,550 71,239 1,387,714 $ 17,162,909 $ 7,894,756 $ 43,273,062 $ 6,507,042) ( 26,110,153) ( 1,387,714 $ 17,162,909 $
	8,602,994 $ 4,170,145) ( 4,432,849 $ 4,432,849 $ 4,209 - 5,629) ( 53,179) ( 39,570 4,417,820 $ 8,668,819 $ 4,250,999) ( 4,417,820 $	5,283,793 $ 1,873,902) ( 3,409,891 $ 3,409,891 $ - - - 45,979) ( 9) ( 3,363,903 $ 5,283,601 $ 1,919,698) ( 3,363,903 $	13,572,413 $ 11,595,220) ( 1,977,193 $ 1,977,193 $ 17,841 6,534) ( 2,401) ( 86,689) ( 21,429 1,920,839 $ 13,556,464 $ 11,635,625) ( 1,920,839 $	656,849 $ 617,430) ( 39,419 $ 39,419 $ - - 2,597 3,568) ( - 38,448 $ 659,446 $ 620,998) ( 38,448 $	1,116,937 $ 711,455) ( 405,482 $ 405,482 $ 4,489 84) ( 1,372) ( 18,591) ( 849 390,773 $ 1,087,966 $ 697,193) ( 390,773 $	578,721 $ 442,523) ( 136,198 $ 136,198 $ 5,399 - 5 8,977) ( 871 133,496 $ 577,397 $ 443,901) ( 133,496 $

~53~

Land At January 1, 2018 Cost 5,669,729 $ Accumulated depreciation and impairment 34,697) ( 5,635,032 $ 2018 Opening net book amount 5,635,032 $ Additions - Disposals - Reclassifications - Depreciation charge - Net exchange differences 3,227) ( Closing net book amount 5,631,805 $ At March 31, 2018 Cost 5,666,502 $ Accumulated depreciation and impairment 34,697) ( 5,631,805 $	Buildings and structures	Leased assets - buildings and sttuctuies	Machinery and equipment	Leased assets - machinery and equipment	Transportation equipment	Leasehold improvements	Miscellaneous equipment Total 7,978,335 $ 44,375,402 $ 6,538,067) ( 26,453,103) ( 1,440,268 $ 17,922,299 $ 1,440,268 $ 17,922,299 $ 66,530 218,974 2,311) ( 15,653) ( 69) ( - 107,249) ( 332,287) ( 11,167 39,576 1,408,336 $ 17,832,909 $ 8,065,032 $ 44,653,547 $ 6,656,696) ( 26,820,638) ( 1,408,336 $ 17,832,909 $	Total
	8,903,839 $ 4,236,401) ( 4,667,438 $ 4,667,438 $ 57,318 - - 58,803) ( 19,731 4,685,684 $ 8,989,445 $ 4,303,761) ( 4,685,684 $	5,275,736 $ 1,688,713) ( 3,587,023 $ 3,587,023 $ - - - 46,537) ( 5 3,540,491 $ 5,275,741 $ 1,735,250) ( 3,540,491 $	14,015,941 $ 12,042,721) ( 1,973,220 $ 1,973,220 $ 70,985 10,555) ( 9,305) ( 91,155) ( 11,208 1,944,398 $ 14,107,454 $ 12,163,056) ( 1,944,398 $	870,543 $ 741,771) ( 128,772 $ 128,772 $ - - 9,415 2,371) ( - 135,816 $ 879,958 $ 744,142) ( 135,816 $	1,080,293 $ 741,640) ( 338,653 $ 338,653 $ 12,066 2,787) ( 41) ( 16,193) ( 117 331,815 $ 1,077,069 $ 745,254) ( 331,815 $	580,986 $ 429,093) ( 151,893 $ 151,893 $ 12,075 - - 9,979) ( 575 154,564 $ 592,346 $ 437,782) ( 154,564 $
								17,832,909 $

A. For the three-month periods ended March 31, 2019 and 2018, 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.

~54~

(9) Leasing arrangements - lessee

• A. The Group leases various assets including land, buildings, machinery and equipment as well as business vehicles. Rental contracts are typically made for periods of 2 to 50 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose covenants, but certain leased assets may not be used as security for borrowing purposes.

• B. 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 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.

• C. 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 December 31, 2018, the total amount remitted for the land use right was INR $1,750,350 and CDC Development India Private Limited acquired the land use right.

• D. For the three-month period ended March 31, 2019, the additions to right-of-use assets were $52,847 and sublease income was $190,102.

• E. The carrying amount of right-of-use assets and the depreciation charge are as follows:

Land Buildings Machinery and equipment Transportation equipment (Business vehicles)	At March 31,2019 Carryingamount 4,925,404 $ 2,448,847 18,168 1,822 7,394,241 $	For the three-month period ended March 31,2019
		Depreciation charge
		46,509 $ 97,066 1,204 187
		144,966 $

• F. Interest expenses on lease liabilities for the three-month period ended March 31, 2019 were $25,660 and cash paid outflow were $134,265.

• G. Expenses on short-term leases and leases of low-value assets not adopting IFRS 16 for the threemonth period ended March 31, 2019 were $61,519 and $1,655, respectively.

~55~

(10) Investment property

Land At January 1, 2019 Cost 1,435,178 $ Accumulated depreciation and impairment - 1,435,178 $ 2019 Opening net book amount 1,435,178 $ Reclassifications (transfer during the period) 12,545 Depreciation charge - Net exchange differences 643 Closing net book amount 1,448,366 $ At March 31, 2019 Cost 1,448,365 $ Accumulated depreciation and impairment - 1,448,365 $ Land At January 1, 2018 Cost 1,429,333 $ Accumulated depreciation and impairment - ( 1,429,333 $ 2018 Opening net book amount 1,429,333 $ Depreciation charge - Net exchange differences 4,009) ( Closing net book amount 1,425,324 $ At March 31, 2018 Cost 1,425,324 $ Accumulated depreciation and impairment - ( 1,425,324 $

Buildings and structures Total 2,705,183 $ 4,140,361 $ 1,356,587) ( 1,356,587) ( 1,348,596 $ 2,783,774 $ 1,348,596 $ 2,783,774 $ 5,629 18,174 16,866) ( 16,866) ( 13,757 14,400 1,351,116 $ 2,799,482 $ 2,722,992 $ 4,171,357 $ 1,371,875) ( 1,371,875) ( 1,351,117 $ 2,799,482 $ Buildings and structures Total 2,626,469 $ 4,055,802 $ 1,172,325) 1,172,325) ( 1,454,144 $ 2,883,477 $ 1,454,444 $ 2,883,777 $ 16,923) ( 16,923) ( 6,101 2,092 1,443,622 $ 2,868,946 $ 2,629,742 $ 4,055,066 $ 1,186,420) 1,186,420) ( 1,443,322 $ 2,868,646 $

~56~

• 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	For the three-month period ended March 31,2019 44,604 $ 7,075 $ - $	For the three-month period ended March 31,2018 40,893 $ 8,873 $ - $

• B. The fair value of the investment property held by the Group as at March 31, 2019, December 31, 2018 and March 31, 2018 was $4,457,047, $4,767,717 and $4,356,791, respectively, which is categorized within Level 3 in the fair value hierarchy.

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

		2019	2019			2018
At January 1
Cost	$			5,233,626	$		5,396,065
Accumulated amortization and
impairment				-			-
	$			5,233,626	$		5,396,065
Opening net book amount	$			5,233,626	$		5,396,065
Net exchange differences	(			87,280)			44,315
Closing net book amount	$			5,146,346	$		5,440,380
At March 31
Cost	$			5,146,346	$		5,440,380
Accumulated amortization and
impairment				-			-
	$			5,146,346	$		5,440,380
Goodwill is allocated as follows to the Group’s cash-generating units identified according to
operating segment:
	March 31,2019		December 31,		2018	March 31,2018
Heavy industrial products
division	$ 5,146,346		$	5,233,626		$	5,332,581
Home electric appliance
division		-			-		107,799
	$5,146,346		$	5,233,626		$	5,440,380

On October 15, 2015, the Group acquired 100% equity and obtained control over Motovario S.p.A., which is headquartered in Italy and is primarily engaged in manufacturing and sales of power transmission equipment such as motors and gear reducers, and its subsidiaries for a cash consideration of $3,989,850(EUR 108,214 thousand). As of March 31, 2019, the goodwill arising from the merger amounted to $5,120,463.

~57~

(12) Other non-current assets

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	March 31,2019 - $ 238,648 - 244,290 240,381 89,305 77,507 890,131 $	December 31,2018 2,532,370 $ 292,542 - 219,776 164,345 81,084 90,582 3,380,699 $	March 31,2018
			1,807,745 $ 282,999 165,759 303,909 262,397 86,852 109,404
			3,019,065 $

• A. The Group signed a land use right contract for the use of land. The Group recognized rental expenses of $8,594 for the three-month period ended March 31, 2018. The Group transferred long-term prepaid rent to right-of-use assets for the application of IFRS 16 since January 1, 2019.

• B. 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 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.

• C. 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 December 31, 2018, the total amount remitted for the land use right was INR $1,750,350 and CDC Development India Private Limited acquired the land use right.

• (13) Short-term borrowings

Short-term borrowings
Type of borrowings Bank borrowings	March 31,2019 1,947,764 $		Interest rate range Collateral 0.65%~3.53% Fnancial assets at fair value through other comprehensive income , notes receivable, investments accounted for under the equity method, land, buildings, treasury stocks

			through other comprehensive income , notes receivable, investments accounted for under the equity method, land, buildings, treasury stocks
Type of borrowings Bank borrowings	December 31,2018 1,994,360 $		Interest rate range Collateral 0.65%~3.75% Available-for-sale financial assets, notes receivable, investments accounted for under the equity method, land, buildings, treasury stocks

~58~

Type of borrowings March 31, 2018 Interest rate range Collateral Bank borrowings $ 2,710,538 0.65%~5.31% Financial asset measured at fair value through other comprehensive income, notes receivable, investments accounted for under the equity method, land, buildings, treasury stocks

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

Items Current items: Financial liabilities held for trading Non-hedging derivatives	March31,2019 - $	December31,2018 - $	March31,2018
			1,601 $

• A. The Group recognized net income of $0 and $927 on financial liabilities held for trading for the three-month periods ended March 31, 2019 and 2018, 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:

March 31, 2018

	March 31,2018
Financial instrument Contractperiod Forward exchange contract SELL EUR/BUY USD Apr. 10, 2018 SELL EUR/BUY USD Apr. 25, 2018	EUR 2,000,000 EUR 1,000,000 Contract amount (notionalprincipal)	Fair value
		1,550) ($ 51) (
		1,601) ($

On March 31, 2019 and December 31, 2018, the Group has no non-hedging derivative financial liabilities transaction.

