TMC - Annual Report 2018 | FinancialReports.eu

Stock Code ： 2338

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Taiwan Mask Corporation

2018 Annual Report

Printed on 2018/5/23

Contents of annual report is available on ： http://mops.twse.com.tw Taiwan Mask Corporation ： https://www.tmcnet.com.tw/StockInfo.aspx

l Spokesperson: Name: L.C. Lin

Position: Manager of Data Service Center

Tel: (03)563-4370

Email: [email protected]

l Deputy Spokesperson:

Name: Megan Tsai

Position: Section Manager of Finance Department

Tel: (03)563-4370 Email: [email protected]

l Address: No. 11, Innovation Rd. 1, Science-Based Industrial Park, Hsinchu, Taiwan, R.O.C.

Tel: (03)563-4370 Fax: (03)578-0752

l Stock Transfer Agent:

Name: CTBC Bank Stock Transfer Agent

Address: 5F, No. 83, Section 1, Chung-Chin South Road, Chung-Cheng District, Taipei City, Taiwan, R.O.C.

Website: https://ecorp.ctbcbank.com/cts/index.jsp Tel: (02)6636-5566

l Auditors:

Firm: PricwaterhouseCoopers Taiwan

CPAs: Tina Cheng, Daniel Lee Address: 27F, No. 333, Section 1, Kee-Lung Road, Taipei City, Taiwan, R.O.C. Website: https://www.pwc.com.tw Tel: (02)2729-6666

l Stock transfer agent for stock listed overseas and information for inquiry: None.
l Website: http://www.tmcnet.com.tw

Notice to readers

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

Taiwan Mask Corporation Table of Contents

I. Letter to Shareholders .......................................................................................................... 1 II. Company Profile .................................................................................................................. 4 III. Corporate Governance 1 Organization Chart ........................................................................................................... 7 2 Directors, independent directors, president, vice president, manager of finance department ................................................................................................................... 9 3 The remunerations to the directors (and independent directors), president and vice president .................................................................................................................... 13 4 Implementation of Corporate Governance ..................................................................... 18 5 Fee of CPA ..................................................................................................................... 42 6 Information of Changing CPA ....................................................................................... 43 7 Chairman, president, finance or accounting manager who had been served in the CPA firm or related firm in recent year ..................................................................... 43 8 Information on net change in shareholding and net change in shares pledged by directors, independent directors, managers, and shareholders of 10% shareholding or more ................................................................................................ 44 9 The relation of the top ten shareholders as the definition of related parties or relatives within second degree .................................................................................. 45 10 Investment from directors, managers, and directly or indirectly controlled businesses .................................................................................................................. 45 IV. Stock Subscription 1 Capital and shares .......................................................................................................... 46 2 Corporate bonds ............................................................................................................. 51 3 Preferred stock ............................................................................................................... 51 4 Issuance of global depository receipts ........................................................................... 51 5 Employees stock option certificates ............................................................................... 51 6 Merger and acquisitions or stock shares transferred with new stock shares issued ....... 51 7 Fund implementation plan ............................................................................................. 51 V. Overview of business operation 1 Business overview.......................................................................................................... 52 2 Market analysis and the condition of sale and production ............................................. 54 3 Status of employees ....................................................................................................... 58 4 Expenditure on environmental protection ...................................................................... 59 5 Employee / employer relation ........................................................................................ 60 6 Important agreements ..................................................................................................... 61

VI. Financial information

1 Five-year Financial Summary ........................................................................................ 62 2 Five-year Financial analysis ........................................................................................... 66 3 Audit committee’s report in the most recent years ......................................................... 70 4 Financial statements in the most recent years ................................................................ 72 5 Stand-alone financial statements in the most recent years ........................................... 159 6 Financial difficulties encountered by the Company and/or its affiliates in the recent yearand as of the publication date of the annual report .......................................... 245 VII. Review of financial position, financial performance and risk management 1 Financial position ......................................................................................................... 246 2 Financial performance .................................................................................................. 247 3 Analysis of cash flows.................................................................................................. 248 4 Impact of major capital expenditure on finance and business ..................................... 248 5 Policies, reasons for gain or loss and action plan in regard to investment plans in current year and the next year ................................................................................. 249 6 Risk management ......................................................................................................... 250 7 Other important matters ............................................................................................... 255 VIII. Special disclosures

1 Information of related parties ....................................................................................... 256 2 Privately subscription of marketable securities in the most recent years .................... 262 3 The stock shares of the Company held or disposed by the subsidiaries in the most recent years ............................................................................................................. 262 4 Supplementary disclosures ........................................................................................... 262 5 Occurrence of events defined in Securities Transaction Law Article 36.2.2 that has great impact on shareholder’s equity or security price in the most recent years and up to the date of the report printed ................................................................... 262

I. Letter to Shareholders

TMC consolidated sales revenue in 2018 is NTD$ 2,885,980K, compared with 2017 NTD$ 1,427,070K, it’s a 102.23% growth. The growing part mainly came from that we focused on increasing production efficiency, and merge of Miracle Technology Co., Ltd. (Miracle) in Oct. 2017. Miracle’s sales revenue was consolidated into TMC since Q4, 2017. We focused on increasing production efficiency over the year 2018, so the margin rate increased accordingly from 17% in 2017 to 22% in 2018. Net operating profit is NTD$ 259,530K, with the loss from subsidiaries, the net profit became NTD$145,820K, and earnings per share is NTD$ 1.02. This proud achievement is the first surplus since the continuous loss from 2015. As we projected, the growing pattern of mask industry will be in line with semiconductor industry. To increase the production efficiency and lower the cost will still be the first priority of TMC. Meanwhile, we will enhance our research capability in mask technology to win back in mask market, combined with the sales and profit injection from Miracle, year 2019 will be a prosperous year.

(1) 2017 Business Report

A. Financial comparison between 2017 and 2018:

Unit ： NTD$ thousand

Item	2017	2018	Growth %
Sales Revenue	1,427,073	2,885,982	102.23%
Net Income	(88,553)	145,820	264.67%

B. Analysis for finance and profitability

(A) Finance

With the principle of conservative operation, the self-owned capital ratio is 66% and current ratio is 140% in 2018. TMC has profound finance background and sufficient capital for operating use.

(B) Profitability

Unit ： NTD$ thousand

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Item 2017 2018 Growth %
Gross Margin 243,673 629,008 158.14%
Operating Income (7,904) 259,536 3,383.60%
EBIT (65,269) 203,646 412.01%
Net Income (88,553) 145,820 264.67%
EPS (0.33) 1.02 409.09%
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C. Research and production

  - (A) For the demand of semiconductor technology, TMC involved in 90nm mask development in 2018. TMC aggressively plans to continue working closely with customers to develop photomask-making technology for deep sub-micro nodes, including optical proximity correction and ArF phase shift photomask.

  - (B) We provided all kinds of masks which can be applied in several technologies.  Due to the popularity of cell-phone, the demand for compound semiconductor is getting high.  And with the high demand of IoT, electric car and LED lighting, the demand for mature technology in semiconductor industry was brought up and the demand for mature masks were also getting higher accordingly.

(2) Summary of 2019 business plan
A. Continue to develop the mask with technology under 90nm

FABs now are moving towards 12-inch wafer with technology under 90nm, we have to develop mask production technology accordingly and to expand our capacity with new equipments. This year, TMC aggressively plans to continue working closely with customers to develop photomask-making technology for deep sub-micro nodes, including optical proximity correction and ArF phase shift photomask. This should help to ensure that TMC can maintain our manufacture techniques in photomask quality and cycle time, and continue to meet aggressive R&D and production requirements.

B. Market development in Mainland China and worldwide
- Semiconductor industry now became a major developing industry in both south-east Asia and Mainland China. The growth of the demand of masks will certainly increase in this trend, so TMC will target at the market development in China and worldwide. Miracle has deeply cultivated in China for a long time, the industrial positioning has been affirmed. In addition to wafer capacity services, Miracle can also assist TMC to expand the market development in China.
C. Synergy effect of the Group
- TMC modified its operating strategy since 2017. Mask service is the basement, combined with the foundry service provided by Miracle Technology and the IC design service provided by Weida Hitech(newly merged in 2018), turnkey solution can be a total solution for the customers in semiconductor industry.
(3) Strategy, market competition, regulations and the impact of macro economics

A. Strategy

The major focus of TMC is the production and technology service of masks. As the merge of Miracle Technology in 2017, the service line expanded to foundry service. With mask and foundry service, TMC now plays a key role in this industry. In the long run, TMC plans to integrate the supply chain in semiconductor industry to provide turnkey solutions for our customers.

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B. Market competition, regulations and the impact of macro economics

Mask industry is deeply related with semiconductor industry. So, when semiconductor industry is booming in recent 6 months, the demand for masks will definitely be increased accordingly. Besides, semiconductor industry now became a major developing industry, the demand for masks is strong. We believe that combined with Miracle’s profound customer relationship in China, the consolidated revenue from mask service and foundry service will be optimistically expected.

The mission of TMC is to operate under integrity and honest policy. We will focus on production efficiency and cost reduction to increase our market share. TMC will put every effort to create profit for every shareholder.

Wish you all the best.

Sincerely yours,

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Chairman K.J.Wu

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II. Company Profile

1. Date of establishment: 1988/10/21

2. History of the company:

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1988/04/01 Incorporated by Innovation Industrial Technology Transfer Co., Ltd. The Preparatory Committee
elected Mr. Shih Chin-tai as the Chairman of the Board and hired Mr. Chen Pi-wan to head the
Preparatory Committee.
1988/05/04 Approved by the Science-based Industrial Park Administration for establishment inside the
Science-based Industrial Park in accordance with Article III of the Science-based Industrial Park
Establishment & Management Statute.
1988/10/07 The Promoters’ Meeting officially resolved its Articles of Incorporation, elected its directors and
supervisors, electing nine directors, i.e., Chang Chung-mou, Shih Chin-tai, Chang Ching-chu,
Chang Pao-hsi, Tseng Fan-cheng, Huang Hsien-hsiung, Chiang Chi-lin, Kuo Jui-yu and Chen
Pi-wan, and electing three supervisors, i.e., Chen Min-chan, Wu Kuo-ching and Tsai Mei-li.
The Board of Directors elected Mr. Shih Chin-tai the chairman and hired Mr. Chen Pi-wan to
serve as the president.
1988/10/21 Obtained its company license.
1989/03/04 Approved by Hsinchu Science-based Industrial Park to provide 0.96 hectare of land to erect its
factory.
1989/03/24 Approved by Hsinchu Taxation Administration, obtained its profit-seeking enterprise certificate
and issued its first commercial invoice on March 31.
1989/08/18 Chairman Mr. Shih Chin-tai resigned and was replaced by Mr. Wang Chi-mou.
1989/09/18 Groundbreaking ceremony for its new factory located in Hsinchu Science-based Industrial Park.
1989/11 Purchased its second Electronic Beam System.
1990/03/16 Approved by the Securities and Futures Commission, Ministry of Finance to become a public
company.
1990/04/03 Resolved the decision in the 5 [th] Directors and Supervisors Meeting of Session One for capital
increase in cash amounting to NTD$262.5 million which was paid up in full as of June 5 of the
same year.
1991/04/02 Resolved by its regular meeting of shareholders to change its authorized capital to NTD$500
million to meet the long-term development demand.
1991/07/22 The new plant inside Hsinchu Science-based Industrial Park was completed and dedicated for
normal business operation.
1992/06 Successfully completed the manufacture of 4 M DRAM Mask consigned by ERSO, Industrial
Technology Research Institute (ITRI), verifying Taiwan’s capability to development sub-micron.
1992/08/24 Executed contract with ICA, Japan to purchase the Laser Mask System CORE-2564
manufactured by ETEC to meet its need of integrated circuits of developing 16 M DRAM and
64 M DRAM.
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1993/10 ICS of the United States conferred upon the Corporation Zero-Defect Quality Award in
recognition of its prompt delivery and zero-defect performance.
1994/01 Successfully developed LCD oriented masks to meet the LCD industry in association with
ERSO, Industrial Technology Research Institute (ITRI).
1994/05 The Laser Mask System CORE-2564 PSM newly purchased was shipped to its plant and proved
to accelerate its computerized processing, develop Phase Shift Masks (PSM), as the most
up-to-date equipment available.
1994/11/21 Successfully passed at the 235 [th] Listing Review Committee meeting to approve that the
Corporation could be listed as second category stocks. The Corporation was officially listed on
the Taiwan Stock Exchange Corporation (TSEC) on April 17, 1995.
1995/02/13 The Corporation’s stocks were underwritten by Chinatrust Securities Co., Ltd. and others, eleven
~1995/03/14 securities firms in total, at the initial listing price of @NTD$47 per share. All stocks were
sold on March 14. The Corporation officially declared with Taiwan Stock Exchange
Corporation (TSEC) for listing on March 27 for official listing on April 17.
1995/05/13 The huge-scale mask machine purchased by the Corporation was shipped and installed, making
the Corporation Taiwan’s first one capable of providing large-scale masks required for LCDs.
1995/06/06 Its regular meeting of shareholders resolved to raise the authorized capital to NTD$700 million.
1995/10/17 The third CORE2564 machine purchased arrived and was installed.
1996/01/05 The Securities and Futures Commission, Ministry of Finance approved of the Corporation to
launch capital increase in cash amounting to NTD$85,437,500 which was raised in full on April
2, 1996.
1996/06/01 Its regular meeting of shareholders resolved to raise the authorized capital to NTD$1 billion.
1996/06/27 The Corporation purchased from Japan the electronic beam equipment JBX-7000MV which was
exclusively designed for production of 64M and 256M DRAMS, as the Corporation’s import of
such system for the first time to team up with its existing machinery & equipment to lead the
Corporation’s production into the new era.
1996/07/08 The Corporation inked the joint venture agreement with United Microelectronics Corporation
for 0.35 micron mask production. United Microelectronics Corporation would purchase one
0.35 micron process mask equipment and installed it in the Corporation wherewith the
Corporation would produce and manufacture masks required for its 8” wafer production.
1996/08/02 The laser mask equipment manufactured by ETEC USA purchased by the Corporation arrived
and was installed, in Model ALTA-3000, as the most up-to-date model to date, a model
specifically developed and designed for 0.35 micron mass production and 0.25 micron process.
This Equipment enabled the Corporation to provide equipment supply and support for masks
required for 8” integrated circuit plants.
1996/11/09 Resolved through the 14 [th] Directors and Supervisors Meeting of Session Three for capital
increase in cash with NTD$119,228,750, to make the total paid-in capital of NTD$1.1 billion.
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1997/05/21 Resolved through its regular meeting of shareholders 1997 to increase its authorized capital to
NTD$2.5 billion. Elected the directors and supervisors for Session Four. Mr. Wang Chi-mou
was elected to continue the chairmanship of Session Four.
1997/07/23 Groundbreaking for its Plant II, which was scheduled to be completed by late 1998.
1998/05/21 Resolved in regular meeting of shareholders 1998 to increase its authorized capital to NTD$2.7
billion.
1999/05/05 Resolved in regular meeting of shareholders 1999 to increase its authorized capital to
NTD$3.891 billion.
2000/04 Purchased laser mask equipment manufactured by ETEC, USA, in Model ALTA-3500, a model
specifically designed for 0.18 micron mass production and 0.15 micron process development.
2000/06/12 Resolved in the regular meeting of shareholders 2000 to merge Sin Tai Technologies Pte. Ltd.
and to increase its authorized capital to NTD$4.5 billion. Directors and supervisors of Session
Five were reelected in the meeting. Mr. Hsu Shan-ke was elected the new chairman.
2000/12/01 December 1, 2000 was fixed as the reference (base) day to merge Sin Tai Technologies Pte.
Ltd.
2001/04/24 Resolved in the regular meeting of shareholders 2001 to increase the authorized capital to
NTD$5.2 billion. Directors and supervisors of Session Five were elected supplementary.
Where Wen Sheng Investment Co., Ltd. and Innovation Industrial Technology Transfer Co., Ltd.
resigned from one seat of director and one seat of supervisor. The vacancies were filled up in
the supplementary election by Picvue Electronics Ltd.and Den Ho Venture Capital Co., Ltd.
2002/03 Plant II was completed and dedicated in full.
2003/06/03 Reelected directors and supervisors of Session Six in the regular meeting of shareholders in
2003 where Mr. Hsu Shan-ke was elected to continue the chairmanship.
2006/06/12 Reelected directors and supervisors of Session Seven in the regular meeting of shareholders
2006 where Mr. Hsu Shan-ke was elected to continue the chairmanship.
2009/06/10 Reelected directors and supervisors of Session Seven in the regular meeting of shareholders
2009 where Mr. Hsu Shan-ke was elected to continue the chairmanship.
2012/06/28 Reelected directors and supervisors of Session Nine in the regular meeting of shareholders in
2012 where Mr. Parkson Chen was elected to be the chairman.
2015/06/25 Reelected directors and supervisors of Session Ten in the regular meeting of shareholders in 2015
where Mr. Parkson Chen was elected to be the chairman.
2017/06/23 Reelected directors and supervisors of Session Eleven in the regular meeting of shareholders in
2017 where Mr. K.J. Wu was elected to be the chairman.
2017/10/01 Merged Miracle Technology Co., Ltd.
2018/08/09 Resolved through the Board of Directors for acquire the equity of the Weida Hi-Tech in cash.
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III. Corporate Governance

1. Organization Chart

(1) Organization Chart

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(2) Descriptions of department function

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Department Primary Functions Department Primary Functions
Management of mask manufacturing
process, maintenance and
improvements of production
Audit the Company’s system and the
enforcement of internal regulations, Mask Manufacture equipments, planning for new
Internal Auditor manufacturing site, manufacturing
procedures, and authorization with Center
and inspection of masks, define
corrective actions offered.
product specification, planning of
quality insurance, customer service
and logistic arrangement.
Technology development of CAD,
development of engineering
Research and development of mask,
computer software, maintenance and
problem solving in manufacturing
Data Service Center management of computer, program Engineering III
process, quality insurance, inspection
development, supporting of
and repairmen process of mask.
customers’ data correction and
service.
Product selling, market research and Administration Human resource management,
Sales Department training, management of general
development. Department administrative matters.
Cash management, bank accounts
management, accounting records Procurement
Finance Department Procurement.
booking, and shareholders’ Department
relationship management.
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2. Directors, independent directors, president, vice president, manager of finance department

(1) President, vice president, manager of finance department

(1)Pres	ident, vicep	resident, manager of financ	resident, manager of financ	resident, manager of financ	e department	e department	e department	e department					2019/4/13	2019/4/13	2019/4/13
Position	Nationality	Name	Gender	Date of Office	Shares held Shares held by relatives within second degree				Shares held by nominee arrangement		Experiences & Education	Other position	Other managers, directors or supervisors with relationships within second degree
					Shares Ratio Shares Ratio				Shares	Ratio			Position	Name	Relationship
President	R.O.C.	Yarn Chen	M	2017/10/1	0 0% 0 0%				-	-	EE Master in California University President of Sunplus Technology	Chairman of Weida Hi-Tech Chairman of Gi-Yi Hitech Chairman of Youe Chung Capital Corporation Chairman of Yi-Ming Investment Chairman of Yi-Yuan Investment Director of Miracle Technology Co.,Ltd.	-	-	-
Vice President	R.O.C.	Vincent Tsai	M	2017/10/25	866,255 0.34% 1,995,028 0.79%				-	-	EE PHD in Chung-Yang University Chairman of Miracle Technology Co., Ltd.	Chairman ofJingjing Investment Co., Ltd. Chairman of MIKO TECHNOLOGY Director of Sichuan Miracle Power Technology Co., Ltd. Director of Youe Chung Capital Corporation Director of Miracle Technology Co.,Ltd.	-	-	-
Finance Manager	R.O.C.	Marie Wu	F	2018/1/15	0	0%	0	0%	-	-	Management Science Master in Tamg-Kang University Accounting manager of Macroblock	Finance Manager of Chairman of Weida Hi-Tech	-	-	-

2019/4/13

(2) Directors, independent directors

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Shares held when Shares held by Shares held by Other managers, directors or
Position RegistrationNationalityor Name Gender electedDate (years)Term Date ofelectedfirst elected Current Shares relatives withinsecond degree nomineearrangement Experiences &Education Other position supervisors with relationshipswithin second degree
Shares Ratio Shares Ratio Shares Ratio Shares Ratio Position Name Relationship
MBA of University of Chairman of Browave
Chairman R.O.C. K.J.Wu M 2017/6/23 3 years 2017/6/23 2,282,000 0.90% 3,282,000 1.30% 564,000 0.22% - - Finance director ofMaryland in USA Chairman of Chuang-TongInvestment - - -
ITRI
Chairman of TMC
Chemistry Bachelor of Director of TMC
Tun-Hai University Consultant of TMC
Chairman of TMC Chairman of Innova Vision
President of TMC INC.
Director R.O.C. ParksonChen M 2017/6/23 3 years 1988/10/7 4,891,127 1.94% 3,185,127 1.26% 862,892 0.34% - - Chairman of Innova - - -
Technology Company
Director of SUNNYLAKE
Director of IVKK
Director IVBVI
Bachelor of Director of TMC
Chiao-Tung Chairman of PSMC
Full-Shue 2017/ 2017/ University Chairman of Full-Shue
Investment 6/23 3 years 6/23 7,054,000 2.79% 6,364,000 2.52% - - - - Vice Chairman &President of Investment - - -
Chairman of Ai-Pu Tech
Powerchip Director of FOCI
Director of Sprout
International Limited
Director R.O.C. Director of Xsense
Technology Corporation
Rep: TsaiGuo-Chi M 2017/6/23 3 years 2017/6/23 0 0% 0 0% - - - - Director of ComputingIndependent Director of UiSMemory Technology - - -
Physics PHD of Director of TMC
Ching-Hwa Director of Innova Vision
Director R.O.C. Yu-ShianTsai M 2017/6/23 3 years 2015/6/25 850 0% 5,850 0% - - - - University INC. - - -
Senior Consultant of
APM
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Position	Nationality or Registration Name	Nationality or Registration Name	Gender	Date elected	Term (years)	Date of first elected	Shares held when elected	Shares held when elected	Current Shares	Current Shares	Shares held by relatives within second degree	Shares held by relatives within second degree	Shares held by nominee arrangement Experiences & Education Shares Ratio	Shares held by nominee arrangement Experiences & Education Shares Ratio	Shares held by nominee arrangement Experiences & Education Shares Ratio	Other position	Other managers, directors or supervisors with relationships within second degree	Other managers, directors or supervisors with relationships within second degree	Other managers, directors or supervisors with relationships within second degree
							Shares	Ratio	Shares	Ratio	Shares	Ratio	Shares	Ratio			Position	Name	Relationship

Independent Director	R.O.C.	Wu Yu-Chiun	M	2017/ 6/23	3 years	2017/ 6/23	-	-	-	-	-	-	-	-	Master of EMBA of Taiwan University Director of Securities and Futures Bureau	Independent Director of TMC Independent Director of Chun Zu Machinery Independent Director of EP Tech Supervisor of Browave	-	-	-
Independent Director	R.O.C.	Ji Yun	M	2017/ 6/23	3 years	2015/ 6/25	-	-	-	-	-	-	-	-	Chemistry PHD of Illinois State University Chemistry Professor of Ching Hwa University	Independent Director of TMC	-	-	-
Independent Director	R.O.C.	Hsieh Tai-Ning	M	2017/ 6/23	3 years	2017/ 6/23	-	-	-	-	-	-	-	-	Geology Bachelor of Chinese Culture University President of Fan-Tai Semiconductor	Independent Director of TMC Vice Chairman of Actron Director of Ding-Wei Tech Director of REC Director of Smooth (Ching-Dao)	-	-	-

(3) Major Institutional Shareholders

2019/4/13

(3) Major Institutional Shareholders 2019/4/13	(3) Major Institutional Shareholders 2019/4/13
Institutional Shareholder Major Shareholder
Full-Shue Investment	Powerchip Semiconductor ManufacturingCorporation

(4) Major Shareholders of Institutional Shareholders

	2019/4/13
Institutional Shareholder	Major Shareholder
Powerchip Semiconductor ManufacturingCorporation	Powerchip Technology Corporation

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(5) Professional Experience and Independency of Directors and Independent Directors 2019/4/13

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With more than 5-year experience and qualified for following professional aspects Number of other listed
Independency Check firms currently served
as independent
At least as an instructor or A judge, prosecutor, Field experience as required directors
Profile
above in universities in attorney, CPA or other in commerce, law, finance,
commerce, law, finance, professional and technician accounting or business
Name
accounting or business required for a corporation management 1 2 3 4 5 6 7 8 9 10
management areas who must have successfully
passed the national level
examinations
K.J. Wu ü ü ü ü ü ü ü ü ü
Parkson Chen ü ü ü ü ü ü
Full-Shue Investment
ü ü ü ü ü ü ü ü ü 2
Rep: Tsai Guo-Chi
Tsai Yu-Shian ü ü ü ü ü ü ü ü
Wu Yu-Chiun ü ü ü ü ü ü ü ü ü ü ü 2
Ji Yun ü ü ü ü ü ü ü ü ü ü ü
Hsieh Tai-Ning ü ü ü ü ü ü ü ü ü ü ü
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Note: Please tick with a “P” mark if the directors and independent directors have complied with the requirements below two years prior to being elected and during their tenure of office.

(1)Not as an employee of the Corporation or its affiliate.

(2)Not as a director or supervisor of the Corporation or its affiliate (except as an independent director of the Corporation, its parent, or a subsidiary where the Corporation holds either directly or indirectly over 50% of the voting powers)

(3)Not as himself/herself, his/her spouse, minor children or natural person shareholder holding over 1% of the total issued shares of the Corporation in others’ names or a natural person shareholder ranking among the top ten.

(4)Not as the spouse, blood relative within the second degree or within the third degree of kinship.

(5) Not a director, supervisor, employee of institutional shareholders that hold more than 5% of the outstanding shares of the company, and not a director, supervisor or employee of the top five institutional shareholders.

(6) Not a director, supervisor, manager of shareholders with 5% or more of the holdings in a company that has financial and business transactions with the company

(7)Not a professional, proprietor, partner, company or owner, partner, director, supervisor, manager or the spouse of the above of an institution that provided financial, commercial, or legal service or consultation to the company during last year.

(8)Not as the spouse or blood relative within the second degree with other directors.

(9)Not falling under any clauses of Article 30 of the Company Law.

(10)Not elected as the government, judicial (corporate) person or its statutory representative under Article 27 of the Company Law.

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3. The remunerations to the directors (and independent directors), president and vice president

(1) The remunerations to the directors (and independent directors) Unit ： NTD$ thousand

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Remunerations Serving as a staff member concurrently and receiving remuneration
Sum of
Sum of A+B+ A+B+C+D+E+F+G Having
Compensation(A)(Note 2) Pension (B) AllocationEarnings ProvidedService C+D over earningsafter tax(Note 10) Compensation(E) (Note 5) Pension (F) Earnings Allocation (G)(Note 6) over earnings aftertax(Note 10) remunerationreceived
Position Name (C)(Note 3) (D)(Note 4) from investees
Affiliates beyond the
TMC Corporation?
TMC Affiliates(Note 7) TMC [Affiliates] (Note 7) [TMC] Affiliates(Note 7) TMC [Affiliates] (Note 7) [TMC] Affiliates(Note 7) TMC [Affiliates] (Note 7) [TMC] [Affiliates] (Note 7) In In (Note 7) TMC Affiliates(Note 7) (Note12)
In cash In stock
cash stock
Chairman K.J. Wu
Director Parkson Chen
Full-Shue
Investment
Director
Rep: Tsai
Guo-Chi
2,520 2,520 0 0 5,108 5,108 155 155 3.91 3.91 0 0 0 0 0 0 0 0 3.91 3.91 None
Director Tsai Yu-Shian
Independent
Wu Yu-Chiun
Director
Independent
Ji Yun
Director
Independent Hsieh
Director Tai-Ning
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Note ： Except for the numbers disclosed above, the compensation received when directors provided services to affiliates are:Parkson Chen (TMC’s consultant), the compensation for 2018 is NTD$ 1,440K.

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(2) Remuneration Intervals for Directors (and Independent Directors)

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Name of Directors
Remuneration Intervals for Directors Sum of (A+B+C+D) Sum of (A+B+C+D+E+F+G)
TMC(Note 8) Affiliates (Note 9) H TMC(Note 8) Affiliates (Note 9) I
K.J. Wu, Parkson Chen, Full-Shue K.J. Wu, Parkson Chen, Full-Shue K.J. Wu, Parkson Chen, Full-Shue K.J. Wu, Parkson Chen, Full-Shue
Investment Rep: Tsai Guo-Chi, Investment Rep: Tsai Guo-Chi, Investment Rep: Tsai Guo-Chi, Investment Rep: Tsai Guo-Chi,
Below NT 2,000,000
Tsai Yu-Shian, Wu Yu-Chiun, Ji Tsai Yu-Shian, Wu Yu-Chiun, Ji Tsai Yu-Shian, Wu Yu-Chiun, Ji Tsai Yu-Shian, Wu Yu-Chiun, Ji
Yun, Hsieh Tai-Ning Yun, Hsieh Tai-Ning Yun, Hsieh Tai-Ning Yun, Hsieh Tai-Ning
NT 2,000,000 （ incl. ）〜 5,000,000 （ excl. ）
NT 5,000,000 （ incl. ）〜 10,000,000 （ excl. ）
NT 10,000,000 （ incl. ）〜 15,000,000 （ excl. ）
NT 15,000,000 （ incl. ）〜 30,000,000 （ excl. ）
NT 30,000,000 （ incl. ）〜 50,000,000 （ excl. ）
NT 50,000,000 （ incl. ）〜 100,000,000 （ excl. ）
Above NT 100,000,000
Total 7 7 7 7
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Note 1 ： Names of directors shall be listed separately (institutional shareholder and its representative shall be separately listed), and the remunerations shall be disclosed separately also.

Note 2 ： Remunerations for directors in latest year (including salary, compensation, leave compensation and bonus).

Note 3 ： Please fill in the remunerations for directors approved by board of directors (not yet approved by shareholders’ meeting) in latest year.
Note 4 ： Payment to directors for services provided. (Including traveling, other expense, compensation, rent, car-like non-monetary payments). When paid by non-monetary objects, the nature and cost of the object, the rent of the object, other related expense shall also be disclosed. When a driver is also a non-monetary object, the salary of the driver shall be disclosed in remark, but not included in remunerations.
Note 5 ： When a director is also an employee (president, vice president, manager or employee), the remuneration includes salary, compensation, leave compensation, bonus, traveling, other expense, rent, car-like non-monetary payments. When paid by non-monetary objects, the nature and cost of the object, the rent of the object, other related expense shall also be disclosed. In addition, the salary expense recognized in accordance with IFRS 2 “Share-based payment” includes the acquisition of employee stock warrant, employee restricted stock, and subscription of new shares from cash capitalization.
Note 6 ： When a director is also an employee (president, vice president, manager or employee) received the bonus for employee (paid both by cash and dividend stock), the amount approved by board of directors (not yet approved by shareholders’ meeting) in latest year shall be disclosed.

Note 7 ： The total amount paid to directors from all affiliates (including TMC).

Note 8 ： The total amount of the remuneration paid to directors. The name of director shall be disclosed in the proper interval respectively.
Note 9 ： The total amount paid to directors from all affiliates (including TMC). The name of director shall be disclosed in the proper interval respectively.
Note 10 ： Earnings after tax are the earnings after tax in latest year. When IFRS is adopted, it means the stand-alone earnings after tax in latest year.

Note 11 ： a. The amount directors received from investments other than subsidiaries.

b. The amount directors received from investments other than subsidiaries shall be combined into remuneration intervals table and rename the column as “all investments”.
c. When a director is also a director, supervisor or manager of all investments other than subsidiaries, the remunerations (including compensation, bonus and other service charge) the director received shall be disclosed.
＊ The amount in above table is not calculated based on tax rules, therefore, the table is only for information disclosure, not for taxation purpose.
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(3) Remunerations for President and Vice President

Unit `：` NTD$ thousand

Position	Name	Compensation(A) `（`Note2`）` Pension(B)	Compensation(A) `（`Note2`）` Pension(B)	Compensation(A) `（`Note2`）` Pension(B)	Compensation(A) `（`Note2`）` Pension(B)	Bonus(C) `（`Note3`）`	Bonus(C) `（`Note3`）`	Earnings Allocation(D) `（`Note4`）`	Earnings Allocation(D) `（`Note4`）`	Earnings Allocation(D) `（`Note4`）`	Earnings Allocation(D) `（`Note4`）`	Sum of A+B+ C+D over earnings after tax`（％）（`Note8`）` Having received remuneration from investees beyond the Corporation?(Note9) TMC Affiliates `（`Note5`）`	Sum of A+B+ C+D over earnings after tax`（％）（`Note8`）` Having received remuneration from investees beyond the Corporation?(Note9) TMC Affiliates `（`Note5`）`	Sum of A+B+ C+D over earnings after tax`（％）（`Note8`）` Having received remuneration from investees beyond the Corporation?(Note9) TMC Affiliates `（`Note5`）`
		TMC	Affiliates `（`Note5`）`TMC		Affiliates `（`Note5`）`	TMC	Affiliates `（`Note5`）`	TMC		Affiliates`（`Note5`）`		TMC	Affiliates `（`Note5`）`
								In cash	In stock	In cash	In stock
President	Yarn Chen	8,371	12,342	0	0	0	0	4,544	0	4,544	0	6.48	8.48	None
Vice President	Vincent Tsai

(4) Remuneration Intervals for Presidents and Vice Presidents

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Remuneration Intervals for Presidents and Vice Name of Presidents and Vice Presidents
Presidents
TMC(Note6) Affiliates(Note7) E
Below NT 2,000,000
NT 2,000,000 （ incl. ）〜 5,000,000 （ excl. ） Vincent Tsai
NT 5,000,000 （ incl. ）〜 10,000,000 （ excl. ） Yarn Chen Yarn Chen, Vincent Tsai
NT 10,000,000 （ incl. ）〜 15,000,000 （ excl. ）
NT 15,000,000 （ incl. ）〜 30,000,000 （ excl. ）
NT 30,000,000 （ incl. ）〜 50,000,000 （ excl. ）
NT 50,000,000 （ incl. ）〜 100,000,000 （ excl. ）
Above NT 100,000,000
Total 2 2
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Note 1 ： Names of presidents and vice presidents shall be listed separately (institutional shareholder and its representative shall be separately listed), and the remunerations shall be disclosed separately also. Note 2 ： Remunerations for presidents and vice presidents in latest year (including salary, compensation, leave compensation and bonus).

Note 3 ： Payment to presidents and vice presidents for services provided. (Including traveling, other expense, compensation, rent, car-like non-monetary payments). When paid by non-monetary objects, the nature and cost of the object, the rent of the object, other related expense shall also be disclosed. In addition, the salary expense recognized in accordance with IFRS 2 “Share-based payment” includes the acquisition of employee stock warrant, employee restricted stock, and subscription of new shares from cash capitalization.
Note 4 ： When a president and vice president received the bonus for employee (paid both by cash and dividend stock), the amount approved by board of directors (not yet approved by shareholders’ meeting) in latest year shall be disclosed. If the amount is not yet estimated, estimation shall be made based on the actual payment of last year. When IFRS is adopted, it means the stand-alone earnings after tax in latest year.
Note 5 ： The total amount paid to president and vice presidents from all affiliates (including TMC).
Note 6 ： The total amount of the remuneration paid to president and vice presidents. The name of president and vice president shall be disclosed in the proper interval respectively.

Note 7 ： The total amount paid to president and vice presidents from all affiliates (including TMC). The name of president and vice president shall be disclosed in the proper interval respectively. Note 8 ： Earnings after tax are the earnings after tax in latest year. When IFRS is adopted, it means the stand-alone earnings after tax in latest year. Note 9 ： a. The amount president and vice presidents received from investments other than subsidiaries.

b. The amount president and vice presidents received from investments other than subsidiaries shall be combined into remuneration intervals table and rename the column as “all investments”.
c. When a president and vice president is also a president and vice president, supervisor or manager of all investments other than subsidiaries, the remunerations (including compensation, bonus and other service charge) the president and vice president received shall be disclosed.
＊ The amount in above table is not calculated based on tax rules, therefore, the table is only for information disclosure, not for taxation purpose.
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(5) Earnings Allocation to Managers

2019/4/13

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Unit ： NTD$ thousand
Position Name Amount Paid Amount paid in Total Total over earnings
(Note 1) (Note 1) in Stock Cash after tax （％）
President Yarn Chen
Managers - 3,246 3,246 1.63
Finance Manager Marie Wu
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Note 1: Names and job title of each individual should be separately disclosed. The amount of remunerations can be disclosed in summary.

Note 2: It refers to the employee remuneration (including stock and cash) received by the managerial officers that is distributed in accordance with the proposal for distributing the recent year’s earnings adopted at a meeting of board of directors and such proposal has not been submitted to the Shareholders’ Meeting for approval. If such amount is unable to be estimated, the amount can be determined in accordance with the actual distribution ratio for last year. It refers to the net income of the recent year. After the adoption of IFRS, it refers to the net income in the individual or independent financial statements of the recent year.

Note 3: The scope of application for managers is defined in accordance with the Tai.Chai.Chen (III) No. 0920001301 Letter dated March 27, 2003 by the SEC as follows:
(1) President and the equals
(2) Senior Vice President and the equals
(3) Vice President and the equals
(4) General Manager of Finance
(5) General Manager of Accounting
(6) Managerial officers and the individuals authorized to sign
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(6) Analyze the remunerations to the directors, president and vice president from TMC and all affiliates over stand-alone earnings after tax in recent 2 years

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Unit ： NTD$ thousand ； %
To Presidents and Total Remunerations over
To Directors Total Remunerations
Item Vice Presidents stand-alone earnings after tax (%)
TMC Affiliates TMC Affiliates TMC Affiliates TMC Affiliates
Year
2017 20,186 20,686 20,398 21,084 40,584 41,770 (54.71) (56.31)
2018 7,783 7,783 8,371 12,342 16,154 20,125 8.11 10.10
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specify the policy, standards, combinations, procedure and the association with the performance in operation and future risk:

A. policy of the company on the remunerations ： The policy of the company on the remunerations to directors and supervisors is made pursuant to Article 23 of its Article of Incorporation. Where there is earning for a specific year, at least 10% of the earnings shall be distributed as employee bonus, and no more than 2% of the earnings shall be distributed as remunerations to directors and supervisors. If there is still accumulated deficit, the deficit shall be compensated first. Bonus for employee shall be paid by stock or cash, and the employee shall include employee from subsidiaries. The earnings mentioned above are the earnings tax before the distribution of employee bonus and remunerations to directors and supervisors. The resolution of the earnings allocation shall be made by 50% agreements from directors in board of directors’ meeting when 2/3 of directors are presence. The resolution then shall be reported to the shareholders’ meeting.
B. standards, combinations, procedure ： The remunerations to president and vice president of the company shall be made pursuant to Article 29 of its Article of Incorporation. According to Article 23-1 of its Article of Incorporation, when there are earnings, the accumulated deficit shall be compensated first, then pay the tax, and then reserve 10% as the legal reserve, and reserve or reverse special reserve. After all these reverses, then a proposal to distribute dividend to shareholders can be proposed.
C. the association with the performance in operation and future risk ： After the company merged with Miracle Technology Co., Ltd. and Weida Hi-Tech the TMC’s operation scale increased significantly. TMC focused on increasing production efficiency over the year 2017, and increased capacity utilization rate and increased product gross profit margin. Therefore, the net profit after tax in 2018 increased from 2017. According to TMC’s Article of Incorporation, not over 2% of the profits to be shared to directors. The proportion of the TMC's provision is in line with the regulations and is reasonable.
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4. Implementation of Corporate Governance

(1) Board of Directors’ Meeting

The board of directors’ meeting in 2018: 5 meetings, directors’ presence is as below:

Position Name Presence Deputy Presence (%) (`Ｂ`) (`Ｂ`/`Ａ`)	Remarks
Chairman K.J. Wu 5 0 100
Director Parkson Chen 5 0 100
Director Full-Shue Investment Rep: Tsai Guo-Chi 3 1 60
Director Tsai Yu-Shian 4 0 80
Independent Director Wu Yu-Chiun 5 0 100
Independent Director Ji Yun 5 0 100
Independent Director Hsieh Tai-Ning 4 1 80
Remarks`：`
1. If one of the following circumstances shall state the date of the meeting, proposal content, all opinions from
independent directors and the feedback from the company`：`
A. related to Article 14-3 of the Securities and Exchange Law`：`None
B.except forthe above, resolutions made in board of directors’ meeting with written independent
directors’ objections or reserved opinions`：`None
2. The recusal of directors with a conflict of interest from discussing the respective motions (shall state the name
of the directors, the contents of the motions, the reasons for recusal, and the participation in voting)`：`No such
situation, so it does not apply.
3. The goals of strengthening the functions of the Board ofDirectors of the year and in recent years by	objectives
and the performance evaluation:`：`TMC has established Independent Directors, Audit Committee, and
Remuneration Committees. To assist the board of directors in fulfilling their supervisory responsibilities,
audit Committees and remuneration committees also regularly reports its activities and resolutions to the
board of directors, assisting the board of directors in making decisions through its professional division of
labor and independent detachment.