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.

(15) Other payables

Other payables
Salary and wages payable Employees’compensation payable Dealers’ bonus commission payable Equipment payable Directors’ and supervisors’ remuneration payable Dividends payable Others	March 31,2019 1,416,182 $ 613,425 205,490 169,784 162,351 25,701 1,775,709 4,368,642 $	December 31,2018 1,938,276 $ 569,487 226,860 181,192 135,793 25,711 1,643,041 4,720,360 $	March 31,2018
			1,407,863 $ 610,753 225,493 164,211 174,745 25,890 2,006,091
			4,615,046 $

~59~

(16) Bonds payable

Bonds payable
Issuance of bonds payable	March31,2019 $4,000,000	December31,2018 $4,000,000	March31,2018
			$4,000,000

• 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.

- (17) Long term borrowings

Long-term borrowings
Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	March 31, 2019
Long-term bank borrowings and commercial papers payable	Both borrowing periods are from Aug. 4, 2016 to Aug. 4, 2021; payable as the terms agreed	0.49%~2.27%	Note	8,432,911 $

Less: Current portion (listed as “2300 other current liabilities”)

Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	1,146,799) ( 7,286,112 $ December 31, 2018	1,146,799) ( 7,286,112 $ December 31, 2018
Long-term bank borrowings and commercial papers payable	Both borrowing periods are from Mar. 16, 2011 to Aug. 4, 2021; payable as the terms agreed	0.35%~2.27%	Note		7,650,846 $

Less: Current portion (listed as “2300 other current liabilities”)

Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	904,492) ( 6,746,354 $ March 31, 2018
Long-term bank borrowings and commercial papers payable Less: Current portion (listed	Both borrowing periods are from Mar. 16, 2011 to Aug. 4, 2021; payable as the terms agreed as “2300 other current liabilities”)	0.33%~2.61%	Note	7,177,793 $ 666,418) ( 6,511,375 $

Note: Details of the Group’s assets pledged to others as collateral for borrowings are provided in Note 8.

• A. Under the long-term contracts with certain financial institutions, the Group is required to

~60~

maintain certain financial ratios and capital requirements as well as meet certain restrictions relative to significant asset acquisitions or disposals.

• B. As of March 31, 2019, December 31, 2018 and March 31, 2018, the Group has undrawn borrowing facilities of $20,015,954, $18,253,982 and $18,959,752 respectively.

• (18) Pensions

• A.(a) The Company and its domestic subsidiaries have a defined benefit pension plan in accordance with the Labor Standards Act, 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 Act. 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 insufficient 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 to cover the deficit by next March.

• (b) The pension costs under the defined contribution pension plans of the Group for the threemonth periods ended March 31, 2019 and 2018 were $8,797 and $12,290, respectively.

• (c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2019 amounts to $42,583.

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

• (b) The Company’s mainland China subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. The contribution percentage for the three-month periods ended March 31, 2019 and 2018 was 13%~20%. 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 periods ended March 31, 2019 and 2018 were $108,053 and $105,567, respectively.

~61~

(19) Share capital

• A. As of March 31, 2019, 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 three-month period	For the three-month period	For the three-month period
		ended March 31,2019		ended March 31,2018
At January 1	$	2,002,693	$	2,002,693
Share retired	(	35,000)		-
At March 31	$	1,967,693	$	2,002,693

Note: Share are in thousands.

• B. Treasury shares

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

shares are as follows:
Name of company holdingthe shares Reason for reacquisition The Company Enhance the Company’s credit rating and the stockholders’ equity		Number of shares Carrying amount 35,000 $ 675,840 $ March 31,2019
		Number of shares
		35,000 $		675,840 $

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

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

• (d) Pursuant to the R.O.C. Securities and Exchange Act, treasury shares to enhance the Company’s credit rating and the stockholders’ equity should be retired within six months of acquisition.

• 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 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 March 31, 2019, December 31, 2018 and March 31, 2018, book value of the shares of the Company held by the three subsidiaries all amounted to $321,563. Details are as follows:

~62~

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.		March 31,2019	March 31,2019
		Shares Cost Market value (in thousands) (in dollars) (in dollars) 19,540 14.92 $ 21.00 2,826 10.37 21.00 77 9.37 21.00 22,443 December 31,2018
		Shares Cost (in thousands) (in dollars) 19,540 14.92 $ 2,826 10.37 77 9.37 22,443 March 31,2018		Market value (in dollars) 17.45 $ 17.45 17.45
		Shares (in thousands) 19,540 2,826 77 22,443	Cost (in dollars) 14.92 $ 10.37 9.37	Market value (in dollars) 24.55 $ 24.55 24.55

(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.

• B. The Company’s dividend policy is summarized below:

• 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

~63~

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. As of December 31, 2018, the amount previously set aside as special reserve on initial application of IFRSs and yet to be reversed amounted to $3,640,779.

• E. The appropriations of the 2018 net income was proposed by the Board of Directors on March 26, 2019 while the appropriations of the 2017 net income was resolved by the stockholders on June 20, 2018 as follows:

aside as special reserve on initial application of IFRSs and yet to be reversed amounted to $3,640,779. The appropriations of the 2018 net income was proposed by the Board of Directors on March 26, 2019 while the appropriations of the 2017 net income was resolved by the stockholders on June 20, 2018 as follows:	aside as special reserve on initial application of IFRSs and yet to be reversed amounted to $3,640,779. The appropriations of the 2018 net income was proposed by the Board of Directors on March 26, 2019 while the appropriations of the 2017 net income was resolved by the stockholders on June 20, 2018 as follows:	aside as special reserve on initial application of IFRSs and yet to be reversed amounted to $3,640,779. The appropriations of the 2018 net income was proposed by the Board of Directors on March 26, 2019 while the appropriations of the 2017 net income was resolved by the stockholders on June 20, 2018 as follows:
Amount Dividend per share (in dollars) Amount Dividend per share (in dollars) Legal reserve 315,009 $ 309,236 $ Cash dividends 1,770,924 0.90 $ 1,722,316 0.86 $ For theyear ended December 31,2018 For theyear ended December 31,2017
	Amount 309,236 $ 1,722,316
		0.86 $

• F. For the information relating to employees’ compensation and directors’ and supervisors’ remuneration, please refer to Note 6 (27).

~64~

(22) Other equity items

(23)

Operating revenue Unrealized gains Currency on valuation translation Total At January 1, 2019 3,006,782 $ 1,901,724) ($ 1,105,058 $ Unrealized gains and losses on financial assets: –Group 2,227,454 - 2,227,454 –Associates 7,113 - 7,113 Revaluation transferred to retained earnings 21,280) ( - 21,280) ( Currency translation differences: –Group - 196,003 196,003 At March 31, 2019 5,220,069 $ 1,705,721) ($ 3,514,348 $ Unrealized gains Currency on valuation translation Total At January 1, 2018 - $ 1,759,357) ($ 1,759,357) ($ IFRS opening balance adjustment 1,848,757 - 1,848,757 $ Unrealized gains and losses on financial assets: –Group 690,342 - 690,342 –Associates 4,398) ( - 4,398) ( Revaluation transferred to retained 82,796) ( - 82,796) ( Currency translation differences: –Group - 90,292) ( 90,292) ( At March 31, 2018 2,451,905 $ 1,849,649) ($ 602,256 $ For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 Revenue from customers 11,419,146 $ 11,858,944 $ Others-rental revenue 199,957 195,467 Others-gain on financial assets at fair value through profit or loss 87,944 101,300 11,707,047 $ 12,155,711 $

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:

~65~

B. The Group has recognized the following revenue-related contract assets and liabilities: Revenue recognized that was included in the contract liability balance at the beginning of the period For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 Revenue from external customer contracts Revenue from external customer contracts Sales of heavy industrial products $ 7,288,877 $ 6,832,958 Sales of home appliances 1,217,546 1,801,165 Others 656,025 766,841 Service revenue 1,770,494 1,769,776 Consruction contract 486,204 688,204 11,419,146 $ 11,858,944 $		For the three-month period ended March 31,2019 Revenue from external customer contracts		For the three-month period ended March 31,2018 Revenue from external customer contracts

	B. The Group has recognized the following revenue-related contract assets and liabilities: Revenue recognized that was included in the contract liability balance at the beginning of the period Consruction contract 486,204 688,204 11,419,146 $ 11,858,944 $	ets and liabilities: e at the beginning of the 688,204 11,858,944 $
(24) (25)	Other income Other gains and losses For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 Revenue recognized that was included in the contract liability balance at the beginning of the period Electromechanical engineering contracts - $ - $ Advance sales receipts 287,909 363,089 Royalty received in advance 484 476 288,393 $ 363,565 $ For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 Interest income from bank deposits 68,487 $ 39,559 $ Rental revenue 46,011 45,221 Other non-operating income 66,399 80,186 180,897 $ 164,966 $ For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 Loss on disposal of property, plant and equipment 551) ($ 2,875) ($ Gain on disposal of investments 5,491 - Net currency exchange gain (loss) 6,664 87,180) ( Gain on financial assets (liabilities) at fair value through profit or loss 5,511 1,154 Miscellaneous disbursements 90,757) ( 82,157) ( ($73,642) ($171,058)	For the three-month period ended March 31,2018
		- $ 363,089 476
		363,565 $

~66~

(26) Finance costs

(26)	Finance costs
(27)	Expenses by nature (include employee benefit expense) For the three-month period ended March 31,2019 Interest expense 70,612 $ Other finance expenses 1,419 72,031 $ For the three-month period ended March 31,2019 Wages and salaries 2,086,357 $ Employees’ compensation and directors’ and supervisors’ remuneration 112,206 Labor and health insurance fees 245,323 Pension costs 116,850 Other personnel expenses 103,389 Depreciation charges on property, plant and equipment as well as investment property 335,416 Depreciation charges on right-of -use assets and amortization charges on intangible assets 177,883	For the three-month period ended March 31,2018 56,943 $ 1,794 58,737 $ For the three-month period ended March 31,2018 $ 2,125,978 95,142 226,870 117,857 119,331 349,210 41,517
	Wages and salaries Employees’ compensation and directors’ and supervisors’ remuneration Labor and health insurance fees Pension costs Other personnel expenses Depreciation charges on property, plant and equipment as well as investment property Depreciation charges on right-of -use assets and amortization charges on intangible assets

• A. According to the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, 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 periods ended March 31, 2019 and 2018, employees’ compensation was accrued at $51,380 and $40,314, respectively; while directors’ and supervisors’ remuneration was accrued at $23,109 and $14,327, respectively. The aforementioned amounts were recognized in salary expenses.

• C. For the three-month periods ended March 31, 2019 and 2018, 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 2018 as resolved by the Board of Directors were in agreement with those amounts recognised in the 2018 financial statements. As of March 31, 2019, abovementioned earnings of prior year have not yet been distributed.

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.

~67~

(28) Income tax

A. Income tax expense

(a) Components of income tax expense:

Current tax: Current tax on profit for the period Total current tax Deferred tax: Origination and reversal of temporary differences Impact of change in tax rate Total deferred tax Income tax expense	For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 232,669 $ 186,856 $ 232,669 186,856 30,341 59,800) ( - 134,068 30,341 74,268 263,010 $ 261,124 $	For the three-month period ended March 31,2018
		186,856 $
		186,856
		74,268
		261,124 $

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

follows:
Currency translation differences Impact of change in tax rate		For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 1,773 $ 36,208) ($ - (60,232) $1,773 ($ 96,440)

• B. As of March 31, 2019, the Company and its subsidiaries’ income tax returns through various years between 2014 and 2017, 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.

~68~

(29) Earnings per share

(29)	Earnings per share
(30)	Supplemental cash flow information A. Investing activities with partial cash payments: Weighted average number of ordinary shares outstanding Earnings per Amount after tax (in thousands) share(in dollars) Basic (diluted) earnings per share Profit attributable to ordinary shareholders of the parent $ 634,584 1,964,298 $ 0.32 Weighted average number of ordinary shares outstanding Earnings per Amount after tax (in thousands) share(in dollars) Basic (diluted) earnings per share Profit attributable to ordinary shareholders of the parent $ 537,261 1,980,250 $ 0.27 For the three-monthperiod ended March 31,2019 For the three-monthperiod ended March 31,2018 For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 Acquisition of property, plant and equipment 71,939 $ 218,974 $ Add: Payables at beginning of the period 181,192 136,471 Less: Payables at end of the period 169,784) ( 164,211) ( Cash paid 83,347 $ 191,234 $	For the three-monthperiod ended March 31,2019
		Weighted average number of ordinary shares outstanding Earnings per Amount after tax (in thousands) share(in dollars) $ 634,584 1,964,298 $ 0.32 For the three-monthperiod ended March 31,2018	Earnings per share(in dollars)
			$ 0.32
			Earnings per share(in dollars)
			$ 0.27

~69~

• (31) Details of significant non controlling interests As of March 31, 2019 , December 31, 2018 and March 31, 2018, the non-controlling interest amounted to $4,738,315, $4,812,255 and $6,130,648, respectively. The information on noncontrolling interest and respective subsidiaries is as follows:

Non-Controlling Interest

Name of subsidiary	Principal place of business R.O.C R.O.C R.O.C	Amount Ownership $ 362,519 36.48% 1,117,986 67.85% 1,891,013 47.25% March 31,2019	Amount Ownership $ 343,717 36.48% 1,095,193 67.85% 2,122,394 47.25% December 31,2018	Amount Ownership $ 343,717 36.48% 1,095,193 67.85% 2,122,394 47.25% December 31,2018
		Amount $ 362,519 1,117,986 1,891,013	Amount $ 343,717 1,095,193 2,122,394
Tecom Co., Ltd. Taiwan Pelican Express Co., Ltd. Century Development Corporation				36.48% 67.85% 47.25%

Non-Controlling Interest March 31, 2018

Name of subsidiary	Principal place of business R.O.C R.O.C R.O.C R.O.C	Amount 289,464 $ 1,155,740 1,113,709 2,045,015	Ownership
Tecom Co., Ltd. Taiwan Pelican Express Co., Ltd. Kuen Ling Machinery Refrigerating Co., Ltd.(Note) Century Development Corporation			36.48% 67.85% 80.02% 47.25%

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. The summarized financial information is provided in Note 6(7).

~70~

Summarized financial information of the subsidiaries: Balance sheets

Balance sheets
				Tecom Co.,Ltd.
		March 31,2019		December		31,2018		March 31,2018
Current assets	1,291,748 $		$		1,310,189		$	1,495,840
Non-current assets		1,110,190				794,441		700,305
Current liabilities	(	1,214,898)	(		1,145,990)		(	1,265,455)
Non-current liabilities	(	531,139)	(			359,631)	(	440,969)
Total net assets		655,901 $	$			599,009	$	489,721
		Taiwan Pelican Express Co.,Ltd.
		March 31,2019		December		31,2018		March 31,2018
Current assets	1,675,476 $		$		1,638,107		$	1,794,882
Non-current assets		1,866,426				744,434		674,856
Current liabilities	(	857,818)	(			741,776)	(	736,744)
Non-current liabilities	(	1,035,965)	(			26,555)	(	29,619)
Total net assets	1,648,119 $		$		1,614,210		$	1,703,375
		CenturyDevelopment Corporation
		March 31,2019		December		31,2018		March 31,2018
Current assets	811,388 $		$			901,156	$	1,616,364
Non-current assets		7,817,031			5,697,648			4,719,862
Current liabilities	(	585,661)	(			588,627)	(	574,576)
Non-current liabilities	(	3,016,916)	(			671,449)	(	870,116)
Total net assets	5,025,842 $		$		5,338,728		$	4,891,534
Statements of comprehensive income
				Tecom	Co.,Ltd.
		For the three-month period				For the three-month period
		ended March 31,2019				ended March 31,2018
Revenue		$		446,327		$		592,120
Loss before income tax		(		34,905)		(		40,865)
Income tax expense		(		137)				-
Loss for the period		(		35,042)		(		40,865)
Other comprehensive
income (loss) (net of tax)				94,352		(		19,374)
Total comprehensive
income (loss) for the period		$		59,310		($		60,239)
Comprehensive income (loss)
attributable to non-
controlling interest		$		19,940		($		26,608)

~71~

			Taiwan Pelican Express Co.,Ltd.	Taiwan Pelican Express Co.,Ltd.	Taiwan Pelican Express Co.,Ltd.	Taiwan Pelican Express Co.,Ltd.	Taiwan Pelican Express Co.,Ltd.
		For the three-month period				For the three-month period
			ended March 31,2019				ended March 31,2018
Revenue	$		895,500	$			859,686
Profit before income tax			48,852				18,076
Income tax expense	(		11,118)	(			2,533)
Profit for the period			37,734				15,543
Other comprehensive income
(net of tax)			30,576				24,990
Total comprehensive income
for the period	$		68,310	$			40,533
Comprehensive income
attributable to non-controlling
interest	$		25,651	$			11,160
Dividends paid to non-
controlling interests	$		-	$			-
			CenturyDevelopment Corporation
			For the three-month period				For the three-month period
			ended March 31,2019				ended March 31,2018
Revenue	$		215,984		$		290,301
Profit before income tax			77,761				75,099
Income tax expense	(		17,495)		(		17,117)
Profit for the period			60,266				57,982
Other comprehensive income
(loss)
(net of tax)			11,131		(		4,743)
Total comprehensive income
for the period	$		71,397		$		53,239
Comprehensive income
attributable to non-controlling
interest	$		34,902		$		27,974
Dividends paid to non-controlling
interests		$	-			$	-

~72~

Statements of cash flows

Statements of cash flows
		Tecom Co.,Ltd.
		For the three-month period	For the three-month period
		ended March 31,2019	ended March	31,2018
Net cash (used in) provided
by operating activities	($	86,647)	$	116,744
Net cash provided by
(used in) investing
activities		13,667	(	95,872)
Net cash provided by
financing activities		71,225		45,140
(Decrease) increase in cash
and cash equivalents	(	1,755)		66,012
Cash and cash equivalents,
beginning of period		181,889		306,221
Cash and cash equivalents, end
of period	$	180,134	$	372,233
		Taiwan Pelican Express Co.,Ltd.
		For the three-month period	For the three-month period
		ended March 31,2019	ended March	31,2018
Net cash provided by operating
activities	$	88,218	$	73,070
Net cash used in investing
activities	(	14,859)	(	15,834)
Net cash (used in) provided
by financing activities	(	34,775)		5,009
Effect of exchange rates on
cash and cash equivalents		63		23
Increase in cash and cash
equivalents		38,647		62,268
Cash and cash equivalents,
beginning of period		888,268		1,041,321
Cash and cash equivalents,
end of period	$	926,915	$	1,103,589

~73~

	CenturyDevelopment Corporation	CenturyDevelopment Corporation	CenturyDevelopment Corporation
	For the three-month period		For the three-month period
	ended March 31,2019		ended March 31,2018
Net cash provided by operating
activities	$ 124,608	$	105,373
Net cash used in investing
activities	( 889)	(	4)
Net cash (used in) provided by
financing activities	( 185,580)		361,596
Effect of exchange rates on
cash and cash equivalents	(4,355)	(	2,768)
(Decrease) increase in cash and
cash equivalents	(66,216)		464,197
Cash and cash equivalents,
beginning of period	550,896		808,457
Cash and cash equivalents,
end of period	$484,680	$	1,272,654

~74~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of relatedparties	Relationship with the Group	Names of relatedparties	Relationship with the Group
Teco Middle East Electrical & Machinery Co., Ltd. (TME) Teco (PHILIPPINES) 3C & Appliances, Inc (Teco 3C) Jiangxi Teco - Lead PM Generator (Jiangxi Teco - Lead) Taian-Jaya Electric Sdn. Bhd. (Taian-Jaya) 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) Teco-Motech Co., Ltd. (Teco-Motech) Kuen Ling Co., Ltd. (Kuen Ling) (Note 1) Kuen Ling Co., Ltd. (Kuen Ling) (Note 1)	Associates 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	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 〃 〃 〃 〃 〃 〃

Note 1: 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 associates.