(2) Audit Committee’s Meeting

The audit committee’s meeting in 2018: 5 meetings; independent directors’ presence is as below:

The audit committee’s meetingin 2018: 5 meetings;independent directors’presence is as b	elow:
Position Name Presence Deputy Presence (%) (`Ｂ`) (`Ｂ`/`Ａ`)	Remarks
Independent Director Wu Yu-Chiun 5 0 100
Independent Director Ji Yun 5 0 100
Independent Director Hsieh Tai-Ning 4 1 80
Remarks`：`
1. If one of the following circumstances shall state the date of the meeting, proposal content, all opinions from
audit committees and the feedback from the company`：`
A. related to Article 14-5 of the Securities and Exchange Law`：`None
B. except for the above, the matters that are not approved by the Audit Committee but resolved with the
consent of two thirds of the Board members`：`None
2. For the independent directors having themselves excused from attending the meeting due to a conflict of
interest, the name of the independent directors, the content of the motion, the reason for the conflict of interest,
and the participation in voting should be detailed:`：`No such situation, so it does not apply.

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The communication among the independent directors, the internal audit manager, and the independent auditors ：

A. Summary of communication between independent directors and internal audit supervisors

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Date Summary of communication highlights
Internal audit report in Oct.-Dec., 2017.
2018/3/23
Report on the 2017 Internal Control System Statement Proposition.
2018/5/9 Internal audit report in Jan.-Mar., 2018.
2018/8/9 Internal audit report in Apr.-Jun., 2018.
Report to the Company's " Annual Audit Scheme " for 2019.
2018/11/8
Internal audit report in Jul.-Sep., 2018.
B. Summary of communication between independent directors and accountants
Date Summary of communication highlights
CPAs provides assessment of IFRS 16 impact on the company and
discuss with the independent directors.
2018/3/23
CPAs expressed their opinions on the Company's 2017 individual and
consolidated audit results and discuss with the independent director.
CPAs report their results of review on the first quarter 2018
2018/5/9
consolidated and discuss with the independent director.
CPAs expressed their opinions on the second quarter 2018 individual
2018/8/9 and consolidated audit results and discuss with the independent
director.
CPAs report their results of review on the third quarter 2018
2018/11/8
consolidated and discuss with the independent director.
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(3) Composition, responsibilities and operation of the remuneration committee

A. The Members of Compensation Committee:

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With more than 5-year experience and qualified for following
professional aspects Independency Check （ Note ）
Profile At least as an A judge, prosecutor, Field experience Number of other
instructor or above attorney, CPA or other as required in listed firms Remarks
Identity in universities incommerce, law,finance, professional andtechnician required for acorporation who must commerce, law,finance,accounting or 1 2 3 4 5 6 7 8 currently servedof remunerationas the member
Name accounting or have successfully passed business committee
business the national level management
management areas examinations
Independent Hsieh V V V V V V V V V -
Director Tai-Ning
Independent Wu V V V V V V V V V -
Director Yu-Chiun
Chou
other V V V V V V V V V -
Ji-Ren
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Note：The members who have qualified the following conditions two years before being elected andduring the term are to tick the box (“ ”) of the corresponding condition.

(A) Not an employee of the Company or any related party;

(B) Not a director or supervisor of the Company or any related party (except for being an independent director of the Company or any related party, or, the independent directors of subsidiaries that is established by this law or local laws);

(C) Does not hold more than 1% of total stock issued directly or indirectly nor a natural shareholder on the top-ten shareholdings list;

(D) Not the spouse nor a relative within two degrees of lineal consanguinity of an individual falling in the first three categories;

(E) Not a Director, Supervisor, or employee of the legal shareholder that holds over 5% of total stock issued directly or indirectly; or on the top-five shareholdings list of the Company;

(F) Not a Director (executive), Supervisor, management, or a shareholder with over 5% shareholdings of a company or organization that is in business with the Company;

(G) Not an owner, partner, Director, Supervisor, management of a partnership or institution and his/her spouse that provides commerce, law, finance, accounting and consulting service to the Company or related party.

(H) Free of any of the behaviors as defined in Article 30 of Company Act.
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B. Remuneration Committee

(A) Total members in remuneration committee are 3.

(B) Service duty: 2017/6/25-2010/6/24. The remuneration committee’s meeting in 2018: 2 meetings(A), members’ presence is as below:

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Presence Presence (%)
Position Name Deputy Remarks
( Ｂ ) ( Ｂ / Ａ )
Chairman Hsieh Tai-Ning 2 0 100%
Member Wu Yu-Chiun 2 0 100%
Member Chou Ji-Ren 1 0 50%
Remarks ：
1. If board of director don’t accept or adjust the suggestion of remuneration committee, shall state the date
of the meeting, session, proposal content, the resolutions of board of director and the feedback from the
company ： None.
2. Resolutions made in remuneration committee’s meeting with written member’s objections or reserved
opinions shall state the date of the meeting, session, proposal content, all opinions from members and
the feedback from the company ： No objection or reservation by the members of the committee during
each discussion.
3. The discussions and resolutions of remuneration committee and the feedback from the company ：
Date Session Resolutions
A. Retirement pension for ex-president Parkson Chen 【 Approved 】
B. Retirement pension for sales department vice president Shen
Mao-Tian 【 Approved 】
2018/3/23 4-3
C.Proposal of the compensation for new on board finance department
manager Marie Wu was sent to board of directors’ meeting for
resolution 【 Approved 】
2018/11/8 4-4 2018 performance bonus to managers 【 Approved 】
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C. The duty of remuneration committee is:

According to the the Regulations of Remuneration Committee, The Committee shall exercise the care of a good administrator to faithfully perform the following duties and present its recommendations to the board of directors for discussion:

(A) Establish and review periodically the policy, procedure, standards and structure of the performance appraisal and remuneration for directors (incl. independent directors) and managers.
(B) Establish and review periodically the remuneration for directors (incl. independent directors) and managers.

The Committee shall perform the duties under the preceding paragraph in accordance with the following principles:

(A) Performance assessments and compensation levels of directors, and managerial officers shall take into account the general pay levels in the industry. Also to be evaluated are the reasonableness of the correlation between the individual's performance and this Corporation's operational performance and future risk exposure.
(B) There shall be no incentive for the directors or managerial officers to pursue compensation by engaging in activities that exceed the tolerable risk level of this Corporation.
(C) For directors and senior managerial officers, the percentage of bonus to be distributed based on their short-term performance and the time for payment of any variable compensation shall be decided with regard to the characteristics of the industry and the nature of this Corporation's business.
20 -

Compensation" as used in the preceding two paragraphs includes cash compensation, stock options, profit sharing and stock ownership, retirement benefits or severance pay, allowances or stipends of any kind, and other substantive incentive measures. Its scope shall be consistent with the compensation for directors, and managerial officers as set out in the Regulations Governing Information to be published in Annual Reports of Public Companies.

If the board of directors will decline to adopt, or will modify, a recommendation of the remuneration committee, it shall require the consent of a majority of the directors in attendance at a meeting attended by two-thirds or more of the entire board, which in its resolution shall give the comprehensive consideration under the preceding paragraph and shall specifically explain whether the remuneration passed by it exceeds in any way the recommendation of the remuneration committee.

If the remuneration passed by the board of directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified in the board meeting minutes, and shall be publicly announced and reported on the information reporting website designated by the competent authority within 2 days counting from the date of passage by the board of directors.

If decision-making and handling of any matter relating to the remuneration of directors and managerial officers of a subsidiary is delegated to the subsidiary but requires ratification by the board of directors of the parent company, the parent company's remuneration committee shall be asked to make recommendations before the matter is submitted to the board of directors for deliberation.

(4) The member of board of director and important management succession planning

In the succession planning, in addition to the excellent work ability, successors must conform to the company's values. Personality traits must include integrity, commitment, innovation and customer trust. Each month, TMC is personally led by president to conduct regular monthly reports with the middle and high-level supervisors of various departments. The heads of departments report work matters and cross-departmental communication matters. Through the meeting, the ability of key management organizations to formulate strategies can be cultivated. The production and sales meetings led by the sales vice president and consultants every week. Sharing department information from the production and marketing unit and every department can give feedback to achieve management teamwork ability.

In addition, the company arranges higher-level managements for education training from time to time, and enhances the ability to manage and professionally. Through professional ability training, trainees can be integrated and used to cultivate decision-making judgment.

21 -

(5) The state of the company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such departure

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Implementation Status
Incompliance and
Assessment Item
its Reasons
Yes No Explanation
1. Does Company follow “Taiwan Corporate Ｖ TMC had established the corporate governance practices in board of directors’ meeting and posted it on No major deviation
Governance Implementation” to establish and company’s website.
disclose its corporate governance practices?
2. Shareholding Structure & Shareholders’ Rights No major deviation
(1) Does Company has Internal Operation Ｖ (1) TMC has designated spokesperson to handle shareholder suggestions, and assigned legal consultant to
Procedures for handling shareholders’ handle disputes or litigation.
suggestions, concerns, disputes and litigation
matters. If yes, has these procedures been
implemented accordingly?
(2) Does Company possesses a list of major Ｖ (2) TMC tracks the shareholdings of directors, officers, and top ten shareholders. 。
shareholders and beneficial owners of these
major shareholders?
(3) Has the Company built and executed a risk Ｖ (3) TMC has set up internal rules in the Company’s Internal Control System, regulations governing loaning of
management system and “firewall” between the funds, regulations governing the acquisitions and disposals of assets and Affiliated Corporations
Company and its affiliates? Management. Through the establishment of relevant internal policy to establish appropriate risk
management controls. In addition, auditors also regularly monitor implementation.
(4) Has the Company established internal rules Ｖ (4) TMC has established “Procedures for Handling Material Inside Information” and “rules of prevention for
prohibiting insider trading on undisclosed undisclosed information trading”.
information?
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22 -

3. Composition and Responsibilities of the Board of Directors (1) Has the Company established a diversification policy for the composition of its Board of Directors and has it been implemented accordingly? (2) Other than the Remuneration Committee and the Audit Committee which are required by law, does the Company plan to set up other Board committees? (3) Has the Company established methodology for evaluating the performance of its Board of Directors, on an annual basis?	`Ｖ` `Ｖ`	`Ｖ`	(1) TMC re-elected the board directors in 2017 Shareholders’ meeting. There are 7 directors (incl. 3 independent directors) from diverse backgrounds, professional competence and experience. TMC has drawn up the board of directors on the diversification of membership and implementation. See “corporate governance Best Practice Principles” Article 20 of TMC for the policy for diversification of membership. This information is also posted on TMC’s website. The member of TMC board of directors, expertise covers industry and academia. Good at leadership, operational judgment, business management, crisis management, industrial knowledge and international market view is K.J. Wu, Parkson Chen, Tsai Guo-Chi, Tsai Yu-Shian and Hsieh Tai-Ning. Wu Yu-Chiun, who served as the director of the Securities and Futures Bureau, specializes in administrative management and financial affairs. Ji Yun has served in the academic community for a long time. All of them have a lot of guidance on the company's industrial landscape. (2) TMC will set up other functional committee when necessary. (3) The board of director of TMC has approved” governing the board performance evaluation” on 2019/3/20, and will conducted performance evaluations each year regularly in the future. From 2019, at the end of each year, the annual performance evaluation will be carried out according to the” governing the board performance evaluation”. TMC will report the results to the board of directors in the first quarter of the next year. The Company shall take into consideration its condition and needs when establishing the criteria for evaluating the performance of the board of directors, which should cover, at a minimum, the following five aspects: A. Participation in the operation of the company; B. Improvement of the quality of the board of directors' decision making; C. Composition and structure of the board of directors; D. Election and continuing education of the directors; and E. Internal control. The criteria for evaluating the performance of the board members (on themselves or peers), should cover, at a minimum, the following six aspects: A. lignment of the goals and missions of the company; B. wareness of the duties of a director; C. articipation in the operation of the company; D. ement of internal relationship and communication; E. director's professionalism and continuing education; and F. ernal control.	Other than the Remuneration Committee and the Audit Committee, TMC doesn’t set up other Board committes. Other than that, there is no major deviation.

23 -

(4) Does the Company regularly evaluate its external auditors’ independence? `Ｖ` At the end of each year, the units performing evaluations will collect information about the activities of the board of directors and distribute self-evaluation questionnaires such as the Questionnaire of Self-Evaluation of Performance of the Board, the Questionnaire of Self-Evaluation of Performance of Board Members (for Themselves or Peers) to be completed. The unit responsible for evaluation or the secretariat of the board will then collects all information, give scores based on the evaluation indexes, record the evaluation results in a report, and submit the report to the board of directors for discussion and improvement. (4) According to “Certified Public Accountant Act” and “The Norm of Professional Ethics”, TMC regularly evaluate external auditors’ independence. The Board of Directors will evaluate the independence and adequacy of the Company’s auditors according to the Statement of Independence issued by the accounting firm where the auditors belong to and along with the related regulations of the Certified Public Accountant Act. Theresultsof the 2018 evaluations were reported to the Audit Committee on 2018/11/8, and were reviewed and approved by the Board of Directors on the same day. Assessment Result Independence The designated accountant does not have direct or indirect financial interest relationshipwith the Company No Yes The designated accountant does not have a financing or guarantee relationship with the Company or any director or supervisor of the Company. No Yes The designated accountant does not have close business relationship or potential employment relationshipwith the Company. No Yes The designated accountant does / did not currently/ in the recent two years serve as a director, supervisor, or manager of the Company or play a role havingsignificant influence on the audit case. No Yes The non-audit service that the firm of the designated accountant offered to the Company does not have direct influence on any important items of the audit case. No Yes The designated accountant does not promote or act as an intermediate for the shares or other securities issued by the Company. No Yes The designated accountant does not serve as the advocate of the Company nor as the representative of the Company to mediate the dispute between the Companyand anythirdparty. No Yes The designated accountant does not have kinship with any director, supervisor, or manager of the Company or the person having significant influence on the audit service. No Yes	(4) Does the Company regularly evaluate its external auditors’ independence? `Ｖ` At the end of each year, the units performing evaluations will collect information about the activities of the board of directors and distribute self-evaluation questionnaires such as the Questionnaire of Self-Evaluation of Performance of the Board, the Questionnaire of Self-Evaluation of Performance of Board Members (for Themselves or Peers) to be completed. The unit responsible for evaluation or the secretariat of the board will then collects all information, give scores based on the evaluation indexes, record the evaluation results in a report, and submit the report to the board of directors for discussion and improvement. (4) According to “Certified Public Accountant Act” and “The Norm of Professional Ethics”, TMC regularly evaluate external auditors’ independence. The Board of Directors will evaluate the independence and adequacy of the Company’s auditors according to the Statement of Independence issued by the accounting firm where the auditors belong to and along with the related regulations of the Certified Public Accountant Act. Theresultsof the 2018 evaluations were reported to the Audit Committee on 2018/11/8, and were reviewed and approved by the Board of Directors on the same day. Assessment Result Independence The designated accountant does not have direct or indirect financial interest relationshipwith the Company No Yes The designated accountant does not have a financing or guarantee relationship with the Company or any director or supervisor of the Company. No Yes The designated accountant does not have close business relationship or potential employment relationshipwith the Company. No Yes The designated accountant does / did not currently/ in the recent two years serve as a director, supervisor, or manager of the Company or play a role havingsignificant influence on the audit case. No Yes The non-audit service that the firm of the designated accountant offered to the Company does not have direct influence on any important items of the audit case. No Yes The designated accountant does not promote or act as an intermediate for the shares or other securities issued by the Company. No Yes The designated accountant does not serve as the advocate of the Company nor as the representative of the Company to mediate the dispute between the Companyand anythirdparty. No Yes The designated accountant does not have kinship with any director, supervisor, or manager of the Company or the person having significant influence on the audit service. No Yes	(4) Does the Company regularly evaluate its external auditors’ independence? `Ｖ` At the end of each year, the units performing evaluations will collect information about the activities of the board of directors and distribute self-evaluation questionnaires such as the Questionnaire of Self-Evaluation of Performance of the Board, the Questionnaire of Self-Evaluation of Performance of Board Members (for Themselves or Peers) to be completed. The unit responsible for evaluation or the secretariat of the board will then collects all information, give scores based on the evaluation indexes, record the evaluation results in a report, and submit the report to the board of directors for discussion and improvement. (4) According to “Certified Public Accountant Act” and “The Norm of Professional Ethics”, TMC regularly evaluate external auditors’ independence. The Board of Directors will evaluate the independence and adequacy of the Company’s auditors according to the Statement of Independence issued by the accounting firm where the auditors belong to and along with the related regulations of the Certified Public Accountant Act. Theresultsof the 2018 evaluations were reported to the Audit Committee on 2018/11/8, and were reviewed and approved by the Board of Directors on the same day. Assessment Result Independence The designated accountant does not have direct or indirect financial interest relationshipwith the Company No Yes The designated accountant does not have a financing or guarantee relationship with the Company or any director or supervisor of the Company. No Yes The designated accountant does not have close business relationship or potential employment relationshipwith the Company. No Yes The designated accountant does / did not currently/ in the recent two years serve as a director, supervisor, or manager of the Company or play a role havingsignificant influence on the audit case. No Yes The non-audit service that the firm of the designated accountant offered to the Company does not have direct influence on any important items of the audit case. No Yes The designated accountant does not promote or act as an intermediate for the shares or other securities issued by the Company. No Yes The designated accountant does not serve as the advocate of the Company nor as the representative of the Company to mediate the dispute between the Companyand anythirdparty. No Yes The designated accountant does not have kinship with any director, supervisor, or manager of the Company or the person having significant influence on the audit service. No Yes	(4) Does the Company regularly evaluate its external auditors’ independence? `Ｖ` At the end of each year, the units performing evaluations will collect information about the activities of the board of directors and distribute self-evaluation questionnaires such as the Questionnaire of Self-Evaluation of Performance of the Board, the Questionnaire of Self-Evaluation of Performance of Board Members (for Themselves or Peers) to be completed. The unit responsible for evaluation or the secretariat of the board will then collects all information, give scores based on the evaluation indexes, record the evaluation results in a report, and submit the report to the board of directors for discussion and improvement. (4) According to “Certified Public Accountant Act” and “The Norm of Professional Ethics”, TMC regularly evaluate external auditors’ independence. The Board of Directors will evaluate the independence and adequacy of the Company’s auditors according to the Statement of Independence issued by the accounting firm where the auditors belong to and along with the related regulations of the Certified Public Accountant Act. Theresultsof the 2018 evaluations were reported to the Audit Committee on 2018/11/8, and were reviewed and approved by the Board of Directors on the same day. Assessment Result Independence The designated accountant does not have direct or indirect financial interest relationshipwith the Company No Yes The designated accountant does not have a financing or guarantee relationship with the Company or any director or supervisor of the Company. No Yes The designated accountant does not have close business relationship or potential employment relationshipwith the Company. No Yes The designated accountant does / did not currently/ in the recent two years serve as a director, supervisor, or manager of the Company or play a role havingsignificant influence on the audit case. No Yes The non-audit service that the firm of the designated accountant offered to the Company does not have direct influence on any important items of the audit case. No Yes The designated accountant does not promote or act as an intermediate for the shares or other securities issued by the Company. No Yes The designated accountant does not serve as the advocate of the Company nor as the representative of the Company to mediate the dispute between the Companyand anythirdparty. No Yes The designated accountant does not have kinship with any director, supervisor, or manager of the Company or the person having significant influence on the audit service. No Yes	(4) Does the Company regularly evaluate its external auditors’ independence? `Ｖ` At the end of each year, the units performing evaluations will collect information about the activities of the board of directors and distribute self-evaluation questionnaires such as the Questionnaire of Self-Evaluation of Performance of the Board, the Questionnaire of Self-Evaluation of Performance of Board Members (for Themselves or Peers) to be completed. The unit responsible for evaluation or the secretariat of the board will then collects all information, give scores based on the evaluation indexes, record the evaluation results in a report, and submit the report to the board of directors for discussion and improvement. (4) According to “Certified Public Accountant Act” and “The Norm of Professional Ethics”, TMC regularly evaluate external auditors’ independence. The Board of Directors will evaluate the independence and adequacy of the Company’s auditors according to the Statement of Independence issued by the accounting firm where the auditors belong to and along with the related regulations of the Certified Public Accountant Act. Theresultsof the 2018 evaluations were reported to the Audit Committee on 2018/11/8, and were reviewed and approved by the Board of Directors on the same day. Assessment Result Independence The designated accountant does not have direct or indirect financial interest relationshipwith the Company No Yes The designated accountant does not have a financing or guarantee relationship with the Company or any director or supervisor of the Company. No Yes The designated accountant does not have close business relationship or potential employment relationshipwith the Company. No Yes The designated accountant does / did not currently/ in the recent two years serve as a director, supervisor, or manager of the Company or play a role havingsignificant influence on the audit case. No Yes The non-audit service that the firm of the designated accountant offered to the Company does not have direct influence on any important items of the audit case. No Yes The designated accountant does not promote or act as an intermediate for the shares or other securities issued by the Company. No Yes The designated accountant does not serve as the advocate of the Company nor as the representative of the Company to mediate the dispute between the Companyand anythirdparty. No Yes The designated accountant does not have kinship with any director, supervisor, or manager of the Company or the person having significant influence on the audit service. No Yes
4. Does the Company established a full- (or part-) time corporate governance unit or personnel to be in charge of corporate governance affairs(includingbut not	`Ｖ`		TMC has set up a team to handle board of directors’ meetings and shareholders’ meetings, corporate registration and amendment registration, record minutes of board meetings and shareholders meetings.The company's corporate governance related matters are performed by the finance department manager on apart-time basis toprotect shareholders' rights and strengthen the board's	Nomajor deviation

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limited to furnish information required for business execution by directors, handle matters relating to board meetings and shareholders’ meetings according to laws, handle corporate registration and amendment registration, record minutes of board meetings and shareholders meetings, etc.)?			functions. Manager Wu of the Finance Department has been engaged in the management work of accounting and other publicly issued companies for several years. After the resolution of the board of directors was passed on March 20, 2019, the head of corporate governance was set up. The main duties of the company's management personnel are to provide the information required by the directors to conduct business, assist the directors to follow the laws and regulations, and handle matters related to the board of directors and shareholders' meetings in accordance with the law. The business performance of the year 2018 is as follows`：` 1. Assisting independent directors and general directors in performing their duties, providing the required information and arranging director training`：` (1) The board members are regularly notified of the revision of the company's business areas and the latest laws and regulations related to corporate governance. (2) Review relevant information confidentiality levels and provide company information required by directors to maintain communication and communication between directors and business executives (3) Assisting independent directors and general directors in formulating annual refresher plans and arranging courses in accordance with the company's industry characteristics and the background of directors' experience. 2. Assist in the board of directors and shareholders' meeting procedures and resolutions `：` (1) Report to the board of directors, independent directors, and audit committee on the company's corporate governance operations, and confirm whether the company's shareholders' meeting and directors meet the relevant laws and corporate governance rules. (2) Assist and remind the directors of the regulations that should be followed when performing business or making a formal resolution of the board of directors. (3) After the meeting, it is responsible for checking the release of major information of important resolutions of the board of directors, ensuring the legality and correctness of the content of the re-sentence, so as to ensure the investor's transaction information equivalence. 3. Maintain investor relations: Arrange for directors to communicate and communicate with major shareholders, institutional investors or general shareholders as needed, so that investors can obtain sufficient information to evaluate the reasonable capital market value of the company and to maintain good shareholders' rights. 4. Elect the agenda of the board of directors to notify the directors seven days ago, convene the meeting and provide the meeting materials. If the issues need to be avoided, give advance notice and complete the minutes of the board meeting within 20 days after the meeting. 5. Handle the pre-registration of the date of the shareholders' meeting in accordance with the law, make a notice of the meeting within the statutory time limit, discuss the proceedings, and record the proceedings, and apply for change registration in the revised charter or director re-election. The 2018 training courses are as follows: From 2018 May 17th to 18th, , the manager of the finance department conducted the continuing trainingof the accountingsupervisor at the China AccountingResearch and Development

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Foundation of the Republic of China, and completed the three-hour professional training course of
corporate governance.
5. Has the Company established a means of Ｖ TMC built a company website, and set up a communication channel and a stakeholder section to No major
communicating with its Stakeholders address our corporate social responsibilities and any other issues. deviation
(including but not limited to shareholders, 1. Stakeholder category
employees, customers, suppliers, etc.) or The company defines stakeholders as “internal or external groups or individuals who have an
created a Stakeholders Section on its impact on Taiwan's masks or are affected by mask companies”. Based on this definition, the
Company website? Does the Company company's stakeholders include shareholders, investors, employees, customers, suppliers and so
respond to stakeholders’ questions on on.
corporate responsibilities? 2. Interested parties pay attention to issues
After the identification of the stakeholders, based on their influence on the company and the areas
of concern, establish an individual communication platform, and establish a good communication
channel through the responsible units of the company to consolidate the corporate governance,
economic, environmental and social issues of interest to stakeholders. . To assess the most
important issues of concern and to define the key issues affecting the sustainable development of
the Company are “Implementing Business Ethics of Integrity Management”, “Reducing
Operational Environmental Impact”, “Improving Customer Service Satisfaction” and “Social
Welfare and Care”.
3. Stakeholder communication pipeline
Contact Contact Window
Spokesperson –L.C. Lin
Tel – (03)5634370 ext135
Email – [email protected]
Investor Relations
Deputy Spokesperson –Megan Tsai
Tel – (03)5634370 ext118
Email – [email protected]
Customer Contact Window –Mr. Huang
Customer Relations Tel – (03)5634370 ext349
Email – [email protected]
Supplier Contact Window –Ms. Yang
Supplier Relations Tel – (03)5634370 ext371
Email – [email protected]
Employee Contact Window –Ms. Huang
Employee Relations Tel – (03)5634370 ext333
Email – [email protected]
6. Has the Company appointed a professional Ｖ We have appointed China Trust as our registrar for our Shareholders’ Meetings. No major
registrar for its Shareholders’ Meetings? deviation
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7. Information Disclosure No major
(1)Has the Company established a corporate Ｖ (1) The company's website has a special area to expose financial business and corporate governance deviation
website to disclose information regarding information.
its financials, business and corporate
governance status? (2) In addition to the appointment of special personnel to disclose relevant information on a regular
(2) Does the Company use other information Ｖ and irregular basis at the public information observatory as required by the Stock Exchange, the
disclosure channels (e.g. maintaining an Company also reviews the external reports and information from time to time and implements the
English-language website, designating staff spokesperson system in accordance with the regulations. The company website also updates the
to handle information collection and information such as the legal person briefing process.
disclosure, appointing spokespersons,
webcasting investors’ conference etc.)?
8. Has the Company disclosed other Ｖ (1) Employee Rights and Employee Care: Please refer to the “Labor Relations Information” of this No major
information to facilitate a better annual report. deviation
understanding of its corporate governance (2) Investor Relations, Supplier Relationships, and Rights of Interested Persons: Please refer to the
practices (e.g. including but not limited to “Performance of Social Responsibility” of this annual report and the “Interested Persons Area” of
employee rights, employee wellness, the Company's website.
investor relations, supplier relations, rights (3) Directors' training situation: Please refer to the “Director and Manager Training Situation” in this
of stakeholders, directors’ training records, annual report.
the implementation of risk management (4) Implementation of risk management policies and risk measurement standards: Please refer to the
policies and risk evaluation measures, the “Risk Matter Analysis and Evaluation” of this annual report.
implementation of customer relations (5) The company insured liability insurance for all directors every year, and reported the latest
policies, and purchasing insurance for insurance coverage to the board of directors on November 8, 2018 (insurance period from
directors)? October 2, 2018 to October 1, 2019).
9. Please explain the results of the fifth annual corporate governance evaluation issued by the Taiwan Stock Exchange Co., Ltd. Governance Center.
Evaluation index Implementation situation Improve the situation
The company evaluates the independence and eligibility of the visa
accountant at least once a year. The results of the 2018-year evaluation were
Does the company's board of directors regularly (at least once a
reported to the Audit Committee on November 8, 2018, and were reviewed
year) assess the independence of the visa accountant and disclose improved
and approved by the Board of Directors on the same day. These assessment
the assessment process in detail in the annual report?
procedures are also disclosed in detail in the “4. Corporate Governance
Operation Situation” of this annual report.
The Company has passed the “Board Performance Evaluation Method”
resolution on March 20, 2018. The performance evaluation of the Board of
Whether the company’s board performance appraisal method or
Directors should be carried out at least once a year in the future. The
procedure is approved by the board of directors, and Perform Priority improvement
evaluation period should be carried out at the end of each year according to
self-assessment once a year and expose the results of the in the future
the evaluation procedures and evaluation indicators. The annual performance
assessment Company website or annual report?
evaluation, the evaluation results will be reported to the board of directors in
the first quarter of the next year.
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(6) Fulfilling social responsibility

The company's practice of corporate social responsibility is based on the following principles:

Implementing corporate governance

The board of directors of the company shall perform the duty of care of the good managers to supervise the company's practice of social responsibility, and review its implementation effectiveness and continuous improvement at any time to ensure the implementation of corporate social responsibility policies.

The board of directors of the company shall perform corporate social responsibility by the following aspects:

Incorporate corporate social responsibility into the company's operational activities and development direction.
Propose a corporate social responsibility mission (or vision, value) and formulate a corporate social responsibility policy statement.
Ensure that information about corporate social responsibility is disclosed.

Developing a sustainable environment

The company follows environmental regulations and relevant international standards to properly protect the natural environment and is committed to environmental sustainability when performing business activities. The company is committed to improving the efficiency of the use of resources and using recycled materials with low environmental impact, so that the earth's resources can be used sustainably.

The Company considers the impact on eco-efficiency, promotes and educates consumers on the concept of sustainable consumption, and engages in R&D, production and service operations in accordance with the following principles to reduce the impact of the company's operations on the natural environment:

Reduce the resources and energy consumption of products and services.
Discharge of pollutants, toxic substances and wastes, and dispose of waste properly.
Improve the recyclability and reuse of raw materials or products.
Maximize the sustainable use of renewable resources.
Extend the durability of the product.
Increase the effectiveness of products and services.

In order to improve the efficiency of water use, the company should properly and continuously use water resources, and should avoid polluting water, air and land in operation; if it is unavoidable, we will do our utmost to reduce the cost and benefit, technical and financial feasibility. Adverse effects on human health and the environment, adopting the best feasible pollution prevention and control technology measures.

The company should pay attention to the impact of climate change on operational activities, and formulate the company's energy conservation and carbon reduction and greenhouse gas reduction strategies based on operational conditions and greenhouse gas inventory results, and incorporate carbon rights into the company's carbon reduction strategy plan, and Promote to reduce the impact of the company's operations on the natural environment.

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Maintain social welfare

The company complies with relevant labor laws and regulations, protects the legitimate rights and interests of employees, and respects the internationally recognized basic principles of inciting human rights, and must not jeopardize the basic rights of workers. The company's human resources policy should respect the basic labor and human rights protection principles and establish appropriate management methods and procedures.

The company provides a safe and healthy working environment for employees, including providing the necessary health and first aid facilities, and is committed to reducing the hazard to employees' safety and health to prevent occupational disasters. At the same time, the company also regularly implements safety and health education and training for employees, creates a good environment for the development of employees' career, and establishes an effective career development training program.

The company should provide transparent and effective consumer complaint procedures for its products and services, handle consumer complaints fairly and immediately, and comply with relevant regulations to respect the privacy rights of consumers and protect the personal data provided by consumers.

Corporate social responsibility specific promotion situation

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Item Implementation situation
Cohesion of
employees and
February 2018 resumed the long-awaited tail meal meeting.
promote a sense of
belonging
Let employees have a
The salary for employees is increased from 12 months to 14 months.
good salary
December 2018
Warm heart and winter The company shared three to five-layer cakes with colleagues, and warmed
and take care of up for a good year.
farmers At the event, each employee was given one Canadian cabbage, while taking
care of the employees and small farmers.
Caring for foreign December 2018
employees Host a Christmas party to warm up the Filipino colleagues.
December 2018
Caring for employee Physical examination of all employees, the original medical examination of
health NTD$500 per person, increased by one person for NT $1,200 for health
checkups.
January 2019
2019 Spring couplet
Spring Festival charity sale activities, let love continue, a total of
charity sale
NTD$27,300 to raise funds for mustard seed will love the kindergarten.
April 2019
Promote the emotional exchange of employees of the company and serve
2019 Earth Day the community. The clean beach activity is not the end point for stopping
garbage pollution, but it is the best starting point for everyone to kiss the
sea, love the sea and protect the ocean.
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Implementation situation Incompliance and
Evaluation index
Yes NO Summary description its Reasons
1. Implement corporate governance No major deviation
(1) Does the company have a corporate social Ｖ (1) The Company has established a corporate social responsibility code of practice for the
responsibility policy or system and review management of corporate social responsibility, set up a part-time unit to promote corporate
the implementation effectiveness? social responsibility, and is responsible for the formulation and implementation of corporate
social responsibility policies or systems, and will report to the board of directors from time to
time. Conduct a review.
(2) Does the company regularly hold social Ｖ (2) The company promotes education and training courses from time to time, and it also publicizes
responsibility education training? corporate social responsibility matters internally.
(3) Does the company set up a special Ｖ (3) In order to ensure the safety of the work environment and the protection and respect of
(part-time) unit for promoting corporate employees' rights, the company has fulfilled its corporate social responsibility and has taken up
social responsibility, which is authorized by the management responsibility according to the nature of the business. The work is still in line
the board of directors to handle the with the company's commitments.
high-level management and report the The company promotes social enterprise responsibility by the finance department to perform
situation to the board of directors? part-time work, and reports the implementation plan and results to the board of directors. In the
future, the company will continue to implement corporate social responsibility.
department member Job position
Manufacture II environment / Integrate and promote the company's environmental protection,
Health and pollution prevention, safety and health, resource conservation, related
Safety regulations and communication and greenhouse gas tube related work.
Administration Recruitment and retention, remuneration and benefits, physical and
Department Human mental health and safety of employees, education and training and
Resources development, communication and rights protection, and grievance
mechanisms.
Sales Department customer Improve service quality and customer satisfaction, gain customer trust,
service and maintain customer privacy.
Finance Department Information disclosure, dividend policy, tax-related, and properly
Finance handle investors' concerns, help strengthen the board's functions, and
focus on shareholders' rights.
Manufacture II /
Production management Process-related work, including material management, resources;
Manufacture
department / Procurement supplier management, green procurement management, conflict mining
Department
Quality assurance Quality
Product quality and product recall management mechanism.
department assurance
Engineering III/ AI Promote R&D and innovation of technology related to green energy
R&D
Department products.
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Evaluation index	Implementation situation Incompliance and	Implementation situation Incompliance and	Implementation situation Incompliance and
	its Reasons Yes NO Summary description
(4) Does the company have a reasonable salary compensation policy, and combine the employee performance appraisal system with the corporate social responsibility policy, and establish a clear and effective reward and disciplinary system? `Ｖ` (4) The company constructs a salary system based on functions and equal pay for equal work, and depends on factors such as job title, core skills, academic experience, performance, market conditions, and future development of the company, taking into account the retention of outstanding employees and shareholders' equity, and the employee performance appraisal system and The combination of corporate social responsibility policies, through the preparation of working rules by the competent authorities, establishes a clear and effective reward and disciplinary system. In addition, in accordance with Article 23 of the Articles of Association of the Company, the companyshallpayemployees with aprofit of not less than 10% in the currentyear.
2. Developing a sustainable environment (1) Is the company committed to improving the efficiency of the use of resources and using recycled materials that have a low impact on the environmental load? (2) Does the company establish a suitable environmental management system based on its industrial characteristics? (3) Does the company pay attention to the impact of climate change on operational activities, and implement greenhouse gas inventory, formulate corporate energy conservation and carbon reduction and greenhouse gas reduction strategies?	`Ｖ` `Ｖ` `Ｖ`	(1) The company has long been committed to improving the efficiency of resource utilization, such as the ISO9001 process system certification and the annual development of the power saving plan objectives, and reviewing and tracking through regular meetings, in order to make the most efficient use of resources, reduce waste and reduce Carbon, according to the company's commitment to environmental safety and health policy, the use of raw materials to reduce the load on the environment, waste recycling, reduction and reuse. (2) Implementation of the company's environmental management system A. Water Resources Management: Committed to improving water use rates and setting short, medium and long-term goals, with the goal of pursuing sustainable use of water resources. B. Waste management: With “process reduction and resource recovery” as the main axis, waste management is preferred for recycling. (3) The company is committed to environmental protection, responding to green and clean production. Through the implementation of Process Safety Management (PSM) and the institutionalized PDCA management cycle, pollution emissions and environmental impacts are effectively reduced. At the same time, implementation plans and plans are established, and targets are regularly tracked and reviewed. Progress to ensure the goal is achieved. The company has passed ISO14001 management system certification, and the factory department regularly inspects and tracks, implements disaster prevention and pollution prevention, and complies with EU RoHS regulations, and abides by the restrictions of hazardous substances. Through the establishment of ISO14001 environmental management system certification and SGS inspection system, we maintain the quality of environmental management, and do our best to prevent pollution and adhere to the responsibility of society. In recent years, in response to the globalization trend of energy conservation and carbon reduction, the company has actively carried out a series of measures to rectify and rectify, reduce waste, and cherish resources, such as the use of energy-saving lamps for administrative lighting, strengthen the management of air-conditioning, and actively promote electronicization to reduce The amount ofpaper used,without the use of sanitarychopsticks,the use of	No major deviation

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Implementation situation Incompliance and
Evaluation index
Yes NO Summary description its Reasons
environmentally friendly chopsticks, so that employees from the working environment to
deepen the concept of energy saving and carbon reduction, continue to implement waste
reduction, in order to achieve environmental pollution-free goals. And for the environmental
policies promulgated by suppliers, contractors and carriers, we hope that everyone will work
together to protect the environment.
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Evaluation index Implementation situation Incompliance and its Reasons Yes NO Summary description	Evaluation index Implementation situation Incompliance and its Reasons Yes NO Summary description	Evaluation index Implementation situation Incompliance and its Reasons Yes NO Summary description	Evaluation index Implementation situation Incompliance and its Reasons Yes NO Summary description
environmentally friendly chopsticks, so that employees from the working environment to deepen the concept of energy saving and carbon reduction, continue to implement waste reduction, in order to achieve environmental pollution-free goals. And for the environmental policies promulgated by suppliers, contractors and carriers, we hope that everyone will work together to protect the environment.