Note 2: The Company has been liquidated in 2018.

~75~

(2) Significant related party transactions

A. Operating revenue:

Sales of goods and services: Associates Other related parties	For the three-month period ended March 31,2019 83,884 $ 87,466 171,350 $	For the three-month period ended March 31,2018 103,455 $ 100,769 204,224 $

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:

Purchases of goods:
Purchases of goods: Associates Other related parties	For the three-month period ended March 31,2019 67,656 $ 54 67,710 $	For the three-month period ended March 31,2018
		60,928 $ 3
		60,931 $

The purchase terms, including pricing and payments, were based on mutual agreement and have no similar transaction to be compared with. C. Receivables from related parties:

Receivables from related parties: Associates Other related parties Less: Reclassified to other receivables Other receivables - transfer of accounts receivable that were past due Associates Associates Le-Li Co., Ltd. Others Other related parties Other receivables - others	March 31,2019	December 31,2018	March 31,2018	March 31,2018
	$ 147,810 95,602 (5,870) 237,542 5,870 $ 16,762 65,538 5,978 88,278 94,148 $331,690	$ 154,346 94,273 (4,706) 243,913 4,706 $ 15,738 46,977 3,558 66,273 70,979 $314,892	$ 151,028 75,363 (5,077) 221,314 5,077 $ 12,497 40,123 5,112 57,732 62,809 $284,123
				221,314
				5,077
				$ 12,497 40,123 5,112
				57,732
				62,809
				$284,123

(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.

~76~

• (b) The aforementioned accounts receivable that were past due were $5,870, $4,706 and $5,077 as of March 31, 2019, December 31, 2018 and March 31, 2018, respectively. The ageing of the past due accounts receivable is beyond 90 days.

• (c) The other receivables arise mainly from other receivables for rental.

• D. Payables to related parties:

Payables to related parties:
Payables to related parties: Associates Other related parties		March 31,2019		December 31,2018		March 31,2018
		$ 160,121 1,039 $161,160		$ 225,882 1,039 $226,921		$ 99,426 839 $100,265

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:

Key management compensation Associates Salaries and other short-term employee benefits Post-employment benefits		March 31,2019		December 31,2018		March 31,2018
		$

(3) Key management compensation

~77~

8. PLEDGED ASSETS

PLEDGED ASSETS
Pledged asset		March 31,2019		December 31,2018	Purpose
Notes receivable Other current assets Demand deposits Time deposits Cash and bank deposits Financial assets at fair value through other comprehensive income - non-current Teco Image System Co., Ltd. Far Eastone Telecommunications Co., Ltd. Innolux Corporation Taiwan High Speed Rail Corporation Non-current financial assets at amortised cost Investments accounted for under the equity method Creative Sensor Inc. Property, plant, and equipment Land Buildings and structures Right-of-use assets Other non-current assets Refundable deposits Long-term prepaid rent Treasury stock		97,899 $ 65,580 40,404 385,599 18,720 21,753 583,995 150,000 123,784 112,765 3,372,473 916,674 12,223 - 247,091 6,368,860 $ 219,900		97,899 $ 71,965 58,485 339,879 16,800 21,144 495,585 150,000 110,710 96,184 3,406,348 - 5,886 923,078 247,091 6,420,255 $ 229,200	Short-term-borrowings Short-term borrowings, deposits for renting warehouses, deposits for acceptance bill, provisional seizure guarantee of compensation, exercise guarantee for construction, warranty margin, engineering bond, and tariff guarantee Engineering bond, merchandise loans, long-term and short-term borrowings, engineering guarantees, customs security deposit, warranty margin, exercise guarantee for construction and quality assurance for product sales Seizure guarantee Short-term borrowings and commercial papers payable Long-term borrowings 〞 Performance guarantee Short-term borrowings Long-term borrowings, short-term borrowings 〞 Exercise guarantee or warranty for construction and exercise guarantee for tender Short-term borrowings, long-term borrowings and endorsements and guarantees to others Short-term borrowings 〞

~78~

Pledged asset	March 31, 2018	Purpose
Notes receivable Other current assets Demand deposits Time deposits Cash and bank deposits Financial asset measured at fair value through other comprehensive income - non-current - non-current Teco Image System Co., Ltd. Far Eastone Telecommunications Co., Ltd. Innolux Corporation Taiwan High Speed Rail Corporation Investments accounted for under the equity method Creative Sensor Inc. Property, plant, and equipment Land Buildings and structures Other non-current assets Refundable deposits Long-term prepaid rent Treasury stock	34,905 $ 123,788 46,989 319,593 22,440 234,600 28,496 363,375 151,322 119,377 3,770,295 40,987 957,327 247,091 6,460,585 $	Short-term borrowings Short-term borrowings, deposits for renting warehouses, deposits for acceptance bill, provisional seizure guarantee of compensation, exercise guarantee for construction, warranty margin, engineering bond, and tariff guarantee Engineering bond, merchandise loans, long-term and short-term borrowings, engineering guarantees, customs security deposit, warranty margin, exercise guarantee for construction and quality assurance for product sales Seizure guarantee Short-term borrowings and commercial papers payable 〞 Long-term borrowings 〞 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

~79~

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 Intangible assets Construction contract price Architect service fee		March 31,2019		December 31,2018		March 31,2018
		43,188 $ 18,974 188,287 113,400 $363,849		62,957 $ 1,240 188,287 113,400 $365,884		196,231 $ - - - $196,231

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		December 31,2018		March 31,2018
		$ 699,882 1,546,135 5,813,466 $8,059,483		$ 561,826 1,170,558 2,829,463 $4,561,847

As of March 31, 2019, the outstanding usance L/C used for acquiring raw materials and equipment was $395,998.

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.

~80~

(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 Financial assets at amortised cost /Loans and receivables Cash and cash equivalents 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 Financial liabilities at amortised cost Short-term borrowings Notes payable Accounts payable Other payables Lease liabilites Bonds payable Long-term borrowings (including current portion)		March 31,2019		December 31,2018		March 31,2018
		2,553,505 $ 14,637,012 $ 17,519,287 $ 183,428 1,027,563 9,164,150 513,874 238,648 28,646,950 $ - $ 1,947,764 148,974 6,786,865 4,368,642 5,316,789 4,000,000 8,432,911 31,001,945 $		2,334,158 $ 12,350,476 $ 17,535,566 $ 182,725 1,066,632 9,343,700 431,585 292,542 28,852,750 $ - $ 1,994,360 209,979 7,607,871 4,720,360 4,000,000 7,650,846 26,183,416 $		2,708,548 $ 11,974,840 $ 18,166,969 $ - 1,032,423 9,362,598 690,313 282,999 29,535,302 $ 1,601 $ 2,710,538 $ 137,407 7,584,634 4,615,046 - 4,000,000 7,177,793 26,227,019 $

~81~

• 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:

~82~

==> picture [644 x 66] intentionally omitted <==

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

March 31, 2019
Sensitivity Analysis
Foreign currency Effect on other
amount Effect on profit or comprehensive
(In thousands) Exchange rate Book value (NTD) Degree of variation loss income
----- End of picture text -----

(Foreign currency: functional currency)
Financial assets
Monetary items
USD:NTD	USD	$	425,294	30.8200	$	13,107,561	1%	$	131,076	$	-
EUR:USD	EUR		3,619	4.5754		125,254	1%		1,253		-
EUR:NTD	EUR		15,912	34.6100		550,714	1%		5,507		-
USD:RMB	USD		32,718	6.7293		1,008,369	1%		10,084		-
USD:SGD	USD		6,284	1.3547		193,673	1%		1,937		-
JPY:NTD	JPY		967,324	0.2783		269,206	1%		2,692		-
RMB:NTD	RMB		81,383	4.5800		372,734	1%		3,727		-
USD:MYR	USD		8,457	4.0744		260,645	1%		2,606		-
SGD:MYR	MYR		5,513	3.0075		125,421	1%		1,254		-
AUD:NTD	AUD		5,733	21.8550		125,295	1%		1,253		-
SGD:NTD	USD		7,581	22.7500		172,468	1%		1,725		-
Non-monetary items
USD:NTD	USD		633,815	30.8200		19,534,187
EUR:NTD	EUR		122,816	34.6100		4,250,661
SGD:NTD	SGD		146,215	22.7500		3,326,392
VND:NTD	VND		259,003,846	0.0013		336,705
MYR:NTD	MYR		19,340	7.5643		146,296
Financial liabilities
Monetary items
USD:NTD	USD		46,482	30.8200		1,432,575	1%		14,326		-
USD:RMB	USD		6,904	6.7293		212,781	1%		2,128		-
USD:SGD	USD		4,609	1.3547		142,049	1%		1,420		-
USD:AUD	USD		3,490	4.0744		107,562	1%		1,076		-

~83~

==> picture [644 x 66] intentionally omitted <==

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

December 31, 2018
Sensitivity Analysis
Foreign currency Effect on other
amount Effect on profit or comprehensive
(In thousands) Exchange rate Book value (NTD) Degree of variation loss income
----- End of picture text -----