3. Maintain social welfare (1) Does the company formulate relevant management policies and procedures in accordance with relevant regulations and international human rights conventions? (2) Does the company establish an employee complaint mechanism and pipeline and handle it properly? (3) Does the company provide a safe and healthy working environment for employees and regularly implement safety and health education for employees? (4) Does the company establish a mechanism for regular employee communication and notify the operational changes that may have a significant impact on employees in a reasonable manner? (5) Does the company establish an effective career development training program for	V V V V V	(1) In order to fulfill corporate social responsibility and protect the basic human rights of all colleagues, clients and stakeholders, follow the UN Universal Declaration of Human Rights, the UN Guiding Principles on Business and Human Rights, the UN Global Compact and the UN International Labor The principles promulgated by international human rights conventions such as the organization, the formulation and disclosure of human rights policies, and simultaneous disclosure on the company's website. (2) The company has established an employee complaint mechanism and pipeline to handle employee complaints in a timely manner. (3) In addition to the establishment of the employee welfare committee in accordance with the law, the company also organizes various employee activities and employee health checks to protect employees' physical and mental health.The protection measures for the company's healthy environment and personal safety are as follows: A. Environmental safety (A) Regularly test and maintain fire safety equipment, public facilities and cooperate with the government's decree on the comprehensive smoking ban. (B) Regularly implement the Clean Office of the Office to ensure the safety and comfort of the working environment. B. Fire safety aspects Set up a complete fire protection system in accordance with the provisions of the Fire Protection Law. C. Employee health care Regular staff health checkups are held. (4) The Company communicates to employees through the assembly method that may cause significant impact on operational changes. (5) The company has perfect education and training to help employees develop diverse career opportunities.	No major deviation

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Implementation situation Incompliance and
Evaluation index
Yes NO Summary description its Reasons
employees?
(6) Does the company formulate relevant V (6) The company has a dedicated team of customer service professionals who are responsible for
consumer protection policies and grievance assisting with customer needs and complaints. Work with suppliers to comply with the
procedures for research and development, requirements of the European Union (RoHS) Directive on green environmental protection.
procurement, production, operations and
service processes?
(7) Does the company comply with relevant V (7) Whether the Company's marketing and labeling of products and services are in compliance with
regulations and international standards for relevant laws and international standards, and are clearly marked.
marketing and labeling of products and
services?
(8) Before the company and the supplier, did V (8) The company requires suppliers to comply with corporate social responsibility, and has
they assess whether the supplier had any established a supplier management policy internally, requiring suppliers to provide
record of affecting the environment and environmental hazard non-use declarations, environmental management system verification and
society in the past? safety data sheets.
(9) If the contract between the company and its V (9) The Company arranges regular audits for major suppliers, including various laws and
major suppliers includes suppliers who regulations. If there are illegal or environmentally and socially harmful risks, they cannot pass
have violated their corporate social the audit and may terminate their transactions at any time.
responsibility policies and have significant
environmental and social impacts, may
they terminate or terminate the terms of the
contract at any time?
4. Strengthen information disclosure No major deviation
(1) Does the company disclose relevant V The company has established information on corporate social responsibility that is relevant and
information on corporate social reliable on the company's website, and strengthens communication among stakeholders. Relevant
responsibility with relevance and reliability information has been disclosed at the public information observatory in accordance with relevant
on its website and public information regulations.
observatories?
5. If the company has its own corporate social responsibility code based on the Code of Practice for Corporate Social Responsibility of Listed Companies, please describe the
difference between its operation and the code:
The Company has formulated the “Code of Practice for Corporate Social Responsibility” and there is no significant difference between the actual operation of corporate
social responsibility and the Code.
6. Other important information that helps to understand the operation of corporate social responsibility:
The company's website has been built to expose the corporate social responsibility operation and stakeholder area, and to update the relevant corporate social responsibility
operation situation at any time, which helps to understand the operation of corporate social responsibility.
7. If the company's corporate social responsibility report has passed the verification criteria of the relevant verification agency, it should be stated:
The company has passed ISO9001 process quality management system certification and ISO14001 environmental management system certification, as well as ISO16949
recommendation letter.
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(7) Implementing integrity management

(7) Implementingintegritymanagement
Elti id	Implementation situation Incompliance and
vauaon nex	its Reasons Yes No Summary description
1. Establishing an honest business policy and plan (1) Does the company express its commitment to integrity management policies and practices in its regulations and external documents, as well as the commitment of the board of directors and management to actively implement business policies? (2) Does the company have a plan to prevent dishonesty, and specify operating procedures, behavioral guidelines, disciplinary and grievance systems for violations in each program, and implement them? (3) Does the company adopt preventive measures for the business activities of the Article 7 (2) of the “Listed Companies' Integrity Code of Practice” or the risk of high dishonestyin other business areas? V V V (1) The Company complies with the requirements of various laws and regulations, except that the Board of Directors actively implements the policy of passing the Code of Good Faith, and details the company's policy of integrity management and the situation that the board of directors and management should commit to actively implement the company's integrity management code. (2) In order to promote and promote honesty, the company's integrity management code is published on the company's website for peers to inquire at any time as a basis for personal conduct, and set up a reporting acceptance unit. If a major violation is discovered or the company has significant damages. Immediately, a report was made to inform the independent directors to implement the implementation of the dishonest program. Through the company's internal control system, work rules, pre-employment education and regular promotion, and the supervision of the accounting system, the company's determination to crack down on the malpractice is emphasized, and employees are required to abide by the principle of avoidance of interests and to proclaim the company's policies to suppliers. (3) The company is audited regularly and irregularly by auditors and accountants to actively reflect the company's potential conflicts of interest. No major deviation
2. Implementing integrity management (1) Does the company assess the integrity record of the object of the transaction and specify the terms of good faith in the contract with the transaction partner? (2) Does the company set up a special (part-time) unit that promotes the integrity management of the company under the board of directors, and regularly reports its implementation to the board of directors?	V V	(1) Before the business activities of the company, the legality of the transaction objects and their integrity and integrity records are evaluated to ensure that the parties engage in fair and transparent trading activities, create a level playing field and maintain the company's competitiveness. (2) Honesty and trustworthiness has always been an important business philosophy of the company. From the board of directors to the management of various departments, we are committed to promoting integrity management from different levels. All colleagues should believe in and follow the code of good faith. At the same time, the company has an audit committee and internal control system to supervise the company to comply with legal norms. The designated auditing office of the Company is a dedicated unit. According to the work and scope of each unit, the implementation of the Code of Integrity is ensured, and the full-time unit regularly reports its implementation to the Board of Directors on aquarterlybasis.	No major deviation

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Implementation situation
Incompliance and
Evaluation index
its Reasons
Yes No Summary description
(3) Does the company have a policy to prevent V (3) In order to prevent conflicts of interest policies and provide appropriate representation channels,
conflicts of interest, provide a proper the Company has established a code of good faith practice. Based on the principle of good faith
presentation pipeline, and implement it? management, we conduct business activities in a fair and transparent manner. In addition, the
(4) Has the company established an effective company has specifically formulated a reporting system for illegal (including corruption) and
accounting system and internal control unethical behavior.
system for the implementation of integrity V (4) The accounting system and internal control system of the Company are all formulated in
management, and the internal auditing unit accordance with relevant regulations, and the internal audit unit prepares working papers and
regularly checks it, or entrusts an audit reports on the audit results, submits them to the board of directors, and conducts regular
accountant to perform the check? and irregular audits with accountants.
(5) Does the company regularly hold education V (5) The Integrity Code of Practice has been announced on the Company's website and has been
training inside and outside of integrity announced to employees at the monthly management meeting; safety and health management
management? and inspection, the company has carried out staff health inspection / fire inspection / completion
inspection in the 2018 public security inspection In the course of accounting management and
internal control related to business management, the company received 3 training sessions in
the 2018-year, with a total of 36 hours of course training.
3. Operation of the company's reporting system No major deviation
(1) Does the company have a specific reporting V (1) The company's report on possible violations of the law or the code of conduct may be reported
and reward system, and establish a and reported to the audit room of the company. And establish a survey standard operating
convenient reporting pipeline, and assign procedures for accepting and reporting matters, and a confidentiality mechanism for the identity
appropriate appropriate personnel to the of the prosecutor.
respondent?
(2) Does the company set the investigation V (2) The company formulates the grievance operation procedures, the rights and responsibilities of
standard operating procedures and related the case acceptance and the event handling process, and complies with the law of
confidentiality mechanisms for accepting confidentiality and prohibits retaliation against colleagues. The company's "Integrity Code of
the report? Practice" has a clear standard of investigation procedures for handling complaints and related
confidentiality mechanisms.
(3) Does the company take measures to protect V (3) The company's "Integrity Code of Practice" has a clear acceptance of the report, the
the prosecutor from improper disposal due confidentiality of the identity of the prosecutor and the content of the report, and measures to
to the report? prevent the prosecutor from being improperly disposed of due to the report.
4. Strengthen information disclosure No major deviation
(1) Does the company disclose its content of V In addition to the disclosure of the annual report, the company's website has a corporate governance
the Code of Integrity Code and promote its zone to expose information about integrity management.
effectiveness on its website and public
information observatories?
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Implementation situation
Incompliance and
Evaluation index
its Reasons
Yes No Summary description
5. If the company has its own code of conduct in accordance with the Code of Conduct for the Listed Companies, please describe the difference between its operation and the
code:
The Company's "Integrity Code of Practice" has been approved by the Board of Directors on August 6, 104. There is no difference between the actual operation and the
establishment.
(1) Integrity management Regular awareness concepts and education and training regularly promote the concept of integrity management to all employees:
The Integrity Code of Practice has been published on the Company's website and has been issued to employees on the "Integrity Code of Practice" at the monthly
management meeting.
(2) Declaring the terms of good faith in the contract with the subject.
(3) Establish and announce internal independent reporting mailboxes and special lines on the company website and internal websites:
Instantly update the company website and internal website to establish and announce internal independent reporting mailboxes and special lines.
In the year 2018, no relevant integrity reports were received.
According to the company's integrity management code operation and implementation, there is no difference in actual implementation status.
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Other important information that helps to understand the company's integrity operation (such as the company's review and revision of its established integrity code): None.
36 -
(8) The company has established a code of conduct and related regulations

The company's website has a corporate governance zone for investors to check and download relevant corporate governance regulations, please refer to the company'swebsite. https://www.tmcnet.com.tw/Governace.aspx

A. Articles of Association
B. Funding and other people's operating procedures
C. Acquiring or disposing of assets
D. Measures to prevent internal transactions
E. Internal internal information processing procedures
F. Audit committee organization procedures
G. Organizational procedures for the Compensation Commission
H. Code of Integrity
I. Code of Practice for Corporate Social Responsibility
J. Code of Ethics

In addition to the company's related corporate governance operations, please refer to “(5) The state of the company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies, and the reason for any such departure” on pages 22-27 of this annual report.

(9) Measures for preventing internal line transactions and internal major information processing Procedures In order to establish a good internal information processing and disclosure mechanism of the Company to avoid the improper disclosure of information and to ensure the consistency and correctness of the Company's published information to the outside world, and to strengthen the prevention of insider trading, these measures are formulated for all directors, Managers and company colleagues respect and provide educational propaganda in a timely manner. Please refer to our website for related information.https://www.tmcnet.com.tw/Governace.aspx
37 -
(10) Internal control system implementation status
A. Internal control statement

TAIWAN MASK CORPORATION

Declaration of Internal Control System

Date: 2019/3/23

The internal control system in 2017 conforms to the following declarations made in accordance with the self-inspection conducted:

We understand it is the responsibility of the Company’s management to have internal control system established, enforced, and maintained. The Company has the internal control system established to provide a reasonable assurance for the realization of operating effect and efficiency (including profits, performance, and assets safety), the reliability of financial report, and the obedience of relevant regulations.
Internal control system is designed with limitations; therefore, no matter how perfectly it is designed, an effective internal control system is to ensure the realization of the aforementioned three objectives. Due to the change of environment and condition, the effectiveness of an internal control system could change at any time. Our internal control system is designed with self-monitoring mechanism; therefore, we are able to have corrective actions initiated upon identifying any nonconformity.
We have based on the internal control criteria of “Governing Rules for handling internal control system by public offering companies” (referred to as “the Governing Rules” hereinafter) to determine the effectiveness of internal control design and enforcement. The internal control criteria of the “Governing Rules” is the management control process and with the internal control divided into five elements: 1. Environment control, 2. Risk analysis, 3. Control process, 4. Information and communication, and 5. Supervision. Each element is subdivided into several items. Please refer to the “Governing Rules” for the details of the said items.
We have based on the aforementioned internal control criteria to inspect the effectiveness of internal control design and enforcement.
We believe that our audits provide a reasonable basis for our opinion. On December 31, 2017, those standards require that we plan and perform the audit to obtain reasonable assurance about whether the internal control system (including the supervision and management over the subsidiaries) including the fulfillment of business performance and efficiency, the reliability of financial statements and the obedience of governing regulations, and the design and enforcement of internal control system is free of material misstatement and is able to ensure the realization of the aforementioned objectives.
The Declaration of Internal Control is the content of our annual report and prospectus for the information of the public. For any forgery and concealment of the aforementioned information to the public, we will be held responsible by law in accordance with Securities Transaction Regulation No. 20, No. 32, No. 171, and NO. 174.
We hereby declared that the Declaration of Internal Control was approved by the Board of Directors’ Meeting on March 23, 2018 unanimously by the directors at the meeting.

Taiwan Mask Corporation

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Chairman: K.J. Wu Signature

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President: Yarn Chen Signature

38 -
B. Those who need to entrust an accountant to review the internal control system should disclose the accountant's review report: no such situation.
(11) In the most recent year and the end of the annual report, the company and its internal personnel were punished according to law, and the company violated the internal control system for penalties, major defects and improvement.
A. The company and its internal personnel are punished according to law: no such situation.
B. The company’s penalties for violations of internal control systems by its internal personnel ： no such situation.
C. Major Defects and Improvements ： Not applicable.
(12) 2018 years and the end of the annual report, the important date of the shareholders' meeting and the board of directors
A. Important resolutions of the shareholders' meeting
- The important resolutions and implementation of the 2018-year shareholders' meeting of the Company are as follows ：
- (A) Acknowledged the 2017 Business Report and Financial Statements. Implementation situation ： The resolution was passed.
- (B) Acknowledging the 2017-year loss allocation proposal.
  - Implementation situation ： The resolution was passed.
B. Important resolutions of the board of directors

The board of directors of the company has been printed from January 1, 2018 to the annual report. The important resolutions are as follows ：

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Date Session Important resolution
2018/03/23 Eleventh 2017 business reports and financial reports.
the sixth
The company's 2017 annual loss compensation case.
time
The company's 2017 -year internal control system effectiveness assessment and
statement.
The company's financial and accounting directors appointment and dismissal
Amendment of the "Job Licensing Method".
Revision of the "Accounting System".
Amendment of "Measures for Monitoring Subsidiaries".
The loan to the subsidiary Innova Vision INC.
The loan to the subsidiary Youe Chung Capital Corporation.
Streamlined investment structure.
Date, place and cause of the 2018 the shareholders' meeting.
Ratify the consolidated financing credit loan case of Taiwan Land Bank Hsinchu
Branch.
Ratify the consolidated financing credit loan case of Mega Bank Hsinchu Science Park
Zhucun Branch.
Looking for a strategic cooperation direction.
2018/05/09 The The company's 2018 first quarter consolidated financial report.
seventh
The loan to the subsidiary Miracle Technology Co., Ltd.
time
Ratify the consolidated financing credit loan case of Mega Bank Hsinchu Science Park
Zhucun Branch.
Ratify the forward exchange and foreign exchange of Mega Bank Hsinchu Science
Park Zhucun Branch
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39 -

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Date Session Important resolution
2018/06/13 The eighth Participated in the 2018 raised funds by issuance of new shares of Unicon Optical.
time
The loan to the subsidiary Innova Vision INC.
Ratify the consolidated financing credit loan case of O-Bank Business Department
(Main).
Ratify the consolidated financing credit loan case of Fubon Bank Hsinchu branch.
2018/08/09 The ninth The company's 2018 second quarter consolidated financial report.
time
Revision of Article of Incorporation.
Revision of Regulations Governing the Acquisitions and Disposals of Assets and
Check authority.
Revision of Guidelines for Derivatives Trading and Check authority.
Revision of Regulations Governing Loaning of Funds.
Revision of Regulations Governing Making Endorsements and Guarantees.
Revision of Internal Control.
Revision of corporate governance.
Ratify the Supplementary agreement of consolidated financing credit loan case of
O-Bank Business Department (Main).
Ratify the consolidated financing credit loan case of Yuanta Bank Taoyuan Hsinchu
branch.
Ratify the consolidated financing credit loan case of Cathay Bank.
Ratify the consolidated financing credit loan case of Taishin Bank.
Ratify the consolidated financing credit loan case of CTBC Bank.
Ratify the consolidated financing credit loan case of TCB Bank North Hsinchu branch.
Ratify the consolidated financing credit loan case of Far Eastern Bank.
The loan to the subsidiary Youe Chung Capital Corporation.
Participated in the 2018 raised funds by issuance of new shares of Advagene
Biopharma.
Acquire the equity of the Weida Hi-Tech in cash.
2018/11/08 The CPA change.
tenth time
The company's 2018 third quarter consolidated financial report.
Evaluate external auditors’ independence.
The company’s operating plan (internal financial budget ) for 2019.
The cmpany's annual audit scheme for 2019.
Ratify the consolidated financing credit loan case of KGI Bank.
Ratify the consolidated financing credit loan case and derivative financial products of
Entie Bank.
Ratify the consolidated financing credit loan case of Taiwan Land Bank Hsinchu
branch.
Ratify the consolidated financing credit loan case of Mega Bank Hsinchu Science Park
Zhucun Branch.
Ratify the consolidated financing credit loan case of First Bank.
The implementation situation of Innova Vision INC. loan to the subsidiary overrun
improvement plan.
The supervisor reward plan for 2018.
2019/01/09 The
According to TMC’s Regulations Governing Share Repurchase, Transfer the 25th
eleventh
purchased shares of the company to the manager.
time
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40 -

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Date Session Important resolution
2019/03/20 The 2018 business reports and financial reports.
Twelfth
2018 earnings appropriation proposal.
time
2018 bonus compensation for employees and directors appropriation report.
2019 Shareholders’ Meeting.
The shareholder’s proposal for 2019 Shareholders’ Meeting.
The company's 2018 -year internal control system effectiveness assessment and
statement.
Revision of Article of Incorporation.
Revision of Regulations Governing the Acquisitions and Disposals of Assets.
Revision of Internal Control.
Revision of Regulations Governing Loaning of Funds.
Revision of Regulations Governing Making Endorsements and Guarantees.
Establish the Corporate Social Responsibility Guidelines and Corporate Social
Responsibility Committee setting method.
Establish the evaluating the performance of Board of Directors.
Establish the standard operational protocol for responding to requests from directors.
Establish the issue and delivery of shareholder's souvenirs and methods for collecting
deposits.
TMC’s subsidiary Innova Vision INC. intends to reduce capital to make up for losses
and increase capital, TMC gave up the subscription.
TMC’s subsidiary Youe Chung Capital Corporation intends to invest Aptos Technology.
The loan to the subsidiary Innova Vision INC.
The loan to the subsidiary Youe Chung Capital Corporation.
The loan to the subsidiary Miracle Technology Co., Ltd.
Ratify the consolidated financing credit loan case with bank.
Proposed to be appointed by the CTBC bank as the co-ordinating host bank to form a
joint credit banking group, and apply to the joint credit bank to apply for a joint credit
line.
Appointed Company Secretary
2019/05/08 The The company's 2019 first quarter consolidated financial report.
Thirteenth
Ratify the consolidated financing credit loan case with bank.
time
The Supplementary of proposed to be appointed by the CTBC bank as the
co-ordinating host bank to form a joint credit banking group, and apply to the joint
credit bank to apply for a joint credit line.
TMC’s subsidiary Youe Chung Capital Corporation intends to invest Aptos Technology.
The loan to the subsidiary Youe Chung Capital Corporation.
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(13) Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by the Board of Directors ： None.
(14) Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D

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2019/5/23
Dismissal
Position Name Office Date Dismissal Reason
Date
Vice President Shen Mao-Tian 1989/1/4 2018/3/31 Retirement
Finance/ Job transfer to special
Liao Sheng-Foo 1999/7/13 2018/3/23
AccountingManager assistant of Chairman(Note)
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Note ： Due to his personal career planning, he was dismissed the special assistant of Chairman in February 2008 and retired.

41 -

5. Fee of CPA

(1) Fee of CPA

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Auditing
Accounting Firm CPA’s Name Remark
Period
2017.01.01~
Roger Hsueh Daniel Lee Cooperate with the CPA's internal rotation
PriceWaterHouse 2018.06.30
Coopers 2018.07.01~
Tina Cheng Daniel Lee Cooperate with the CPA's internal rotation
2018.12.31
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Note ： The original accountant of TMC is Roger Hsueh Accountant and Daniel Lee Accountant. Due to cooperate with the CPA's internal rotation, since the third quarter of 2018, the financial report accountant has been changed to Tina Cheng Accountant and Daniel Lee Accountant. This adopted by the Audit Committee and the Board of Directors on November 8, 2018.

Unit ： NTD$ thousand

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Non-auditing fees
Auditing Auditing
Accounting Firm CPA’s Name fees System Human Sub Period Remark
Design [Registration] Resource [others] total
Roger Hsueh 2018.01.01~
PriceWaterHouse Daniel Lee 2018.06.30
5,960 0 0 0 841 841 Note
Coopers Tina Cheng 2018.07.01~
Daniel Lee 2018.12.31
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Note ： A. The above fees paid to the certified public accountant are to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm.
(A) TMC ： Auditing fees is NTD$4,900 thousand, non-auditing fees is NTD$100 thousand (Legal advice and agenda review etc.).
(B) Subsidiary-Innova Vision INC ： auditing fees is NTD$ 310 thousand, non-auditing fees is NTD$ 140 thousand (Handling capital change and Calaview equity transfer service).
(C) Subsidiary-Miracle Technology Co., Ltd ： auditing fees is NTD$500 thousand.
(D) Subsidiary-Innova Technology Company ： auditing fees is NTD$100 thousand.
(E) Subsidiary-Yu-chang Investment ： non-auditing fees is NTD$15 thousand (Handling surplus to capital increase, issuing new shares change registration and capital amount audit service).
(F) Subsidiary ： Youe Chung Capital Corporation-auditing fees is NTD$ 150 thousand, non-auditing fees is NTD$ 586 thousand (Handling the Youe Chung Capital Corporation and merger of Yu-chang Investment).
B. The original accountant of TMC is Roger Hsueh Accountant and Daniel Lee Accountant. Due to cooperate with the CPA's internal rotation, since the third quarter of 2018, the financial report accountant has been changed to Tina Cheng Accountant and Daniel Lee Accountant. This adopted by the Audit Committee and the Board of Directors on November 8, 2018.
(2) When non-audit fees paid to the certified public accountant, to the accounting firm of the certified public accountant, and/or to any affiliated enterprise of such accounting firm are one quarter or more of the audit fees paid thereto, the amounts of both audit and non-audit fees as well as details of non-audit services ： None.
(3) If the company changes accounting firm and the amount of audit fee paid in the year of change is less than that in the year before, the amount of decrease and reason ： None.
(4) If the audit fee is more than 15% less than that paid in the previous year, the amount and percentage of decrease and reason ： None.
42 -

6. Information of Changing CPA

(1) Regarding previous CPA

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Date of change July 1, 2018
The attesting CPA of the Company was previously assigned to CPA
Roger Hsueh and Daniel Lee of PricewaterhouseCoopers Taiwan and
Reason for the change and
has been changed to CPA Tina Cheng and CPA Daniel Lee starting
explanation
third quarter of 2018 in compliance with internal adjustment of the
certifying CPA firm.
Client
CPA Commissioner
Termination initiated by client or Status
accountant declined to accept the Commission －－
appointment terminated voluntarily
－－
Commission rejected
(not renewed)
Audit opinions other than
－
unqualified opinions issued in the
past two years and reasons
－
Accounting principle or practice
－ Disclosure of financial report
Yes
－ Auditing scope or procedures
Opinions different from those of
－ Others
issuer
－
No V
Explanation
Other disclosure matters
(disclosures required by Article 10
None
Section 6 Paragraph 1 Point 4&7 of
the Standards)
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(2) Regarding succeeding CPA

2)RegardingsucceedingCPA
CPA Firm	PricewaterhouseCoopers Taiwan
Name of CPA	Tina Chengand Daniel Lee
Date of appointment	July1, 2018
Consultation given on accounting treatment or accounting principle adopted for any specific transactions and on possible opinion issued on financial report prior to appointment and results	None
Succeeding CPAs' written opinions that are different from those of theprevious CPAs	None

(3) The former CPA's reply to matters under Items 1 and 2-3, Subparagraph 6, Article 10 of the Regulations Governing Information to be published in Annual Reports of Public Companies ： None.

7. Chairman, president, finance or accounting manager who had been served in the CPA firm or related firm in recent year `：` None.

43 -

8. Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Department Heads and Shareholders of 10% Shareholding or More

(1) Information on Net Change in Shareholding

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2018 As of 2019/4/13
Pledged Pledged
Position Name Holding Holding Holding Holding
Increase Increase
Increase Increase
(Decrease) (Decrease)
(Decrease) (Decrease)
Chairman K.J. Wu - - 1,000,000 -
Director Parkson Chen (1,307,000) (1,100,000) (399,000) -
Director Full-Shue Investment
(690,000) - - -
Rep: Tsai Guo-Chi
Director Tsai Yu-Shian - - 5,000 -
Independent Wu Yu-Chiun - - - -
Director
Independent Ji Yun - - - -
Director
Independent Hsieh Tai-Ning - - - -
Director
President Yarn Chen - - - -
Vice President Vincent Tsai - - - -
Shen Mao-Tian
Vice President - - - -
(Dismissal Date ： 2018/3/31)
Finance/
Marie Wu
Accounting (Office Date ： 2018/1/15) - - - -
Manager
Finance/
Accounting Liao Sheng-Foo(Dismissal Date ： 2018/3/23) - - - -
Manager
Holding more Chairman of Youe Chung
than 10% Capital Corporation 37.081.440 - - -
shareholders (Office Date ： 2018/5/31)
Holding more
than 10% Yu-chang Investment - - -
(Dismissal Date ： 2018/5/31) [(37,081,440)]
shareholders
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Note ： Youe Chung Capital Corporation is the shareholder who holds more than 10% of TMC’s shares.

(2) Information of shares transferred ： None.

(3) Information of equity pledged ： None.

44 -

9. The relation of the top ten shareholders as the definition of related parties or relatives within second degree

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Name and Relationship
Shareholding
Current Spouse’s/minor’s Between the Company’s Top
by Nominee
Name Shareholding Shareholding Ten Shareholders, or Spouses or Remarks
Arrangement
Relatives Within Two Degrees
Shares % Shares % Shares % Name Relationship
Youe Chung Capital Corporation 37,081,440 14.67% - - - - -
Youe Chung Capital CorporationRep: Yarn Chen - - - - - - -
Father &
Chao-I, Wu 7,277,000 2.88% - - - - K.J. Wu -
Daughter
Full-Shue Investment 6,364,000 2.52% - - - - -
Full-Shue Investment
Rep: Tsai Guo-Chi - - - - - - -
INVESCO INT BUYBACK
3,517,000 1.39% - - - - -
ACHIEVERS ETF
Father &
K.J. Wu 3,282,000 1.30% 564,000 0.22% - - Chao-I, Wu -
Daughter
Parkson Chen 3,185,127 1.26% 862,892 0.34% - - -
Yung-Hsiang, Chang 2,635,000 1.04% - - - - -
Chin-Hua, Chiu 2,376,000 0.94% - - - - -
Cheng-Hsiang, Chen 2,306,000 0.91% - - - - -
Yu-Chen, Lai 2,224,850 0.88% - - - - -
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10. Investment from directors, managers, and directly or indirectly controlled businesses

2018/12/31

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Direct or Indirect
Ownership by the Company Total Ownership
Ownership by Directors,
Affiliated Enterprises
Supervisors, Managers
Shares % Shares % Shares %
SunnyLake Park International 6,344,000 100% - - 6,344,000 100%
Holdings,Inc.
Youe Chung Capital Corporation 142,329,470 100% - - 142,329,470 100%
Innova Vision INC. 5,203,956 30.26% 5,514,596 32.06% 10,718,552 62.32%
Miracle Technology Co., Ltd. 18,287,168 100% - - 18,287,168 100%
Weida Hi-Tech 25,510,500 100% - - 25,510,500 100%
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Note ： Affiliated enterprises are the companies held as equity-investments.

45 -

IV. Stock Subscription

1. Capital and Shares

(1) Capital History

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Unit ： Shares ； NTD
Authorized shares Paid-in Capital Remarks
Year/ Par Capital Increased
Month value Shares Amount Shares Amount Source by Assets Other others
than Cash
1988/10 $10.00 35,000,000 $350,000,000 8,750,000 $87,500,000 Note(1)
1990/06 $10.00 35,000,000 $350,000,000 35,000,000 $350,000,000 Note(2)
1991/05 $10.00 50,000,000 $500,000,000 40,250,000 $402,500,000 Note(3)
1992/07 $10.00 50,000,000 $500,000,000 44,275,000 $442,750,000 Note(4)
1995/06 $10.00 70,000,000 $700,000,000 55,883,750 $558,837,500 Note(5)
1996/04 $10.00 70,000,000 $700,000,000 64,427,500 $644,275,000 Note(6)
1996/06 $10.00 100,000,000 $1,000,000,000 88,077,125 $880,771,250 Note(7)
1997/04 $10.00 100,000,000 $1,000,000,000 100,000,000 $1,000,000,000 Note(8)
1997/06 $10.00 250,000,000 $2,500,000,000 146,700,000 $1,467,000,000 Note(9)
1998/07 $10.00 270,000,000 $2,700,000,000 237,420,000 $2,374,200,000 Note(10)
1999/08 $10.00 389,000,000 $3,891,000,000 267,287,969 $2,672,879,690 Note(11)
1999/10 $10.00 389,000,000 $3,891,000,000 267,290,313 $2,672,903,130 Note(12)
2000/08 $10.00 389,000,000 $3,891,000,000 294,037,400 $2,940,374,000 Note(13)
2000/12 $10.00 389,000,000 $3,891,000,000 331,189,900 $3,311,899,000 Note(14)
2001/07 $10.00 450,000,000 $4,500,000,000 374,784,587 $3,747,845,870 Note(15)
2002/08 $10.00 500,000,000 $5,000,000,000 424,917,953 $4,249,179,530 Note(16)
2003/06 $10.00 500,000,000 $5,000,000,000 398,093,953 $3,980,939,530 Note(17)
2003/09 $10.00 500,000,000 $5,000,000,000 399,593,953 $3,995,939,530 Note(18)
2003/11 $10.00 500,000,000 $5,000,000,000 398,181,953 $3,981,819,530 Note(19)
2004/06 $10.00 500,000,000 $5,000,000,000 379,443,953 $3,794,439,530 Note(20)
2004/08 $10.00 500,000,000 $5,000,000,000 369,443,953 $3,694,439,530 Note(21)
2004/10 $10.00 500,000,000 $5,000,000,000 370,943,953 $3,709,439,530 Note(22)
2004/12 $10.00 500,000,000 $5,000,000,000 361,963,953 $3,619,639,530 Note(23)
2005/09 $10.00 500,000,000 $5,000,000,000 359,498,953 $3,594,989,530 Note(24)
2006/02 $10.00 500,000,000 $5,000,000,000 353,902,953 $3,539,029,530 Note(25)
2008/05 $10.00 500,000,000 $5,000,000,000 351,072,953 $3,510,729,530 Note(26)
2008/10 $10.00 500,000,000 $5,000,000,000 345,072,953 $3,450,729,530 Note(27)
2009/01 $10.00 500,000,000 $5,000,000,000 335,072,953 $3,350,729,530 Note(28)
2009/11 $10.00 500,000,000 $5,000,000,000 338,908,953 $3,389,089,530 Note(29)
2010/09 $10.00 500,000,000 $5,000,000,000 288,072,611 $2,880,726,110 Note(30)
2011/09 $10.00 500,000,000 $5,000,000,000 282,072,611 $2,820,726,110 Note(31)
2011/11 $10.00 500,000,000 $5,000,000,000 277,871,611 $2,778,716,110 Note(32)
2011/12 $10.00 500,000,000 $5,000,000,000 271,871,611 $2,718,716,110 Note(33)
2012/08 $10.00 500,000,000 $5,000,000,000 270,090,611 $2,700,906,110 Note(34)
2012/11 $10.00 500,000,000 $5,000,000,000 262,713,611 $2,627,136,110 Note(35)
2015/10 $10.00 500,000,000 $5,000,000,000 252,713,611 $2,527,136,110 Note(36)
----- End of picture text -----

Note ：

(1) The founding capital On October 21 1988 was NTD$87,500,000.
(2) Under the Letter of Approval from the SFC on March 16 1990, SFC (79) Tai Tsai Cheng (I) No. 000474, the company was permitted to public offering and raised funds by issuance of new shares at 262.5 million NTD.
(3) Under the Letter of Approval from the SFC on May 14 1991, SFC (80) Tai Tsai Cheng (I) No. 000999, the company was permitted to capitalize the retained earnings into equity at the amount of 52.5 million NTD.
(4) Under the Letter of Approval from the SFC on July 20 1992, SFC (81) Tai Tsai Cheng (I) No. 001738, the company was permitted to capitalize the retained earnings into equity at the amount of 40.25 million NTD.
(5) Under the Letter of Approval from the SFC on June 30 1995, SFC (84) No. Tai Tsai Cheng (I) No. 378708, the company was permitted to capitalize the retained earnings into equity at the amount of 116.0875 million NTD.
(6) Under the Letter of Approval from the SFC on January 5 1996, SFC (85) Tai Tsai Cheng (I) No. 64745, the company was permitted to raise funds by issuing new shares at the amount of NTD$85,437,500.
(7) Under the Letter of Approval from the SFC on June 10 1996, SFC (85) Tai Tsai Cheng (I) No. 368278, the company was permitted to capitalize the retained earnings into equity at the amount of NTD$236,496,250.
(8) Under the Letter of Approval from the SFC on December 21 1996, SFC (85) Tai Tsai Cheng (I) No. 71905, the company was permitted to raise funds by issuing new shares at the amount of NTD$119,228,750.
(9) Under the Letter of Approval of the SFC on June 5 1997, SFC (86) Tai Tsai Cheng (I) No. 451508, the company was permitted to capitalize the retained earnings into equity at the amount of 367 million NTD, and from capital reserves the amount of 100 million NTD.
46 -
(10) Under the Letter of Approval of SFC on July 8 1998, SFC (87) Tai Tsai Cheng (I) No.57619, the company was permitted to capitalize the retained earnings and capital reserve into equity at the amount of 628.47 million NTD and 278.73 million NTD respectively.
(11) Under the Letter of Approval of the SFC on May 20 1999, SFC (88) Tai Tsai Cheng (I) No. 47567, the company was permitted to capitalize the retained earnings into equity at the amount of NTD$292,665,680., and raise funds by issuing corporate bonds as equity at the amount of NTD$6,014,001.
(12) In October 1999, the corporate bonds were converted into equity at the amount of NTD$23,440.
(13) Under the Letter of Approval from the SFC on June 29 2000, SFC (89) Tai Tsai Cheng (I) No. 56329, the company was permitted to capitalize the capital reserve into equity at the amount of NTD$267, 290,310 and convert corporate bonds into equity at the amount of NTD$180,560.
(14) Under the Letter of Approval from the SFC on November 9 2000, SFC (89) Tai Tsai Cheng (I) No.90247, the company was permitted to raise funds from numerous sources for a total of NTD$371,525,000.
(15) Under the Letter of Approval from the SFC on May 22 2001, SFC (90) Tai Tsai Cheng (I) No. 131546, the company was permitted to capitalize the retained earnings into equity at the amount of NTD$435,946,870.
(16) Under the Letter of Approval from the SFC on June 18, SFC Tai Tsai Cheng (I) No. 0910132958, the company was permitted to capitalize the retained earnings into equity at the amount of NTD$501,333,660.
(17) Under the Letter of Approval from the SFC on December 19 2002 , SFC Tai Tsai Cheng (III) No. 0910167268, February 26 2003, SFC Tai Tsai Cheng (III) No. 0920106285, June 12 2003, SFC Tai Tsai Cheng (III) No. 0920126614, the company was permitted to decrease capital by repurchase treasury stocks for preserving the shareholders’ equity.
(18) Capitalization of retained earnings amounted to NTD$ 15 million approved under the Letter Tai-Tsai-Chen-Tze (I) No. 0920131289 issued by the Securities and Futures Commission of the Ministry of Finance dated July 17 2003.
(19) Repurchased of bonus stocks to employees without being transferred in three years under the Letter (89)Tai-Tsai-Chen-Tze (III) No. 98643 issued by the Securities and Futures Commission of the Ministry of Finance dated December 6 2000 resulted in the capital reduction of NTD$14,120,000.
(20) Under the Letter of Approval from the SFC on June 3 2004, SFC Tai Tsai Cheng (III) No. 0930124885, the company was permitted to decrease capital of NTD$187,380,000 by repurchase treasury stocks for preserving the shareholders’ equity.
(21) Under the Letter of Approval from the SFB on July 7 2004, SFB Jing Kung Cheng (III) No. 0930130255, the company was permitted to decrease capital of NTD$100,000,000 by repurchase treasury stocks for preserving the shareholders’ equity.
(22) Under the Letter of Approval from the SFB on July 27 2004, SFB Jing Kung Cheng (I) No. 0930133470, the company was permitted to capitalize the retained earnings into equity at the amount of NTD$15,000,000.
(23) Under the Letter of Approval from the SFB on September 1 2004, SFB Jing Kung Cheng (III) No. 0930139490, the company was permitted to decrease capital of NTD$89,800,000 by repurchase treasury stocks for preserving the shareholders’ equity.
(24) Under the Letter of Approval from the SFB on June 2005, SFB Jing Kung Cheng (III) No. 0940124037, the company was permitted to decrease capital of NTD$24,650,000 by repurchase treasury stocks for preserving the shareholders’ equity.
(25) Under the Letter of Approval from the SFB on December 2005, SFB Jing Kung Cheng (III) No. 0940159771, the company was permitted to decrease capital of NTD$55,960,000 by repurchase treasury stocks for preserving the shareholders’ equity.
(26) Under the Letter of Approval from the SFB in autumn 2008, SFB Jing Kung Cheng (III) No. 0970015115, the company was permitted to decrease capital of NTD$28,300,000 by repurchase treasury stocks for preserving the shareholders’ equity.
(27) Under the Letter of Approval from the SFB on September 2008, SFB Jing Kung Cheng (III) No. 0970026404, the company was permitted to decrease capital of NTD$60,000,000 by repurchase treasury stocks for preserving the shareholders’ equity.
(28) Under the Letter of Approval from the SFB on December 2008, SFB Jing Kung Cheng (III) No. 0970035293, the company was permitted to decrease capital of NTD$100,000,000 by repurchase treasury stocks for preserving the shareholders’ equity.
(29) Increase capital into NTD$38,360,000 for employees’ subscription warrants use.
(30) The capital reduction of NTD$508,363,420 was approved by Letter of Jin-Kuan-Cheng-3-Tzu No. 0990035554 of Financial Supervisory Commission, Executive Yuan on July 29, 2010.
(31) The capital reduction of NTD60,000,000 was approved by Letter of Jin-Kuan-Cheng-3-Tzu No. 1000046532 of Financial Supervisory Commission, Executive Yuan on 2010/09/22.
(32) The capital reduction of NTD42,010,000 was approved by Letter of Jin-Kuan-Cheng-3-Tzu No. 10000517786 of Financial Supervisory Commission, Executive Yuan on 2011/11/22.
(33) The capital reduction of NTD60,000,000 was approved by Letter of Jin-Kuan-Cheng-3-Tzu No. 1000063425 of Financial Supervisory Commission, Executive Yuan on 2011/12/26.
(34) The capital reduction of NTD41,820,000 was approved by Letter of Jin-Kuan-Cheng-3-Tzu No. 1010035989 of Financial Supervisory Commission, Executive Yuan on 2012/08/14.
(35) The capital reduction of NTD31,950,000 was approved by Letter of Jin-Kuan-Cheng-3-Tzu No. 1010049862 of Financial Supervisory Commission, Executive Yuan on 2012/11/02.
(36) The capital reduction of NTD100,000,000 was approved by Letter of Jin-Kuan-Cheng-3-Tzu No. 1040043244 of Financial Supervisory Commis[sion, Executive Yuan on 2015/10/26.]
47 -

(2) The types of outstanding shares as of the date this report is printed

				2019/4/13 Unit`：`Shares
Types of	Authorized capital
shares	Outstanding shares	Un-issued shares	Total	Remarks
Common shares	252,713,611	247,286,389	500,000,000	Stocks listed on the TSE

Note ： Outstanding shares contain 20,000,000 shares of treasury stock (doesn’t written off).

(3) Shelf Registration `：` None.

(4) Structure of Shareholders

4) Structure of Shareholders	4) Structure of Shareholders	4) Structure of Shareholders	4) Structure of Shareholders	4) Structure of Shareholders	4) Structure of Shareholders	4) Structure of Shareholders	4) Structure of Shareholders
2019/4/13 Unit`：`Shares`；`%
Shareholder Quantity Government Agencies Financial Institutions Other institutional shareholders QFII and foreign nationals Individuals Treasury stocks Total
Total number	0 6 82 52 35,045 1 35,186
Shares held	0 76,715 52,361,982 6,202,727 174,072,187 20,000,000 252,713,611
HoldingProportion	0.00%	0.03%	20.72%	2.45%	68.89%	7.91%	100.00%

(5) Dispersion of shareholding

A. Common shares

2019/4/13

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Number of
Holding Shares Total Shares Holding ％
Shareholders
1 ~ 999 16,142 3,179,998 1.26%
1,000 ~ 5,000 14,200 31,112,424 12.31%
5,001 ~ 10,000 2,531 20,040,613 7.93%
10,001 ~ 15,000 679 8,669,011 3.43%
15,001 ~ 20,000 524 9,755,596 3.86%
20,001 ~ 30,000 375 9,675,904 3.83%
30,001 ~ 50,000 340 13,912,174 5.51%
50,001 ~ 100,000 217 15,556,540 6.16%
100,001 ~ 200,000 95 13,148,863 5.20%
200,001 ~ 400,000 35 9,684,288 3.83%
400,001 ~ 600,000 17 8,242,956 3.26%
600,001 ~ 800,000 7 4,841,893 1.92%
800,001 ~1,000,000 6 5,257,934 2.08%
More than 1,000,001 shares 18 99,635,417 39.42%
Total 35,186 252,713,611 100.00%
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B.Preferred stock ： None.

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2019/4/13

(6) Major Shareholders

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

Shares
Holding Shares Holding ％
Name
Youe Chung Capital Corporation 37,081,440 14.67%
Chao-I, Wu 7,277,000 2.88%
Full-Shue Investment 6,364,000 2.52%
INVESCO INT BUYBACK ACHIEVERS ETF 3,517,000 1.39%
K.J. Wu 3,282,000 1.30%
Parkson Chen 3,185,127 1.26%
Yung-Hsiang, Chang 2,635,000 1.04%
Chin-Hua, Chiu 2,376,000 0.94%
Cheng-Hsiang, Chen 2,306,000 0.91%
Yu-Chen, Lai 2,224,850 0.88%
----- End of picture text -----

(7) The market price, net value, earnings, dividend and related information on each outstanding share for the past two years

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

Year AS of 2019/3/31
2018 2018
Item （ Note 8 ）
Market price High 20.55 37.65 28.05
per share Low 8.63 15.60 16.80
（ Note 1 ） Average 16.19 28.15 24.39
Net value Before dividends were paid-out 12.30 13.08 13.42
per share
（ Note 2 ） After dividends were paid-out - (Note 9) (Note 10)
Earnings per Weighted average number of shares (in thousands) 225,910 195,632 195,632
share Earnings per share （ Note 3 ） (0.33) 1.02 0.31
Cash dividend - (Note 9) (Note 10)
Dividend Stock Stock Dividend from Retained earnings - (Note 9) (Note 10)
per share dividend Stock Dividend from Capital Reserve - (Note 9) (Note 10)
Accumulated unpaid dividend （ Note 4 ） - - (Note 10)
P/E Ratio （ Note 5 ） (49.06) 27.60 (Note 10)
Analysis on P/P Ratio （ Note 6 ） - (Note 9) (Note 10)
ROI
Dividend Yield （ Note 7 ） - (Note 9) (Note 10)
----- End of picture text -----

Note 1: Indicating the high and low market price, the average price is calculated by dividing the value of outstanding shares by the total number of outstanding shares.
Note 2: Calculated by the profit allocation decision resolved by shareholders’ meeting held next year and the number of outstanding shares in the end of this year.
Note 3: When there is adjustment for stock dividend, the earnings per share before the adjustment and after the adjustment shall be both disclosed.