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

~84~

March 31, 2018

Financial assets Monetary items USD:NTD USD EUR:USD EUR EUR:NTD EUR USD:RMB USD USD:SGD USD JPY:NTD JPY RMB:NTD RMB USD:MYR USD MYR:SGD MYR AUD:NTD AUD USD:AUD USD Non-monetary items USD:NTD USD EUR:NTD EUR SGD:NTD SGD VND:NTD VND MYR:NTD MYR Financial liabilities Monetary items USD:NTD USD USD:RMB USD USD:SGD USD SGD:NTD SGD USD:AUD USD EUR:NTD EUR JPY:NTD JPY (Foreign currency: functional currency)	Foreign currency amount (In thousands)	Exchange rate	Book value(NTD)		SensitivityAnalysis	SensitivityAnalysis	Effect on other comprehensive income
					Degree of variation	Effect on profit or loss
	120,227 $ 7,312 16,004 59,016 7,280 1,151,375 83,069 3,091 12,394 6,541 1,567 619,197 117,312 144,458 171,881,538 17,903 69,391 14,559 9,294 7,030 3,936 5,689 450,168	29.1050 1.2324 35.8700 6.2632 1.3104 0.2739 4.6470 3.8756 0.3381 22.3450 1.3025 29.1050 35.8700 22.2100 0.0013 7.5098 29.1050 6.2632 1.3104 22.2100 1.3025 35.8700 0.2739	3,499,207 $ 262,281 574,063 1,717,661 211,884 315,362 386,022 89,964 93,076 146,159 45,608 18,021,726 4,207,973 3,208,416 223,446 134,448 2,019,625 423,740 270,502 156,136 114,557 204,064 123,301		1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	34,992 $ 2,623 5,741 17,177 2,119 3,154 3,860 900 931 1,462 456 20,196 4,237 2,705 1,561 1,146 2,041 1,233	$ - - - - - - - - - - - - - - - - - -

~85~

• 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 years ended March 31, 2019 and 2018 amounted to $6,664 and ($87,180), 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. 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 three-month periods ended March 31, 2019 and 2018 would have increased/decreased by $127,675 and $135,427, 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 $731,851 and $590,840, respectively, as a result of other comprenersive income classified as equity investment at fair value through other comprehensive 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 three-month periods ended March 31, 2019 and 2018, 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 March 31, 2019 and 2018, if interest rates at that date had been 0.25% higher/lower with all other variables held constant, post-tax profit for the three-month periods ended March 31, 2019 and 2018 would have been $5,190 and $4,944 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: If the contract payments were past due over 30 days based on the terms, there has been

~86~

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 customers’ 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 notes and accounts receivable. On March 31, 2019, December 31, 2018 and March 31, 2018 the loss rate methodology is as follows:

Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days Total Not past due Up to 30 days 31 to 90 days 91 to 180 days Over 180 days Total		March 31,2019
	Expected credit loss rate 0%~1% 0%~2% 1%~20% 1%~100% 1%~100%

~87~

			March 31,2018	March 31,2018	March 31,2018
	Expected credit loss rate		Total book value				Loss allowance
Not past due		0%~1%		$	8,113,164	($	35,631)
Up to 30 days		0%~1%			1,016,140	(	2,403)
31 to 90 days		1%~20%			493,520	(	7,654)
91 to 180 days		1%~30%			240,230	(	17,918)
Over 180 days	1%~100%				488,646	(	114,387)
			$		10,351,700	($	177,993)
			March 31,2019
	Expected credit loss rate		Total book value				Loss allowance
Individual		100%		$	27,330	($	27,330)
Group A		0%~5%			5,162,036	(	6,771)
Group B		1%~10%			2,049,268	(	5,973)
Group C		1%~20%			1,226,239	(	9,909)
Group D		1%~40%			516,826	(	8,356)
Group E	1%~100%			$	1,154,339	($	123,528)
			$		10,136,038	($	181,867)
		December 31,2018
	Expected credit loss rate		Total book value				Loss allowance
Individual		100%		$	32,126	($	32,126)
Group A		0%~5%			5,085,107	(	5,788)
Group B		1%~10%			1,996,658	(	5,844)
Group C		1%~20%			1,326,201	(	5,103)
Group D		1%~40%			481,759	(	3,837)
Group E	1%~100%				1,427,915	(	130,649)
			$		10,349,766	($	183,347)
			March 31,2018
	Expected credit loss rate		Total book value				Loss allowance
Individual		100%		$	35,667	($	35,667)
Group A		0%~5%			5,211,618	(	8,702)
Group B		1%~10%			2,077,981	(	12,854)
Group C		1%~20%			1,780,359	(	52,338)
Group D		1%~40%			461,059	(	5,215)
Group E	1%~100%				785,016	(	63,217)
			$		10,351,700	($	177,993)
Movements in relation to the Group applying the simplified approach to provide loss
allowance for notes receivable and accounts			receivable are as follows:
		For the three-month period For the				three-month period
		ended March 31, 2019 ended March 31, 2018
		Notes receivable and Notes receivable and
		accounts receivable accounts receivable
At January 1_IAS	39	$			183,347 $		185,215
Provision for (reversal of )
impairment					1,509 (		9,253)
Effect of foreign exchange		(			2,989)		2,031
At March 31		$			181,867 $		177,993

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

~88~

• (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 March 31, 2019, December 31, 2018 and March 31, 2018 the undrawn credit amounts are $20,015,954, $18,253,982 and $18,959,752, 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.

~89~

Non-derivative financial liabilities:

March 31, 2019 Short-term borrowings Notes payable Accounts payable Lease liabilities Other payables Bonds payable Long-term borrowings (including current portion) December 31, 2018 Short-term borrowings Notes payable Accounts payable Other payables Bonds payable Long-term borrowings (including current portion) March 31, 2018 Short-term borrowings Notes payable Accounts payable Other payables Bonds payable Long-term borrowings (including current portion)	Upto 1year	Between 1 and 2years	Between 2 and 3years	Between 3 and 5years	Over 5years
	1,947,764 $ 148,974 6,786,865 509,121 4,368,642 - 6,551,951 Upto 1year	$ - - - 438,140 - 3,000,000 947,349 Between 1 and 2years	$ - - - 420,636 - 1,000,000 908,693 Between 2 and 3years	$ - - - 655,294 - - - Between 3 and 5years	$ - - - 4,776,896 - - 30,000 Over 5years
	1,994,360 $ 209,979 7,607,871 4,720,360 - 5,260,106 Upto 1year	- $ - - - 3,000,000 1,146,265 Between 1 and 2years	- $ - - - 1,000,000 1,251,118 Between 2 and 3years	- $ - - - - - Between 3 and 5years	- $ - - - - - Over 5years
	2,710,538 $ 137,407 7,584,634 4,615,046 - 4,275,944	- $ - - - - 904,933	- $ - - - 3,000,000 1,065,085	- $ - - - 1,000,000 943,514	- $ - - - - -

~90~

     - iv. As of March 31, 2019 December 31, 2018 and March 31, 2018, 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:

follows:
March 31, 2019 Financial assets at fair value through profit or loss Equity securities Financial assets at fair value through other comprehensive income Equity securities Assets Recurring fair value measurements December 31, 2018 Financial assets at fair value through profit or loss Equity securities Financial assets at fair value through other comprehensive income Equity securities Assets Recurring fair value measurements	Level 1 1,606,016 $ 14,490,422 16,096,438 $ Level 1 1,364,013 $ 12,041,947 13,405,960 $	Level 2 $ - - - $ Level 2 - $ - - $	Level 3 947,489 $ 146,590 1,094,079 $ Level 3 970,145 $ 308,529 1,278,674 $	Total
				2,553,505 $ 14,637,012
				17,190,517 $
				Total
				2,334,158 $ 12,350,476
				14,684,634 $

~91~

March 31, 2018 Financial assets at fair value through profit or loss Equity securities Financial asset measured at fair value through other comprehensive income, Equity securities Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss Forward exchange contracts Recurring fair value measurements Assets	Level 1 1,739,854 $ 11,652,158 13,392,012 $ - $	Level 2 225,723 $ - 225,723 $ 1,601 $	Level 3 742,971 $ 322,682 1,065,653 $ - $	Total
				2,708,548 $ 11,974,840
				14,683,388 $
				1,601 $

• 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.

~92~

• E. For the three-month periods ended March 31, 2019 and 2018, there was no transfer between Level 1 and Level 2.

• F. The following table presents the changes in level 3 instruments.

Level 1 and Level 2. he following table presents the	changes in level 3 instruments.	hanges in level 3 instruments.	hanges in level 3 instruments.
Beginning balance Gain and loss recognized in other comprehensive income Acquired during the period Sold during the period Transferred out from level 3 Ending balance	For the three-month period For the three-month period ended March 31,2019 ended March 31,2018 $ 1,278,674 $ 1,162,875 ( 184,595) 31,075 - 39,765 - ( 4,571) - (163,491) $1,094,079 $1,065,653 Non-derivative equity	Non-derivative equity
			For the three-month period ended March 31,2018
			$1,065,653

• 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 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.

~93~

Non-derivative equity: Unlisted shares Private equity fund Non-derivative equity: Unlisted shares Private equity fund Non-derivative equity: Unlisted shares Private equity fund	Fair value at March 31, 2019	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
	1,125,131 $ Fair value at December 31, 2018	Market comparable companies Valuation technique	Price to earnings ratio multiple Discount for lack of marketability Significant unobservable input	1.31~3.71 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
	1,278,674 $ Fair value at March 31,2018	Market comparable companies Valuation technique	Price to earnings ratio multiple Discount for lack of marketability Significant unobservable input	0.99~3.46 15%~20% Range (weighted average)	The higher the multiple and control premium, the higher the fair value The higher the discount for lack of marketability, the lower the fair value Relationship of inputs to fair value
	1,065,654 $	Market comparable companies	Price to earnings ratio multiple Discount for lack of marketability	1.05~4.01 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:

~94~

March 31, 2019

				March31,2019	March31,2019	March31,2019
Financial assets Equity instrument 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%		$- $- December31,2018				26,257 $	26,257) ($
	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%		$- $- March31,2018				63,948 $	63,948) ($
	Input	Change		Recognized inprofit or loss				comprehensive income Recognized in other
				Favourable change	Unfavourable change			Favourable change	Unfavourable change
	Discount for lack of marketability	±5%		- $		- $		53,283 $	53,283) ($

~95~

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 Note 6(13).

• 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.

~96~

(3) Financial information by industry

The segment information of the reportable segments provided to the chief operating decision-maker for the three-month periods ended March 31, 2019 and 2018 is as follows:

2019 and 2018 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		For the three-monthperiod ended March 31,2019
	Heavy industrial Home appliances products division division 7,869,276 $ 1,281,397 $ 4,313,258 667,421 12,182,534 $ 1,948,818 $ 732,590 $ 4,967) ($ 271,735 $ 69,867 $ 39,605,012 $ 3,942,664 $ 41,661 $ 12,990 $ 16,722,033 $ 2,174,537 $		Adjustment and elimination 2,556,374 $ - $ 232,933 5,213,612) ( 2,789,307 $ 5,213,612) ($ 198,455 $ - $ 171,697 $ - $ 21,994,191 $ 6,802,527) ($ 17,288 $ - $ 9,399,766 $ 7,391,056) ($ Others	Total
				11,707,047 $ -
				11,707,047 $
				926,078 $
				513,299 $
				58,739,340 $
				71,939 $
				20,905,280 $

~97~

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		For the three-monthperiod ended March 31,2018	For the three-monthperiod ended March 31,2018
	Heavy industrial products division 7,526,593 $ 4,679,318 12,205,911 $ 721,776 $ 235,884 $ 38,397,377 $ 90,382 $ 16,480,385 $	Home appliance division 1,973,039 $ 860,480 2,833,519 $ 76,708 $ 47,177 $ 6,258,107 $ 39,983 $ 3,214,637 $	Adjustment and elimination 2,656,079 $ - $ 285,600 5,825,398) ( 2,941,679 $ 5,825,398) ($ 108,870 $ - $ 107,666 $ - $ 17,404,940 $ 7,284,752) ($ 88,609 $ - $ 5,963,055 $ 8,055,724) ($ Others	Total
				12,155,711 $ -
				12,155,711 $
				907,354 $
				390,727 $
				54,775,672 $
				218,974 $
				17,602,353 $

~98~

• (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 three-month periods ended March 31, 2019 and 2018 is provided as follows:

		For the three-month period	For the three-month period		For the three-month period	For the three-month period
			ended March 31,2019			ended March 31,2018
Adjusted operating income of
reportable segments	$		727,624	$		798,484
Adjusted operating income of other
operating segments			198,455			108,870
Interest income			68,487			39,559
Gains on financial instruments			5,511			1,154
Financial cost	(		72,031)	(		58,737)
Associates’ and joint ventures’
profit and loss accounted for under
the equity method			8,130			10,165
Losses on disposals of property, plant
and equipment	(		551)			-
Others			33,807	(		46,805)
Income before income tax	$		969,432	$		852,690

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

~99~

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Loans to others

For the three-month period ended March 31, 2019

Table 1

Expressed in thousands of NTD (Except as otherwise indicated)

Maximum outstanding balance during the three- month period ended March 31, 2019 Balance at March 31, 2019 (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 92,310 $ 80,132 $ 55,476 $ 2.3 Short-term financing - $ For operating capital - $ 0 TECO ELECTRIC & MACHINERY CO., LTD. QingDao Teco 〃 〃 137,492 136,805 136,805 3.5 Short-term financing - For operating capital - 1 U.V.G. Teco Netherlands 〃 〃 247,240 242,270 - 0.5 Short-term financing - For operating capital - 2 Teco Westinghouse TWMM 〃 〃 67,804 67,804 44,073 3.53~ 3.93 Short-term financing - For operating capital - 2 Teco Westinghouse TECO ELECTRIC & MACHINERY CO., LTD. 〃 〃 308,200 308,200 308,200 1.1 Short-term financing - For operating capital - 3 Tong-An Assets TECO ELECTRIC & MACHINERY CO., LTD. 〃 〃 200,000 200,000 200,000 1.05 Short-term financing - For operating capital - 4 Jiangxi Teco QingDao Teco 〃 〃 57,538 57,250 57,250 3.5 Short-term financing - For operating capital -	- - $ - - - - - - - - - - - -	1,673,963 $ 1,673,963 466,334 787,559 787,559 526,717 78,161	5,579,875 $ 5,579,875 777,223 1,575,118 1,575,118 526,717 156,321	Note 2 Note 2 Note 3 Note 4 Note 4 Note 5 Note 6

Table 1, Page 1

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 (March 31, 2019), and limit on loans to a single party shall not exceed 3% of the Company's net assets based on the latest financial statements (March 31, 2019).

• Note 3: In accordance with U.V.G.' s policy, limit on total loans shall not exceed 10% of U.V.G.' s net assets based on the latest financial statements (December 31, 2018), and limit on loans to a single party shall not exceed 6% of U.V.G.' s net assets based on the latest financial statements (March 31, 2019).

• Note 4: 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 (March 31, 2019), and limit on loans to a single party shall not 10% of Teco Westinghouse' s net assets based on the latest financial statements (March 31, 2019).

• Note 5: 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 (March 31, 2019), 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 (March 31, 2019).

• Note 6: In accordance with Jiangxi Teco 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 (March 31, 2019), 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 (March 31, 2019). Note 7: The credit line approved by the Board of Directors.

Table 1, Page 2

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Provision of endorsements and guarantees to others For the three-month period ended March 31, 2019

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Number (Note 1) Endorser/ guarantor	Party being endorsed/guaranteed	Limit on endorsements/ guarantees provided for a single party (Note 3)	Maximum outstanding endorsement/ guarantee amount as of March 31, 2019	Outstanding endorsement/ guarantee amount at March 31, 2019	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	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
	Companyname Relationship with the endorser/ guarantor （Note 2）
0 TECO ELECTRIC & MACHINERY CO., LTD. 0 TECO 0 TECO ELECTRIC & MACHINERY CO., LTD. 0 TECO ELECTRIC & MACHINERY CO., LTD. 1 Teco Westinghouse 2 Motovario S.p.A. 3 Yatec Engineering Corporation 4 Century Development	TECO Smart Technologies Co., Ltd. (2) Teco International (2) Motovario (2) Others (2)、(6) TWMM (4) TECNOFIB SRL (1) Yatec Engineering (VN) Company Limited (4) CDC DEVELOPMENT INDIA PRIVATE LIMITED (6)	11,159,751 $ 11,159,751 11,159,751 11,159,751 787,559 850,132 89,209 405,533	100,000 $ 100,000 2,085,293 75,531 24,551 500 32,321 211,291	100,000 $ 100,000 1,816,333 66,962 18,625 490 5,321 211,291	100,000 $ 100,000 1,816,333 66,962 18,625 490 5,321 -	- $ - - - - - - -	0.18 0.18 3.26 0.12 0.24 0.01 2.39 5.21	33,479,252 $ 33,479,252 33,479,252 33,479,252 1,575,118 2,550,397 178,417 811,067	Y Y Y Y Y N Y N	N N N N N N N N	N N N N N N N N	Note 3 〃 〃 〃 Note 4 Note 5 Note 6 Note 7

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

(1) Having business relationship.

Table 2, Page 1

• (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 as required by the construction contract.

• (6) Due to joint venture, each shareholder provides 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 (March 31, 2019), and the guarantee to a single party shall not exceed 20% of the Company's net assets.

• 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 (March 31, 2019), and the guarantee to a single party shall no exceed 10% of Teco Westinghouse's net assets.

• 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 (March 31, 2019), and the guarantee to a single party shall not exceed 20% of Motovario S.p.A.'s net assets. Note 6:In accordance with Yatec Engineering Corporation’s policy, the total guarantee amount shall not exceed 80% of Yatec Engineering Corporation’s net assets based on the latest financial statements (March 31, 2019),

and the guarantee to single party shall not exceed 40% of Yatec Engineering Corporation’s net assets. If the guarantee amount is denominated in foreign currency, the amount shall be translated at the exchange rate prevailing on the date of approval by the Board of Directors to assess whether the guarantee amount exceeds the limit.

• Note 7:In accordance with Century Development’s policy, the total guarantee amount shall not exceed 20% of Century Development’s net assets based on the latest financial statements (March 31, 2019), and the guarantee to a single party shall not exceed 10% of Century Development’s net assets. If the guarantee amount is denominated in foreign currency, the amount shall be translated at the exchange rate prevailing on the date of approval by the Board of Directors to assess whether the guarantee amount exceeds the limit.

Table 2, Page 2

Table 3

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

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

March 31, 2019

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by Marketable securities Relationshipwith the securities issuer General ledger account		As of March 31, 2019	As of March 31, 2019	Footnote
	Number of shares	Book value	Ownership (%) Fair value
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. 〃 Note 3 Stock 10,etc. 〃 Note 2 Tong-an Investment Stock 13 An investee company accounted by the Company using equity method Note 1 Stock 12 Related party in substance 〃 Stock 14 None 〃 Stock 15 〃 〃 Stock 16 The Company is a director of the investee 〃 Stock 17 None 〃 Stock 16,etc 〃 Note 2 Stock 18,etc. 〃 Note 3 Fund 2, etc. 〃 Note 2 Fund 3, etc 〃 Note 4 U.V.G Stock 19, etc. 〃 Note 1 An-Tai International Stock 13 An investee company accounted by the Company using equity method 〃 Stock 12 Related party in substance 〃 Stock 20 〃 〃 Stock 21 None 〃 Stock 22, etc. 〃 Note 3 Stock 10,etc. 〃 Note 2 Jie-Zheng Property Fund 4, etc. 〃 Note 2 Teco Electro Stock 12 Related party in substance Note 1	190,061 9,610 5,098 10,084 11,527 47,839 2,710 32,980 7,500 45,871 - 16,559 4,856 665 19,540 9,197 9,018 1,285 14,050 34,979 3,429 14,728 922 1,077 118 2,826 1,270 2,756 195 1,670 170 - 200	6,842,181 $ 96,102 86,419 117,482 304,901 375,057 19,783 308,552 314,775 225,818 175,326 341,032 223,745 27,573 414,249 143,465 661,016 142,635 3,533,575 446,649 442,020 775,936 14,444 37,453 5,706 32,355 33,602 186,560 9,669 82,844 7,642 67,811 3,113	3.38 6,842,181 $ 0.10 96,102 - 86,419 0.08 117,482 1.96 304,901 1.98 375,057 0.06 19,783 10.99 308,552 5.00 314,775 - 225,818 - 175,326 - 341,032 - 223,745 - 27,573 0.98 414,249 8.17 143,465 0.28 661,016 0.04 142,635 9.89 3,533,575 - 446,649 - 442,020 - 775,936 - 14,444 - 37,453 - 5,706 0.01 32,355 1.13 33,602 8.51 186,560 0.15 9,669 - 82,844 - 7,642 - 67,811 0.18 3,113