Note 4: When issuing equity security with a condition of reserving dividend, the unpaid accumulated dividend shall be disclosed.

Note 5: P/E ratio=average price at close for each share for the year/earnings per share.

Note 6: P/P ratio= average price at close for each share for the year/cash dividend per share.

Note 7: Cash Dividend Yield= Cash dividend per share/average price at close for each share for the year.

Note 8: Each net value and EPS shall be filled to the print date of annual report with the data attested (reviewed) by the CPA in last quarter. The other columns should also be filled up to the current year data as of the print date of the annual report.

Note 9: Pending for shareholders’ approval.

Note 10: None.

(8) Dividend Policy and Status of Execution

A. Dividend Policy

The company will consider the overall environment and the special characteristics for the growth of the industry, long-term financial requirements as planned and stable growth when declaring dividends. Therefore, dividends will be allocated after the earnings have been allocated for retained earnings in order to meet the demand for capital. Capital requirements for the company shall be based on the capital budget. The procedure for allocating dividends is as follows:

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 - `（` A `）` Map out the optimal capital budget.

 - `（` B `）` Figure out the capital resource for enforcing the budget.

 - `（` C `）` The amount of financing required for the budget will be deducted from the retained earnings (the amount short will be covered by funds raised from issuing new shares of capital stocks of corporate debts).

 - `（` D `）` A percentage from the remainder of the earnings shall be set aside as working capital and the rest will be allocated as dividends. In principle, the proportion for cash dividend should not exceed 20% of total dividend allocated.

B. The proposal of dividend allocation for this shareholders’ meeting
- TMC has drawn up the 2018 year surplus distribution case on the board of directors on March 20, 2019.TMC proposes to distribute cash dividend at the rate of NTD$194,083,152 (NTD$0.834 per share) in the 2018 Shareholders’Meeting.
C. Description of significant changes in expected dividend policies ： None.
(9) The influence of issuing stock dividend as proposed in this shareholders’ meeting on the operation performance and earnings per share of the company ：

No stock dividend issuing proposal will be submitted to the shareholders’ meeting.

(10) Remuneration to Employees and directors
A. Scope of remuneration to employees and directors referred to in the Articles of Incorporation ： The amount to cover accumulated loss shall be reserved from the earnings of this year, and no less than 10% of the balance as the remuneration to employees and no more than 2% of the balance as the remuneration to directors.
- The remuneration to employees shall be paid by cash or stock, and the counterparts entitled to receive remuneration to employees referred to in the preceding paragraph shall include employees of the Company’s subsidiaries.
- The earnings referred to in the preceding paragraph are the net income before tax, remuneration to employees and directors.
- When paying remuneration to employees and directors, the resolution shall be made upon 2/3 of directors’ presence and 1/2 of the presented directors’ agreement in the board of director meeting. Then the resolution shall be reported in shareholders’ meeting.
B. The basis for estimating the amount of employee, director, and supervisor compensation, for calculating the number of shares to be distributed as employee compensation, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period ：
- The basis for estimating the amount of employee and director is base on the company's articles of association.

In the case of the accounting treatment of the discrepancy between the actual distributed amount and the estimated figure, it shall be identified as accounting changes and stated as the income of the year of allocation.

C. The 2017 remuneration allocated to employees and directors ：

Unit ： NTD

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

Proposal Proposed by board Actual Allocation by
Difference
of directors Shareholders' meeting
1. Allocation
Director remuneration 0 0 No
employee remuneration-in cash 0 0 No
employee remuneration-in stock 0 0 No
2. Earnings per share
Original Earnings per share (0.33) (0.33) No
Set Earnings per share (0.33) (0.33) No
----- End of picture text -----

50 -

D. The board of directors passed the 2018 remuneration allocated to employees and directors `：`

Unit ： NTD

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

Proposal Proposed by board Actual Distribution by
Difference
of directors Shareholders' meeting
1. Allocation
Director remuneration 5,107,944 Note Note
employee remuneration-in cash 25,964,995 Note Note
employee remuneration-in stock - -
2. Earnings per share
Original Earnings per share 1.02 Note Note
Set Earnings per share 1.02 Note Note
----- End of picture text -----

Note ： Pending for shareholders’ approval. There is no difference between the aforementioned compensation

of employees, directors and supervisors and the amount recognized in the board meeting’s approval in March 20, 2019.

E. Linkage between directors' performance evaluation and salary compensation

The remuneration to directors shall be paid by the directors in accordance with the provisions of No. 23 of the Articles of Association, with a profit of not more than 2% of the current year. Consider the company's operating results, and give reasonable compensation by contribution and performance; the general manager and manager's policy of paying compensation, based on the salary level of the position in the same industry, the scope and responsibility of the position in the company, and the contribution of the company's operational objectives is paid. The procedures for setting up remuneration are based on the market salary level and experience, the company's overall operational performance, future business risks to industry, development trends, also think about individual achievement rate and contribution. The performance review and reasonableness of remuneration are approval by the compensation committee and the board of directors, the remuneration system is reviewed and approval at any time according to the actual operating conditions and relevant laws and regulations. To balance between continued operations and risk control.

(11) Purchase of Treasury stock ： None.

2. Corporate bonds `：` None.

3. Preferred stock `：` None.

4. Issuance of global depository receipts `：` None.

5. Employees stock option certificates `：` None.

6. Merger and acquisitions or stock shares transferred with new stock shares issued `：` None.

7. Fund implementation plan `：` None.

51 -

V. Overview of Business Operation

1. Business overview

(1 ） Business Scope
A. Main Business
- (A) The research, development, manufacturing and sales of masks.
- (B) Provide services in technical assistance, consultation, inspection, repair and maintenance of the above products. The primary business of our company is the manufacturing of masks for semiconductors, ICs in particular. This constitutes about 75% of our sales. As for the masks used in LCDs and masks for WLCSP package, we will increase our investment depending on the development of the LCD industry and advanced package technology in the country.
B. Our products and Services

With the ongoing development and improvement in the manufacturing of IC chips in the foundries, we can supply masks for the following products:

undries,we can supplymasks for the following products:	undries,we can supplymasks for the following products:	undries,we can supplymasks for the following products:
Customer Industry Mask Equipment Mask Specification
Diode ProximityAligner 1X full field
Transistor Projection Aligner 1X Reticle
IC Stepper Aligner projection5X/4X/2.5X/2X Reticle (5”&6”)
LCD Nikon masks upto 7”
CCD Cannon Chrome contactprints
LED ASML (4”~7”)
-	Ultratech	Large area mask(8”~24”)

C. New products and services under development
TMC aggressively plans to continue working closely with customers to develop photomask-making technology for deep sub-micro nodes, including optical proximity correction and ArF phase shift photomask.

`（` 2 `）` Industry Overview

A. Current Status and Future Outlook in Mask Industry

Mask is vital tooling for the production of integrated circuit (IC), and must be produced in conformity to customer specifications. In Taiwan, the production process of IC amazingly improved from the 7 micro to 10 nm at current moment or from IC used in digital watches to memory products and cell-phone communication devices. However, IC industry is moving towards high-end and advanced technology, latest progress is 10nm mask’s development and manufacturing. TMC didn’t invest in high-end technology in the past few years, so now; TMC still stays in 90 nm technology. Compared with other two competitors in Taiwan, TMC’s technology is far behind them. Fortunately, the demand for cell-phone is strong, and the popular of IOT, electric car and LED devices, the demand for IC in mature technology increased accordingly. And with the new management team set up in Q4 last year, we put much more effort on improving service quality and production efficiency to get new orders in areas mentioned above. And we saw a bright sales projection in the future.

52 -

B. Future trend in mask industry

Mask is critical to the IC industry and the product specifications of which followed the trend of development of IC technology. Since 1976, the IC industry of Taiwan has been on the growth and improvement, with production process technology advancing from 7μ→5μ→3.5μ→2μ→1.2μ→1.0μ→0.8μ→0.6μ→0.5μ→

0.4μ→0.35μ→0.25μ→0.18μ→0.13μ→0.11μ→90nm→65nm→40nm→28nm→20nm, and even the 16nm, 10nm, 7nm, 5nm and 3 nm at the moment. Follow the trend of technology development; there are differences and gaps in mask production between FABs.In-house mask houses were set up by FABs; fewer orders were placed into independent mask houses. Such as the mask house set up by Samsung impacted the orders placed to PKL directly and the mask market in great China indirectly. When moving into advanced technology in IC design houses, it created negative impact to independent mask houses.

When it came to LCD monitor industry, the story is totally different. As the new generation of 10 or 10.5, the glass is getting bigger; it’s getting harder to use only one mask to apply to a whole piece of glass. The pattern shall be divided into 5 or 6 pieces of mask, and using the technology of stitch to finish one layer. Therefore, the technology level in LCD mask was promoted into a higher level. And, as the improvement of package technology, gold bump and RDL in wafer process needs mask as a tool to transfer the pattern. This process increased the large size mask demand like 9-inch mask (for 8-inch wafer) and 14-inch mask (for 12-inch wafer).

C. Overall economy, Industry development trend and Market competition

Semicondutor industry is the leading factor to help Taiwan manufacturing industry transforming into high technology industry and also contributed a lot for the prosperous of Taiwan economic. Taiwan semiconductor industry plays a leading role in global supply chain. The supply chain of semiconductor in Taiwan is highly integrated and the performance could be in a leading position in global wize. Mask is the key mold tool when manufacturing wafers and it is a key component in semiconductor industry.

Before ITRI could successfully establish its capacity in the production of mask, Taiwan firms had to send computer tapes to mask makers in other countries for the production of mask that Taiwan IC industry needed. This process was very time consuming. The successful development of the strength in the manufacturing of mask enabled Taiwan to significantly condense the lead-time for the development of IC products, and in turn, fortified the competitive power of the electronic products made in Taiwan. There are geographic distinctions for mask, as the USA, Japan and Europe also produced mask. However, continuous communications and correction are required in the process for the manufacturing of mask, and short delivery lead-time became the rule of the game in the industry. There are occasions that delivery is required in a dozen hours after an order was placed. As such, the establishment of a domestic firm for mask production was a common dream in the IC industry. Over the years, there have been new entrants to the mask production industry, which made this market highly competitive. And with the trend of emerging in-house mask houses for advanced technology, independent mask houses were facing an integration period to acquire others or to be merged. The company took a conservative strategy not to invest huge amount of cash into equipments, therefore to be standing tall as an independent mask house till now. Though TMC was not equipped with 28nm, 20nm, 10nm or 7nm mask technology, we only focus on mature technology in

53 -

mask manufacturing, and other special mask like stitch mask and large size mask for package technology. Recently, TMC successfully helped an IC design house to manufacture its 6-inch-wafer proved the professional expertise of TMC in mask manufacturing. With our help, the FAB broke through the constraint of its equipment into advanced technology, which increased the utilization rate and lowered the production cost, brought benefit for all 3 parties.

D. The upper, middle and lower course in the supply chain

	Circuit design			Mask making		Chipmaking	Encapsulation	Encapsulation
1 2	Logic design Circuit design	4		Mask making Rubber Protective Film	8 9	Oxidation Mask calibration	16 17	Slicing Slace
3	Layout design				10	Etching	18	Solder Wire
					11	Diffusion	19	Pulp-molding
					12	Ion Implantation	20	Test
					13	CVD(Chemical Vapor Deposition)
					14	Electrode metal spattering
					15	Check chip

				Wafer fab			Cchiptest
			5	Single crystal
			6	Slicing
			7	Grinding
								Delivery

`（` 3 `）` Overview of research and development

The spending on research and development of successfully developed technologies and products in recent years as of the day this report is printed.

Year	RD Expense	Technologysuccessfullydeveloped
2018	NTD$113,965 thousand	90nm mask technology
2019Q1	NTD$45,753 thousand	90nm mask technology

`（` 4 `）` Business plan

A. Short term plan ： continue the investment for the development of the 90nm products, improve yield rate and increase market share.
B. Medium term plan ： the development of large size mask and special mask, improve yield rate and increase market share.
C. Long term plan ： the development of technology under 65nm, new customer development.

2. Market analysis and the condition of sale and production

`（` 1 `）` Market analysis

A. Selling area of main products

Customers demand high quality in masks, fast delivery, and convenient communication. Therefore, mask supply is closely associated with geographic proximity. The only thing is mask firms in the country can meet the needs of the customer firms in technology and delivery time. Therefore, the mask industry is targeted to support the need of semiconductor and related industries in the region. The quality of masks directly affects the yield rate of foundries for the manufacturing of semiconductor chips. Accordingly, a good quality mask firm must invest in expensive equipment and good working

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environment for production. This is essential for the quality and delivery requirements of the customers. In addition, a better understanding on the needs of the customers is also important, as it can help save time for communication. Only by doing so, the manufacturing of masks can just meet the needs of the customers and not affect the yield rate and cost.

We have successfully positioned ourselves in the development of technological capacity. We persist in the concept of quality first. We pledge to satisfy the needs of our customers with high quality and high efficiency in service.

				Unit`：`NTD$ thousand`；％`	Unit`：`NTD$ thousand`；％`
Area	Year	2017		2018
		Amount	`％`	Amount	`％`
Domestic	Taiwan	889,437	62.33	1,662,696	57.61
Export	Asia	489,746	34.32	1,053,309	36.50
	America	27,645	1.94	143,579	4.98
	Other	20,245	1.41	26,398	0.91
Net Sales		1,427,073	100.00	2,885,982	100.00

B.The future supply and demand in the market and growth

The production volume of masks is closely associated with the volume of newly developed IC products and the production volume of the foundries. As for the actual situation in the development of IC in our country, the cost for the manufacturing of masks accounted for 1-2% of the IC chips production value. Looking at the performance of respective firms and their progress in setting up 12” foundries, we can see that IC production value is expected to pick up momentum in the few years that follow. By then, the value for the use of masks in the IC industry will increase substantially. The LCD industry in our country is also growing to top 3 in the world. We expected more and more manufacturing plants would join the production soon. We anticipate the expansion of the IC industry and the LCD industry in the country will boost the demand for masks, and our business will boom as well.

In our projection, though the production equipments are not in line with advanced technology to compete with other mask houses, we still accumulated over 30 years mask production experiences. And we have our specialties on making special masks and large size masks, we are confident of expanding order volume and making profit. Particularly, TMC merged Miracle Technology Co., Ltd. in Oct, 2017. TMC turned its role from a simple vendor of foundry FAB into a business partner of foundry FAB. This also reflected in the increased order volume from foundry FABs both in Taiwan and Korea. On the other hand, 3 subsidiaries of Miracle Technology Co., Ltd. in Mainland China also helped the expansion of sales in China area.

C. Niche market

(A) We have the technology and the talent for the R&D of 0.18 micron, 0.15 micron, 0.13 micron, 0.11 micron and 90 nm products. We have state-of-the-art equipment for production and fast delivery service. We believe our competitors cannot challenge our position.
(B) After the merger of Miracle Technology Co., Ltd., TMC now can provide IC design houses a turnkey solution service from mask production, wafer foundry to package and testing.
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(C) With the combination of masks production technology from TMC and foundry process technology from Miracle Technology Co., Ltd., TMC now can help our customers to develop special masks and foundry process technology and also increase competition ability of our customers.
D. The advantages, challenges and solutions
(A) Advantages
- a 、 We have the most extensively used electronic beam and the latest laser exposure equipment in the world. We also have the most sophisticated plants for production. This will be essential for enhancing our yield rate and effective for cutting cost down.
- b 、 We successfully installed our information transmission system with the USA and Southeast Asia, which facilitates the taking of orders from overseas.
- c 、 Most foundry FABs are working hard to expand their facilities for 8” and 12” wafer manufacturing, which will eventually boost up the demand for masks.
- d 、 We possess advanced mask technology, and can meet the demand for production with 0.25um, 0.18um, 0.15um, 0.13um, 0.11um and 90 nm processes.
- e 、 We have already enjoyed the economy of scale in production and have a high yield rate. We are not inferior to imported masks. Therefore, we can effectively cut down our cost for the products and have advantages in competition within the industry.
- f 、 We are financially healthy and can invest in advanced techonology equipment in due time.
- g 、 We are capable of providing turnkey solutions to IC design houses after the merge with Miracle Technology Co., Ltd.
(B) Challenges
- a、The competition in the domestic market is getting severer and the selling price has dropped. The result is the trimming of profit.
- b、We have inadequate supply of labor in the country and the wages are on the rise.
- c、Current technology ceiling is 90nm which makes TMC not capable of competing with other mask houses.
(C) Solutions
- a 、 We have standardized our production and enable each order to be processed at the same standard with stable quality.
- b 、 We can handle information processing quickly, and have acquired more advanced computer systems to speed up processing the products designed by customers and shorten the delivery lead-time.
- c 、 We have computerized our administrative support system, which helps enhance efficiency, reduce waste and cut costs.
- d 、 We have applied new equipment timely and can fully meet the development needs in IC technology.
- e 、 We have maintained normal speed in our production lines, and can deliver our goods to the hands of customers timely.
- f 、 We have actively developed the deep sub-micro nodes, including optical proximity correction and ArF phase shift photomask. We work in conjunction with lower stream manufacturers in developing deep sub-micro nodes masks.
- g 、 We add new equipment from time to time to expand our production capacity and meet the needs for masks at different levels. In doing so, we could maintain equilibrium in the profitability of different product lines and strengthen our competitiveness.
- h 、 We have put a greater effort in developing overseas market to increase our revenue and profit.
- i 、 To maintain a profound customer relationship, we put much effort to understand customers’ needs and develop special masks by customers’ requests.
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`（` 2 `）` Application for main products and production process

Masks are an indispensable piece of mold for the manufacturing of IC. Basically, a mask is

analogous to the negative for developing a photograph. Its function is like a negative, but its image is presented as a circuit.

The material of mask is a flat piece of glass. It may be a piece of quartz, soda lime glass or silicate boric acid glass. A super thin layer of chromium will be plated on its surface. In the production process, the circuit required for the IC can be stored in the computer magnetic tape with high precision, and then through the image generator to expose the image on a piece of glass tainted with a light-sensitive substance. After proper development, and through a chemical engraving process, the circuit is fixed on the glass and is delivered to the IC chips manufacturers for their process of production.

`（` 3 `）` Supply of key materials

A. We purchase blank masks from major manufacturers in Japan and the USA. Since pellicles can be obtained in Taiwan partially, insufficient volume will be imported from manufacturers in Japan and the USA. As for chemicals, we import them from the USA and Japan.
B. All indirect materials can be purchased domestically.
C. We purchase our machinery parts and components from original manufacturers from the USA and Japan.
（ 4 ） The list of major suppliers and buyers in the past two years
A. List of Major Suppliers in the Last 2 Fiscal Years

										Unit`：`NTD$thousand	Unit`：`NTD$thousand	Unit`：`NTD$thousand
Item		2017				2018				As of 2019 Q1
	Supplier	Amount	%	Relation with The issuer Supplier		Amount %		Relation with The issuer	Supplier	Amount	%	Relation with the issuer
1	MagnaChip	99,628	20	None	MagnaChip	493,149 29		None	MSK	93,821	35	None
2	HOYA	81,998	17	None					VIS	29,095	11	None
3	INABATA	76,887	15	None					HOYA	27,627	10	None
4	Others	238,683	48		Others	1,206,582	71		Others	118,429	44
Net purchase amount		497,196	100		Net purchase amount	1,699,731	100		Net purchase amount	268,972	100

Note ： Reasons for changes in % of purchases: The proportion of products sold is different, the materials purchased are different from the manufacturers.

B. List of Major Clients in the Last 2 Fiscal Years:

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2017 2018 2019 Q1
Ite Relation Relation Relation
m Name Amount % with the Name Amount % with the Name Amount % with the
issuer issuer issuer
1 Others 1,427,073 100 Others 2,885,982 100 Others 711,254 100
Net Sales 1,427,073 100 Net Sales 2,885,982 100 Net Sales 711,254 100
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Note ： In the past two years and 2019 Q1 no single customer accounted for more than 10% of the company's total net sales.

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`（` 5 `）` The Production Value and Volume in the past two years

Unit ： pcs thousand ； NTD$ thousand

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Production Year
2017 2018
Capacity
Main Products Capacity Volume Value Capacity Volume Value
（ or by Department ）
Mask 45 28 808,326 45 43 977,165
Others 32,175 28,806 375,074 71,600 57,262 1,279,809
Total 32,220 28,834 1,183,400 71,645 57,305 2,256,974
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`（` 6 `）` The Sales Volume and Value in the past two years

Unit ： pcs thousand ； NTD$ thousand

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Sales Qty Year 2017 2018
/Amt.
Domestic Export Domestic Export
Main
Sales Sales Sales Sales Sales Sales Sales Sales
Products
(or by epartment) Qty. Amt. Qty. Amt. Qty. Amt. Qty. Amt.
Mask 20 713,375 8 311,601 31 990,054 12 458,338
Others 11,437 176,062 17,150 226,035 14,498 672,642 42,764 764,948
Total 11,457 889,437 17,158 537,636 14,529 1,662,696 42,776 1,223,286
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3. Status of employees

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2019/4/30
Year 2017 2018 As of 2019/4/30
Technical(Engineer) 115 169 165
No. of Adm. and selling 104 102 129
Employee Operator 189 212 208
Total 408 485 502
Average Age 38.67 38.53 40.25
Average Seniority 7.67 6.71 6.10
P.H.D. 3.68 3.92 3.19
Master 9.56 20.00 20.52
Academy
Bachelor 66.91 59.18 59.76
Ratio
Senior High School 17.65 15.05 14.74
Below Senior High 2.20 1.85 1.79
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4. Expenditure on environmental protection

(1) In the most recent year and up to the date of publication of the annual report, the company has not incurred any pollution disputes and losses.
(2) Future countermeasures and possible expenditures

l Countermeasures

The products from our company have to pass through the process of light exposure, developing, chemical etching, and strip photo-resistance, and washed with sulphuric acid before packaging. The entire process demands chemical treatment. To prevent pollution, we treat wastewater strictly through acid/alkaline treatment tanks to control the discharged water strictly within the standards designated by the Science-based Industrial Park Administration. In our efforts to control pollution and protect the environment, we can claim that we have the most advanced water and fume treatment facilities in the world. For preventing wastewater tanks from polluting underground water by being worn out, we have designed the wastewater tank in an “elevated” manner, enabling engineers to check leaks at any time. This can be called the most advanced wastewater treatment equipment in the world. All waste gases and fumes are absorbed by activated carbon and water before emission. All wastewater can be treated through the said process before being emitted into the Wastewater Treatment Center of the Hsinchu Science-based Industrial Park Waste Water Treatment Center for secondary treatment.

We have taken environmental protection as our first priority ever since our operation. There has been no record of any pollution so far.

The company has no direct or indirect sale of its products to Europe or governed by ROHS of EU.

l Environmental expenditure

A.The past year

2018 of environmental protection-related expenses of NTD$ 3,598 thousand, related to environmental protection routine maintenance, removal, handling, testing costs NTD $3,178 thousand. The processing facility maintenance and renewal expenses was NTD$ 420 thousand.

B.Future planning

2019 of expected environmental goals

(A) To set up a heat-exchanger to have the chiller unit set up in FAB 2 provide cold water for FAB 1. This project will replace the chiller unit set up in FAB1, estimated to save NTD$ 3,600 thousand each year. By shuting down one chiller unit, 25,000 tons of water (recycled water) will be saved. This project is planning to be finished by around NTD$ 1,800 thousand.
(B) The replacement of the air-conditioning box (MAU) of the first plant can save NTD$ 2,400 thousand per year and the estimated project expenditure is approximately NTD$ 10,000 thousand.
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5. Employee / Employer relation

(1) Fringe benefits, advanced education, training programs, retirement systems for employees and

enforcement thereof; the accords reached by and between labor and management, and efforts to safeguard employees’ interests:

A. Employee fringe benefits and trainings:
[Salary and incentive system]
- A variety combination of salary package (Dragon Boat Festival, Moon Festival, year-end bonus), occasional increase in performance bonuses and allocation of earnings.
- •There are also bonuses for outstanding performance and profit sharing to be issued with no fix schedule.
- •Employee dividends, employee stock option system.
[Life Care and Protection]
- •Complete group guarantee (free life insurance / accident insurance / hospitalization
- / accident medical / occupational disaster).
- •Subsidy for new born babies, subsidy for weddings and funerals.
- •Birthday / Festival Gift Certificate.
- •Physical examinations for employees are conducted in a regular basis.
- •Contracted stores with special discounts.
- •Welfare Committee holds annual domestic/ foreign employee travels, ball games.
- •Employee health care, regular doctors and nurses to the factory care, provide professional advice.
- •Christmas party.
[Convenience facility]
- •Free interior parking lots: there are huge parking spaces in the buildings and the parking lots are freely provided to the employees.
- •Sporting facilities: there are an interior tennis court, an interior badminton court and a table tennis court inside the building.
- •Provide nursery room and improve facilities for female colleagues.
- •Set up a staff restaurant with free charge coffee and tea, and set up a 180-inch screen for watching.
- •Provide dorms for job seekers in foreign counties.
[Training]
- •Provide education for new colleagues.
- •Functional training based on the needs of employee.
- •Provide employee self-growth with external training.

B. Retirement:

The company has instituted its internal regulation governing the retirement of formal employees under the “Labor Standards Law” whereby a certain amount of salaries shall be appropriated as reserve for pension fund. Such fund will be deposited in Taiwan Bank. From July 1 2005 onward, employees eligible for pension under the new “Statue for Labor Retirement and Pension” are entitled to contribution made by the company to their respective individual accounts with the Labor Insurance Bureau. Such contribution shall be no less than 6% of their respective salary. The disbursement of pension to retired employees shall be made in accordance with their respective portion of deposits with the trustee account and the accumulated amount payable in lump sum or monthly installments.

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C. Labor right maintenance negotiation ：
- •Regularly hold labor-management meetings to enable colleagues to communicate with the company.
- •Provide an internal web platform to share information and interact instantly with colleagues.
(2) Labor-Management dispute over the last two years ： None.

6. Important agreements

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Nature of Contracting Restriction
Contract Period Content
contract parties clauses
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Nature of contract	Contracting parties	Contract Period	Content	Restriction clauses

Land lease agreements	Hsinchu Science Park Bureau	2009/09-2028/12 2009/06-2028/12 2005/01-2024/12 2009/11-2028/12 2015/09-2034/12 2014/03-2033/12	Building factories, warehouses, laboratory or storage and workplaces	None

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VI. Financial information

1. Five-year Financial Summary

(1) Condensed balance sheets (consolidated)

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Unit ： NTD$ thousand
Up to March 31,
Fiscal year 2014 2015 2016 2017 2018
2019 (Note1)
Item
Current Assets
2,266,095 2,274,628 1,984,072 1,623,242 1,734,383 1,709,672
Property, plant and equipment 1,330,605 1,100,506 939,984 989,220 966,563 935,307
Intagible Assets 43,254 40,177 8,391 38,291 112,544 111,123
Other Assets
583,033 539,296 625,471 459,396 1,050,828 1,648,512
Total Assets
4,222,987 3,954,607 3,557,918 3,110,149 3,864,318 4,404,614
Before
297,034 294,919 298,943 556,083 1,238,297 1,408,656
Current Distribution
Liabilities After
428,370 370,733 298,943 556,083 (Note2) (Note2)
Distribution
Non-Current Liabilities 42,340 42,062 41,474 74,926 52,210 365,667
Before
339,374 336,981 340,417 631,009 1,290,507 1,774,323
Total Distribution
Liabilities After
470,730 412,795 340,417 631,009 (Note2) (Note2)
Distribution
Total Equities Attributable to
3,448,876 3,232,814 2,994,142 2,405,630 2,558,494 2,626,011
Parent Company
Capital 2,627,136 2,527,136 2,527,136 2,527,136 2,527,136 2,527,136
Capital Surplus 211,797 220,924 180,286 212,948 169,431 172,566
Before
894,895 796,254 613,296 539,080 738,815 799,619
Retained Distribution
Earnings After
834,471 796,254 613,296 539,080 (Note2) (Note2)
Distribution
Other Equity (14,287) (20,506) (35,582) 11,207 7,853 11,431
Treasury Stock (270,665) (290,994) (290,994) (884,741) (884,741) (884,741)
Non-Controlling Interests 434,737 384,812 223,359 73,510 15,317 4,280
Before
3,883,613 3,617,626 3,217,501 2,479,140 2,573,811 2,630,291
Distribution
Total Equity
After
3,752,257 3,541,812 3,217,501 2,479,140 (Note2) (Note2)
Distribution
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Note 1 ： The above financial information was audited and certified by CPA. Note 2 ： Pending for shareholders’ approval.

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(2) Condensed comprehensive income statements (consolidated)

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Unit ： NTD$ thousand
(The loss per share is expressed in NTD)
Fiscal year Up to March 31,
2014 2015 2016 2017 2018
Item 2019 (Note1)
Operating income 1,766,618 1,485,306 1,196,457 1,427,073 2,885,982 711,254
Gross profit 331,828 191,409 48,503 243,673 629,008 154,781
Operating profit or loss 36,223 (97,950) (173,141) (7,904) 259,536 21,838
Non-Operating income
46,977 (13,527) (66,197) (57,365) (55,890) 33,482
and expense
Net income before tax 83,200 (111,477) (239,338) (65,269) 203,646 55,320
Net income of
56,728 (129,112) (238,702) (88,553) 145,820 49,842
continuing operations
Loss of discontinued
- - - - - -
operation
Net income (loss) 56,728 (129,112) (238,702) (88,553) 145,820 49,842
Other Comprehensive
5,757 (53,508) (19,286) 293,804 1,299 3,503
Incomes (Net)
Total Comprehensive
62,485 (182,620) (257,988) 205,251 147,119 53,345
Incomes
Net Incomes (Losses)
Attributable to：Parent 60,268 (37,071) (165,262) (74,177) 199,203 60,804
Company
Net Incomes (Losses)
Attributable to：
(3,540) (92,041) (73,440) (14,376) (53,383) (10,962)
Non-Controlling
Interest
Total Comprehensive
Incomes (Losses)
Attributable to：Parent 65,772 (44,436) (177,164) (27,427) 200,011 64,382
Company
Total Comprehensive
Incomes (Losses)
Attributable to：Parent (3,287) (138,184) (80,824) 232,678 (52,892) (11,037)
Company
Basic Gain (Loss) per
0.25 (0.15) (0.71) (0.33) 1.02 0.31
Share
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Note ： The above financial information was audited and certified by CPA.

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(3) Condensed balance sheets (stand-alone)

Unit ： NTD$ thousand

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Fiscal year
2014 2015 2016 2017 2018
Item
Current Assets 1,528,571 1,622,605 1,642,976 754,702 1,162,525
Property, plant and
1,111,337 929,734 800,553 840,707 855,134
equipment
Intagible Assets 3,738 2,959 1,699 1,255 939
Other Assets 1,087,106 942,123 811,738 1,101,279 1,514,835
Total Assets 3,730,752 3,497,421 3,256,966 2,697,943 3,533,433
Before
203,030 184,726 183,658 222,161 935,415
Current Distribution
Liabilities After
334,386 260,540 183,658 222,161 (Note2)
Distribution
Non-Current Liabilities 78,846 79,881 79,166 70,152 39,524
Before
281,876 264,607 262,824 292,313 974,939
Total Distribution
Liabilities After
413,232 340,421 262,824 292,313 (Note2)
Distribution
Capital 2,627,136 2,527,136 2,527,136 2,527,136 2,527,136
Capital Surplus 211,797 220,924 180,286 212,948 169,431
Before
894,895 796,254 613,296 539,080 738,815
Retained Distribution
Earnings After
834,471 796,254 613,296 539,080 (Note2)
Distribution
Other Equity (14,287) (20,506) (35,582) 11,207 7,853
Treasury Stock (270,665) (290,994) (290,994) (884,741) (884,741)
Before
3,448,876 3,232,814 2,994,142 2,405,630 2,558,494
Distribution
Total Equity
After
3,317,520 3,157,000 2,994,142 2,405,630 (Note2)
Distribution
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Note 1 ： The above financial information was audited and certified by CPA. Note 2 ： Pending for shareholders’ approval.

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(4) Condensed comprehensive income statements (stand-alone)

Unit ： NTD$ thousand

(The loss per share is expressed in NTD)

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Fiscal year
2014 2015 2016 2017 2018
Item
Operating income 1,395,544 1,286,008 1,019,528 1,024,976 1,448,393
Gross profit 204,442 237,339 115,183 216,650 471,228
Operating profit or loss 64,844 108,301 (12,586) 73,561 287,563
Non-Operating income
12,111 (129,858) (152,415) (130,953) (61,955)
and expense
Net income before tax 76,955 (21,557) (165,001) (57,392) 225,608
Net income of
60,268 (37,071) (165,262) (74,177) 199,203
continuing operations
Loss of discontinued
- - - - -
operation
Net income (loss) 60,268 (37,071) (165,262) (74,177) 199,203
Other comprehensive
profit and loss (net after 5,504 (7,365) (11,902) 46,750 808
tex)
Total current
comprehensive profit 65,772 (44,436) (177,164) (27,427) 200,011
and loss
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Note ： The above financial information was audited and certified by CPA.

(5) CPA and auditing opinions over the last five years

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Fiscal year Name of CPA Auditing opinions
Kwok-Wah Tsang
2014 Modified Unqualified
Lin Yu-Kwan
Kwok-Wah Tsang
2015 Unqualified Opinion
Daniel Lee
Daniel Lee
2016 Unqualified Opinion
Kwok-Wah Tsang
Roger Hsueh
2017 Unqualified Opinion
Daniel Lee
Tina Cheng
2018 Unqualified Opinion
Daniel Lee
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2. Five-year Financial Analysis

(1) Consolidated Financial Ratio Analysis complying with IFRS

Five-year Financial Analysis (1)Consolidated Financial Ratio Analysis complyingwith IFRS	Five-year Financial Analysis (1)Consolidated Financial Ratio Analysis complyingwith IFRS
Fiscal year (Note 1) Analysisitems (Note2) 2014 2015 2016 2017 2018 Up to March 31, 2019
Financial Structure `（`%`）`	Debt-asset ratio 7.56 8.52 9.57 20.29 33.40 40.28
	Ratio of long-term capital to property,plant and equipment 310.34 328.72 346.71 258.19 271.69 184.63
Solvency `（`%`）`	Current ratio 752.88 771.27 663.70 291.91 140.06 121.37
	Quick ratio 674.37 609.12 538.92 208.77 100.08 85.58
	Interest coverage ratio 592.58 - - (17.33) 37.54 18.90
Operating ability	Receivables turnover rate (times) 3.75 3.92 14.62 3.66 5.37 4.94
	Average collection days for receivables 98 94 25 99.72 67.97 73.88
	Inventory turnover rate (times) 11.21 2.54 9.63 3.77 6.00 5.34
	Payables turnover rate(times) 13.22 12.02 66.50 11.11 11.45 9.79
	Average daysforsale 33 144 38 96.82 60.83 68.39
	roperty, plant and equipment turnover rate(times) 1.2 1.22 4.69 1.48 2.95 2.20
	Totalasset turnover rate (times) 0.37 0.36 1.27 0.43 0.83 0.69
Profitability Returnonassets (%) 1.59 (3.16) (6.35) (2.57) 4.31 5.06 Returnonequity (%) 1.72 (3.44) (6.98) (3.11) 5.77 7.66 Ratio of income before tax to paid-incapital 2.93 (4.41) (9.47) (2.58) 8.06 8.76 Profitmarginbefore tax(%) 4.32 (8.69) (19.95) (6.21) 5.05 7.01 Earningsper share(NTD$) 0.25 (0.15) (0.71) (0.33) 1.02 0.31	Returnonassets (%) 1.59 (3.16) (6.35) (2.57) 4.31 5.06
	Returnonequity (%) 1.72 (3.44) (6.98) (3.11) 5.77 7.66
	Profitmarginbefore tax(%) 4.32 (8.69) (19.95) (6.21) 5.05 7.01
	Earningsper share(NTD$) 0.25 (0.15) (0.71) (0.33) 1.02 0.31
Cash flow	Cash flow ratio (%) 210.30 99.72 14.91 107.31 (12.88) 3.42
	Cash flow adequacyratio(%) 304.43 168.70 157.00 190.86 115.66 96.91
	Cash flow reinvestment ratio (%) 4.06 2.90 0.64 11.11 (3.34) 1.42
Leveraging	Operatingleverage 5.40 (8.88) (6.20) (81.74) 3.05 6.80
	Financial leverage 1.00 1.00 1.00 0.69 1.02 1.16
Reasons for changes in financial ratios in the last two years`：` A. Financial Structure (Debt-asset ratio), Solvency (Current ratio`、`Quick ratio`、`Interest coverage ratio)`：`As a result of the increase in short-term borrowings, the current liabilities increased. B. Operating Ability (Receivables turnover rate`、`Average collection days for receivables`、`Inventory turnover rate`、`Fixed assets turnover rate`、`Total assets turnover rate)`：`The company's capacity utilization rate increased and sales increased, the operating capacity increased significantly. C. Profitability (Return on assets`、`Return on shareholders' equity`、`Ratio of income before tax to paid-in capital`、`Profit margin before tax`、`Earnings per share)`：`The net profit of the current period turned from loss to profit, the profitability of each item increased. D. Cash Flow (Cash flow ratio`、`Cash flow adequacy ratio`、`Cash flow reinvestment ratio)`：`Due to the negative net cash flow from operating activities during the period. E. Leveraging (Operating leverage`、`Financial leverage)`：`Due to the operating profit of the current period was changed from loss to profit andfinancialcost washigher.

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Note 1 ： The financial information from 2014 to 2018 years has been verified by CPA. Note 2: The calculation formula of the analysis project is as follows:

A. Financial Structure
(A) Debt-asset ratio = total liabilities / total assets
(B) Debt-asset ratio = total liabilities / total assets
B. Solvency
(A) Current ratio = current assets / current liabilities
(B) Quick ratio = (current assets – inventory – prepaid expenses) / current liabilities
(C) Interest coverage ratio = income before income tax and interest expenses / current interest expenses
C. Operating ability
(A) Receivables (including accounts receivable and notes receivable arising from business oeprations) turnover rate = net sales / average receivables (including accounts receivable and notes receivable arising from business operations) for each period
(B) Average collection days for receivables = 365 / receivables turn over rate
(C) Inventory turnover rate = cost of sales / average inventory
(D) Payables (including accounts payable and notes payable arising from business operations) turnover rate = cost of sale / average payables (including accounts payable and notes payable arising from business operations) for each period
(E) Average days of sale = 365 / inventory turnover rate
(F) Property, plant and equipment turnover rate = net sales / average net worth of property, plant and equipment
(G) Total asset turnover rate = net sales / average total assets
D. Profitability
(A) Return on assets = [net income + interest expenses (1- tax rate)] / averate total assets
(B) Return on equity = net income / averate total equity
(C) Profit margin before tax = net income / net sales
(D) Earnings per share = (profit and loss attributable to owners of the parent – dividends on preferred shares) / weighted average number of issued shares
E. Cash flow
(A) Cash flow ratio = Net cash flow from operating activities / current liabilities
(B) Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend)
(C) Cash flow reinvestment ratio = (Net cash flow from operating activities – cash dividend) / gross property, plant and equipment value + long-term investment + other non-current assets + working capital)
F. Leveraging:
(A) Operating leverage = (net operating revenue – variable operating costs and expenses) / operating income
(B) Financial leverage = operating income / (operating income / interest expenses)
67 -

(2) Individual Financial Ratio Analysis complying with IFRS

(2)Individual Financial Ratio Analysis complying with IFRS	(2)Individual Financial Ratio Analysis complying with IFRS
Fiscal year (Note 1) Analysis item (Note2) 2014 2015 2016 2017 2018
Financial Structure `（`%`）`	Debt-asset ratio 7.56 7.57 8.07 10.83 27.59
	Ratio of long-term capital to property, plant and equipment 317.43 356.31 383.90 294.49 303.81
Solvency `（`%`）`	Current ratio 752.88 878.38 894.58 339.71 124.28
	Quick ratio 674.37 795.11 813.58 254.53 103.63
	Interest coverage ratio 951.06 - - (2294.68) 73.21
Operating Ability	Receivables turnover rate (times) 3.85 4.05 3.78 3.97 4.80
	Average collection days for receivables 95 90 97 92 76
	Inventory turnover rate (times) 12.53 12.64 11.81 8.69 8.09
	Payables turnover rate (times) 13.23 11.59 14.30 16.31 16.79
	Average days for sale 29 29 31 42 45
	Fixed assets turnover rate (times) 1.20 1.26 1.18 1.25 1.71
	Totalassets turnover rate (times) 0.37 0.36 0.30 0.34 0.46
Profitability Return on assets(%) 1.59 (1.03) (4.89) (2.49) 6.48 Returnonshareholders'equity (%) 1.72 (1.11) (5.31) (2.75) 8.03 Ratio of income before tax to paid-in capital 2.93 (0.85) (0.50) (2.27) 10.11 Profitmarginbefore tax(%) 4.32 (2.88) (16.21) (7.24) 13.75 Earnings pershare (NTD$) 0.25 (0.15) (0.71) (0.33) 1.02	Return on assets(%) 1.59 (1.03) (4.89) (2.49) 6.48
	Returnonshareholders'equity (%) 1.72 (1.11) (5.31) (2.75) 8.03
	Profitmarginbefore tax(%) 4.32 (2.88) (16.21) (7.24) 13.75
	Earnings pershare (NTD$) 0.25 (0.15) (0.71) (0.33) 1.02
Cash Flow	Cash flow ratio (%) 210.30 158.07 47.02 282.97 24.69
	Cash flow adequacy ratio (%) 282.52 215.41 200.96 217.76 198.45
	Cash flow reinvestment ratio (%) 4.05 2.92 0.20 12.84 4.61
Leveraging	Operating leverage 7.36 5.92 (36.97) 6.61 2.54
	Financial leverage 1.00 1.00 1.00 1.00 1.01
Reasons for changes in financial ratios in the last two years`：` A. Financial Structure (Debt-asset ratio), Solvency (Current ratio`、`Quick ratio`、`Interest coverage ratio)`：`As a result of the increase in short-term borrowings, the current liabilities increased. B. Operating Ability (Receivables turnover rate`、`Fixed assets turnover rate`、`Total assets turnover rate)`：`The company's capacity utilization rate increased and sales increased, the operating capacity increased significantly. C. Profitability (Return on assets`、`Return on shareholders' equity`、`Ratio of income before tax to paid-in capital`、`Profit margin before tax`、`Earnings per share)`：`The net profit of the current period turned from loss to profit, the profitability of each item increased. D. Cash Flow (Cash flow ratio`、`Cash flow reinvestment ratio)`：`The net cash flow from operating activities during the period was lower than previous years. E.Leveraging (Operating leverage) `：`The operating profit of the current period turned from loss to profit, it was larger than the previous period.

68 -

Note 1 ： The financial information from 2014 to 2018 years has been verified by CPA. Note 2: The calculation formula of the analysis project is as follows:

A. Financial Structure
(A) Debt-asset ratio = total liabilities / total assets
(B) Debt-asset ratio = total liabilities / total assets
B. Solvency
(A) Current ratio = current assets / current liabilities
(B) Quick ratio = (current assets – inventory – prepaid expenses) / current liabilities
(C) Interest coverage ratio = income before income tax and interest expenses / current interest expenses
C. Operating ability
(A) Receivables (including accounts receivable and notes receivable arising from business oeprations) turnover rate = net sales / average receivables (including accounts receivable and notes receivable arising from business operations) for each period
(B) Average collection days for receivables = 365 / receivables turn over rate
(C) Inventory turnover rate = cost of sales / average inventory
(D) Payables (including accounts payable and notes payable arising from business operations) turnover rate = cost of sale / average payables (including accounts payable and notes payable arising from business operations) for each period
(E) Average days of sale = 365 / inventory turnover rate
(F) Property, plant and equipment turnover rate = net sales / average net worth of property, plant and equipment
(G) Total asset turnover rate = net sales / average total assets
D. Profitability
(A) Return on assets = [net income + interest expenses (1- tax rate)] / averate total assets
(B) Return on equity = net income / averate total equity
(C) Profit margin before tax = net income / net sales
(D) Earnings per share = (profit and loss attributable to owners of the parent – dividends on preferred shares) / weighted average number of issued shares
E. Cash flow
(A) Cash flow ratio = Net cash flow from operating activities / current liabilities
(B) Net cash flow adequacy ratio = Net cash flow from operating activities for the most recent five years / (capital expenditures + inventory increase + cash dividend)
(C) Cash flow reinvestment ratio = (Net cash flow from operating activities – cash dividend) / gross property, plant and equipment value + long-term investment + other non-current assets + working capital)
F. Leveraging:
(A) Operating leverage = (net operating revenue – variable operating costs and expenses) / operating income
(B) Financial leverage = operating income / (operating income / interest expenses)
69 -

3. Audit committee’s report in the most recent years

Taiwan Mask Corporation

Auditing Report from Auditing Committee

。 The Board of Directors has prepared Taiwan Mask Corporation (“the Company”) 2018 Business Report, financial statements, and proposal for earnings apporpriation. The CPA firm of PWC was retained to audit the Company’s financial statements and CPA Tina Cheng and CPA Daniel Lee have issued an audit report relating to financial statements. The above Business Report, financial statements, and earnings apporpriation proposals have been examined and determined to be correct and accurate by the Auditing Committee of Taiwan Mak Corporation. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law, we hereby submit this report.

To Shareholders’ meeting held in 2019

Taiwan Mask Corporation

==> picture [75 x 72] intentionally omitted <==

Chairman of Auditing Committee: Wu Yu-Chiun

2019/3/20

70 -

Taiwan Mask Corporation and Subsidiaries

Affiliates Consolidated Financial Statements

The companies required to be included in the consolidated financial statements of affiliates in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” for the year ended December 31, 2018 are all the same as the companies required to be included in the consolidated financial statements of parent and subsidiary companies as provided in International Accounting Standard 10 “Consolidated and Separate Financial Statements.” Relevant information that should be disclosed in the consolidated financial statements of affiliates has all been disclosed in the consolidated financial statements of parent and subsidiary companies. Hence, we have not prepared a separate set of consolidated financial statements of affiliates.

Truly yours,

Taiwan Mask Corporation Chairman: K.J. Wu

==> picture [46 x 25] intentionally omitted <==

==> picture [86 x 83] intentionally omitted <==

2019/3/20

71 -

4. Financial statements in the most recent years

Auditor’s Report

(108)Tsai-Shen-Bao No.18003611

To Taiwan Mask Corporation ：

Opinion

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

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

Basis for Opinion

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

Key Audit Matters

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

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

72 -

Evaluation of Inventories

Description

Refer to Note 4(13) for the accounting policies on the evaluation of inventories, Note 5(2) for the uncertainty of accounting estimations and assumptions for evaluation of inventories, and Note 6(5) for the detail description of inventory accounts. The inventory amount and allowance for inventory valuation loss as of December 31, 2018 is NTD$ 569,547 thousand and NTD$ 160,972 thousand respectively.

The Group is primarily engaged in mask and integrated circuit services in semiconductor industry. Due to the rapid technological innovations, short life-cycle and competition within the mask industry, the risk of price fluctuation and inventory obsolete is higher than other industry. Since the inventory amount is material in this Group, the evaluation of inventories has been identified a key audit matter.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

Based on the understanding of the operation and industrial nature of the reticle group, it is reasonable to assess the policies and procedures adopted for the inventory allowance for impairment losses.
Evaluate management's inventory assessment report to verify the correctness of inventory age.
Verify the amount of the net realizable value of the inventory to confirm the admissibility of the inventory evaluation loss.

Income recognition

Description

For the accounting policy on income recognition, please refer to Note 4 (25) of the financial report; the operating income in 2018 is NTD$2,885,982.

The Group mainly produces and sells products such as masks and integrated circuits used in semiconductors. The sales customers are numerous and scattered. The trading conditions vary according to market conditions and customer needs. Considering the sales revenue is the main transaction of the company. The consolidated financial statements have a significant impact. The accountant believes that the recognition of its sales revenue is one of the most important matters for the year.

How our audit addressed the matter

The audit procedures that the accountant has implemented are as follows：

Understand the type of major income and assess internal operations, review revenue recognition accounting treatment.
Obtain the sales revenue statement, sample the sales transactions and verify the relevant documents to verify the appropriateness of the sales revenue.
For the balance of accounts receivable at the end of the period, execute the certificate and balance confirmation test procedures, and perform tests on the adjustment items of the letter of the letter to confirm that the differences have been properly adjusted.
Execute the cut-off test for the sales receipts transaction for a certain period of time before and after the closing date, and confirm that the account is correct at the time of entry.
73 -

Other matter–Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial statements of Taiwan Mask Corporation as of and for the years ended December 31, 2018 and 2017.

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

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

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

Those charged with governance, including the Audit Committee, are responsible for overseeing the Group’s financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

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

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
74 -
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

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

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

Form the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonable be expected to outweigh the public interest benefits of such communication.

For and on behalf of PricewaterhouseCoopers, Taiwan

Tina Cheng

Certified Public Accountants

Daniel Lee

75 -

Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets DECEMBER 31, 2018 AND 2017

							in thousand	NTD
			DECEMBER 31, 2018				DECEMBER 31,	2017
	Assets	Notes		AMOUNT	%		AMOUNT	%
	Current Assets
1100	Cash and Cash Equivalents	6(1)	$	563,408	15	$	636,955	20
1110	Financial Asset at Fair Value Through	12(4)
	Profit or Loss-Cur.			-	-		22,891	1
1136	Financial Assets at Amortized Cost- Cur.	6(3)		54,335	1		-	-
1147	Debt Investments in No Active	12(4)
	Market-Cur.			-	-		21,699	1
1150	Notes Receivables(Net)	6(4)		1,277	-		2,633	-
1170	Accounts Receivables(Net)	6(4)		597,152	16		469,460	15
1180	Accounts Receivables`－`Related	6(4)
	Parties(Net)	and7		4,178	-		1,089	-
1200	Other Receivables			13,607	-		17,356	1
1210	Other Receivables`－`Related Parties	7		4,636	-		7,590	-
1220	Tax Assets			710	-		8,254	-
130X	Inventories	6(5)		408,575	11		343,997	11
1410	Prepayments			77,026	2		88,103	3
1470	Other Current Assets			9,479	-		3,215	-
11XX	Total Current Assets			1,734,383	45		1,623,242	52
	Non-Current Assets
1510	Financial Asset at Fair Value Through	6(2)
	Profit or Loss-Non Cur.			731,826	19		-	-
1523	Available-for-Sale Financial Assets - Non	12(4)
	Current			-	-		230,986	8
1535	Financial Assets at Amortized Cost-Non	6(3)
	Cur.	and8		29,727	1		-	-
1550	Investment under Equity Method	6(6)		126,760	3		96,197	3
1600	Properties, Plants and Equipment	6(7)and8		966,563	25		989,220	32
1780	Intangible Assets			112,544	3		38,291	1
1840	Deferred Income Tax Assets	6(22)		5,238	-		27,017	1
1900	Other Non-Current Assets	6(11)and8		157,277	4		105,196	3
15XX	Total Non-Current Assets			2,129,935	55		1,486,907	48
1XXX	Total Assets		$	3,864,318	100	$	3,110,149	100
		(Continued)

76 -

Taiwan Mask Corporation and Subsidiaries Consolidated Balance Sheets DECEMBER 31, 2018 AND 2017

Liabilities and Equities		in thousand NTD DECEMBER 31, 2018 DECEMBER 31, 2017 Notes AMOUNT % AMOUNT % 6(8) $ 591,000 15 $ 81,253 3 6(16) 58,701 2 - - 54 - 234 - 236,387 6 157,789 5 287,675 7 173,071 5 7 1,003 - - - 17,744 1 19,223 1 45,733 1 124,513 4 1,238,297 32 556,083 18 6(9) - - 24,627 1 6(22) 17,189 - 15,609 - 6(11) 21,917 1 28,914 1 3,223 - 94 - 6(10) 9,881 - 5,682 - 52,210 1 74,926 2 1,290,507 33 631,009 20 6(12) 2,527,136 65 2,527,136 81 6(13) 169,431 5 212,948 7 6(14) 524,792 14 599,009 19 14,287 - 14,287 - 199,736 5 ( 74,216) ( 2) 6(15) 7,853 - 11,207 - 6(12) ( 884,741)( 23) ( 884,741) ( 28) 2,558,494 66 2,405,630 77 15,317 1 73,510 3 2,573,811 67 2,479,140 80 9 11 $ 3,864,318 100 $ 3,110,149 100
Current Liabilities 2100 Short Term Loans 2130 Contract Liabilities- Current 2150 Notes Payables 2170 Accounts Payables 2200 Other Payables 2220 Other Payables`－`Related Parties 2230 Current Income Tax Liabilities 2300 Other Current Liabilities 21XX Total Current Liabilities Non-Current Liabilities 2540 Long-term Loans 2570 Deferred Income Tax 2640 Defined Benefit Liabilities-Non Current 2645 Guarantee deposits received 2670 Other Non-Current Liabilities 25XX Total Non-Current Liabilities 2XXX Total Liabilities Equities Attributable to Parent Company Stock 3110 Common Stock Additional Paid-in Capital 3200 Additional Paid-in Capital Retained Earnings 3310 Legal Reserve 3320 Special Reserve 3350 Uncompensated Deficit Other Equities 3400 Other Equities 3500Treasury Stock 31XX Total Equities Attributable to Parent Company 36XXNon-Controlling Interests 3XXX Total Equities Major Commitments and Contingencies Major Events after Financial Statement Date 3X2X Total Liabilities and Equities

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

77 -

Taiwan Mask Corporation and Subsidiaries Consolidated Comprehensive Income Statements FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Items	in thousand NTD (Except gain (loss) per share is in NTD) 2018 2017 Notes AMOUNT % AMOUNT % 6(16)and14 $ 2,885,982 100 $ 1,427,073 100 6(5) ( 2,256,974) ( 78) ( 1,183,400 ) ( 83) 629,008 22 243,673 17 ( 114,735 ) ( 4) ( 118,108 ) ( 8) ( 143,525 ) ( 5) ( 74,276 ) ( 5) ( 113,965 ) ( 4) ( 59,193 ) ( 4) 2,753 - - - ( 369,472) ( 13) ( 251,577 ) ( 17) 259,536 9 ( 7,904 ) - 6(17) 30,044 1 6,449 - 6(18) ( 36,415 ) ( 1) ( 3,093 ) - 6(19) ( 5,573 ) - ( 3,646 ) - ( 43,946) ( 2) ( 57,075 ) ( 4) ( 55,890) ( 2) ( 57,365 ) ( 4) 203,646 7 ( 65,269 ) ( 4) 6(22) ( 57,826) ( 2) ( 23,284 ) ( 2) $ 145,820 5 ($ 88,553 )( 6)
4000Operating Incomes 5000Operating Costs 5900 Gross Income from Operations Operating Expenses 6100 Selling Expenses 6200 Administrative Expenses 6300 R & D Expenses 6450 Expected Credit Impairment Benefit 6000 Total Operating Expenses 6900Operating Gain & Loss Non-Operating Incomes and Losses 7010 Other Incomes 7020 Other Gains and Losses 7050 Financial Costs 7060 The share of affiliates and joint venture profits and losses recognized by the equity method 7000 Total Non-Operating Incomes and Losses 7900Earnings (Loss)Before Tax 7950 Income Tax Expense (Benefit) 8200Net Income (Loss)

Items

in thousand NTD
(Except gain (loss) per share is in NTD)
2018
2017
Notes
AMOUNT

%

AMOUNT
%
6(16)and14
$ 2,885,982
100
$ 1,427,073
100
6(5)
(
2,256,974) (
78) (
1,183,400 ) (
83)
629,008
22
243,673
17
(
114,735 ) (
4) (
118,108 ) (
8)
(
143,525 ) (
5) (
74,276 ) (
5)
(
113,965 ) (
4) (
59,193 ) (
4)
2,753
-
-
-
(
369,472) (
13) (
251,577 ) (
17)
259,536
9 (
7,904 )
-
6(17)
30,044
1
6,449
-
6(18)
(
36,415 ) (
1) (
3,093 )
-
6(19)
(
5,573 )
- (
3,646 )
-
(
43,946) (
2) (
57,075 ) (
4)
(
55,890) (
2) (
57,365 ) (
4)
203,646
7 (
65,269 ) (
4)
6(22)
(
57,826) (
2) (
23,284 ) (
2)
$ 145,820
5 ($ 88,553 )(
6)

4000Operating Incomes
5000Operating Costs
5900
Gross Income from
Operations
Operating Expenses
6100
Selling Expenses
6200
Administrative Expenses
6300
R & D Expenses
6450
Expected Credit Impairment
Benefit
6000
Total Operating Expenses
6900Operating Gain & Loss
Non-Operating Incomes and
Losses
7010
Other Incomes
7020
Other Gains and Losses
7050
Financial Costs
7060
The share of affiliates and joint
venture profits and losses
recognized by the equity method
7000
Total Non-Operating Incomes
and Losses
7900Earnings (Loss)Before Tax
7950 Income Tax Expense (Benefit)
8200Net Income (Loss)

(Continued)

78 -

	Taiwan Mask Corporation	Taiwan Mask Corporation	and Subsidiaries	and Subsidiaries	and Subsidiaries
	Consolidated Comprehensive		Income Statements
	FOR THE YEARS ENDED DECEMBER 31, 2018			AND 2017
								in thousand NTD
					(Except gain (loss) per share is in NTD)
			2018					2017
	Items Notes		AMOUNT			%		AMOUNT	%
	Other Comprehensive Incomes (Net)
	Components of other comprehensive
	income that will
	not be reclassified to profit or loss
8311	Re-measurements of defined benefit
	plan	$		650		- ($		38 )	-
	Components of other comprehensive
	income that will be reclassified to
	profit or loss
8361	Financial statement translation
	differences of foreign operations			649		-		2,462	-
8362	Unrealized Evaluation Profit and Loss
	of Available-for-Sales Financial
	Assets				-	-		291,380	20
8360	Total Components of other
	comprehensive income that will be
	reclassified to profit or loss			649		-		293,842	20
8500	Total Comprehensive Incomes	$	147,119			5	$	205,251	14
	Net Incomes (Losses) Attributable to`：`
8610	Parent Company	$	199,203			7 ($		74,177 ) (	5)
8620	Non-Controlling Interest (		53,383) (			2) (		14,376) (	1)
	(Continued)

79 -

Taiwan Mask Corporation and Subsidiaries Consolidated Comprehensive Income Statements FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Items	in thousand NTD (Except gain (loss) per share is in NTD) 2018 2017 Notes AMOUNT % AMOUNT % $ 145,820 5 ($ 88,553)( 6) $ 200,011 7 ($ 27,427 ) ( 2) ( 52,892) ( 2) 232,678 16 $ 147,119 5 $ 205,251 14 6(23) $ 1.02 ($ 0.33) 6(23) $ 1.01 ($ 0.33)
Total Total Comprehensive Incomes (Losses) Attributable to`：` 8710 Parent Company 8720 Non-Controlling Interest Total Basic Gain (Loss) per Share 9750 Net Gain (Loss) Diluted Gain or Loss per Share 9850 Net Gain (Loss)

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

80 -

`Notes`				Taiwan Mask Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 Equities Attributable to Parent Company	Taiwan Mask Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 Equities Attributable to Parent Company	Taiwan Mask Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 Equities Attributable to Parent Company	Taiwan Mask Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 Equities Attributable to Parent Company	Taiwan Mask Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 Equities Attributable to Parent Company	Taiwan Mask Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 Equities Attributable to Parent Company	Taiwan Mask Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 Equities Attributable to Parent Company					i
				CONS
				FOR	THE YEARS ENDED DECEMBER 31, 2018 AN			D
					Equities Attributable to P			a
	Common Stock		Additional P Capital	aid-in	Retained Earnings				Other Equities		TreasuryStock		Total
					Legal Reserves	Special Reserves	Uncompensated Deficit		Conversion balance of financial statement translation of foreign operatingagencies	Unrealized Evaluation Profit and Loss of Available-for-Sales Financial Assets
6(15) 6(14) 6(13) 6(13) 6(15) 6(15) 6(14) 6(13) 6(13)	$ 2,527,136 - - - - - - - - - $ 2,527,136 $ 2,527,136 - 2,527,136 - - - - - - - $ 2,527,136	$ 180 5 27 $ 212 $ 212 212 ( 4 ( 38 $ 169	$ 180	,286 - - - - ,628 ,034 - - - ,948 ,948 - ,948 - - - - ,946 ) ,571 ) - ,431	$ 761,097 - - - ( 162,088 ) - - - - - $ 599,009 $ 599,009 - 599,009 - - - ( 74,217 ) - - - $ 524,792	$ 14,287 - - - - - - - - - $ 14,287 $ 14,287 - 14,287 - - - - - - - $ 14,287	($ 162,088 ) ( 74,177 ) ( 39 ) ( 74,216 ) 162,088 - - - - - ($ 74,216 ) ($ 74,216 ) 3,756 ( 70,460 ) 199,203 406 199,609 74,217 ( 3,630 ) - - $ 199,736		$ 5,719 - 1,732 1,732 - - - - - - $ 7,451 $ 7,451 - 7,451 - 402 402 - - - - $ 7,853	($ 41,301 ) - 45,057 45,057 - - - - - - $ 3,756 $ 3,756 ( 3,756 ) - - - - - - - - $ -	($ 290,994 ) - - - - - - ( 667,963 ) - 74,216 ($ 884,741 ) ($ 884,741 ) - ( 884,741 ) - - - - - - - ($ 884,741 )	$ 2,994,142 ( 74,177 ) 46,750 ( 27,427 ) - 5,628 27,034 ( 667,963 ) - 74,216 $ 2,405,630 $ 2,405,630 - 2,405,630 199,203 808 200,011 - ( 8,576 ) ( 38,571 ) - $ 2,558,494		$ 223,359 ( 14,376 ) 247,054 232,678 - - ( 43,987 ) - ( 338,540 ) - $ 73,510 $ 73,510 - 73,510 ( 53,383 ) 491 ( 52,892 ) - - - ( 5,301 ) $ 15,317	$ 3,217,501 ( 88,553 ) 293,804 205,251 - 5,628 ( 16,953 ) ( 667,963 ) ( 338,540 ) 74,216 $ 2,479,140 $ 2,479,140 - 2,479,140 145,820 1,299 147,119 - ( 8,576 ) ( 38,571 ) ( 5,301 ) $ 2,573,811


			5 27
			$ 212
			$ 212
			212


			$ 169

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

81 -

Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flow

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

`Notes` Cash Flow from Operating Activities Net Income(Loss) Before Tax Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities Revenues and Expenses Depreciation 6(20) Amortization 6(20) Expected Credit Impairment Benefit / Bad Debt Expenses Interest Incomes 6(17) Interest Expenses 6(19) Allowances for Sales Return and Discounts Net Profit of Financial Asset at Fair Value Through Profit or Loss 6(18) Dividend income 6(17) The Share of Affiliates Profits and Losses Recognized by the Equity Method Gains (loss) on Disposal of Property, Plants and Equipment 6(18) Gain (loss) on disposal of investments 6(18) Impairment Loss of Financial Assets 6(18) The Changes of Assets/ Liabilities related to Operating Activities The Changes of Assets related to Operating Activities Force of Financial Asset at Fair Value Through Profit or Loss Notes Receivable Accounts Receivable Accounts Receivable-related Parties Other Receivables Other Receivables-related Parties Inventories Prepayments Other Current Assets The Changes of Liabilities related to Operating Activities Contract Liabilities Notes Payable Accounts Payable Other Payables Other Payables- related Parties Other Current Liabilities Accrued Pension Liability Other Non-Current Liabilities Net Cash In-Flow (Out-Flow) from Operating Activities Interest Received Dividends Received Interest Paid Income Tax Paid Net Cash In-Flow(Out-Flow) from Operating Activities	FOR THE YEARS ENDED DECEMBER 31,2018 $ 203,646 146,423 3,131 ( 2,753 ) ( 3,158 ) 5,573 - 12,430 ( 16,264 ) 43,946 33,489 649 ( 3,735 ) ( 529,269 ) 1,356 ( 94,491 ) ( 935 ) 4,022 4,251 ( 12,744 ) 3,775 6,908 ( 24,888 ) ( 181 ) 43,488 39,102 1,003 ( 3,615 ) ( 7,102 ) - ( 145,943 ) 3,112 16,264 ( 4,469 ) ( 28,403 ) ( 159,439 )	in thousand NTD FOR THE YEARS ENDED DECEMBER 31,2017 ( $ 65,269 ) 160,373 2,187 18,167 ( 2,963 ) 3,647 183 ( 1,348 ) ( 2,128 ) 57,075 ( 1,748 ) ( 61,585 ) 23,970 524,578 7,322 9,635 7,068 ( 18,799 ) ( 1,506 ) ( 17,261 ) 2,297 ( 38 ) - 156 ( 15,414 ) 36,388 - ( 48,881 ) ( 13,351 ) ( 220 ) 602,535 3,093 2,128 ( 3,647 ) ( 5,744 ) 598,365

(Continued)

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Taiwan Mask Corporation and Subsidiaries Consolidated Statements of Cash Flow

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Cash Flow from Investment Activities Acquisition of Amortized Cost Financial Assets Disposal of Amortized Cost Financial Assets Disposal of Debt Investment in No Active Market Acquisition of Available-for-sales Financial Assets Disposal of Available-for-sales Financial Assets Acquisition of investment property by the Equity Method Cash Out-Flow from Merge Acquisition of Property, Plants and Equipment Disposal of Property, Plants and Equipment Acquisition of Intangible Assets Disposal of Intangible Assets Increase of Other Financial Assets Increase of Refundable Deposits Net Cash In-Flow(Out-Flow) from Investment Activities Cash Flow from Funding Activities Increase of Short Term Loan Redemption of Short Term Loan Redemption of Long Term Loan Buy Back Treasury Stock Treasury Stock Transactions Lease account payable Increase of Guarantee Deposits The Changes of Non-Controlling Interests Net Cash In-Flow (Out-Flow) from Funding Activities Adjustments of Exchange Rate Increase (Decrease) of Cash and Cash Equivalents Beginning Balance of Cash and Cash Equivalents Ending Balance of Cash and Cash Equivalents	`Notes` 6(27)	FOR THE YEARS ENDED DECEMBER 31,2018 ( $ 32,635 ) 15,995 - - ( - ( 66,991 ) ( ( 149,693 ) ( ( 205,618 ) ( 29,453 ( 2,163 ) ( - - ( ( 1,105 ) ( ( 412,757 ) 916,000 ( 406,253 ) ( 26,303 ) ( - ( - 11,525 3,029 - ( 497,998 ( 651 ( 73,547 ) 636,955 $ 563,408	in thousand NTD FOR THE YEARS ENDED DECEMBER 31,2017 $ - - 434,376 67,254 ) 14,008 49,864 ) 37,797 ) 129,816 ) - 977 ) 4,437 3 ) 2,131 ) 164,979 25,092 - 415 ) 357,063 ) 239,893 - 6 319,502 ) 411,989 ) 5,229 356,584 280,371 $ 636,955

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

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TAIWAN MASK CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

1. HISTORY

TAIWAN MASK CORPORATION (TMC or the Company) was established in the Republic of China (R.O.C.) on 1988/10/21 and first operated in March, 1989. Based on the resolution made on 2000/6/12 shareholders‟ meeting, TMC merged Shin -Tai Corporation on 2000/12/1. The Company and the subsidiaries (the Group) is primarily engaged in the research, development, manufacturing and selling of Mask and Circuit, and also provide technology assistance, consultation, inspection and maintenance services for Mask and Circuit. The Group is also manufacturing and selling medical wares.

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

These consolidated financial statements were reported to the Boar d of Directors and issued on March 20, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

84 -

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendments to IFRS 2, ‘Classification and measurement of share-based payment transactions’ Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with IFRS 4, Insurance contracts’ IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from contracts with customers’ Amendments to IAS 7, ‘Disclosure initiative’ Amendments to IAS 12,‘Recognition of deferred tax assets for unrealised Amendments to IAS 40, ‘Transfers of investment property’ IFRIC 22, ‘Foreign currency transactions and advance consideration’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1,‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 12,‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28,‘Investments in associates and joint ventures’	January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2018

New Standards,Interpretations and Amendments

Effective date by
International
Accounting
Standards Board

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

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

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

A. IFRS 9, “Financial instruments”
(A) Classification of debt instruments is driven by the entity‟s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset at fair value through other comprehensive income or financial asset measured at amortized cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to recognize the equity instrument not held for trading at fair value in other comprehensive income.
85 -
(B) The impairment losses of debt instruments are assessed using an “expected credit loss” approach. An entity assesses at the end of each financial reporting period whether there has been a significant increase in credit risk on that instrument since initial recognition to recognize 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of loss allowance). The Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.
(C)The Group has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018, please refer to Notes 12(4) B and C.
B. IFRS 15, „Revenue from contracts with customers‟ and amendments

IFRS 15, „Revenue from contracts with customers‟ replaces IAS 11, „Construction contracts‟, IAS 18, „Revenue‟ and relevant interpret ations. According to IFRS 15, revenue is recognized when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps:

Step 1: Identify customer contract.

Step 2: Identify contract liabilities.

Step 3: Define transaction price. Step 4: Allocate transaction price into contract liabilities.

Step 5: Recognize revenue when finish contract liabilities.

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

C. Amendments to IAS 7, „Disclosure initiative‟

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

The Group expects to provide additional disclosure to explain the changes in liabilities arising from financing activities.

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

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

86 -

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

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

IFRS 16, “Leases”

IFRS 16, “Leases”, replaces IAS 17, “Leases” and related interpretations and Standing Interpretations Committee (SICs). The standard requires lessees t o 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). Lessor accounting still uses the dual classification approach: operating lease and finance lease, and only increases the related disclosures.

The Group expects to recognize the lease contract of lessees in line with IFRS 16. Accordingly, on January 1, 2018, the Group will have to increase „right -of-use asset‟ by $329,853 and increase lease liability by$329,853, respectively.

(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:

IFRSs issued by IASB but not yet endorsed by the FSC New standards, interpretations and amendments issued by included in the IFRSs as endorsed by the FSC are as follows:	IASB but not yet
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of Material’ Amendments to IFRS 3, ‘Definition of a business’ Amendments to IFRS 10 and IAS 28, ‘ Sale or contribution of assets between an investor and its associate or joint venture’ IFRS 17, ‘Insurance contracts’	January 1, 2020 January 1, 2020 To be determined by International Accounting Standards Board January 1, 2021

87 -

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.

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, the consolidated financial statements have been prepared under the historical cost convention:
- (A) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (B) Financial assets at fair value through other comprehensive income/Available-for-sale financial assets measured at fair value.
- (C) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group‟s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.
C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply modified retrospective approach whereby the cumulative impact of the adoption was recognized as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year ended December 31, 2017 were prepared in compliance with International Accounting Standard 39 („IAS 39‟), International Accounting Standard 18 („IAS 18‟) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies and details of significant accounts.
88 -
(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 controlled by the Group. The Group controls an entity when the Group is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Consolidation of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases when the Group loses control of the subsidiaries.
- (B) Inter-company transactions, balances and unrealized gains or losses on transactions between companies within the Group are eliminated. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group.
- (C) Profit or loss and each component of other comprehensive income are attributed to the owners of the parent and to the non-controlling interests. Total comprehensive income is attributed to the owners of the parent and to the non-controlling interests even if this results in the non-controlling 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 recogni zed directly in equity.
- (E) When the Group loses control of a subsidiary, the Group re -measures 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 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 rel ation to the subsidiary should be reclassified from equity to profit or loss, if such gains or losses would be reclassified to profit or loss when the related assets or liabilities are disposed of.
B. Subsidiaries included in the consolidated financial statements:
89 -

Investor	Subsidiary	Main business activities	December 31,2018 December 31,2017 - 100 100 100 - 100 100 100 30.26 30.26 100 100 100 - - 21.48 - 100 32.06 10.58 100 100 100 100 100 100 Ownership (%)	December 31,2018 December 31,2017 - 100 100 100 - 100 100 100 30.26 30.26 100 100 100 - - 21.48 - 100 32.06 10.58 100 100 100 100 100 100 Ownership (%)	Remark
Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Youe Win Capital Corporation Youe Win Capital Corporation Youe Chung Capital Corporation Miracle Technology CO., LTD. Miracle Technology CO., LTD. Jingjing Investment Co., Ltd.	Taiwan Mask Corp.-USA SunnyLake Park International Holding, Inc. Youe Win Capital Corporation Youe Chung Capital Corporation Innova Vision INC. Miracle Technology CO., LTD. Weida Hi-Tech Innova Vision INC. Suichang Investment Co., Ltd. Innova Vision INC. Jingjing Investment Co., Ltd. Miracle Technology (Samoa)Co., Ltd. Miko-China Enterprise (Shanghai) Co., Ltd.	Selling of masks Investing in communication business Investing in communication business Investing in communication business Medical device manufacturing, wholesale and trading Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. Research, design, development, manufacturing and sales of display panel control chips and modules Medical device manufacturing, wholesale and tradin Investing in communication business Medical device manufacturing, wholesale and tradin Investing in communication business Investing in communication business Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc.	- 100 - 100 30.26 100 100 - - 32.06 100 100 100	100 100 100 100 30.26 100 - 21.48 100 10.58 100 100 100	Note 6 Note 4 Note 4 Note 1 Note 5 Note 4 Note 4 Note 4 Note 1 Note 1 Note 1

90 -

Investor	Subsidiary	Main business activities	December 31,2018 December 31,2017 100 100 100 100 100 100 64.29 - 35.71 - - - 100 100 100 100 9.23 - 100 - 90.77 100 Ownership (%)	December 31,2018 December 31,2017 100 100 100 100 100 100 64.29 - 35.71 - - - 100 100 100 100 9.23 - 100 - 90.77 100 Ownership (%)	Remark
Jingjing Investment Co., Ltd. Miracle Technology (Samoa)Co., Ltd. Misun Technology Co., Ltd. Miko-China Enterprise (Shanghai) Co., Ltd. Miracle International Enterprise(Sha nHai) Co., Ltd. Youe Chung Capital Corporation Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision (B.V.I.) Inc.	MIKO Technology Co., Ltd. Misun Technology Co., Ltd. Miracle International Enterprise(Sha nHai) Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Suichang Investment Co., Ltd. Innova Technology Company Innova Vision (B.V.I.) Inc. Innova Vision Kabushiki Kaisha Calaview International Holding Company Limited Innova Vision Kabushiki Kaisha	Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. Investing in communication business Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. IC product design, production and sales IC product design, production and sales Investing in communication business Medical device manufacturing, wholesale and trading Investing in communication business Medical device manufacturing, wholesale and trading Investing in communication business Medical device manufacturing, wholesale and trading	100 100 100 64.29 35.71 - 100 100 9.23 100 90.77	100 100 100 - - - 100 100 - - 100	Note 1 Note 1 Note 1 Note 3 Note 3 Note 4 Note 2

91 -

Investor	Subsidiary	Main business activities	December 31,2018 December 31,2017 100 - 100 - 100 100 22.30 35.71 77.70 64.29 - 100 Ownership (%)	December 31,2018 December 31,2017 100 - 100 - 100 100 22.30 35.71 77.70 64.29 - 100 Ownership (%)	Remark
Calaview International Holding Company Limited Weida Hi- Tech Weida Hi- Tech Weida Hi- Tech Smart Touch Co., Ltd. Central star Ltd.	Innova Vision Shenzen Touch Hi-Tech Smart Touch Co., Ltd. Central Star Ltd. Central Star Ltd. Touch Hi-Tech	Medical device manufacturing, wholesale and trading Touch screen system hardware design and software development and production Investing in communication business Investing in communication business Investing in communication business Touch screen system hardware design and software development and production	100 100 100 22.30 77.70 -	- - 100 35.71 64.29 100	Note 2 Note 5 Note 5 Note 5 Note 5 Note 5

Note1 ： The company acquired Miracle Technology 100% shares, and then the income and loss from Miracle Technology were combined into the consolidated financial statements of the company.
Note2 ： The Group acquired Calaview International Holding Company Limited 100% shares, also acquired its subsidiary Innova Vision Shenzen 100% shares indirectly. Starting from that time, the income and loss from Calaview and its subsidiary were combined into the consolidated financial statements of the company.
Note3 ： In March 2007, the Group jointly invested and established Sichuan Miracle Electronic Technology Co., Ltd., and held 71.42% of the shares. The company's income and loss were included in the consolidate d statement since the acquisition of control, and it was obtained in December of the Republic of China. 100% equity.
Note4 ： The group organized reorganization, and the company‟s related assets and liabilities were merged into Yu Chuan Investment Co., Ltd., in May 2018.
Note5 ： In August 2018, the company obtained control through the acquisition of the equity of Wei Dao Hi-Tech Co., Ltd., and incorporated the income and loss of the company and its subsidiaries into the consolidated statement since the acquisition of control 100% equity in November 2018.
Note6 ： The Company was dissolved in 2018.
92 -
C. Subsidiaries not included in the consolidated financial statements: None.
D. Adjustments for subsidiaries with different balance sheet dates: None.
E. Significant restrictions: None.
F. Subsidiaries that have non-controlling interests that are material to the Group:

As of December 31, 2018 and 2017 the non-controlling interest amounted to $15,317 and $73,510, respectively. The information of non-controlling interest and respective subsidiaries is as follows:

subsidiary	Amount Ownership (%) Amount Ownership (%) $ 15,317 37.68% $ 67,202 37.68% Non-controllinginterest December 31,2018 December 31,2017	Amount Ownership (%) Amount Ownership (%) $ 15,317 37.68% $ 67,202 37.68% Non-controllinginterest December 31,2018 December 31,2017
	Amount Ownership (%) $ 15,317 37.68% December 31,2018
	Amount $ 15,317	Amount $ 67,202
Inova Vision INC. and subsidiary

Summarized financial information of the subsidiaries:

Balance sheets

Balance sheets
		Innova Vision INC.		and subsidiary
		December 31, 2018		December 31, 2017
Current assets	$	230,150	$	265,385
Non-current assets		74,607		124,283
Current liabilities	(	259,250)	(	211,242)
Non-current liabilities	(	4,854)	(	67)
Total net assets	$	40,653	$	178,359

Statements of comprehensive income

93 -

Statements of cash flows
Income
Gain (loss) before income tax

Tax income(gain)

Income (loss) from Continuing Operation

Income (loss) from Continuing Operation

Other comprehensive income (net after
tax）

Total comprehensive income for the
period

Total comprehensive income attributable
to Non-controlling interest

Payment to non-controlling equity
dividends
Cash provided by (used in) operating
activities

Cash provided by (used in) investing
activities

Cash provided by (used in) financing
activities
Effects of exchange rate change on cash
and cash equivalents

Net increase (decrease) in cash and cash
equivalents
Cash and cash equivalents at beginning
of year
Cash and cash equivalents at end of year 2018
2017
161,782
$ 166,766
$ 124,489)
($ 128,099)
($ 5,621)
(
2,671)
(
130,110)
(
130,770)
(
130,110)
(
130,770)
(
1,565)
(
1,941
131,675)
($ 128,829)
($ 55,482)
($ 48,540)
($ -
$ -
$ Innova Vision INC. and subsidiary
2018
2017
12,842)
($ 30,209)
($ 25,167)
(
24,759)
(
51,651
50,000
2,214)
(
1,938
11,428
3,030)
(
17,612
20,642
29,040
$ 17,612
$ Innova Vision INC. and subsidiary

(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 NTD, 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 re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in profit or loss in the period in which they arise.
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- (B) Monetary assets and liabilities denominated in foreign currencies at the period end are retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss.
- (C) Non-monetary assets and liabilities denominated in foreign currenci es held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the initial transactions.
- (D) All other foreign exchange gains and losses based on the nature of those transactions 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 and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
  - i. Assets and liabilities for each balance sheet presented are translated at the 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 recognised in other comprehensive income.
- (B) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Group retains partial interest in the former foreign subsidiary after losing control of the former foreign subsidiary, such transactions should be accounted for as disposal of all interest in the foreign operation.
- (C) 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 the 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;
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- (D) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are to be exchanged or used to settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current
- liabilities; otherwise they are classified as non-current liabilities:
- (A) Liabilities that are expected to be settled within the normal operating cycle;
- (B) Liabilities arising mainly from trading activities;
- (C) Liabilities that are to be settled within twelve months from the balance sheet date;
- (D) Liabilities for which the repayment date cannot be extended unconditionally to more than twelve months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
(6) Cash equivalents

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

(7) Financial assets 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 assets at fair value and recognizes the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.
D. The Group recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
(8) Financial assets at amortized cost
A. Financial assets at amortized 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 pri ncipal and interest.
B. The Group‟s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.
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(9) 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.

(10) Impairment of financial assets

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

(11) Derecognition of financial assets

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

(12) Operating leases (lessor)

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

(13) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs a nd related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item 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.

(14) Investments accounted for using equity method / associates

A. Associates are all entities over which the Group has significant influence but not control. In general, it is presumed that the investor has significant influence, if an investor holds, directly or indirectly 20 percent or more of the voting power of the investee. Investments in associates are accounted for using the equity method and are initially recognized at cost.
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
97 -

Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

C. When changes in an associate‟s equity do not arise from profit or loss or other comprehensive income of the associate and such changes do not affect the Group‟s ownership percentage of the associate, the Group recognizes 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.

(15) 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, 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 3~56years

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Machinery and equipment 2~14years Utility equipment 3~6years Transportation equipment 3~6years Leasehold assets 2~10years Mold equipment 2years Other equipment 3~5years

(16) Operating leases (lessee)

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

(17) Intangible assets

A. Trademarks and licenses

Separately acquired trademarks and licenses are stated at historical cost. Trademarks and licenses acquired in a business combination are recognized at fair value at the acquisition date. Trademarks and licenses have a finite useful life and are amortized on a straight-line basis over their estimated useful lives of 10 to 15 years.