Table 3, Page 1

Securities held by Marketable securities Relationshipwith the securities issuer General ledger account		As of March 31, 2019	As of March 31, 2019	Footnote
	Number of shares	Book value	Ownership (%) Fair value
Information Technology Stock 23, etc. None 〃 Teco Singapore Stock 16,etc. 〃 〃 Taiwan Pelican express Stock 16, etc. 〃 〃 Teco Australia Stock 16 〃 〃 Teco Nanotech Stock 12 Related party in substance 〃 Fund 5 None Note 2 Sankyo Stock 24 〃 Note 1 Tecom Stock 2 〃 〃 Stock 1 The Company is a corporate director of the investee 〃 Tecom International Stock 25 None Note 3 Stock 26,etc. 〃 Note 1 Fund 6 〃 Note 2 Top-Tower Stock 13 An investee company accounted by the Company using equity method Note 3 Stock 27, etc. None 〃	32,645 304 459 460 81 62 - 2,175 16,222 3,354 758 3,177 77 708	32,645 $ 79,402 116,816 117,091 1,252 11,051 7,248 21,753 583,995 36,892 680 14,877 1,622 42	- 32,645 $ - 79,402 - 116,816 0.32 117,091 0.07 1,252 - 11,051 - 7,248 0.02 21,753 0.29 583,995 1.69 36,892 - 680 - 14,877 - 1,622 - 42

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

Table 4

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 three-month period ended March 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty		Tran	saction		Differences in transaction terms compared to third partytransactions	Differences in transaction terms compared to third partytransactions	Notes/account	s 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 Tai-An Wuxi Wuxi Teco Qing Dao Teco Teco Industrial (Malaysia) Sdn. Bhd. Tong Dai Tong Tai Jung Teco Singapore Teco Westinghouse Teco Westinghouse Canada Teco Australia	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 〃 〃 〃 〃	560,243 $ 147,628 217,775 162,718 134,601 245,433) ( 169,335) ( 140,763) ( 819,040) ( 273,356) ( 231,154) (	16% 4% 6% 5% 4% (5%) (4%) (3%) (18%) (6%) (5%)	30 days 〃 〃 〃 〃 90 days 〃 〃 〃 〃 〃	Note 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	Note 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	28,300) ($ 22,203) ( 315,554) ( 109,840) ( 117,493) ( 233,994 175,765 79,824 503,556 214,273 131,063	(1%) (1%) (8%) (3%) (3%) 7% 5% 2% 14% 6% 4%

Note: Comparable with other types of transactions, trading conditions are handled in accordance with the agreement of the conditions.

Table 4, Page 1

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Receivables from related parties reaching $100 million or 20% of paid-in capital or more March 31, 2019

			March 31, 2019
Table 5 Creditor	Counterparty	Relationship with the counterparty	Balance as at March 31,2019	Turnover rate	Overdue receivables		Allowance for doubtful accounts Amount collected subsequent to the balance sheet date Expressed in thousands of NTD (Except as otherwise indicated)
					Amount	Action taken
TECO ELECTRIC & MACHINERY CO., LTD. 〃 〃 〃 〃 〃 〃 〃 〃 〃 Teco Westinghouse Wuxi Teco Qing Dao Teco Teco Industrial (Malaysia) Sdn. Bhd. U.V.G.	Tong Dai Tong Tai Jung Teco Westinghouse QingDao Teco Wuxi Teco Teco Australia Sankyo Teco Netherlands Teco Westinghouse Canada Motovario S. P. A. 〃 〃 〃 〃 Teco Netherlands	An investee accounted for under the equity method 〃 An indirect investee accounted for under the equity method 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃 〃	234,124 $ 176,229 503,821 270,130 111,459 133,933 221,946 330,023 214,273 167,228 308,200 315,554 109,840 117,493 242,270	4.48 3.80 7.45 - 0.23 5.36 0.46 0.14 7.64 1.17 - 2.41 7.94 5.58 -	- $ - - - - - 177,362 263,773 - - - - - - -	- - - - - - In the process of collection 〃 - - - - - - -	83,864 $ 56,515 288,472 617 1,837 60,254 8,184 - 145,068 45,887 - 63,922 66,456 73,844 - Total amount was $18,179

Table 5, Page 1

Table 6

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES Significant inter-company transactions during the reporting period For the three-month period ended March 31, 2019

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(Note 3)
0 0 0 0 0 0 0 0 0 0 1 2 3 4 5 0 0 0 0 0 0 6	TECO ELECTRIC & MACHINERY CO., LTD. 〃 〃 〃 〃 〃 〃 〃 〃 〃 Wuxi Teco Qing Dao Teco Teco Industrial (Malaysia) Sdn. Bhd. 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 Wuxi Teco Motovario S. P. A. Teco Westinghouse Canada TECO ELECTRIC & MACHINERY CO., LTD. 〃 〃 〃 Teco Netherlands Teco westinghouse Teco Westinghouse Canada Teco Singapore Tong Dai Tong Tai Jung Teco Australia TECO ELECTRIC & MACHINERY CO., LTD.	(1) 〃 〃 〃 〃 〃 〃 〃 〃 〃 (2) 〃 〃 〃 (3) (1) 〃 〃 〃 〃 〃 (2)	Notes receivable, accounts receivable and other receivables 〃 Accounts receivable and other receivables 〃 〃 〃 〃 〃 〃 Accounts receivable 〃 〃 〃 Other receivables 〃 Sales 〃 〃 〃 〃 〃 〃	234,124 $ 176,229 503,821 270,130 133,933 330,023 221,946 111,459 167,228 214,273 315,554 109,840 117,493 308,200 242,270 819,040 273,356 140,763 245,433 169,335 231,154 560,243	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% - - - - - - - - - - - - 7% 2% 1% 2% 1% 2% 5%

Table 6, Page 1

Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)			Transaction
				General ledger account	Amount	Transaction terms	Percentage of consolidated total operating revenues or total assets(Note 3)
7 Tai-An Wuxi TECO ELECTRIC & MACHINERY CO., LTD. 1 Wuxi Teco 〃 2 QingDao Teco 〃 3 Teco Malaysia 〃 Note 1: The numbers filled in for the transaction company in respect of (1) Parent company is ‘0’.			(2) Sales 〃 〃 〃 〃 〃 〃 inter-company transactions are as follows:		147,628 $ 217,775 162,718 134,601	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% 2% 1% 1%

(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 three-month period ended March 31, 2019

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 at March 31,2019	Shares held as at March 31,2019	Shares held as at March 31,2019	Net profit (loss) of the investee for the three-month period ended March 31,2019	Investment income (loss) recognized by the Company for the three- month period ended March 31,2019	Footnote
				Balance as at March 31,2019	Balance as at March 31, 2019	Number of shares	Ownership (%)	Book value
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 $ 431,109 100,013 726,428 112,985 2,490,000 128,496 8,505,434 121,232 200,000	12,293 $ 431,109 100,013 726,428 112,985 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	2,116,423 $ 247,437 1,125,021 10,137,251 3,349,205 9,076,193 241,968 7,732,142 167,335 216,315	92,527 $ 35,042) ( 859 201,665 31,419 83,935 3,033) ( 70,417 11,027 1,957) (	28,841 $ 20,715) ( 1,051 201,565 28,277 83,599 1,919) ( 66,662 6,357 300) (	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 at March 31,2019	Shares held as at March 31,2019	Shares held as at March 31,2019	Net profit (loss) of the investee for the three-month period ended March 31,2019	Investment income (loss) recognized by the Company for the three- month period ended March 31,2019	Footnote
				Balance as at March 31,2019	Balance as at March 31, 2019	Number of shares	Ownership (%)	Book value
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 Taian-Etacom Technology Co., Ltd.	Taiwan Taiwan Vietnam Taiwan Taiwan Philippines British Virgin Islands 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 Bus bar and manufacturing of its components	117,744 $ 22,444 352,252 92,389 2,111,889 165,819 454,923 951,141 150,000 255,116 199,496 70,330	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	37,542,159 5,290,800 29,013,668 7,799,996 388,423,711 17,131,155 14,883,591 96,353,338 25,018,661 24,121,700 11,900,642 7,033,000	33.84 92.63 100 64.95 100 76.70 100 28.67 100 25.27 15.63 84.73	440,254 $ 273,504 336,705 144,783 5,267,169 170,882 1,484,010 1,287,447 495,735 416,383 313,119 141,603	33,108) ($ 12,275 1,269) ( 20 14,362 584 2,757) ( 65,727 340) ( 37,734 20,871 1,542	11,205) ($ 11,370 1,281) ( 3 14,362 2,531 3,350) ( 17,085 340) ( 9,486 3,262 1,307	None None None None None None None None None None None None