B. Computer software

Computer software is stated at cost and amortized on a straight -line basis over its estimated useful life of 3 years.

C. Goodwill

Goodwill arises in a business combination accounted for by applying the acquisition method.

(18) 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, intangible assets with an indefinite useful life and intangible assets that have not yet been available for use 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.
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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.

(19) Borrowings

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.

(20) 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.

(21) 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 re ndered by employees in a period and should be recognized as expense in that period when the employees render service.

B. Pensions
(A)Defined contribution plans

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

(B)Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Group in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The rate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.
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ii. Re-measurements 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. Past service costs are recognized immediately in profit or loss.
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 as it can no longer withdraw an offer of termination benefits or it recognizes relating 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 expense and liability, 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.

(22) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the c ountries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the unappropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the
101 -

balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.

D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed.
E. Current income tax assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset on the balance sheet when the entity has the legally enforceable right to offset current tax assets against current tax liabilities and they are levied by the same taxation authority on either the same entity or different entities that intend to settle on a net basis or realize the asset and settle the liability simultaneously.
F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from tax laws to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.

(23) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company‟s equity share capital that has been issued, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company‟s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company‟s equity holders.

(24) Dividends

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

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(25) Revenue recognition

Sales of goods

A. The Group manufacturing and selling of Mask and Circuit, also medical wares. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer‟s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.
B. 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. 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.

(26) 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.

(27) Operating segments

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

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

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

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

None.

(2) Critical accounting estimates and assumptions

Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Group must determine the net realizable value of inventories on balance sheet date using judgements and estimates. Due to the rapid technology innovation, the Group evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31 2018, the carrying amount of inventories was $408,575.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
		December 31, 2018		December 31, 2017
Cash on hand and petty cash	$	3,182	$	1,609
Checking accounts and demand deposits		535,426		527,899
Time deposits		24,800		107,447
Total	$	563,408	$	636,955

A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Group has no cash and cash equivalents pledged to others.

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

Items Non-current items: Financial assets mandatorily measured at fair value through profit or loss Listed and OTC stocks Unlisted and non-OTC stocks Privately Offered Fund Valuation adjustment Total		December 31,2018
		613,771 $ 63,926 110,247
		787,944 56,118) (
		$ 731,826

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss is listed below:
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Financial assets mandatorily measured at
fair value through profit or loss
Listed and OTC stocks	($	20,269)
Unlisted and non-OTC stocks		10,836
Beneficiary certificates		89
Total	($	9,344)

B. The Group has no financial assets at fair value through profit or loss pledged to others.
C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).
D. Information on financial assets at fair value through profit or loss as of December 31, 2017 is provided in Note 12(4).
(3) Financial assets at amortized cost

A. Amounts recognized in profit or loss in relation to amortized cost is listed below: Items Current item: Time deposits Non-current items: Time deposits Interest income		December 31, 2018 54,335 $
		29,727 $
		financial assets at 2018 797 $

A. Amounts recognized in profit or loss in relation to financial assets at amortized cost is listed below:
B. Details of the Group‟s financial assets at amortized cost pledged to others as collateral are provided in Note 8.
C. Information relating to credit risk of financial assets at amortized cost is provided in Note 12(2).
D. Information on investments in debt instruments without active market as of December 31, 2017 is provided in Note 12(4).
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(4) Notes and accounts receivable

Notes receivable Accounts receivable Accounts receivable – related parties Less: Allowance for sales returns and discounts Less: Loss allowance (	December 31, 2018 December 31, 2017 1,277 $ 2,633 $ 599,932 $ 493,027 $ 4,178 1,089 604,110 494,116 - 1,912) ( 2,780) 21,655) ( 601,330 $ 470,549 $

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

Not past due Less than 30 days Between 31 and 90 days Between 91 and 180 days More than 181 days		Accounts receivable Notes receivable 483,098 $ 1,277 $ 76,987 - 32,436 - 2,288 - 9,301 - 604,110 $ 1,277 $ December 31,2018	Accounts receivable Notes receivable 483,098 $ 1,277 $ 76,987 - 32,436 - 2,288 - 9,301 - 604,110 $ 1,277 $ December 31,2018	Accounts receivable Notes receivable 483,098 $ 1,277 $ 76,987 - 32,436 - 2,288 - 9,301 - 604,110 $ 1,277 $ December 31,2018		Accounts receivable Notes receivable 306,782 $ 2,633 $ 101,559 - 54,278 - 9,716 - 21,781 - 494,116 $ 2,633 $ December 31,2017	Accounts receivable Notes receivable 306,782 $ 2,633 $ 101,559 - 54,278 - 9,716 - 21,781 - 494,116 $ 2,633 $ December 31,2017	Accounts receivable Notes receivable 306,782 $ 2,633 $ 101,559 - 54,278 - 9,716 - 21,781 - 494,116 $ 2,633 $ December 31,2017
		Accounts receivable				Accounts receivable
		483,098 $ 76,987 32,436 2,288 9,301 604,110 $		1,277 $ - - - - 1,277 $		306,782 $ 101,559 54,278 9,716 21,781 494,116 $		2,633 $ - - - - 2,633 $

The above ageing analysis was based on past due date.

B. The Group has no notes and accounts receivable pledged to others as collateral.
C. As at December 31, 2018 without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of
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the amount that best represents the Group‟s accounts receivable were $ 601,330 respectively.

D. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).
(5) Inventories

Inventories
Raw materials Work in process Finished goods Merchandise inventories Total Raw materials Work in process Finished goods Merchandise inventories Total		December 31,2018
	Cost 140,121 $ 151,213 216,131 62,082 569,547 $	Allowance for valuation loss 33,540) ($ 39,685) ( 85,464) ( 2,283) ( 160,972) ($ December 31,2017	Book value
			106,581 $ 111,529 130,667 59,798
			408,575 $

	Cost 135,838 $ 126,523 194,978 35,219 492,558 $	Allowance for valuation loss	Book value 89,892 $ 86,169 132,873 35,063 343,997 $
		45,946) ($ 40,354) ( 62,105) ( 156) ( 148,561) ($

The cost of inventories recognized as expense for the year:

		`2018`			`2017`
Cost of sold inventory	`$`	`2,248,479`	`$`		`1,161,119`
Allowance(reversal) for valuation and
obsolescence loss		`10,296`			`22,775`
Revenue from sale of scraps	`(`	`882)`	`(`		`824)`
Others	`(`	`919)`			`330`
	`$`	`2,256,974`		`$`	`11,834`

(6)	Investments accounted for using equity method 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: December 31, 2018 December 31, 2017 Associates: Advagene Biopharma Co., Ltd. `$ 126,760` `$ 96,197`

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		`2018`		`2017`
Income (Loss) from Continuing Operation	`($`	`111,323)`	`($`	`138,127)`
Other comprehensive income (net after tax`）`		`-`		`-`
Total comprehensive income (loss) for the period	`($`	`111,323)`	`($`	`138,127)`

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(7) Property, plant and equipment

January 1, 2018 Cost Accumulated depreciation and impairment 2018 January 1 Combined transfer number Combined transfer number- Accumulated depreciation Acquisitions Disposals-Cost Disposals-Accumulated depreciation Depreciation Transfer to expense-Cost Transfer to expense- Accumulated depreciation Net exchange differences- Cost Net exchange differences- Accumulated depreciation December 31 December 31, 2018 Cost Accumulated depreciation and impairment	Buildings (Land) Machinery and equipment Office Equipment 1,490,342 $ 2,201,484 $ 18,474 $ 965,516) ( 1,812,298) ( 10,905) ( 524,826 $ 389,186 $ 7,569 $ 524,826 $ 389,186 $ 7,569 $ - - 777 - - 1,184) ( 53,552 103,219 10,113 - 87,351) ( 2,208) ( - 58,218 1,481 38,258) ( 86,637) ( 4,002) ( - - - - - - 14 2 84 14) ( 2) ( 84) ( 540,120 $ 376,635 $ 13,730 $ 1,543,908 $ 2,217,354 $ 28,424 $ 1,003,788) ( 1,840,719) ( 14,694) ( 540,120 $ 376,635 $ 13,730 $	Transportation 4,848 $ 3,199) ( 1,649 $ 1,649 $ - - - 537) ( 537 384) ( - - 19) ( 17 1,263 $ 4,292 $ 3,029) ( 1,263 $	Leasehold Improvements Molding Equipment Other Equipment Leasing assets 112,728 $ 16,837 $ 12,137 $ 5,903 $ 68,800) ( 12,479) ( 11,002) ( - 43,928 $ 4,358 $ 1,135 $ 5,903 $ 43,928 $ 4,358 $ 1,135 $ 5,903 $ - 3,597 - - - 19,696) ( - 2,327 2,569 4,705 3,634 86,894) ( 15,557) ( - 53,891 - 15,478 - 8,606) ( 2,526) ( 2,806) ( 3,204) ( - 14,319) ( - - - 11,857 - - - - - - - - - - 4,646 $ 1,939 $ 6,552 $ 6,333 $ 28,161 $ 5,087 $ 24,578 $ 9,537 $ 23,515) ( 3,148) ( 18,026) ( 3,204) ( 4,646 $ 1,939 $ 6,552 $ 6,333 $	Construction in progress and equipment under installation Total 10,666 $ 3,873,419 $ - 2,884,199) ( 10,666 $ 989,220 $ 10,666 $ 989,220 $ 4,374 - 20,880) ( 4,679 184,798 - 192,547) ( - 129,605 - 146,423) ( - 14,319) ( - 11,857 - 81 - 83) ( 15,345 $ 966,563 $ 15,345 $ 3,876,686 $ - 2,910,123) ( 15,345 $ 966,563 $

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January 1, 2017 Cost Accumulated depreciation and impairment 2017 January 1 Combined transfer number Acquisitions Disposals Reclassification Combined individual influences Depreciation Reclassification Net exchange differences December 31 December 31, 2017 Cost Accumulated depreciation and impairment	Buildings (Land) Machinery and equipment Office Equipment 1,436,236 $ 2,055,412 $ 10,575 $ 922,276) ( 1,705,706) ( 5,138) ( 513,960 $ 349,706 $ 5,437 $ 513,960 $ 349,706 $ 5,437 $ 40,215 8 527 8,043 136,354 4,060 - - - - - - - - - 41,778) ( 101,100) ( 2,452) ( 4,386 4,218 - - - 3) ( 524,826 $ 389,186 $ 7,569 $ 1,490,342 $ 2,201,484 $ 18,474 $ 965,516) ( 1,812,298) ( 10,905) ( 524,826 $ 389,186 $ 7,569 $	Transportation Leasehold Improvements Molding Equipment Other Equipment Construction in progress and equipment under installation Total 3,357 $ 111,512 $ 14,267 $ 12,137 $ 8,604 $ 3,652,100 $ 1,274) ( 59,722) ( 7,598) ( 10,402) ( - 2,712,116) ( 2,083 $ 51,790 $ 6,669 $ 1,735 $ 8,604 $ 939,984 $ 2,083 $ 51,790 $ 6,669 $ 1,735 $ 8,604 $ 939,984 $ 48 - - - - 40,798 5,903 1,217 2,571 - 10,666 168,814 - - - - - - - - - - - - - - - - - - 482) ( 9,079) ( 4,882) ( 600) ( - 160,373) ( - - - - 8,604) ( - - - - - - 3) ( 7,552 $ 43,928 $ 4,358 $ 1,135 $ 10,666 $ 989,220 $ 10,751 $ 112,728 $ 16,837 $ 12,137 $ 10,666 $ 3,873,419 $ 3,199) ( 68,800) ( 12,479) ( 11,002) ( - 2,884,199) ( 7,552 $ 43,928 $ 4,358 $ 1,135 $ 10,666 $ 989,220 $

A. The significant components of buildings include main land, building and factory, which is/are depreciated over 3 and 56 years, respectively.

B. Amount of borrowing costs in 2018 and 2019 capitalized as part of proper ty, plant and equipment were $0.

C. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

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(8) Short -term borrowings

Short-term borrowings
Type of borrowings Bank borrowings Credit borrowings Type of borrowings Bank borrowings Credit borrowings	December 31, 2018 591,000.0 $ December 31, 2017 81,253 $	Interest rate range	Collateral
		1.138%~1.35% Interest rate range	- Collateral
		2.886%~3.087%	`-`

Interest expense recognized in profit or loss amounted to $4,274 and $1,520 for the years ended December 31, 2018 and 2017, respectively.

- (9) Long term borrowings

The years ended December 31, 2018: None.

For the long-term loan contract of the Group from November 11, 2012 to January 11, 2032, the Group had settled the loan in advance in July 2018 due to financial planning considerations.

Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral	December 31, 2017	December 31, 2017
					26,303 $ 1,676) ( 24,627 $
Bank borrowings secured borrowings Less: Current portion of long- term borrowings	2012.11.11~2032.01.11 payable at maturity date, commencing 20 years after the initial date of borrowing	1.62%	Land and buildings

(10) Finance lease liabilities

The Group leases in transportation and machine equipment under finance lease. Future minimum lease payments and their present values as at December 31, 2018 and 2017 are as follows:

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December 31, 2018

			December 31,2018
Current items: Not more than 1 year Non-current items:	Total finance lease liability		Future financial expenses	Present value of finance lease liabilities
	8,987 $ 10,132 - 10,132 19,119 $	749) ($ 251) ( - 251) ( 1,000) ($		8,238 $ 9,881 - 9,881 18,119 $
More than 1 year but not more than 5 years Not more than 5 years Total

The years ended December 31, 2017: None.

(11) 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 contributions for the deficit by next March.
- (B) The amounts recognized in the balance sheet are as follows:

		December 31, 2018		December 31, 2017
Present value of defined benefit	($	41,564)	($	47,832)
obligations
Fair value of plan assets		29,020		27,605
Net defined benefit liability	($	12,544)	($	20,227)

(C) Movements in net defined benefit liabilities are as follows:
112 -

Year ended December 31, 2018 Balance at January 1 Current service cost Interest (expense) income Remeasurements: Return on plan asset (excluding amounts included in interest income or expense) Change in financial assumptions Change in demographic assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	47,832) ($ 264) ( 555) ( 48,651) ( - 942) ( 120) ( 940 122) ( - 7,209 41,564) ($		27,605 $ - 347 27,952 774 - - - 774 617 323) ( 29,020 $	20,227) ($ 264) ( 208) ( 20,699) ( 774 942) ( 120) ( 940 652 617 6,886 12,544) ($

113 -

Year ended December 31, 2017 Balance at January 1 Merger transfer Current service cost Interest (expense) income Remeasurements: Return on plan asset (excluding amounts included in interest income or expense) Change in financial assumptions Change in demographic assumptions Experience adjustments Pension fund contribution Paid pension Balance at December 31	Present value of defined benefit obligations		Fair value of plan assets	Net defined benefit liability
	57,300) ($ 3,748) ( 552) ( 737) ( 62,337) ( - 815) ( 89) ( 983 79 - 14,426 47,832) ($	25,972 $ 1,317 - 374 27,663 119) ( - - - 119) ( 487 426) ( 27,605 $		31,328) ($ 2,431) ( 552) ( 363) ( 34,674) ( 119) ( 815) ( 89) ( 983 40) ( 487 14,000 20,227) ($

(D) The Bank of Taiwan was commissioned to manage the Fund of the Company‟s and domestic subsidiaries‟ defined benefit pension plan in accordance with the Fund‟s annual investment and utilization plan and the “Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign financial institutions, investment in domestic or foreign listed, over-the-counter, or private placement equity securities, investment in domestic or foreign real estate securitization

114 -

products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual distributions on the final financial statements shall be no less than the earnings attainable from the amounts accrued from two-year time deposits with the interest rates offered by local banks. If the earnings are less than aforementioned rates, government shall make payment for the deficit after being authorized by the Regulator. The Company and domestic subsidiaries have no right to participate in managing and operating that fund and hence the Company and domestic subsidiaries are unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composit ion of fair value of plan assets as of December 31, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

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

Discount rate Future salary increases		Year ended December 31,2018		Year ended December 31,2017
		1.00%~1.125% 2.00%~2.5%		1.25% 2.00%~2.50%

Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was a s follows:

December 31, 2018 Effect on present value of defined benefit obligation December 31, 2017 Effect on present value of defined benefit obligation	Discount	Decrease 0.25% 1,392 $ 1,521 $ rate	Increase 0.25% Decrease 0.25% 1,353 $ 1,304) ($ 1,487 $ 1,482) ($ Future salaryincreases
	Increase 0.25% 1,334) ($ 1,467) ($		Increase 0.25% 1,353 $ 1,487 $

The sensitivity analysis above is based on one assumption which changed while the other conditions remain unchanged. In practice, more than one assumption may change all at once. The method of analyzing sensitivity and the method of calculating net pension liability in the balance sheet are the same. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.

(F) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2019 amount to $635.
(G) As of December 31, 2018, the weighted average duration of the retirement plan is 12-16 years.
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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. 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 pension costs under defined contribution pension plans of the Group for the years ended December 31, 2018 and 2017 were $12,984 and $9,747, respectively.
(12) Share capital
- A. As of December 31, 2018, the Company‟s authorized capital was $5,000,000, consisting of 500,000 thousand shares of ordinary stock (including 20,000 thousand shares reserved for employee stock options issued by the Company), and the paid-in capital was $2,527,136 with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.
  - Movements in the number of the Company‟s ordinary shares outstanding are as follows:

Unit: share in thousands

January Subordinate companies increase holdings of stock Purchase of treasury shares December 31	2018 2017 195,632 232,265 - 16,633) ( - 20,000) ( 195,632 195,632

B. Treasury shares
(A) Reason for share reacquisition and movements in the number of the Company‟s treasury shares are as follows:

Shares held by	Reason for reacquisition		December 31,2018 (Expressed in thousands of shares)	December 31,2018 (Expressed in thousands of shares)
			Number of shares 37,081 20,000 57,081	Book value 527,678 $ 357,063 884,741 $
Subsidiary- Youe Chung Capital Corporation Taiwan Mask Corporation	Subsidiary holds shares of the company To be reissued to employees Total

116 -

Shares held by	Reason for reacquisition		December 31,2017 (Expressed in thousands of shares)	December 31,2017 (Expressed in thousands of shares)
			Number of shares 37,081 20,000 57,081	Book value 527,678 $ 357,063 884,741 $
Subsidiary- Suichang Investment Co., Ltd. Taiwan Mask Corporation	Subsidiary holds shares of the company To be reissued to employees Total

(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 realized 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 should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three -year period are to be retired. Treasury shares to enhance the Company‟s credit rating and the stockholders‟ equity should be retired within six months of acquisition.
(E) The Group organized and reorganized in May 2018, and merged Suichang Investment Co., Ltd. and Youe Win Capital Corporation into Youe Chung Capital Corporation (hereinafter referred to as “Suichan g Campany”, “Youe Win Campany” and “Youe Chung Company”). Suichang Campany and Youe Win Campany were closed and transferred the relevant assets and liabilities to Youe Chung Company. Before the reorganization, Suichang Company held the shares, and after reorganization, Youe Chung Company held the shares of the company. As of December 31, 2017, Suichang Company held 37,081 shares, with an average book value of $14.23 per share and a fair value of $18 per share. As of December 31, 2018, Youe Chung Company held 37,081 shares, the average book value per share was $14.23, and the fair value per share was $18.35. The transfer of treasury stock costs is based on the book value of the shares held by Suichang Company in each period, based on the indirect shareholding ratio of the Company .
(F) In July 13, 2017, the board of directors passed to purchase treasury stocks. From July 17, 2017 to September 13, 2017 were bought back 20,000 shares, and purchase amount was $357,063.
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(13) Capital surplus

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

Treasury shares	Recognition of changes in ownership interest in subsidiaries	Recognition of changes in ownership interest in subsidiaries	Employee stock options	Employee stock options	Total	Total
145,471 $ - - 145,471 $ Treasury shares	62,959 $ 7,484) ( 38,571) ( 16,904 $ Recognition of changes in ownership interest in subsidiaries		4,518 $ 2,538 - 7,056 $ Employee stock options		212,948 $ 4,946) ( 38,571) ( 169,431 $ Total
139,843 $ 5,628 - 145,471 $		40,443 $ - 22,516 62,959 $		- $ - 4,518 4,518 $		180,286 $ 5,628 27,034 212,948 $

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(14) Retained earnings (deficit to be compensated)

A. Under the Company‟s Articles of Incorporation, the current year‟s earnings, if any, shall first be used to pay all taxes and offset prior years‟ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. When such legal reserve amounts to the total authorized capital, the Company shall not be subject to this requirement. The Company may then appropriate or reverse a certain amount as special reserve according to the demand for the business or relevant regulations. After the distribution of earnings, the remaining earnings and prior years‟ undistributed earnings may be appropriated according to a resolution of the Board of Directors adopted in the shareholders‟ meeting.
B. To well design a long term financial plan and stabilize the operation, the company chose a residual dividend policy to plan the future capital fund needs based on capital investment budget. First to appropriate the retained earnings to get capital funds fulfilled and residual earnings will be paid off as dividends. The steps are:
(A) Define an optimized capital budget.
(B) Define the fund needs to fulfill one capital budget.
(C) Define how much fund shall be fulfilled by retained earnings. (Unfulfilled part shall be fulfilled by fund raising or bond issuing.)
(D) To reserve a certain amount of residual earnings, then dividends shal l be paid off to shareholders. According to the dividend policy of the company, cash dividend ratio shall not be lower than 20% of total dividends.
C. Except for covering accumulated deficit, increasing capital or payment of cash in proportion to ownership percentage, the legal reserve shall not be used for any other purpose. The amount capitalized or the cash payment shall be limited to the portion of legal reserve which exceeds 25% of the paid-in capital.
D. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the end of the financial reporting period before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
E. As resolved by the shareholders on June 13, 2018 and June 23, 2017, the deficit in 2017 and 2016 shall be compensated by legal reserve for $74,217 and $162,088.
F. On March 20, 2019, the Board of Directors proposed that total dividends for the distribution of earnings for the year of 2018 were $194,083 at $0.834 (in dollars) per share.
G. For the information relating to employees‟ compensation (bonuses) and directors‟ and supervisors‟ remuneration, please refer to Note 6(21).
119 -

(15) Other equity items

2018

			2018	2018
(16)	Operating revenue Unrealized evaluation of profit and loss January 1 3,756 $ Effect on retrospective application 3,756) ( Foreign currency conversion difference: –Group - December 31 - $ Unrealized evaluation of profit and loss January 1 41,301) ($ Revaluation 45,057 Foreign currency conversion difference: –Group - December 31 3,756 $ Revenue from contracts with customers	Unrealized evaluation of profit and loss	Foreign currency translation Total 7,451 $ 11,207 $ - 3,756) ( 402 402 7,853 $ 7,853 $ Foreign currency translation Total 5,719 $ 35,582) ($ - 45,057 1,732 1,732 7,451 $ 11,207 $ 2017 2018 2,885,982 $
		3,756 $ 3,756) ( - - $ Unrealized evaluation of profit and loss



				$

A. Disaggregation of revenue from contracts with 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:

2018 Revenue from dept. Revenue from internal dept. contracts Revenue from external customer contracts Timing of revenue recognition At a point in time	Semiconductor 2,943,827 $ 218,921) ( 2,724,906 $ 2,724,906 $	Medical division 161,782 $ 706) ( 161,076 $ 161,076 $	Total 3,105,609 $ 219,627) (
			2,995,982 $ 2,995,982 $

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B. Contract liabilities

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

			December 31, 2018
Contract liability		$	58,701
C. Related disclosures for	2017	operating revenue are provided in Note 12(5).

(17) Other income

(17)	Other income
(18) (19)	Other gains and losses Finance costs Interest income`：` Bank deposits Financial assets at amortised cost Interest income Other interest income Total interest income Rent income Dividend income Others Gains(Losses) on disposals of property, plant and equipment Gains(Loss) on disposal of investments Currency exchange gains(loss) Gains(Loss) on financial assets at fair value through profit or loss Reversal of impairment loss(Impairment loss) recognised in profit or loss, financial Other expenses Interest expense Other finance expense	2018 2,340 $ 797 21 3,158 271 16,264 10,351 $ 30,044 2018 33,489) ($ 649) ( 12,654 12,430) ( 3,735 6,236) ( $ (36,415) 2018 4,508 $ 1,065 5,573 $	2017 2,963 $ - - 2,963 15 2,128 1,343 $ 6,449 2017
			1,748 $ 61,585 21,841) ( 1,348 23,970) ( 21,963) ( $ (3,093) 2017 3,561 $ 85 3,646 $

121 -

(20) Expenses by nature

penses by nature
mployee benefit expense Employee benefit expenses Depreciation charges on property, plant and equipment Amortisation charges on intangible Total Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses	2018 395,903 $ 146,423 3,131 545,457 $ 2018 344,067 $ 23,865 13,456 14,515 395,903 $	2017
		255,075 $ 160,373 2,187
		417,635 $
		2017
		210,740 $ 21,999 10,672 11,664
		255,075 $

(21) Employee benefit expense

A. According to the Articles of Incorporation of the Company, the current year‟s profit shall be used first to cover accumulated deficit, if any, and then the remaining balance shall be distributed as follows: no less than 10% as employees‟ compensation, and no more than 2% as directors‟ remuneration.
B. For the ended of 2018, employees‟ compensation was accrued at $25,884, respectively; directors‟ and supervisors‟ remuneration was accrued at 5,108, respectively. The aforementioned amounts were recognized in salary expenses.

In 2017, due to accumulated losses, there were no employee bonus and the compensation of the directors were estimated.

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

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(22) Income tax

A. Income tax expense

Components of income tax expense:

			2018		2017
Current tax:
Current tax on profits for the year	$		36,083	$	22,535
Previous income tax low (high)
estimate	(		1,616)		321
Total current tax			34,467		22,856
Deferred tax:
Origination and reversal of			24,344		428
temporary differences
Impact of change in tax rate	(		985)		-
Total deferred tax			23,359		428
Income tax expense		$	57,826	$	23,284
Reconciliation between income	tax		expense and accounting		profit
			2018		2017
Tax calculated based on profit before		($	23,445)	($	12,768)
tax and statutory tax rate
Effect disallowed by tax regulation			50,359		6,355
Effect from Alternative Minimum Tax			-		6,039
Taxable loss not recognised as deferred
tax assets			26,560		32,448
Prior year income tax (over)
underestimation		(	1,616)		321
Change in assessment of realisation of
deferred tax assets			6,953	(	9,111)
Effect from changes in tax regulation		(	985)		-
Income tax expense		$	57,826	$	23,284

B. Reconciliation between income tax expense and accounting profit

C. Amounts of deferred tax assets or liabilities as a result of temporary differences and tax losses are as follows:
123 -

2018

January1 Deferred tax assets: -Temporary differences: Loss on inventory 1,879 $ Allowance for bad debts 3,010 Investment tax credits 4,900 Unrealised pensions 4,490 Unrealised exchange loss 311 Other 12,427 Total 27,017 $ Deferred tax liabilities: -Temporary differences: Unrealised exchange gain 145) ( Other 15,464) ( 15,609) ($ Total 11,408 $	Business combination	Recognised in profit or loss	Recognised in other comprehensive income - $ - - - - - - $ - - - - $	Recognised in equity December 31 - $ 4,587 $ - - - - - - - 6 - 645 - $ 5,238 $ - 899) ( - 16,290) ( - 17,189) ( - $ 11,951) ($
	- $ - - - - - - $ - - - - $	2,708 $ 3,010) ( 4,900) ( 4,490) ( 305) ( 11,782) ( 21,779) ($ 754) ( 826) ( 1,580) ( 23,359) ($

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2017

January1 Deferred tax assets: -Temporary differences: Loss on inventory 3,855 $ Allowance for bad debts 1,283 Allowance for Sales Returns and Discoutns 252 Investment tax credits 6,919 Unrealised pensions 6,765 Unrealised exchange loss - Other 9,124 Net operating carryforwards 1,729 Total 29,927 $ Deferred tax liabilities: -Temporary differences: Unrealised exchange gain 1,593) ( Other - 1,593) ( Total 28,334 $	Business combination - $ - - - - - - - - $ - 15,887) ( 15,887) ( 15,887) ($	Recognised in profit or loss	Recognised in other comprehensive income	Recognised in equity December 31 - $ 1,879 $ - 3,010 - - - 4,900 - 4,490 - 311 611) ( 12,427 - - 611) ($ 27,017 $ - 145) ( - 15,464) ( - 15,609) ($ 611) ($ 11,408 $
		1,976) ($ 1,727 252) ( 2,019) ( 2,275) ( 311 3,914 1,729) ( 2,299) ($ 1,448 423 1,871 428) ($	- $ - - - - - - - - $ - - - - $

D. Expiration dates of unused tax losses and amounts of unrecognized deferred tax assets are as follows:
125 -

December 31, 2018

Year incurred	Amount filed/ assessed	Unused amount	Unrecognized deferred income tax assets	Expiry year
2014 2015 2015 2016 2016 2016 2017 2017 2017 2018 2018	Amount filed Amount filed Amount filed Amount filed Amount filed Amount filed Assessed Assessed Assessed Assessed Assessed	24,288 $ 35,299 30,501 8,476 73,464 51,003 10,657 161,256 85,413 131,239 34,401	24,288 $ 35,299 30,501 8,476 73,464 51,003 10,657 161,256 85,413 131,239 34,401	2024 2025 2025 2026 2026 2026 2027 2027 2027 2028 2028

December 31, 2017

Year incurred	Amount filed/ assessed	Unused amount	Unrecognized deferred income tax assets	Expiry year
2014 2015 2016 2016 2017 2017	Amount filed Amount filed Amount filed Amount filed Assessed Assessed	24,288 $ 35,299 8,476 73,464 10,657 161,256	24,288 35,299 8,476 73,464 10,657 161,256	2024 2025 2026 2026 2027 2027

E. The amounts of deductible temporary difference that are not recognized as deferred tax assets are as follows:

Can deduct temporary differences	December 31, 2018 483,755 $	December 31, 2017 741,996 $

F. The Company‟s income tax returns through 2016 have been assessed and approved by the Tax Authority.
G. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company‟s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has accessed the impact of the change in income tax rate.
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(23) Earnings per share

ings per share
Basic earnings per share Profit attributable to the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares Employees' bonus Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic loss per share Profit attributable to ordinary shareholders of the parent	Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share (in dollars) 199,203 $ 195,632 1.02 $ 199,203 $ 195,632 - 1,411 199,203 $ 197,043 1.01 $ Year ended December 31,2018 Amount after tax Weighted average number of ordinary shares outstanding (share in thousands) Earnings per share (in dollars) 74,177) ($ 225,910 0.33) ($ Year ended December 31,2017
	Amount after tax		Weighted average number of ordinary shares outstanding (share in thousands)
	$
	$
	$

		Amount after tax		Weighted average number of ordinary shares outstanding (share in thousands)
		74,177) ($		225,910	0.33) ($

The weighted average number of shares outstanding in 2018, which has been deducted from the number of shares held by the subsidiary company, Yu Chuan Investment (shares) company, which are regarded as treasury shares of the company (the number of shares is calculated according to the shareholding ratio of the company).

The weighted average number of outstanding foreign shares in 2017 has been deducted from the number of shares held by the subsidiary company, Suichang Investment Co., Ltd., which holds shares of the company as treasury shares (the number of shares is calculated based on the shareholding ratio of the company). In addition, due to the loss of the above -mentioned various periods, the employee's compensation has an anti-dilution effect, so the diluted loss per share is equal to the basic loss per share.

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(24) Transactions with non -controlling interest

Acquisition of additional equity interest in a subsidiary

On December 26, 2017, the Group acquired an additional 58.92% of shares of its subsidiary- Suichang Investment Co., Ltd., for a total cash consideration of $328,580. The carrying amount of non-controlling interest in 372,567 was $372,567 at the acquisition date. This transaction resulted in a decrease in the non-controlling interest by $372,567 and decrease in the equity attributable to owners of the parent by $43,987. The effect of changes in interests in 43,987 on the equity attributable to owners of the parent for the years ended December 31, 2017 is shown below:

Carrying amount of non-controlling interest acquired Consideration paid to non-controlling interest Capital surplus- difference between proceeds on actual acquisition of or disposal of equity interest in a subsidiary and its carrying amount	Year ended December 31,2017 372,567 $ 328,580) ( 43,987 $

(25) Business combinations

A. In August, 2018, the Group acquired 65.35% equity of Wei Da Hi-Tech Co., Ltd. in cash of $ 191,710 and obtained control of the company. The main business items of the company are research, design and development of display panel control chips and their modules, manufacturing and sales. The Group expects to combine semiconductor industry resources and expand its business scale after the acquisition
(A) The following table summarizes the consideration paid for Wei Da Hi-Tech Co., Ltd. and the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the non-controlling interest at the acquisition date:
128 -

		Merger date
Purchase consideration
Purchase consideration-Cash	$	191,710
Non-controlling interests account for the identifiable net
assets share of the acquiree		66,179
		257,889
Obtaining the fair value of identifiable assets and
liabilities
Cash		107,824
Trade receivables		32,147
Other receivables		1,704
Inventories		50,274
Other Current Assets		5,620
Property, plant and equipment		4,357
Intangible assets		20,701
Other Non-Current Assets		938
Accounts payable	(	19,705)
Other accounts payable	(	10,995)
Other current liabilities	(	1,788)
Other non-current liabilities	(	100)
Identifiable net assets		190,977
Goodwill	$	66,912

(B) The fair value of the acquired identifiable intangible assets is provisional pending receipt of the final valuations for those assets.
(C) The operating revenue included in the consolidated statement of comprehensive income since August, 2018 contributed by Weida Hi-Tech Company was $43,582. Weida Hi-Tech Company also contributed loss before income tax of $24,536 over the same period. Had Weida Hi-Tech Company been consolidated from January 1, 2018, the consolidated statement of comprehensive income would show operating revenue of $3,047,757 and profit before income tax of $187,218.
B. In October 2017, the Group acquired 100% equity of Miracle Technology Co., Ltd. in cash at $252,651 and obtained control over Miracle Technology Co., Ltd., which is mainly engaged in the manufacture of electronic components, electronic materials and precision instruments, designed with power components. The Group expects to combine semiconductor industry resources and expand its business scale after the acquisition.
(A) The following table summarizes the consideration paid for Miracle Company and the fair values of the assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the non-controlling interest at the acquisition date:
129 -

		Merger date
Purchase consideration-Cash	$	252,651
Non-controlling interests		250
		252,901
Obtaining the fair value of identifiable assets and
liabilities
Cash		214,854
Notes and trade receivables		201,803
Other receivables		1,648
Inventories		42,228
Other Current Assets		1,985
Financial Assets Carried at Cost		3,115
Property, plant and equipment		48,323
Intangible assets		3,344
Other Non-Current Assets		313
Short-term borrowings	(	56,160)
Accounts payable	(	118,226)
Current income tax liabilitie	(	2,029)
Deferred income tax liabilities	(	15,887)
Other current liabilities	(	68,068)
Long-term borrowings	(	27,448)
Accrued Pension	(	2,431)
Identifiable net assets		227,364
Goodwill	$	25,537

(B) The fair value of the acquired identifiable intangible assets is $3,344.

(C) The operating revenue included in the consolidated statement of comprehensive income since October, 2017 contributed by Miracle Company was $253,304. Miracle Company also contributed profit before income tax of $1,026 over the same period. Had Miracle Company been consolidated from January 1, 2017, the consolidated statement of comprehensive income would show operating revenue of $2,129,917 and profit before income tax of $3,765.

(26) Operating leases

The Group leases in land and building assets under non -cancellable operating lease agreements. The lease terms to 2034. The Group recognized rental expenses of $33,823 and $35,877 in profit or loss for the years ended December 31, 2018 and 2017, respectively. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Not later than one year Later than one year but not later than five years Later than five years	December 31, 2018 15,891 $ 54,954 60,083 130,928 $	December 31, 2017 28,443 $ 58,037 67,244
		153,724 $

130 -

(27) Supplemental cash flow information

Investing activities with partial cash payments:

	Investing activities with partial cash payments:	Investing activities with partial cash payments:	Investing activities with partial cash payments:	Investing activities with partial cash payments:
(28)	Changes in liabilities from financing activities 2018 Purchase of property, plant and equipment 184,798 $ $ Add: Opening balance of payable on equipment 11,606 Ending balance of advanced on equipment 133,635 Less: Opening balance of advanced on equipment 48,644) ( ( Ending balance of payable on equipment 75,777) ( ( Cash paid during the year 205,618 $ $ Short-term borrowings Long-term borrowings Deposits received January 1,2018 81,253 $ 26,303 $ 94 $ Changes in cash flow from financing 509,747 26,303) ( 3,029 Changes in acquisition of subsidiaries - - 100 December 31, 2018 591,000 $ - $ 3,223 $					2017 168,814 5,869 48,644 81,905) 11,606) 129,816 Total liabilities from financing activities

					$

	January 1,2018 Changes in cash flow from financing Changes in acquisition of subsidiaries December 31, 2018	Short-term borrowings	Long-term borrowings
		81,253 $ 509,747 - 591,000 $	26,303 $ 26,303) ( - - $	94 $ 3,029 100 3,223 $		107,650 $ 486,473 100 594,223 $

RELATED PARTY TRANSACTIONS

(1)Names of related parties and relationship

Names of related parties Relationship with the Group

Innova Vision Shenzen Subsidiary(note1) Weida Hi-Tech The general manager of the company is the chairman of the company(note2) WishRich Technology Co., Ltd. The director of the subsidiary of the company is the chairman of the company Maxchip Electronics Corporation The director of the company is the chairman of the company

Hsin Chiao Technology Corporation

Advanced Silicon SA

Macroblock, Inc.

Other Related Parties

The director of the subsidiary of the company is the chairman of the company The chairman of the subsidiary of the company is the director of the company The company's subsidiaries are directors of the company General manager of the company

Note1: merged into the Group in January, 2018. Note2: merged into the Group in September, 2018.

131 -

(2) Significant related party transactions

A. Operating revenue:

Goods are sold based on the price available to third parties. Sales of goods: Other Related Parties	lists in force and terms that would be 2018 2017 39,800 $ 78 $

available to third parties.
B. Purchases: Purchases of goods: Other Related Parties	2018 63,928 $	2017
		- $

Goods and services are purchased from associates on normal commercial terms and conditions.

C. Receivables from related parties:

and conditions. C. Receivables from related parties:	and conditions. C. Receivables from related parties:
D. Payables to related parties: E. Property transactions: (A) Acquisition of office equipment: Trade receivables: Other Related Parties Other receivables: Other Related Parties Total Accounts payable: Other Related Parties Other accounts payable: Other Related Parties Total Other Related Parties $		December 31, 2018 4,178 $ 4,636 8,814 $ December 31, 2018 - $ 1,003 1,003 $ 2018 1,790 $		December 31, 2017 - $ 7,590
				7,590 $
				December 31, 2017 - $ -
				- $
		2018 1,790		2017
	$		$	-

132 -

(B) Acquisition of financial assets:

Year ended December 31, 2018

		Year ended December 31,2018
Accounts Other Related Parties Investment which is adopting equity method	No. of shares Objects 141,103 Shares of Weida Hi-Tech	Consideration
		1,646 $

2017:None.

F. Loans to /from related parties:

Outstanding balance: (“other account receivable”) ：

F. Loans to /from related parties: Outstanding balance: (“other account receivable”)`：`	F. Loans to /from related parties: Outstanding balance: (“other account receivable”)`：`	F. Loans to /from related parties: Outstanding balance: (“other account receivable”)`：`
(3)Key management compensation PLEDGED ASSETS The Group‟s assets pledged as collateral are as follows: December 31, 2018 December 31, 2017 Subsidiaries - $ 15,193 $ Less:Allowance for Bad Debts - 7,603) ( - $ 7,590 $ 2018 2017 Salaries and short-term employee benefits 20,715 $ 9,978 $ Post-employment benefits 20,886 - Total 41,601 $ 9,978 $ Asset item December 31, 2018 December 31, 2017 Purpose Book value			December 31, 2017 15,193 $ 7,603) (
			$	7,590
				2017
			$	9,978 -
			$	9,978
				Purpose
Time deposits(Financial assets at amortised cost-Non current) Time deposits(Other non-current assets) Land and buildings Machinery and equipment	29,727 $ - - 29,727 $	- $ 45,723 302,324 30,240 378,287 $		Outbound cargo guarantee and lease deposit Outbound cargo guarantee and lease deposit Long-term borrowings Long-term borrowings

8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

(1) Contingencies

Subidiary - Innova Vision International Inc. (IVKK) imported contact lenses in

133 -

March 2015 contained anti-UV material, which did not match up with the materials disclosed in the certification issued by Japanese government. Japanese government issued an oral order to ask IVKK make announcements on the newspapers about the material unmatched and stopped the selling activities in Japan. IVKK then discussed with its major agents to return the goods and negotiated a “return and change of the goods plan”. Some of the agents have already returned the goods one after plan.

The Group had recognized losses against returned contact l enses and all the compensation. Till 2018/12/31, the ending balance of the compensation payable is $20,323 and booked as “other current liabilities” .

(2) Commitments

A. Signed but not yet paid equipment maintenance contracts

A.Signed but not yet paid equipment m	aintenance contract	s
B.Operating leases contracts Please see Note 6(26). Machine maintenance	December 31, 2018 33,765 $	December 31, 2017 43,303 $

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL REPORTING PERIOD

The company's subsidiary, Yu Chuan Investment Co., Ltd. (hereinafter referred to as " Yu Chuan Investment") is a long-term investment. On March 18, 2019, the board of directors of the Yu Chuan Investment decided to participate in the subscription of the private equity of Aptos Technology Co., Ltd. The shares of NT$4 obtained Group Aptos Technology Co., Ltd. obtained 16,250 shares with a total amount of $65,000.

12. OTHERS

(1) Capital management

The Group‟s objectives when managing capital are to safeguard the Group‟s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including „current and non-current borrowings‟ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as „equity‟ as shown in the consolidated balance sheet plus net debt.

During the year ended December 31, 2018, the Group‟s strategy, which was unchanged from 2017, was to maintain the gearing ratio within reasonable security range. The gearing ratios at December 31, 2018 and 2017 were as follows:

134 -

Total borrowings Less: Cash and cash equivalents Net debt Total equity Total capital Gearing ratio	December 31, 2018 December 31, 2017 591,000 $ 107,556 $ 563,408) ( 636,955) ( 27,592 529,399) ( 2,573,811 2,479,140 2,601,403 $ 1,949,741 $ 1.06% -

(2) Financial instruments

A. Financial instruments by category

Financial instruments by category
Financial assets Financial assets at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Financial assets designated as at fair value through profit or loss on initial recognition Financial assets at fair value through other comprehensive income Available-for-sale financial assets Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Financial assets at amortised cost Investments in debt instruments without active market Notes receivable Accounts receivable Other receivables Guarantee deposits paid Other financial assets Financial liabilities Financial liabilities at amortised cost Short-term borrowings Notes payable Accounts payable Other accounts payable Lease account payable Long-term borrowings (including current portion) Guarantee deposits received	December 31, 2018 731,826 $ - - 563,408 84,062 - 1,277 601,330 18,243 12,867 - 2,013,013 $ 591,000 $ 54 236,387 288,678 18,119 - 3,223 1,137,461 $	December 31, 2017 - $ 22,891 230,986 636,955 - 21,699 2,633 470,549 24,946 10,830 45,723
		1,467,212 $
		81,253 $ 234 157,789 173,071 - 26,303 94
		438,744 $

135 -
B. Financial risk management policies
(A) The daily operations of the Group are subject to a number of financial risks, including market risks (including exchange rate risk, interest rate risk, and price risk), credit risk and liquidity risk. The Group's overall risk management policy focuses on unpredictable events in the financial markets and seeks to mitigate potential adverse effects on the Group's financial position and financial performance.
(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 co-operation 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 ex change risk, interest rate risk and credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
(A) Market risks
- i. Foreign exchange risk

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, JPY and CNY). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD RMB:NTD Financial liabilities Monetary items USD:NTD JPY:NTD			Exchange rate Book value (NTD) 30.715 189,786 $ 4.472 203,372 30.715 79,124 0.2782 31,546 December 31,2018	Exchange rate Book value (NTD) 30.715 189,786 $ 4.472 203,372 30.715 79,124 0.2782 31,546 December 31,2018
			Exchange rate 30.715 4.472 30.715 0.2782
				189,786 $ 203,372 79,124 31,546

136 -

December 31, 2017

(Foreign currency: functional currency) Financial assets Monetary items USD:NTD JPY:NTD Financial liabilities Monetary items USD:NTD JPY:NTD	USD 6,889 JPY 19,367 USD 641 JPY 110,578 Foreign currency amount (In thousands)	Exchange rate 29.76 0.2642 29.76 0.2642	Book value (NTD)
			205,021 $ 5,188 19,073 29,251

ii. The total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the years ended December 31, 2018 and 2017, amounted to $12,654 and ($21,841).
iii. Analysis of foreign currency risk arising from significant foreign exchange variation:

Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 1,898 $ - $ 1% 2,034 - 1% 791) ($ - 1% 315) ( - Year ended December 31,2018 SensitivityAnalysis	Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 1,898 $ - $ 1% 2,034 - 1% 791) ($ - 1% 315) ( - Year ended December 31,2018 SensitivityAnalysis	Degree of variation Effect on profit or loss Effect on other comprehensive income 1% 1,898 $ - $ 1% 2,034 - 1% 791) ($ - 1% 315) ( - Year ended December 31,2018 SensitivityAnalysis

Degree of variation	Effect on profit or loss
1% 1% 1% 1%	1,898 $ 2,034 791) ($ 315) (	- $ - - -

137 -

Year ended December 31, 2017

	Effect on profit or loss Effect on other comprehensive income 2,050 $ - $ 52 - 191 $ - 293 - SensitivityAnalysis	Effect on profit or loss Effect on other comprehensive income 2,050 $ - $ 52 - 191 $ - 293 - SensitivityAnalysis
Degree of variation	Effect on profit or loss
1% 1% 1% 1%	2,050 $ 52 191 $ 293	- $ - - -

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 and available-for-sale financial assets.
ii. The Group mainly invests in equity instruments comprised of shares and open-end funds. The value of equity instruments are susceptible to market price risk arising from uncertainties about future performance of equity markets. Assuming a hypothetical increase of 1% in the price of the aforementioned financial assets at fair value through profit or loss while the other conditions remain unchanged could increase the Group‟s non-operating revenue for the year ended December 31, 2018 and 2017 by $7,318 and $229, respectively. A change of 1% in the price of the aforementioned available-for-sale financial instruments could increase the Group‟s other comprehensive income for the year ended December 31, 2018 and 2017 by $0 and $2,310, respectively.

Cash flow and fair value Interest rate risk

i. The Group‟s main interest rate risk arises from short-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. During 2018, the Group‟s borrowings at variable rate were mainly denominated in New Taiwan dollars and US Dollars.
ii. The Group‟s borrowings are measured at amortized cost. The borrowings are periodically contractually reprised and to that extent are also exposed to the risk of future changes in market interest rates.
iii. If the borrowing short term interest rate had increased/decreased by 1% with all other variables held constant, profit, net of tax for the years ended December 31, 2018 and 2017 would have increased/decreased by $5,910 and $813, respectively. The main factor is that changes in interest expense result in floating-rate borrowings.
138 -
(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 and fair value through profit or loss.
ii. According to the Group‟s credit policy, each operating entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors, and the utilization of credit limits is regularly monitored.
iii. The Group refers to the forecast ability of global economic indicators to adjust the loss rate which is based on historical and current information when assessing the future default possibilit y of contract assets, accounts receivable and other receivables. The provision matrix as of December 31, 2018 is as follows:

Expected loss

	Expected loss
December 31,2018	rate	Total book value	Loss allowance
	0% 0% 5% 35% 50% 100% 0.77%	262,325 $ 70,170 11,816 498 22 - 259,259 604,090 $	- $ - 590 174 11 - 2,005 2,780 $
Not past due Up to 30 days past due 31~90 days past due 91~180 days past due 181~360 days past due More than 360 days Individual provision Total

139 -
iv. Movement in relation to the group applying the simplified approach to provide loss allowance for notes and trade receivab le is as follows:

approach to provide loss allowance for notes and as follows:	llowance for notes and	trade receivab le i
Accounts receivable At January 1_IAS 39 21,655 $ Adjustments under new standards - At January 1_IFRS 9 21,655 Reversal of impairment loss 2,753) ( Reclassified to other income in this period 12,628) ( Amount that was written off due to uncollectible 2,072) ( Reclassified 1,422) ( December 31 2,780 $ 2018	2018
		Contract assets
		- $ -
		- - - - -
		- $

(C) Liquidity risks
i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by the Group treasury. The Group treasury monitors rolling forecasts of the Group‟s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. The surplus cash generated by each operating entities of the Group will be gathered back to the Group treasury. The Group treasury then invests surplus cash in demand deposits, time deposits, financial assets at fair value through profit or loss, financial assets at amortized cost and debt investments in no active market (time deposits with 3-12 months period), choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. At the year ended December 31, 2018 and 2017, the Group held financial assets at monetary market of $ 614,561 and $679,936, respectively. Those are expected to readily generate cash inflows for managing liquidity risk.

iii. Non-derivative financial liabilities:

.Non-derivative financial liabil	ities:
Fixed rate: Expiring within one year	December 31, 2018 249,000 $	December 31, 2017
		- $

iv. 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 non- derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.
140 -

Non-derivative financial liabilities:
Less than 1year
Over 1year
December 31, 2018
Short-term
borrowings
591,000
$ -
$ Notes payable
54
-
Accounts
payable
236,387
-
Other payables
288,678
-
Other current
liabilities
20,323
-
Lease account
payable
8,987
10,132
Less than 1year
Over 1year
December 31, 2017
Short-term
borrowings
81,253
$ -
$ Notes payable
234
-
Accounts
payable
157,789
-
Other payables
173,071
-
Other current
liabilities
43,527
-
Long-term
borrowings
1,676
24,627

Total
591,000
$ 54
236,387
288,678
20,323
19,119
Total
81,253
$ 234
157,789
173,071
43,528
26,303

(3) Fair value information
A. 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 takes place with sufficient frequency and volume to provide pricing information on an ongoing basis.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
- Level 3: Unobservable inputs for the asset or liability, including financial assets available for sale in the Group.
141 -
B. Financial instruments not measured at fair value
The carrying amounts of cash and cash equivalents, notes and trade receivables, other receivables, short-term borrowings, notes and trade payables, and other payables are reasonably approximate to the fair values.
C. The related information on financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

December 31, 2018 Assets Recurring fair value measurements Financial assets at fair value through profit or loss December 31, 2017 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Available-for-sale financial assets Equity securities Total	Level 1 598,163 $ Level 1 22,891 $ 87,484 110,375 $	Level 2 - $ Level 2 - $ - - $	Level 3 133,663 $ Level 3 - $ 143,502 143,502 $		Total
					731,826 $

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:

Market quoted price	Listed and OTC stocks	Open-end fund Net asset value
	Closing price

(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 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 financial reporting date.
142 -
(C) 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. 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 sheets. The pricing and inputs information used during valuation are carefully assessed and adjusted based on current market conditions.
(D) The Group adjusted credit risks assessment into fair value calculation of financial and non-financial instruments to reflect the credit risk of counterparty and quality of the Group.
E. There was no transfer into or out between Level 1 and Level 2 for the year ended December 31, 2018 and 2017.
F. The following chart is the movement of Level 3 for the year ended December 31, 2018 and 2017:

December 31, 2018 and 2017:
		Equitysecurities
January 1, 2018	$	143,502
Acquired in the period		28,075
The invested company reduces the capital	(	16,026)
Reversal of impairment		3,735
Recognized in profit (loss)	(	25,623)
December 31, 2018	$	133,663
		Equitysecurities
January 1, 2017	$	142,767
Acquired in the period		20,311
The investment capital is refunded in this period	(	14,080)
Gains and losses recognised in other comprehensive income		16,817
Transfers out from level 3	(	5,320)
Recognized in profit (loss)	(	16,993)
December 31, 2017	$	143,502

G. 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:
143 -

December 31, 2018

December 31, 2018	18
Fair value Unlisted shares $ 48,915 Venture capital shares Private equity fund 84,748 Nonderivative equity instrument: December 31, 2017 Fair value Unlisted shares `$ 76,567` Venture capital shares Private equity fund `66,935` Nonderivative equity instrument:	Fair value	Valuation technique	Significant unobservable input		Range (weighted average)	Relationship of inputs to fair value The higher the net asset value, the higher the fair value The higher the net asset value, the higher the fair value Relationship of inputs to fair value - The higher the net asset value, the higher the fair value - The higher the net asset value, the higher the fair value
					- - Range (weighted average)
				Net asset value Net asset value		- -	The higher the net asset value, the higher the fair value The higher the net asset value, the higher the fair value

H. 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 a different outcome. For financial assets and liabilities classified as Level 3, if the factors of assessment changed, then the impact to income or other comprehensive income is:

December 31, 2018

Input Change Favourable change Unfavourable change Favourable change Unfavourable change Financial assets Equity instrument Net asset value ± 1% 1,337 $ (1,337) $ - $ - $ Recognised inprofit or loss Recognised in other comprehensive income Input Change Favourable change Unfavourable change Favourable change Unfavourable change Financial assets Equity instrument Net asset value ± 1% - $ - $ 1,435 $ 1,435) ($ December 31,2017 Recognised inprofit or loss Recognised in other comprehensive income	Input	Input	Change	Recognised	Recognised	inprofit or loss	inprofit or loss	Recognised in other comprehensive income	Recognised in other comprehensive income
				Favourable change		Unfavourable change		Favourable change	Unfavourable change
	Net asset value ± 1% Input Change		1,337 $ (1,337) $ - $ - $ Favourable change Unfavourable change Favourable change Unfavourable change - $ - $ 1,435 $ 1,435) ($ December 31,2017 Recognised inprofit or loss Recognised in other comprehensive income	1,337 $		(1,337) $ - $ December 31,2017
			Favourable change		Unfavourable change		Favourable change
Net asset value		± 1%	- $		- $		1,435 $ (

144 -

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

A. Summary of significant accounting policies adopted in 2017
(A) Financial assets at fair value through profit or loss
- i. Financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges.
- ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
- Iii. Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently premeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.
(B) Available for sale financial assets
- i. They are non-derivatives that are either designated in this category or not classified in any of the other categories.
- ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.
- iii. They are initially recognized at fair value plus transaction costs. These financial assets are subsequently re-measured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income.
(C) Loans and receivables
- i. Accounts receivable
  - Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. They are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
- ii. Investment in debt instrument without active market Investments in debt instrument without active market held by the Group are those time deposits with a short maturity period but do not qualify as cash equivalents, and they are measured at initial investment amount as the effect of discounting is immaterial.
(D) Impairment of financial assets
- i. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more even that occurred after the initial recognition of the asset (a „loss event‟) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
- ii. The criteria that the Group uses to determine whether there is
145 -

objective evidence of impairment loss is as follows:

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

Available-for-sale financial assets

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

146 -
B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017,IAS 39, to January 1, IFRS 9, were as follows:

IAS39 Transferred into and measured at fair value through profit or loss Transferred into and measured at amortised cost IFRS9	Measured at fair value through profit or loss	Available- forsale- equity	Held- tomaturity Measured at amortised cost - $ - 67,422 67,422 $	21,699 $ - 21,699) ( - $ Debt instrument without active market	105,196 $ - 45,723) ( 59,473 $ Other non- current assets	Total	Effects	Effects
		Measured at fair value through other comprehensi ve income- equity					Retained earnings 539,080 $ 3,756 - 542,836 $	Others equity
	22,891 $ 230,986 - 253,877 $	230,986 $ 230,986) ( - - $				380,772 $ - - 380,772 $		11,207 $ 3,756) ( - 7,451 $

Under IAS 39, because the cash flows of debt instruments, which were classified as: available for-sale financial assets and debt instruments without 、 active market, amounting to $230,986 $21,699and $45,723, respectively, do not meet the condition that it is intended to settle the principal and interest on the outstanding principal balance, they were reclassified as "financial assets at fair value through profit or loss" amounting to $230,986 and “financial assets at amortized cost” amounting to $67,422. Increased retained earnings and reduced other equity interest in the amounts of $3,756 and $3,756 on initial application of IFRS 9.

C .The significant accounts as for the year ended December 31, 2017, are as follows:

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

follows: (A)Financial assets at fair value through profit or loss
Items Current items: Financial assets held for trading Beneficiary certificates Valuation adjustment of financial assets held for trading Total		December31,2017
		22,682 $ 209
		$ 22,891

i. The Group recognised net profit amounting to $1,348 on financial assets held for trading for the year ended December 31, 2017.
ii. No financial assets at fair value through profit or loss held by the Group were pledged to others.
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(B) Available-for-sale financial assets

Items Non-current items: Listed and OTC stocks Unlisted and non-OTC stocks Private fund Total Valuation adjustment of financial assets held for trading Accumulated Impairment - Available-for-Sale Financial Assets Total		December 31,2017 90,871 $ 98,633 94,243 283,747 3,756 56,517) ( $ 230,986

i. The Group recognized $45,057 in other comprehensive income for fair value change for the year ended December 31, 2017.
ii. The Group recognized accumulated impairment loss of $56,517 on bond investments—as of December 31, 2107.
iii. As of December 31, 2017, no available-for-sale financial assets held by the Group were pledged to others.
(C) Investments in debt instruments without active markets

Items Current items: Time deposits	December 31,2017
	21,699 $

  - i. The Group investments bank debentures from three months to twelve months.

  - ii. As of December 31, 2017, no investments in debt instruments without active markets held by the Group were pledged to others.

D. Credit risk information for the year ended December 31, 2017:
(A) Credit risk refers to the risk of financial loss to the Group arising from default by the client or counterparties of financial instruments on the contract obligations. According to the Group‟s credit policy, each local entity in the Group is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.

Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including outstanding receivables. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted.

(B) For the year ended December 31, 2017, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.
(C) The credit quality information of financial assets that are neither past
148 -

due nor impaired is as follows ：

Group 1`：`Domestic customers. Group 2`：`Foreign customers. Group 1 Group 2	December 31,2017 242,670 $ 62,200 304,870 $

(D) The ageing analysis of financial assets that were past due but not impaired is as follows:

							December	December	31,2017	31,2017
Up to 30 days							$			101,559
31 to 90 days										54,278
91 to 180 days										9,716
Over 180 days										126
							$			165,679
(E) Movements	in	the	provision		for	impairment		of		accounts
receivable for the year ended December					31, 2017:
						2017
		Individualprovision				Group provision				Total
At January 1		$	3,052		$			-	$	3,052
Provision for			17,514					653		18,167
impairment
Reclassified				-				436		436
At December 31		$	20,566		$		1,089		$	21,655

(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in 2017

A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017:

Sales of goods

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

149 -
(B) The Group offers customers volume discounts and right of return for defective products. The Group estimates such discounts and returns based on historical experience. Provisions for such liabilities are recorded when the sales are recognized. The volume discounts are estimated based on the anticipated annual sales quantities.
B. The revenue recognized by using above accounting policies for the year ended December 31, 2017 are as follows:

2017

Operating Revenue

$ 1,427,073

C. The effects and description of current balance sheet and comprehensive income statement if the Group continues adopting the above accounting policies for the year ended December 31, 2018 are as follows:

			December 31,2018
			Balance by using		Effects from
Balance sheet items	Description	Balance by using IFRS 15	previous accounting		chages in accounting
			policies		policy
Contract liabilities	(1)	58,701	-		58,701
Advance sales receipts	(1)	-	58,701	(	58,701)

Note (1): Recognize contract liabilities related to sales contracts in accordance with IFRS 15, expressed as advance receipts under the origina l accounting policy.

SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): Please refer to table 2.
D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company‟s paid-in capital: Please refer to table3.
E. Total purchases from or sales to related parties of at least $100 million or 20% of the paid-in capital: None .
F. Receivables from related parties reaching NT$100 million or 20% of paid-in
capital or more: None.
G. The amount of real estate acquired is NT$300 million or the paid-up capital is over 20%. ： None.
H. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
I. Trading in derivative instruments undertaken during the reporting periods: None.
150 -
J. Significant inter-company transactions during the reporting periods: Please refer to table 4.
(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 5.

(3) Information on investments in Mainland China

Please refer to table 6.

14 `、` SEGMENT INFORMATION

(1) General information

Management has determined the reportable operating segments based on the reports reviewed by the chief operating decision maker that are used to make strategic decisions.

The basis of the Group's corporate composition, divisional basis and departmental information has not changed significantly during the period.

(2) Measurement of segment information

The Group allocates resources according to the adjusted net profit of each department to assess the performance of the operating department.

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

The segment information provided to the chief operating decision-maker for the reportable segments is as follows:

Year ended December 31, 2018 `：`

Revenue from external customers Inter-segment revenue Total segment revenue Segment income (loss) including: Depreciation Amortisation Financial cost Interest income Recognised investment profit or loss which is adopting equity method Segment assets		Mask and Semiconductor division		Medical division 161,076 $ 706 $ 124,488) ($ 25,502) ($ 141) ($ 712) ($ 195 $ - $ 304,757 $	Total 2,885,982 $ 219,627 $ 203,646 $ 146,423) ($ 3,131) ($ 5,573) ($ 3,158 $ 43,946) ($ 3,864,318 $
		2,724,906 $ 218,921 $ 328,134 $ 120,921) ($ 2,990) ($ 4,861) ($ 2,963 $ 43,946) ($ 3,559,561 $

151 -

Year ended December 31, 2017 `：`

customers Inter-segment revenue Total segment revenue Segment income (loss) including: Depreciation Amortisation Financial cost Interest income Recognised investment profit or loss which is adopting equity method Segment assets		Mask and Semiconductor division		Medical division 161,219 $ 5,547 $ 128,099) ($ 37,765 $ 177 $ 50) ($ 18 $ - $ 379,401 $	Total 1,427,073 $ 22,970 $ 65,269) ($ 160,373 $ 2,187 $ 3,646) ($ 2,963 $ 57,075) ($ 3,110,149 $
		1,265,854 $ 17,423 $ 62,830 $ 122,608 $ 2,010 $ 3,596) ($ 2,945 $ 57,075) ($ 2,730,748 $

(4) Reconciliation for segment income (loss)

Inter-department sales are conducted on a fair-trade basis. External income reported to the chief operating decision is measured in a consistent manner with income in the income statement.

The consolidated profit and loss, assets and liabilities of the relevant departments are consistent with the consolidated profit and loss, consolidated assets and consolidated liabilities, so there is no adjustment information.

(5) Information on products and services

External customer income mainly comes from reticle and semiconductor sales revenue and medical equipment revenue, and related product performance is the same as Note 14 (III)

(6) Geographical information

Geographical information for the years ended December 31, 2018 and 2017 is as follows:

follows:
Taiwan Others Total	Revenue Non-current assets 1,662,696 $ 966,369 $ 1,223,286 194 2,885,982 $ 966,563 $ Year ended December 31,2018	Revenue Non-current assets 1,017,362 $ 1,110,074 $ 409,711 58 1,427,073 $ 1,110,132 $ Year ended December 31,2017
	Revenue 1,662,696 $ 1,223,286 2,885,982 $	Revenue 1,017,362 $ 409,711 1,427,073 $
			1,110,074 $ 58 1,110,132 $

(7) Major customer information

For the years ended December 31, 2018 and 2017 there was no single external customer's income accounting for 10% of the total combined income.

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TAIWAN MASK CORPORATION AND SUBSIDIARIES

FINANCINGS PROVIDED

FOR THE YEAR ENDED DECEMBER 31, 2018

Table 1

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

No.	Financing Company	Counterparty	Financial Statement Account	Related Party	Maximum Balance for the	Ending Balance	Amount Actually Drawn	Interest Rate (%)	Nature for Financing	Transacti on Amounts	Reason for Financing	Loss Ending Balance	Collateral	Collateral	Financing Limits for Each Borrowing	1,023,398 $ 1 1,023,398 1 1,023,398 1 20,327 2 16,261 2 20,327 2 Financing Company’s Total Financing Note
													Item	Value
0 0 0 1 1 1	TAIWAN MASK CORPORATIO N TAIWAN MASK CORPORATIO N TAIWAN MASK CORPORATIO N Innova Vision INC. Innova Vision INC. Innova Vision INC.	Miracle Technology CO., LTD. Youe Chung Capital Corporation Innova Vision INC. Innova Vision Shenzen Innova Technology Company Innova Vision Kabushiki Kaisha	Other receivable Other receivable Other receivable Other receivable Other receivable Other receivable	Y Y Y Y Y Y	200,000 $ 300,000 200,000 - - -	200,000 $ 300,000 200,000 - - -	65,780 $ 138,000 160,000 8,281 16,990 56,171	- - - - - -	The need for short-term financing The need for short-term financing The need for short-term financing The need for short-term financing The need for short-term financing The need for short-term financing	- $ - - 465 35,256 18,726	- - - - - -	- $ - - - - -	- - - - - -	- $ - - - - -	1,023,398 $ 1,023,398 1,023,398 20,327 16,261 20,327

153 -

TAIWAN MASK CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD

(EXCLUDING INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES)

FOR THE YEAR ENDED DECEMBER 31, 2018

Table2

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		DECEMB	ER 31,2018		Note
				Shares	CarryingValue	%	Fair Value
TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION SunnyLake Park International Holdings,Inc. SunnyLake Park International Holdings,Inc. SunnyLake Park International Holdings,Inc. SunnyLake Park International Holdings,Inc. Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation	Wk Technology Fund-Common Stock Tech Alliance Corp.-Common Stock Furun Investment Co., Ltd.-Common Stock Unicon Optical Co., Ltd.-Common Stock Spirox Corporation-Common Stock MechanicNet Group,Inc.-Preferred Stock MechanicNet Group,Inc.-Common Stock Telegraph Hill Partners II,L.P.-Fund Telegraph Hill Partners III,L.P.-Fund Orgchem Technologies, INC.-Common Stock Spirox Corporation-Common Stock Macroblock, INC.-Common Stock Aptos Technology-Common Stock TAIWAN MASK CORPORATION-Common Stock	None None None None None None None None None None None The company is a director of the company None Subsidiary	Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current	806,400 $ 652,129 1,743,000 10,000,000 2,229,000 759,999 166,666 - - 1,453,288 3,421,000 3,647,609 4,964,216 37,081,440	- $ - 17,430 117,600 59,069 - - - USD 2,759,169 19,074 90,656 330,838 12,411 680,444	1.89% 2.07% 10.53% 2.06% 2.06% `特別股` 3.74% 1.74% 0.85% 2.66% 3.31% 9.12% 8.74% 14.67%	- $ - 17,430 117,600 59,069 - - - USD 2,759,169 19,074 90,656 330,838 12,411 680,444

154 -

TAIWAN MASK CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2018

Table3 Company Name	Marketable Securities Type and Name (Note 1)	Financial Statement Account	Counter -party `（`Note 2`）`	Nature of Relationship (Note 2)	BeginningBalance	BeginningBalance	Shares Amount Shares 3,647,609 $ 305,669 - (Amounts in th Acquisition(Note 3 and 4)	Shares Amount Shares 3,647,609 $ 305,669 - (Amounts in th Acquisition(Note 3 and 4)	Shares Amount Shares 3,647,609 $ 305,669 - (Amounts in th Acquisition(Note 3 and 4)	ousands of new Taiwan do Disposal(Note 3)	ousands of new Taiwan do Disposal(Note 3)	llars and foreign	currencies,Unless Specified Otherwise) EndingBalance	currencies,Unless Specified Otherwise) EndingBalance
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Value	Gain/Loss on Disposal	Shares	Amount(Note 5)
Youe Chung Capital Corporation	Macroblock, INC- Stock	Financial assets at fair value through profit or loss - non- current	-	-	-	$ -	3,647,609	$ 305,669	-	$ -	$ -	$ -	3,647,609	$ 330,838

Note1: The securities referred to in this table refer to stocks, bonds, beneficiary certificates and securities derived from the above projects.

Note2: Investors using the equity method in the securities account must fill in the two columns.

Note3: The cumulative purchase and sale amount should be calculated separately according to the market price to reach NT$300 million or 20% of the paid-up capital.

Note4: The acquisition in this period include the purchase of 3,500,000 shares and 147,609 shares of stock dividends.

155 -

TAIWAN MASK CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE YEAR ENDED DECEMBER 31, 2018

No. (Note 1) Table4	CompanyName	Related Party	Nature of Relationship (Note 2)	(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise) IntercompanyTransactions	(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise) IntercompanyTransactions	(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise) IntercompanyTransactions	(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise) IntercompanyTransactions
				Financial Statements Account	Amount	Terms	Percentage of Consolidated Net Revenue or Total Assets(Note 3)
0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 2 2 3 3	TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Miracle Technology CO., LTD. Miracle Technology CO., LTD. Miko Technology co., Ltd. Miko Technology co., Ltd.	Innova Vision INC. Innova Vision INC. Innova Vision INC. Youe Chung Capital Corporation Youe Chung Capital Corporation Miracle Technology CO., LTD. Miracle Technology CO., LTD. Miko Technology co., Ltd. Miko Technology co., Ltd. Innova Technology Company Innova Technology Company Innova Technology Company Innova Vision Kabushiki Kaisha Innova Vision Kabushiki Kaisha Innova Vision Kabushiki Kaisha Innova Vision Shenzen Miko Technology co., Ltd. Miko Technology co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd.	1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3 3 3 3	Other receivables Interest income Rental income Other receivables Interest income Other receivables Sales Sales Trade receivables Sales Trade receivables Other receivables Sales Trade receivables Other receivables Other receivables Sales Other payables Sales Trade receivables	182,946 $ 3,181 8,618 138,000 2,282 65,780 7,863 49,321 5,810 33,388 22,570 16,990 18,978 3,160 56,171 8,281 3,120 43,218 62,158 18,671	Pay by agreed time Pay by agreed time Pay by agreed time Pay by agreed time Pay by agreed time Pay by agreed time Month-end 60 days Month-end 60 days Month-end 60 days Month-end 90 days Month-end 90 days Pay by agreed time Month-end 30 days Month-end 30 days Pay by agreed time Pay by agreed time Month-end 30 days Pay by agreed time Month-end 30 days Month-end 30 days	4.73% 0.11% 0.30% 3.57% 0.08% 1.70% 0.27% 1.71% 0.15% 1.16% 0.58% 0.44% 0.66% 0.08% 1.45% 0.21% 0.11% 1.12% 2.15% 0.48%

Note 1: TAIWAN MASK CORPORATION and its subsidiaries are coded as follows:

a. TAIWAN MASK CORPORATION is coded 0.

b.The subsidiaries are coded consecutively beginning from 1 in the order presented in the table above.

Note 2: Transactions are categorized as follows:

a. The parent company to subsidiary.
b. Subsidiary to parent company.

c. Subsidiary to subsidiary.

Note 3: The transaction amount accounts for the calculation of the combined total revenue or total assets ratio. In the case of assets and liabilities, the ending balance is calculated as the total assets. If it is a profit or loss item, the accumulated amount in the period accounts for the total combined revenue.

Note 4: Only transactions with a total amount of NT$1 million or more will be disclosed, and the transaction will not be disclosed separately.

156 -

TAIWAN MASK CORPORATION AND SUBSIDIARIES

NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA) FOR THE YEAR ENDED DECEMBER 31, 2018

Table5

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Investor Company	Investee Company	Location	Main Businesses	Original Inves	tment Amount	Balance	as of December 3	1,2018	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee Note
				December 31, 2018	December 31, 2017	Shares	Percentage of Ownership	Carrying Value
Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision (B.V.I.) Inc. Miracle Technology CO., LTD. Miracle Technology CO., LTD. MIRACLE(SAMOA)CO.,LTD Jingjing Investment Co., Ltd. Weida Hi-Tech Weida Hi-Tech Smart Touch Co.,Ltd.	SunnyLake Park International Holdings, Inc. Youe Chung Capital Corporation Innova Vision INC. Advagene Biopharma Co., Ltd. Miracle Technology CO., LTD. Weida Hi-Tech Innova Vision INC. Advagene Biopharma Co., Ltd. Innova Technology Company Calaview International Holding Company Limited Innova Vision (B.V.I.) Inc. Innova Vision Kabushiki Kaisha Innova Vision Kabushiki Kaisha Jingjing Investment Co., Ltd. Miracle(Samoa)Co.,Ltd. Misun Technology Co., Ltd. Miko Technology Co., Ltd. Smart Touch Co.,Ltd. Central Star Ltd. Central Star Ltd.	British Virgin Islands Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Seychelles British Virgin Islands Japan Japan Taiwan British Virgin Islands British Virgin Islands Hong Kong British Virgin Islands Seychelles British Virgin Islands	Investing in communication business Investing in communication business Medical device manufacturing, wholesale and trading Medical, research and development, manufacturing Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. Research, design, development, manufacturing and sales of display panel control chips and modules Medical device manufacturing, wholesale and trading Medical, research and development, manufacturing Contact lens sales Investing in communication business Investing in communication business Contact lens sales Contact lens sales Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business	203,026 1,697,627 52,040 165,691 252,651 293,371 55,146 65,719 5,000 - 60,157 8,349 56,420 10,012 10,215 10,215 37 14,602 4,076 13,714	191,183 300,000 190,706 98,700 252,651 - 50,785 30,000 5,000 - 60,157 - 56,420 10,012 10,215 10,215 37 15,847 7,657 13,714	6,344,000 142,329,470 5,203,956 12,549,652 10,527,143 25,510,500 5,514,596 3,550,223 500,000 1,000,000 1,000,000 600 5,900 1,400,000 - - 10,000 4,573 129,200 450,000	100 100 30.26 28.48 100 100 32.06 9.85 100 100 100 8.06 90.77 100 100 100 100 100 22.3 77.7	84,774 413,877 12,301 98,808 313,715 233,623 13,035 27,952 35,322) ( 7,834) ( 45,678) ( 4,662) ( 45,847) ( 160,700 20,275 20,275 64,863 3 - 1	65) ( 325,699) ( 130,110) ( 111,323) ( 56,132 40,964) ( 130,110) ( 111,323) ( 9,020) ( 2,319) ( 6,953) ( 7,161) ( 7,161) ( 55,889 3,094 3,094 28,115 1,842) ( 1,023) ( 1,023) (	65) ( 43,736) ( 39,368) ( 32,924) ( 61,787 21,495) ( 36,520) ( 7,432) ( 9,020) ( 2,319) ( 6,953) ( 206) ( 6,955) ( 55,889 3,094 3,094 28,115 1,842) ( 228) ( 795) (

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TAIWAN MASK CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2018

Investee Company Table6	Main Businesses	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Beginning Balance of Accumulated Outflow of Investment	Outflow Inflow Ending Balance Accumulated Outflow of Investment Investment Flows (Amounts in thou	Outflow Inflow Ending Balance Accumulated Outflow of Investment Investment Flows (Amounts in thou	Net Income (Loss) of the Investee Company sands of new	Percentage of Ownership (%) Taiwan dolla	Carrying Amount as of December 31, 2018 Ending Balance of Accumulated Inward Remittance of Note Investment Income (Loss) Recognized in Current Period (Note 2 ) rs and foreign currencies,Unless Specified Otherwise)	Carrying Amount as of December 31, 2018 Ending Balance of Accumulated Inward Remittance of Note Investment Income (Loss) Recognized in Current Period (Note 2 ) rs and foreign currencies,Unless Specified Otherwise)	Carrying Amount as of December 31, 2018 Ending Balance of Accumulated Inward Remittance of Note Investment Income (Loss) Recognized in Current Period (Note 2 ) rs and foreign currencies,Unless Specified Otherwise)
					Outflow Inflow
Miko-China Enterprise (Shanghai) Co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Innova Vision Shenzen Touch Hi-Tech Company Name	Electronic component manufacturing, wholesale of electronic materials and precision instruments, power Electronic component manufacturing, wholesale of electronic materials and precision instruments, power IC product design, production and sales Medical device manufacturing, wholesale and tradin Research, design, development, manufacturing and sales of display Ending Balance of Accumulated Investment in Mainland China	3,283 $ 10,215 11,618 4,337 5,743 Investment Amounts Authorized by Investment Commission, MOEA	2 2 2 2 2 Upper Limit on Investment Authorized by Investment Commission, MOEA	3,283 $ 10,215 - - 4,109	- $ - $ - - - - - - 1,634 -	3,283 $ 10,215 - - 5,743	27,480 $ 3,094 5,054) ( 2,319) ( 8,079) (	100% 100% 100% 100% 100%	27,480 $ 3,094 2,967) ( 2,319) ( 5,215) (	109,719 $ - $ 20,275 - 25,380 - 7,860) ( - 2,045 -	`註`2(2)B `註`2(2)B `註`2(2)B `註`2(2)B `註`2(2)B
Miko-China Enterprise (Shanghai) Co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Innova Vision Shenzen Touch Hi-Tech	3,283 $ 10,215 - - 5,743	3,283 $ 10,215 - 4,337 5,743	$ 166,564 166,564 166,564 24,392 100,027

Note 1 ： The methods for engaging in investment in Mainland China include the following:

a. Direct investment in Mainland China.

b. Indirectly investment in Mainland China through companies registered in a third region (Please specify the name of the company in third region).

c. Other methods.

Note 2 ： The investment income (loss) recognized in current period:Please specify no investment income (loss) has been recognized due to the investment is still during development stage. The investment income (loss) were determined based on the following basis:

a. The financial report was audited and certified by an international accounting firm in cooperation with an R.O.C. accounting firm.
b. The financial statements was audited and certificated by independent auditors of the parent company in Taiwan.

c. Others.

Note 3: The relevant figures in this table should be listed in NTD.

158 -

5. Stand-alone financial statements in the most recent years

Independent Auditors‟ Report

To the Board of Directors and Shareholders of

TAIWAN MASK CORPORATION

Opinion

We have audited the accompanying separate balance sheets of TAIWAN MASK CORPORATION as of December 31, 2018 and 2017, and the related statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2018 and 2017, and notes to the separate financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of the other independent auditors, as described in the Other matters section of our report, the separate financial statements present fairly, in all material respects, the separate financial position of TAIWAN MASK CORPORATION as of December 31, 2018 and 2017, and its financial performance and its cash flows for the years ended December 31, 2018 and 2017, in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers”.

Basis for opinion

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

Key audit matters

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

159 -

Key audit matters for the separate financial statements in the current period are stated as follows:

Evaluation of inventories

Description

Refer to Note 4(12) for the accounting policies on the evaluation of inventories, Note 5(2) for the uncertainty of accounting estimations and assumptions for evaluation of inventories, inventory accounts description please refer to Note 6(5), and Note 6(6) for the details of allowance for inventory valuation. The inventory amount and allowance for inventory valuation loss as of December 31, 2018 is NT$ 133,290 thousand and NT$ 4,966 thousand respectively.

TAIWAN MASK CORPORATION is primarily engaged in mask and integrated circuit services in semiconductor industry. Due to the rapid technological innovations, short life-cycle and competition within the mask industry, the risk of price fluctuation and inventory obsolete is higher than other industry. Since the inventory amount is material in this Company, the evaluation of inventories has been identified a key audit matter.

How our audit addressed the matter

We have performed primary audit procedures for the above matter as follows:

Based on the understanding of the operation and industrial nature of the reticle group, it is reasonable to assess the policies and procedures adopted for the inventory allowance for impairment losses.
Evaluate management's inventory assessment report to verify the correctness of inventory age.
Verify the amount of the net realizable value of the inventory to confirm the admissibility of the inventory evaluation loss.
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Income recognition

Description

For the accounting policy on income recognition, please refer to Note 4 (24) of the financial report; the operating income for the year ended December 31, 2018 is NT$1,448,393.

TAIWAN MASK CORPORATION mainly produces and sells products such as masks and integrated circuits used in semiconductors. The sales customers are numerous and scattered. The trading conditions vary according to market conditions and customer needs. Considering the sales revenue is the main transaction of the company. The consolidated financial statements have a significant impact. The accountant believes that the recognition of its sales revenue is one of the most important matters for the year.

How our audit addressed the matter

The audit procedures that the accountant has implemented are as follows:

Understand the type of major income and assess internal operations, review revenue recognition accounting treatment.
Obtain the sales revenue statement, sample the sales transactions and verify the relevant documents to verify the appropriateness of the sales revenue.
For the balance of accounts receivable at the end of the period, execute the certificate and balance confirmation test procedures, and perform tests on the adjustment items of the letter of the letter to confirm that the differences have been properly adjusted.
Execute the cut-off test for the sales receipts transaction for a certain period of time before and after the closing date, and confirm that the account is correct at the time of entry.

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

In preparing the consolidated financial statements, management is responsible for assessing TAIWAN MASK CORPORATION‟s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting

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unless management either intends to liquidate t TAIWAN MASK CORPORATION or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the Audit Committee, are responsible for overseeing the financial reporting process of TAIWAN MASK CORPORATION.

Independent auditor’s responsibilities for the audit of the separate financial statements

Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor‟s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ROC GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate financial statements.

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

Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control of TAIWAN MASK CORPORATION.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management‟s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of TAIWAN MASK CORPORATION to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor‟s report to the related disclosures in the separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor‟s report. However, future events or conditions may
162 -

cause TAIWAN MASK CORPORATION to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the separate financial statements, including the disclosures, and whether the separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within TAIWAN MASK CORPORATION to express an opinion on the separate financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor‟s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditor‟s report because the adverse consequences of doing so would reasonable be expected to outweigh the public interest benefits of such communication.