Table 7, Page 2

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at March 31,2019	Shares held as at March 31,2019	Shares held as at March 31,2019	Net profit (loss) of the investee for the three-month period ended March 31,2019	Investment income (loss) recognized by the Company for the three- month period ended March 31,2019	Footnote
				Balance as at March 31,2019	Balance as at March 31, 2019	Number of shares	Ownership (%)	Book value
TECO ELECTRIC & MACHINERY CO LTD Eagle Holding 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 54,874 200,000 274,856 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	4,250,661 $ 4,250,661 4,250,661 1,511,894 218,743 136,035 203,875 677,847 112,032 195,384 261,579 138,224 741,926 131,228 120,109 69,931	86,465 $ 86,465 86,465 3,211 652) ( 1,792 38,779 65,727 37,734 3,965) ( 7,716) ( 1,714 5,431 5,431 1,434) ( 6,131	86,465 $ 86,465 86,465 3,211 652) ( 513 2,194 8,710 2,558 1,133) ( 2,315) ( 1,714 10,367 1,834 1,128) ( 3,092	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 at March 31,2019	Shares held as at March 31,2019	Shares held as at March 31,2019	Net profit (loss) of the investee for the three-month period ended March 31,2019	Investment income (loss) recognized by the Company for the three- month period ended March 31,2019	Footnote
				Balance as at March 31,2019	Balance as at March 31, 2019	Number of shares	Ownership (%)	Book value
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. 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.	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 $ 300,000 9,912 365,820 88,108 179,222 52,560 201,467 184,893 200,000 274,856	3,850,997 30,000,000 144,600 12,160,000 2,510 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	65,815 $ 287,465 10,815 350,326 125,803 245,753 111,466 468,243 214,527 194,365 258,757	2,963 $ 3,965) ( 184) ( 7,716) ( 1,829 65,727 38,779 13,153) ( 65,727 3,965) ( 7,716) (	1,529 $ 1,699) ( 61) ( 3,086) ( 1,829 3,983 1,201 13,153) ( 3,016 2,152) ( 2,823) (	None None None None None None None None None None None

Table 7, Page 4

TECO ELECTRIC & MACHINERY CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China

For the three-month period ended March 31, 2019

Investee in Mainland China Table 8	Main business activities	Paid-in capital	Investment method	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2019	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2019	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2019	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2019	Net income of investee for the three-month period ended March 31,2019	Ownership held by the Company (direct or indirect)(%)	Investment income (loss) recognized by the Company for the three-month period ended March 31,2019	Book value of investments in Mainland China as of March 31,2019 Accumulated amount of investment income remitted back to Taiwan as of March 31,2019 (Except as otherwise indicated) Footnote Expressed in thousands of NTD	Book value of investments in Mainland China as of March 31,2019 Accumulated amount of investment income remitted back to Taiwan as of March 31,2019 (Except as otherwise indicated) Footnote Expressed in thousands of NTD	Book value of investments in Mainland China as of March 31,2019 Accumulated amount of investment income remitted back to Taiwan as of March 31,2019 (Except as otherwise indicated) Footnote Expressed in thousands of NTD
					Remitted to Mainland China	Remitted back to Taiwan
Teco (Dong Guang) Wuxi Teco Taian (Wuxi) Nanchang Teco 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 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 management	268,799 $ 1,697,276 495,213 456,293 1,481,569 947,331 20,590 678,681	Note 2 Note 1 Note 11 Note 3 Note 1 Note 1 Note 3 Note 3	188,139 $ 768,259 205,551 456,293 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	911) ($ 25,368 632 241 13,984 10,210 580 720) (	100 82.35 100 100 98.07 87.6 100 100	911) ($ 20,890 632 241 11,346 8,944 910 720) (	142,076 $ 1,636,287 1,331,552 7,186) ( 1,478,799 351,065 29,703 263,979	- $ - - - - - - -	Note 16 Note 15 Note 16 Note 16 Note 15 Note 15 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, 2019	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2019	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2019	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2019	Net income of investee for the three-month period ended March 31,2019	Ownership held by the Company (direct or indirect)(%)	Investment income (loss) recognized by the Company for the three-month period ended March 31,2019	Book value of investments in Mainland China as of March 31,2019	Accumulated amount of investment income remitted back to Taiwan as of March 31,2019	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Teco Han Zou 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.	Development and consulting of device products 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 $ 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 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 $ 340,469 391,843 - 15,990 79,813 - 62,865 59,444 23,829 240,818 - -	- $ - - - - - - - - - - - -	- $ - - - - - - - - - - - -	9,837 $ 340,469 391,843 - 15,990 79,813 - 62,865 59,444 23,829 240,818 - -	3,262) ($ 2,655) ( 516) ( 4,078) ( 709) ( 3,278) ( 39 541) ( 558 19,053 3,390) ( 683 1,993	100 24 100 39.9 100 100 100 45 100 100 100 100 100	3,262) ($ 637) ( 516) ( 1,627) ( 709) ( 3,278) ( 39 2,293) ( 558 19,053 3,390) ( 683 1,993	26,834 $ 30,549 74,652 7,170) ( 14,448 126,376 7,625 731 39,276 42,923 158,532 123,033 820,339	- $ - - - - - - - - - - - -	Note 16 Note 16 Note 16 Note 16 Note 16 Note 16 Note 16 Note 16 Note 16 Note 15 Note 16 Note 16 Note 16

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, 2019	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2019	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2019	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2019	Net income of investee for the three-month period ended March 31,2019	Ownership held by the Company (direct or indirect)(%)	Investment income (loss) recognized by the Company for the three-month period ended March 31,2019	Book value of investments in Mainland China as of March 31,2019	Accumulated amount of investment income remitted back to Taiwan as of March 31,2019	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Beijing Pelican Express Fubon Gehua (Beijing) Trading Wuhan Tecom Tecom Tech (Wuxi) Tecom Tech Investment (BVI) Beijing Tecom Innovation Technology Co., Ltd. Information Technology (Wuxi) Information Technology Total Service (Hang Zhou)	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	26,422 $ 344,643 6,950 485,455 34,990 14,566 10,167 2,257	Note 4 Note 5 Note 6 Note 7 Note 8 Note 8 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	79) ($ - 66) ( 77 - 141) ( 1,977) ( 15) (	100 1.63 100 100 100 100 100 100	79) ($ - 66) ( 77 - 141) ( 1,977) ( 15) (	2,649 $ - 2,033 3,166 - 80 17,839 150) (	- $ - - - - - - -	Note 15 Notes 17 and 18 Note 15 Note 15 Note 20 Note 15 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, 2019	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2019	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2019	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2019	Net income of investee for the three-month period ended March 31,2019	Ownership held by the Company (direct or indirect)(%)	Investment income (loss) recognized by the Company for the three-month period ended March 31,2019	Book value of investments in Mainland China as of March 31,2019	Accumulated amount of investment income remitted back to Taiwan as of March 31,2019	Footnote
					Remitted to Mainland China	Remitted back to Taiwan
Information Technology Total Service (Xiamen) Wuxi TECO Precision Industry Co. Ltd.	ERP building, system maintenance and purchases of information appliance R&D, manufacturing and sales of motors and provide products sales skills	$ 1,000 115,125	Note 9 Note 10	- $ 86,101	- $ -	- $ -	- $ 86,101	200) ($ 1,954	100 100	200) ($ 1,954	428 $ 126,381	- $ 43,266	Note 16 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 Tech Investment (B.V.I) Limited and then invest in Mainland China. Note 9: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Information Technology Total Service (BVI) Co., Ltd. and then invest in Mainland China. Note 10: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Teco Electro Devices Co., Ltd. and then invest in Mainland China. Note 11: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invest through Micropac Worldwide (B.V.I) and then invest in Mainland China.

• Note 12: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invest through Teco Holding USA Inc. and Teco Westinghouse Motor Company and then invest in Mainland China. Note 13: Through investing in investees in the third areas, which then invested in the investee in Mainland China: Invested through Tecocapital Investment (Samoa) Co., Ltd. and then invest in Mainland China.

• Note 14: Through investing in an existing company in the third area, which then invested in the investee in Mainland China: Invest through Great Teco Motor (Pte) Ltd., Teco Australia Pty. Ltd. and Teco Electric & Machinery (Pte) Ltd. and then invest in Mainland China.

Note 15: The amount recognized was based on the financial statements that were reviewed by R.O.C. parent company's CPA firm.

Note 16: The amount recognized was based on the financial statements that were not reviewed by the other CPA firm.

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

Note 18: As of March 31, 2019, accumulated impairment of $24,746 was accrued.

• Note 19: The Board of Directors of Suzhou Teco Electvic & Machinery Co., Ltd. resolved to merge with Qing Dao Teco. Under the merger, 蘇州東元電機有限公司 will be the dissolved company while the Qing Dao Teco will be the surviving company.

Note 20: The liquidation has been completed.

Table 8, Page 4

Companyname	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2019	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	36,322,241 $ 988,871 393,541 174,172 232,389

• 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.

Table 8, Page 5

Table 9

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 three-month period ended March 31, 2019

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Sale(purchase)	Property transaction	Accounts receivable (payable)	Accounts receivable (payable)	Provision of endorsements and guarantees	Provision of endorsements and guarantees		Financing			Others
	Amount %	Amount %	Balance at March 31,2019	%	Balance at March 31,2019	Purpose	Maximum balance during the three-month period ended March 31,2019	Balance at March 31,2019	Interest rate	Interest during the three-month period ended March 31,2019
Wuxi Teco Taian (Wuxi) Jiangxi Teco QingDao Teco Xiamen An-Tai Wuxi Teco Precision Wuxi Teco Taian (Wuxi) Jiangxi Teco QingDao Teco Xiamen An-Tai Teco (Jiang Xi) Wuxi Teco Precision	$ 6,966 - 5,085 - 10,556 - - - - - 115 - ( 217,775) (6%) ( 147,628) (4%) ( 22,039) - ( 162,718) (5%) ( 1,296) - ( 5,929) - ( 20,779) -	$ - - - - - - - - - - - - - - - - - - - - - - - - - -	5,166 3,734 10,221 881 - 115 ( 315,554) ( 22,203) ( 7,051) ( 109,840) - ( 3,286) -	- - - - - - (8%) (1%) - (1%) - - -	$ - - - - - - - - - - - - -	- - - - - - - - - - - - -	$ - - - 137,492 92,310 - - - - - - - -	$ - - - 136,805 80,132 - - - - - - - -	- - - 3.5% 2.3% - - - - - - - -	$ - - - 1,142 224 - - - - - - - -

Table 9, Page 1