For and on behalf of PricewaterhouseCoopers, Taiwan

Tina Cheng

Certified Public Accountants

Daniel Lee

2019/3/20

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TAIWAN MASK CORPORATION SEPARATE BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

ASSETS	DECEMBER 31,2017	DECEMBER 31,2017
	AMOUNT $ 173,577 - 1,751 241,574 15,496 9,142 116,389 7,548 113,280 75,907 38 754,702 - 83,331 - 914,479 840,707 1,255 9,534 93,935 1,943,241 $ 2,697,943	%
Current assets 1100 Cash and Cash Equivalents 1136 Financial Assets at Amortized Cost- Cur. 1150 Notes Receivables(Net) 1170 Accounts Receivables(Net) 1180 Accounts Receivables`－`Related Parties(Net) 1200 Other Receivables 1210 Other Receivables`－`Related Parties 1220 Tax Assets 130X Inventories 1410 Prepayments 1470 Other Current Assets 11XX Total Current Assets Non-Current Assets 1510 Financial Asset at Fair Value Through Profit or Loss-Non Cur. 1523 Available-for-Sale Financial Assets - Non Current 1535 Financial Assets at Amortized Cost-Non Cur. 1550 Investment under Equity Method 1600 Properties, Plants and Equipment 1780 Intangible Assets 1840 Deferred Income Tax Assets 1900 Other Non-Current Assets 15XX Total Non-Current Assets 1XXX Total Assets		7 - - 9 1 - 4 - 4 3 -
		28
		- 3 - 34 31 - - 4
		72
		100

164 -

TAIWAN MASK CORPORATION SEPARATE BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

LIABILITIES AND EQUITY

DECEMBER 31,2018
DECEMBER 31,2017
Notes
AMOUNT
%
AMOUNT
%
6(8)
$ 591,000
17
$ -
-
6(15)
21,857
1
-
-
66,879
2
49,550
2
231,520
7
136,175
5
9,939
-
13,184
-
-
-
20,296
1
6(9)
14,220
-
2,956
-
935,415
27
222,161
8
6(21)
899
-
145
-
6(10)
19,568
1
26,412
1
6(9)
19,057
-
43,595
2
39,524
1
70,152
3
974,939
28
292,313
11
6(11)
2,527,136
72
2,527,136
94
6(12)
169,431
4
212,948
8
6(13)
524,792
15
599,009
22
14,287
-
14,287
1
199,736
6
(
74,216) (
3)
6(14)
7,853
-
11,207
-
6(11)
(
884,741 ) (
25) (
884,741) (
33)
2,558,494
72
2,405,630
89
9
11
$ 3,533,433
100
$ 2,697,943
100

Current Liabilities
2100
Short Term Loans
2130
Contract Liabilities- Current
2170
Accounts Payables
2200
Other Payables
2230
Current Income Tax Liabilities
2310
Advance Receipts
2399
Other Current Liabilities-Other
21XX
Total Current Liabilities
Non-Current Liabilities
2570
Deferred Income Tax
2640
Defined Benefit Liabilities- Non Current
2670
Other Non-Current Liabilities
25XX
Total Non-Current Liabilities
2XXX
Total Liabilities
Equity
Stock
3110
Common Stock
Additional Paid-in Capital
3200
Additional Paid-in Capital
Retained Earnings
3310
Legal Reserve
3320
Special Reserve
3350
Uncompensated Deficit
Other Equities
3400
Other Equities
3500
Treasury Stock
3XXX
Total Equities
Major Commitments and Contingencies
Major Events after Financial Statement Date
3X2X
Total Liabilities and Equities

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

165 -

TAIWAN MASK CORPORATION

SEPARATE STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

(Except gain (loss) per share is in NTD)

Items

2018
2017
Notes
AMOUNT
%
AMOUNT
%
6(15)
$ 1,448,393
100
$ 1,024,976
100
6(5)
(
977,165) (
67)(
808,326)(
79)
471,228
33
216,650
21
471,228
33
216,650
21
(
42,237 ) (
3) (
52,813) (
5)
(
64,815 ) (
5) (
44,977) (
4)
(
76,974 ) (
5) (
45,299) (
5)
361
-
-
-
(
183,665) (
13)(
143,089)(
14)
287,563
20
73,561
7
6(16)
30,098
2
20,636
2
6(17)
(
19,708 ) (
1) (
25,305) (
2)
6(18)
(
3,540 )
-
(
25)
-
(
68,805) (
5)(
126,259)(
12)
(
61,955) (
4)(
130,953)(
12)
225,608
16
(
57,392) (
5)
6(21)
(
26,405) (
2)(
16,785)(
2)
199,203
14
(
74,177)(
7)
$ 199,203
14
( $ 74,177)(
7)
$ 406
-
( $ 39)
-
402
-
1,732
-
12(4)
-
-
45,057
4
808
-
46,750
4
$ 200,011
14
( $ 27,427)(
3)
6(22)
$ 1.02
( $ 0.33)
6(22)
$ 1.01
( $ 0.33)

4000
Operating Incomes
5000
Operating Costs
5900
Gross Income from Operations
5950
Realized Gross profit
Operating Expenses
6100
Selling Expenses
6200
Administrative Expenses
6300
R & D Expenses
6450
Expected Credit Impairment Benefit
6000
Total Operating Expenses
6900
Operating Gain & Loss
Non-Operating Incomes and Losses
7010
Other Incomes
7020
Other Gains and Losses
7050
Financial Costs
7070
Share of profit of subsidiaries, associates and
joint ventures accounted for under equity
method
7000
Total Non-Operating Incomes and Losses
7900
Earnings (Loss)Before Tax
7950
Income Tax Expense (Benefit)
8000
Profit from continuing operations for the year
8200
Net Income (Loss)
Other comprehensive income
Components of other comprehensive income
that will not be reclassified to profit or loss
8311
Re-measurements of defined benefit plan
Components of other comprehensive income
that will be reclassified to profit or loss
8361
Financial statement translation differences of
foreign operations
8362
Unrealized loss on valuation of
available-for-sale financial assets
8360
Total Components of other comprehensive
income that will be reclassified to profit or los
8500
Total Comprehensive Incomes (Losses)
Basic Gain (Loss) per Share
9750
Net Gain (Loss)
Diluted Gain or Loss per Share
9850
Net Gain (Loss)

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

166 -

TAIWAN MASK CORPORATION SEPARATE STATEMENTS OF CHANGES IN EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

For the year ended December 31, 2017 Balance at January 1, 2017 Net Loss Other Comprehensive Profit or Loss Total Comprehensive Profit or Loss Year 2016 Deficit Compensated with Legal Reserves APIC-Dividend Paid by Parent Company and received by Subsidiaries Changes of the Shares Invested in Subsidiaries Buy-Back Treasury Stock Subsidiaries Sold Out the Shares of Parent Company—Treasury Stock Transaction Balance at December 31, 2017 For the year ended December 31, 2018 Balance at January 1, 2018 Impact of Retroactive Applications Adjusted Balance as of January 1, 2018 Net Income Other Comprehensive Profit or Loss Total Comprehensive Profit or Loss Year 2017 Deficit Compensated with Legal Reserves Changes of the Shares Invested in Subsidiaries Difference between consideration and carrying amount of subsidiaries acquired or disposed Balance at December 31, 2018	Notes		Commonshares	Capitalsurplus			RetainedEarnings	RetainedEarnings	Other EquityInterest	Other EquityInterest	Other EquityInterest	Treasury Stock		Total Equities
					Legal reserve		Special reserve	Unappropriated retained earnings	Financial statements translation differences of foreign operations		Unrealized gain on valuation of available-for-sal e financial assets
	6(14) 6(13) 6(12) 6(12) 6(14) 6(14) 6(13) 6(12) 6(12)		$ 2,527,136 - - - - - - - - $ 2,527,136 $ 2,527,136 - 2,527,136 - - - - - - $ 2,527,136	$ 180,286 - - - - 5,628 27,034 - - $ 212,948 $ 212,948 - 212,948 - - - - ( 4,946 ) ( 38,571 ) $ 169,431	$ 761,097 - - - ( 162,088 ) - - - - $ 599,009 $ 599,009 - 599,009 - - - ( 74,217 ) - - $ 524,792		$ 14,287 - - - - - - - - $ 14,287 $ 14,287 - 14,287 - - - - - - $ 14,287	($ 162,088 ) ( 74,177 ) ( 39 ) ( 74,216 ) 162,088 - - - - ($ 74,216 ) ($ 74,216 ) 3,756 ( 70,460 ) 199,203 406 199,609 74,217 ( 3,630 ) - $ 199,736		$ 5,719 - 1,732 1,732 - - - - - $ 7,451 $ 7,451 - 7,451 - 402 402 - - - $ 7,853	($ 41,301 ) - 45,057 45,057 - - - - - $ 3,756 $ 3,756 ( 3,756 ) - - - - - - - $ -	($ 290,994 ) - - - - - - ( 667,963 ) 74,216 ($ 884,741 ) ($ 884,741 ) - ( 884,741 ) - - - - - - ($ 884,741 )	$ 2,994,142 ( 74,177 ) 46,750 ( 27,427 ) - 5,628 27,034 ( 667,963 ) 74,216 $ 2,405,630 $ 2,405,630 - 2,405,630 199,203 808 200,011 - ( 8,576 ) ( 38,571 ) $ 2,558,494

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

167 -

TAIWAN MASK CORPORATION SEPARATE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Notes Cash Flow from Operating Activities Net Income(Loss) Before Tax Adjustments to Reconcile Net Income to Net Cash Flow from Operating Activities Revenues and Expenses Depreciation 6(19) Amortization 6(19) Expected Credit Impairment Benefit / Bad Debt Expenses Interest Incomes 6(16) Interest Expenses 6(18) Net Profit of Financial Asset at Fair Value Through Profit or Loss 6(17) Dividend income 6(16) The Share of Affiliates Profits and Losses Recognized by the Equity Method Gain (loss) on disposal of investments 6(17) Impairment Loss of Financial Assets 6(17) The Changes of Assets/ Liabilities related to Operating Activities The Changes of Assets related to Operating Activities Force of Financial Asset at Fair Value Through Profit or Loss Financial assets at fair value through profit or loss Notes Receivable Accounts Receivable Accounts Receivable-related Parties Other Receivables Other Receivables-related Parties Inventories Prepayments Other Current Assets Other Financial Assets The Changes of Liabilities related to Operating Activities Contract Liabilities Notes Payable Other payables Advance Receipts Other Current Liabilities Accrued Pension Liability Other Non-Current Liabilities Net Cash In-Flow from Operating Activities Interest Received Dividends Received Interest Paid Income Tax Paid Net Cash In-Flow from Operating Activities	2018 $ 225,608 117,535 897 ( 361 ) ( 7,486 ) 3,540 29,253 ( 4,170 ) 68,805 ( 47 ) ( 3,735 ) ( 145,729 ) - 600 ( 95,358 ) 8,734 1,471 ( 3,375 ) ( 15,044 ) 12,674 ( 1,532 ) - 1,561 17,329 24,161 - 9,018 ( 6,869 ) - 237,480 4,259 4,170 ( 3,147 ) ( 11,821 ) 230,941		2017 ($ 57,392 ) 122,381 1,197 5,430 ( 5,629 ) 25 ( 1,139 ) - 126,259 ( 2,445 ) 18,415 - 518,867 1,465 11,413 ( 15,496 ) ( 7,057 ) ( 64,713 ) ( 40,541 ) ( 1,117 ) 1,213 ( 4 ) - ( 34 ) 23,633 1,807 148 ( 13,423 ) ( 220 ) 623,043 5,758 - ( 25 ) ( 127 ) 628,649

(Continued)

168 -

TAIWAN MASK CORPORATION SEPARATE STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

Cash Flow from Investment Activities Acquisition of Amortized Cost Financial Assets Disposal of Amortized Cost Financial Assets Disposal of Debt Investment in No Active Market Acquisition of Available-for-sales Financial Assets Acquisition of investment property by the Equity Method The capital returned by the invested company Other Receivables- Increase of related Parties Acquisition of Property, Plants and Equipment Acquisition of Intangible Assets Increase of Refundable Deposits Net Out-Flow from Investment Activities Cash Flow from Funding Activities Increase of Short Term Loan Redemption of Short Term Loan Buy Back Treasury Stock Lease account payable Increase of Guarantee Deposits Net Cash In-Flow (Out-Flow) from Funding Activities Increase (Decrease) of Cash and Cash Equivalents Beginning Balance of Cash and Cash Equivalents Ending Balance of Cash and Cash Equivalents	Notes 6(24)	2018 2017 ( $ 25,000 ) $ - 15,995 - - 433,500 - ( 46,944 ) ( 372,205 ) ( 592,652 ) - 14,080 ( 263,780 ) - ( 146,191 ) ( 123,315 ) ( 581 ) ( 753 ) ( 472 ) ( 1,829 ) ( 792,234 ) ( 317,913 ) 916,000 - ( 325,000 ) - - ( 357,063 ) 1,457 - 9 6 592,466 ( 357,057 ) 31,173 ( 46,321 ) 173,577 219,898 $ 204,750 $ 173,577

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

169 -

TAIWAN MASK CORPORATION

NOTES TO SEPARATE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANISATION

TAIWAN MASK CORPORATION (TMC or the Company) was established in the Republic of China (R.O.C.) on 1988/10/21 and first operated in March, 1989. Based on the resolution made on 2000/6/12 shareholders‟ meeting, TMC merged Shin -Tai Corporation on 2000/12/1. The company's main business items are mask research, development, manufacturing, sales and supply of technical support, consulting, inspection and repair services and international trade of the aforementioned products.

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

These separate financial statements were authorized for issuance by the Board of Directors on March 20, 2019.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

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

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

170 -

New Standards,Interpretations and Amendments

Effective date by
International
Accounting
Standards Board

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

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

Except for the following, the above standards and interpretations have no significant impact to the Company‟s financial condition and financial performance based on the Company‟s assessment:

A. IFRS 9, “Financial instruments”
(A) Classification of debt instruments is driven by the entity‟s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset at fair value through other comprehensive income or financial asset measured at amortized cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to recognize the e quity instrument not held for trading at fair value in other comprehensive income .
(B) The impairment losses of debt instruments are assessed using an “expected credit loss” approach. An entity assesses at the end of each financial reporting period whether there has been a significant increase in credit risk on that instrument since initial recognition to recognize 12 -month expected credit losses or lifetime expected credit losses (interest revenue would be
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calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of loss allowance). The Company shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.

(C) The Company has elected not to restate prior period financial statements using the modified retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018, please refer to Notes 12(4) B and C.
B. IFRS 15, „Revenue from contracts with customers‟ and amendments

IFRS 15, „Revenue from contracts with customers‟ replaces IAS 11, „Construction contracts‟, IAS 18, „Revenue‟ and relevant interpretations. According to IFRS 15, revenue is recognized when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

The core principle of IFRS 15 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an am ount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognizes revenue in accordance with that core principle by applying the following steps:

Step 1: Identify customer contract.

Step 2: Identify contract liabilities

Step 3: Define transaction price.

Step 4: Allocate transaction price into contract liabilities.

Step 5: Recognize revenue when finish contract liabilities .

C. Amendments to IAS 7, „Disclosure initiative‟

The Company expects to provide additional disclosure to explain the changes in liabilities arising from financing activities.

(2) Effect of new issuances of or amendments to International Financial Reporting Standards as endorsed by the FSC but not yet adopted by the Company

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

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		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	January 1, 2019
settlement’
Amendments to IAS 28, ‘ Long-term interests in associates and		January 1, 2019
joint ventures’
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 Company‟s	financial condition and financial
performance based on the Company‟s assessment. The quantitative impact will be
disclosed when the assessment is complete.
IFRS 16, “Leases”

IFRS 16, “Leases”, replaces IAS 17, “Leases” and related interpretations and Standing Interpretations Committee (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). Lessor accounting still uses the dual classification approach: operating lease and finance lease, and only increases the related disclosures.

The Company expects to recognize the lease contract of lessees in line with IFRS 16. Accordingly, on January 1, 2018, the Company will have to increase „right-of-use asset‟ by $329,678 and increase lease liability by$329,678, respectively.

`(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:

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

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

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

`(1)` Compliance statement

These separate financial statements have been prepared in accordance with the “Regulations Governing the Preparation of Financial Statements by Securities Issuers”.

(2) Basis of preparation
A. Except for the following items, the separate financial statements have been prepared under the historical cost convention:
- (A) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.
- (B) Financial assets at fair value through other comprehensive income/Available-for-sale financial assets measured at fair value.
- (C) Defined benefit liabilities recognized based on the net amount of pension fund assets less present value of defined benefit obligation.
B. The preparation of financial statements in conformity with Financial Supervisory Commission, R.O.C. requires IFRSs and International Accounting Standard the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company‟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.
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C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Company has elected to apply modified retrospective approach whereby the cumulative impact of the adoption was recognized as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 were not restated. The financial statements for the year en ded December 31, 2017 were prepared in compliance with International Accounting Standard 39 („IAS 39‟), International Accounting Standard 18 („IAS 18‟) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies and details of significant accounts.
(3) Foreign currency translation

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The separate financial statements are presented in “New Taiwan Dollars (NTD)”, which is the Company‟s functional and 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 premeasured. 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 retranslated at the exchange rates prevailing at the balance sheet date. Exchange differences arising upon re-translation at the balance sheet date are recognized in profit or loss .
(C) Non-monetary assets and liabilities denominated in foreign currencies held at fair value through profit or loss are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in profit or loss. Non-monetary assets and liabilities denominated in foreign currencies held at fair value through other comprehensive income are re-translated at the exchange rates prevailing at the balance sheet date; their translation differences are recognized in other comprehensive income. However, nonmonetary assets and liabilities denominated in foreign currencies that are not measured at fair value are translated using the historical exchange rates at the dates of the init ial transactions.
(D) All other foreign exchange gains and losses based on the nature of those transactions 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 Company entities and associates that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
- i. Assets and liabilities for each balance sheet presented are translated at the 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
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```
 - iii. All resulting exchange differences are recognised in other comprehensive income.
```
- (B) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange differences that were recorded in other comprehensive income are proportionately transferred to the non-controlling interest in this foreign operation. In addition, even when the Company 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.
- (C) 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 the balance sheet date.
(4) 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 settle liabilities more than twelve months after the balance sheet date.
B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they are classified as non-current liabilities:
- (A) Liabilities that are expected to be settled within the normal operating cycle;
- (B) Liabilities arising mainly from trading activities;
- (C) Liabilities that are to be settled within twelve months fro m 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.

`(5)` Cash equivalents

(6) 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.
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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 Company measures the financial assets at fair value and recognizes the transaction costs in profit or loss. The Company subsequently measures the financial assets at fair value, and recognizes the gain or loss in profit or loss.
D. The Company recognizes the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

`(7)` Financial assets at amortized cost

A. Financial assets at amortized cost are those that meet all of the following criteria:
(A) The objective of the Company‟s business model is achieved by collecting contractual cash flows.
(B) The assets‟ contractual cash flows represent solely payments of principal and interest.
B. The Company‟s time deposits which do not fall under cash equivalents are those with a short maturity period and are measured at initial investment amount as the effect of discounting is immaterial.

`(8)` Accounts and notes receivable

A. Accounts and notes receivable entitle the Company 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.

`(9)` Impairment of financial assets

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

`(10)` De recognition of financial assets

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

`(11)` Operating leases (lessor)

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

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`(12)` Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted-average method. The cost of finished goods and work in progress comprises raw materials, direct labor, other direct costs and related production overheads (allocated based on normal operating capacity). It excludes borrowing costs. The item 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.

`(13)` Investments accounted for using equity method / associates and subsidiaries

A. Subsidiaries are all entities (including structured entity) controlled by the Company. The Company controls an entity when the Company 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.
B. Unrealized gains on transactions between the Company and its subsidiaries are eliminated to the extent of the Company‟s interest in the subsidiaries. Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Company.
C. The Company‟s share of its subsidiaries‟ 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 Company‟s share of losses in a subsidiary equals or in other comprehensive income. When th e Company‟s share of losses in a subsidiary equals or exceeds its interest in the subsidiary, the Company should continue to recognize losses in proportion to its ownership.
D. Changes in a parent‟s ownership interest in a subsidiary that do not result in the parent losing control of the subsidiary (transaction 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 Company loses control of a subsidiary, the Company re-measures 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, on the same basis as would be required if all the related assets or liabilities were disposed of. That is, other comprehensive income in relation to the subsidiary should be reclassified to profit or loss.
F. Associates are all entities over which the Company has significant influence
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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.

G. The Company‟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 Company‟s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Company does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
H. 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 Company‟s ownership percentage of the associate, the Company recognizes the Company‟s share of change in equity of the associate in „capital surplus‟ in proportion to its ownership.
I. Unrealized gains on transactions between the Company and its associates are eliminated to the extent of the Company‟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 Company.
J. In the case that an associate issues new shares and the Company does not subscribe or acquire new shares proportionately, which results in a change in the Company‟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 Company‟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.
K. According to “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, profit and other comprehensive income in the separate financial statements should be the same as profit and other comprehensive income attributable to shareholders of the parent in the consolidated financial statements, and the equity in the separate financial statements should be the same as the equity attributable to shareholders of the parent in the consolidated financial statements.

`(14)` 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 Company and the cost of the item can be measured reliably. The carrying amount of the
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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, pla nt, 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 y ear-end. If expectations for the assets‟ residual values and useful lives differ from previous estimates or the patterns of consumption of the assets‟ future economic benefits embodied in the assets have changed significantly, any change is accounted for as a change in estimate under IAS 8, „Accounting Policies, Changes in Accounting Estimates and Errors‟, from the date of the change. The estimated useful lives of property, plant and equipment are as follows:

Buildings and structures 5~56years Machinery and equipment 5~14years Transportation equipment 6years Utility equipment 3~6years

`(15)` Operating leases (lessee)

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

`(16)` Intangible assets

Computer software is stated at cost and amortized on a straight -line basis over its estimated useful life of 3 years.

`(17)` Impairment of non -financial assets

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

`(18)` Borrowings

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(19) 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.
(20) Employee benefit
A. Short-term employee benefits

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

B. Pensions
(A) Defined contribution plans

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

(B) Defined benefit plans
i. Net obligation under a defined benefit plan is defined as the present value of an amount of pension benefits that employees will receive on retirement for their services with the Company in current period or prior periods. The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The net defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The r ate used to discount is determined by using interest rates of government bonds (at the balance sheet date) of a currency and term consistent with the currency and term of the employment benefit obligations.
ii. Re-measurements 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. Past service costs are recognized immediately in profit or loss.

C. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of employment as a result from either the Company‟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 Company recognizes expense as it can no longer withdraw an offer of termination benefits or it recognizes relating restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet date shall be

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discounted to their present value.

D. Employees‟ compensation and directors‟ and supervisors‟ remuneration

Employees‟ compensation and directors‟ and supervisors‟ remuneration are recognized as expense and liability, 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.

`(21)` Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or items recognized directly in equity, in which cases the tax is recognized in other comprehensive income or equity.
B. The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in accordance with applicable tax regulations. It establishes provisions where appropriate based on the amounts expected to be paid to the tax authorities. An additional tax is levied on the un-appropriated retained earnings and is recorded as income tax expense in the year the stockholders resolve to retain the earnings.
C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated balance sheet. However, the deferred tax is not accounted for if it arises from initial recognition of goodwill or of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the Company and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realized or the deferred tax liability is settled.
D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. At each balance sheet date, unrecognized and recognized deferred tax assets are reassessed.
E. A deferred tax asset shall be recognized for the carry forward of unused tax credits resulting from tax laws to the extent that it is possible that future taxable profit will be available against which the unused tax credits can be utilized.
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`(22)` Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.
B. Where the Company repurchases the Company‟s equity share capital that has been issued, the consideration paid, including any direct ly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company‟s equity holders. Where such shares are subsequently reissued, the difference between their book value and any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company‟s equity holders.

`(23)` Dividends

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

`(24)` Revenue recognition

A. The Company manufacturing and selling of Mask. Sales are recognized when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer‟s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Company has objective evidence that all criteria for acceptance have been satisfied.
B. As the time interval between the transfer of committed goods or service and the payment of customer does not exceed one year, the Company does not adjust the transaction price to reflect the time value of money.
C. 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.

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

The preparation of these separate financial statements requires management to make critical judgments in applying the Company‟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 adjust ed 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 ad dressed below:

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(1) Critical judgments in applying the Company‟s accounting policies

None.

`(2)` Critical accounting estimates and assumptions

Evaluation of inventories

As inventories are stated at the lower of cost and net realizable value, the Company must determine the net realizable value of inventories on balance sheet date using judgments and estimates. Due to the rapid technology innovation, the Company evaluates the amounts of normal inventory consumption, obsolete inventories or inventories without market selling value on balance sheet date, and writes down the cost of inventories to the net realizable value. Such an evaluation of inventories is principally based on the demand for the products within the specified period in the future. Therefore, there might be material changes to the evaluation.

As of December 31 2018, the carrying amount of inventories was $128,324.

6. DETAILS OF SIGNIFICANT ACCOUNTS

`(1)` Cash and cash equivalents

Demand deposits Time deposits Total	December 31, 2018 179,950 $ 24,800 204,750 $	December 31, 2017 114,057 $ 59,520
		173,577 $

A. The Company transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.
B. The Company has no cash pledged to others.

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

Items Non-current items: Financial assets mandatorily measured at fair value through profit or loss Listed and OTC stocks Unlisted and non-OTC stocks Valuation adjustment Total	December 31,2018 199,533 $ 32,442 231,975 37,876) ( 194,099 $

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or loss is listed below:
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		2018
Financial assets mandatorily measured at
fair value through profit or loss
Listed and OTC stocks	($	29,253)
Unlisted and non-OTC stocks		3,768
Beneficiary certificates		14
Total	($	25,471)

B. The Company has no financial assets at fair value through profit or loss pledged to others.
C. Information relating to credit risk of financial assets at fair value thr ough profit or loss is provided in Note 12(2).
D. Information on financial assets at fair value through profit or loss as of December 31, 2017 is provided in Note 12(4).
(3) Financial assets at amortized cost

Items Current item: Time deposits Non-current items: Time deposits	December 31,2018
	25,000 $
	29,413 $

A. Amounts recognized in profit or loss in relation to financial assets at amortized cost is listed below:

amortized cost is listed below:
		`2018`
Interest income	`$`		`797`

B. Details of the Company‟s financial assets at amortized cost pledged to others as collateral are provided in Note 8.
C. Information relating to credit risk of financial assets at amortized cost is provided in Note 12(2).
D. Information on investments in debt instruments without active market as of December 31, 2017 is provided in Note 12(4).

`(4)` Notes and accounts receivable

Notes receivable Accounts receivable Accounts receivable – related parties Less: Loss allowance	December 31, 2018 1,151 $ 338,069 $ 6,762 344,831 776) ( 344,055 $	December 31, 2017 1,751 $
		244,284 $ 15,496
		259,780 2,710 (
		257,070 $

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

Accounts receivable Notes receivable 262,325 $ 1,151 $ 70,170 - 11,816 - 498 - 22 - 344,831 $ 1,151 $ December 31,2018	Accounts receivable Notes receivable 262,325 $ 1,151 $ 70,170 - 11,816 - 498 - 22 - 344,831 $ 1,151 $ December 31,2018	December 31,2017	December 31,2017
Accounts receivable		Accounts receivable	Notes receivable
262,325 $ 70,170 11,816 498 22 344,831 $	1,151 $ - - - - 1,151 $	185,854 $ 51,838 20,167 301 1,620 259,780 $	1,751 $ - - - -
			1,751 $

The above ageing analysis was based on past due date.

B. The Company has no notes and accounts receivable pledged to others as collateral.
C. As at December 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 Company‟s accounts receivable were $344,055 respectively.
D. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

`(5)` Inventories

	December 31,2018	Book value 94,398 $ 10,608 23,318 128,324 $
Cost 99,364 $ 10,608 23,318 133,290 $	Allowance for valuation loss 4,966) ($ - - 4,966) ($ December 31,2017
Cost 90,712 $ 7,565 30,560 128,837 $	Allowance for valuation loss 15,557) ($ - - 15,557) ($	Book value
		75,155 $ 7,565 30,560
		113,280 $

The cost of inventories recognized as expense for the year:

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Cost of sold inventory Allowance(reversal) for valuation and obsolescence loss	2018 987,756 $ 10,591) ( 977,165 $	2017 813,042 $ 4,716) ( 808,326 $

The Company's inventory portion prepared for the depreciation loss in the previous period has been sold, resulting in a rebound in the net realizable value of the inventory and recognition as a decrease in the cost of goods sold.

`(6)` Investments accounted for using equity method

Taiwan Mask Corp. - USA SunnyLake Park International Holdings, Inc. Youe Win Capital Corporation Youe Chung Capital Corporation Innova Vision INC. Advagene Biopharma Co., Ltd. (note) Miracle Technology CO., LTD. Weida Hi-tech `小` `計`	December 31, 2018 December 31, 2017 - $ 502) ($ 84,774 70,774 - 212,600 413,877 255,246 12,301 53,968 98,808 66,397 313,715 255,996 233,623 - 1,157,098 $ 914,479 $

Note1 ： The Company was dissolved in 2018.

Note2 ： The Company organized reorganization, and the company‟s related assets and liabilities were merged into Yu Chuag Investment Co., Ltd., in May 2018.
A. Information about the Company‟s subsidiaries is provided in Note 4(3) of the 2018 consolidated financial statements.
B. In October 2017, the Company acquired 100% equity of Miracle Technology Co., Ltd. in cash at $252,651 and obtained control of Miracle Technology Co., Ltd. Information about Miracle Technology Co., Ltd. is provided in Note 6(25) of the 2018 consolidated financial statements.
C. The company did not subscribe for the share capital of the company's employee stock options in accordance with the shareholding ratio in June, 2018. In addition, the company purchased 2,679,652 shares of the company in cash at $66,991 in October, 2018.
D. From August to October, 2018, the Company acquired 100% equity of Wei Da Hi-Tech Co., Ltd. in cash of $ 293,371 and obtained control of Wei Da Hi-Tech Co., Ltd. Information about Wei Da Hi-Tech Co., Ltd. is provided in Note 6(25) of the 2018 consolidated financial statements.
187 -

`(7)` Property, plant and equipment

											Construction in progress
					Machinery and				Office		and equipment under
		Buildings(Land)			equipment		Transportation		Equipment		installation		Total
January 1, 2018
Cost	`$`	`1,439,964`		`$`	`1,882,717`	`$`	`8,092`	`$`	`11,707`	`$`	`10,666`	`$`	`3,353,146`
Accumulated
depreciation and impairment	`(`	`960,474)`	`(`		`1,546,637)`	`(`	`608)`	`(`	`4,720)`		`-`	`(`	`2,512,439)`
	`$`	`479,490`		`$`	`336,080`	`$`	`7,484`	`$`	`6,987`	`$`	`10,666`	`$`	`840,707`
`2018`
January 1	`$`	`479,490`		`$`	`336,080`	`$`	`7,484`	`$`	`6,987`	`$`	`10,666`	`$`	`840,707`
Acquisitions		`42,394`			`73,002`		`3,635`		`7,665`		`5,266`		`131,962`
Depreciation	`(`	`37,479)`	`(`		`72,986)`	`(`	`3,569)`	`(`	`3,501)`		`-`	`(`	`117,535)`
Reclassifications		`586`			`-`		`-`		`-`	`(`	`586)`		`-`
December 31	`$`	`484,991`		`$`	`336,096`	`$`	`7,550`	`$`	`11,151`	`$`	`15,346`	`$`	`855,134`
December 31, 2018
Cost	`$`	`1,482,944`		`$`	`1,955,719`	`$`	`11,727`	`$`	`19,372`	`$`	`15,346`	`$`	`3,485,108`
Accumulated
depreciation and impairment	`(`	`997,953)`	`(`		`1,619,623)`	`(`	`4,177)`	`(`	`8,221)`		`-`	`(`	`2,629,974)`
	`$`	`484,991`		`$`	`336,096`	`$`	`7,550`	`$`	`11,151`	`$`	`15,346`	`$`	`855,134`

188 -

											Cons t ru ct ion in p rogr	Cons t ru ct ion in p rogr
				Machinery and				Office			a nd equ ip ment u nde
		Buildings(Land)		equipment		Tra nsport a t ion		Equipment			ins t a lla t ion		Total
January 1, 2017
Cost	$	1,429,855	$	1,744,636	$	2,189	$		7,647	$	8,604	$	3,192,931
Accumulated
depreciation and impairment	(	921,285)	(	1,468,441)	(	243)	(		2,409)		-	(	2,392,378)
	$	508,570	$	276,195	$	1,946	$		5,238	$	8,604	$	800,553
2017
January 1	$	508,570	$	276,195	$	1,946	$		5,238	$	8,604	$	800,553
Acquisitions		8,042		133,864		-			4,060		10,666		156,632
Depreciation	(	41,509)	(	78,196)	(	365)	(		2,311)		-	(	122,381)
Reclassifications		4,387		4,217		5,903			-	(	8,604)		5,903
December 31	$	479,490	$	336,080	$	7,484	$		6,987	$	10,666	$	840,707
December 31, 2017
Cost	$	1,439,964	$	1,882,717	$	8,092	$	11,707		$	10,666	$	3,353,146
Accumulated
depreciation and impairment	(	960,474)	(	1,546,637)	(	608)	(		4,720)		-	(	2,512,439)
	$	479,490	$	336,080	$	7,484	$		6,987	$	10,666	$	840,707

A. Amount of borrowing costs capitalized as part of property, plant and equipment were $0.

B. Information about the property, plant and equipment that were pledged to others as collaterals is provided in Note 8.

189 -

`(8)` Short -term borrowings

hort-term borrowings
Type of borrowings Bank borrowings Credit borrowings	December 31, 2018 591,000.0 $	Interest rate range	Collateral
		1.138%~1.35%	-

The year ended December 31, 2017: None.

Interest expense recognized in profit or loss amounted to $3,187 and $0 for the years ended December 31, 2018 and 2017, respectively.

`(9)` Finance lease liabilities

The Company leases in transportation and machine equipment under finance lease. Future minimum lease payments and their present values for the year ended December 31, 2018 and 2017 are as follows:

Current items: Not more than 1 year Non-current items:			December 31,2018	Present value of finance lease liabilities
	Total finance lease liability		Future financial expenses
	2,411 $ 5,200 - 5,200 7,611 $	166) ($ 106) ( - 106) ( 272) ($		2,245 $ 5,094 - 5,094 7,339 $
More than 1 year but not more than 5 years Not more than 5 years Total

The year ended December 31, 2017: None.

`(10)` Pensions

A.(A) The Company has 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 t o 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 contributes monthly an amount equal to 2% of the employees‟ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor pension reserve account by December 31, every year.
190 -

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 will make contributions for the deficit by next March.

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

		December 31, 2018		December 31, 2017
Determine the present value of the	($	26,622)	($	32,996)
welfare obligation
Project equity fair value		7,054		6,584
Net defined benefit liability	($	19,568)	($	26,412)

Determine the

	Determine the
2018 January 1 Current service costs Interest (expense) income Recognized: Plan assets rewards (not including amount of interest income Effect from financial Effect from demographic assumption differences Experience adjustment Deposited retirement fund Pension benefits December 31	present value of the welfare obligation	Project equity fair value	Net defined benefit liability
	32,996) ($ 264) ( 370) ( 33,630) ( - 435) ( 87) ( 321 201) ( - 7,209 26,622) ($	6,584 $ - 85 6,669 176 - - - 176 532 323) ( 7,054 $	26,412) ($ 264) ( 285) ( 26,961) ( 176 435) ( 87) ( 321 25) ( 532 6,886 19,568) ($

191 -

Determine the

	Determine the
	present value of the Project equity fair	Net defined benefit
	welfare obligation value	liability
2017
January 1	45,850) ($ 6,057 $	39,793) ($
Current service	552) ( -	552) (
costs
Interest (expense)	566) ( 75	491) (
income
	46,968) ( 6,132	40,836) (
Recognized:
Plan assets
rewards (not
including amount
of interest income d ) Effect from	- 14) (	14) (
financial	453) ( -	453) (
Effect from
demographic
assumption
differences	91) ( -	91) (
Experience	516 -	516
adjustment
	28) ( 14) (	42) (
Deposited	- 466	466
retirement fund
Pension benefits	14,000 -	14,000
December 31	32,996) ($ 6,584 $	26,412) ($
(D)The Bank of	Taiwan was commissioned to manage	the Fund of the
Company‟s defined benefit pension plan in accordance with the Fund‟s
annual investment and utilization plan and the “Regulations for Revenues,
Expenditures, Safeguard and Utilization of the Labor		Retirement Fund”
(Article 6: The scope of utilization for the Fund includes deposit in
domestic or foreign financial institutions, investment in domestic or
foreign listed, over-the-counter, or private placement		equity securities,
investment in domestic or foreign real estate securitization products, etc.).
With regard to	the utilization of the Fund, its minimum earnings in the
annual distributions on the final financial statements shall be no less than
the earnings attainable from the amounts accrued from two -year time
deposits with the interest rates offered by local banks. If the earnings are
less than aforementioned rates, government shall make payment for the
deficit after being authorized by the Regulator. The Company has no right
to participate in	managing and operating that fund and hence the Company

192 -

is unable to disclose the classification of plan assets fair value in accordance with IAS 19 paragraph 142. The composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the Annual Labor Retirement Fund Utilization Report announced by the government.

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

Discount rate Future salary increase rate	2018 1.125% 2.125%	2017
		1.25%
		2.125%

The assumptions of future mortality in 2018 and 2017 are estimated according to the Taiwan Annuity Insurance Life Table.

Because the main actuarial assumption changed, the present value of defined benefit obligation is affected. The analysis was as follows:

December 31, 2018 Impact on determining the present value of welfare obligations December 31, 2017 Impact on determining the present value of welfare obligations	Increase by0.25% Reduced by0.25% 876) ($ 915 $ 980) ($ 1,023 $ Discount rate	Increase by0.25% Reduced by0.25% 884 $ 882) ($ 991 $ 955) ($ Future salaryincrease rate
	Increase by0.25% 876) ($ 980) ($	Increase by0.25% 884 $ 991 $

(F) Expected contributions to the defined benefit pension plans of the Company for the year ending December 31, 2019 amount to $549.
(G) As of December 31, 2018, the weighted average duration of the retirement plan is 16 years.
B.(A) Effective July 1, 2005, the Company has established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. 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 pension costs under defined contribution pension plans of the Company for the year ended December 31, 2018 and 2017 were $6,371 and $5,203, respectively.
193 -

`(11)` Share capital

A. As of December 31, 2018, the Company‟s authorized capital was $5,000,000, consisting of 500,000,000 shares of common stock (including 20,000,000 shares which were reserved for employee stock options), and the paid-in capital was $2,527,136, with a par value of $10 (in dollars) per share. All proceeds from shares issued have been collected.

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

as follows:
		Unit: share in thousands
		2018		2017
January 1		195,632		232,265
Subordinate companies increase
holdings of stock		- (		16,633)
Purchase of treasury shares		- (		20,000)
December 31		195,632		195,632
reasury shares
)Reason for share	reacquisition and movements in the		number of the
Company‟s treasury	shares are as follows:
		December 31,2018
		(Expressed in thousands of shares)
Shares held by	reacquisition	of shares		Book value
Subsidiary-
Youe Chung Capital	Subsidiary holds shares
Corporation	of the company	37,081	$	527,678
Taiwan Mask	To be reissued to
Corporation	employees	20,000		357,063
		57,081	$	884,741
		December 31,2017
		(Expressed in thousands of shares)
	Reason for	Number
Shares held by	reacquisition	of shares		Book value
Subsidiary-
Suichang Investment	Subsidiary holds shares
Co., Ltd.	of the company	37,081	$	527,678
Taiwan Mask	To be reissued to
Corporation	employees	20,000		357,063
		57,081	$	884,741

B. Treasury shares
(A) Reason for share reacquisition and movements in the number of the Company‟s treasury shares are as follows:
194 -
(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 realized capital surplus.
(C) Pursuant to the R.O.C. Securities and Exchange Act, treasury sha res 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 should be reissued to the employees within three years from the reacquisition date and shares not reissued within the three-year period are to be retired. Treasury shares to enhance the Company‟s credit rating and the stockholders‟ equity should be retired within six months of acquisition.
(E) The Group organized and reorganized in May 2018, and merged Suichang Investment Co., Ltd. and Youe Win Capital Corporation into Youe Chung Capital Corporation (hereinafter referred to as “Suichang Campany”, “Youe Win Campany” and “Youe Chung Company”). Suichang Campany and Youe Win Campany were closed and transferred the relevant assets and liabilities to Youe Chung Company. Before the reorganization, Suichang Company held the shares, and after reorganization, Youe Chung Company held the shares of the company. As of December 31, 2017, Suichang Company held 37,081 shares, with an average book value of $14.23 per share and a fair value of $18 per share. As of December 31, 2018, Youe Chung Company held 37,081 shares, the average book value per share was $14.23, and the fair value per share was $18.35. The transfer of treasury stock costs is based on the book value of the shares held by Suichang Company in each period, based on the indirect shareholding ratio of the Company.
(G) In July 13, 2017, the board of directors passed to purchase treasury stocks. From July 17, 2017 to September 13, 2017 were bought back 20,000 shares, and purchase amount was $357,063.

`(12)` Capital surplus

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

195 -

January 1, 2018 Adjustment of the shareholding ratio of the invested company Difference between consideration and carrying amount of subsidiaries acquired or disposed December 31, 2018 January 1, 2017 Subordinate company is allocated cash to the company Adjustment of the shareholding ratio of the invested company December 31, 2017	Treasury shares 145,471 $ - - 145,471 $ Treasury shares 139,843 $ 5,628 - 145,471 $	Recognition of changes in ownership interest in subsidiaries 62,959 $ 7,484) ( 38,571) ( 16,904 $ Recognition of changes in ownership interest in subsidiaries 40,443 $ - 22,516 62,959 $	Employee stock options 4,518 $ 2,538 - 7,056 $ Employee stock options - $ - 4,518 4,518 $	Total
				212,948 $ 4,946) ( 38,571) ( 169,431 $ Total
				180,286 $ 5,628 27,034 212,948 $

`(13)` Retained earnings (deficit to be compensated)

A. Under the Company‟s Articles of Incorporation, the current year‟s earnings, if any, shall first be used to pay all taxes and offset prior years‟ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. When such legal reserve amounts to the total authorized capital, the Company shall not be subject to this requirement. The Company may then appropriate or reverse a certain amount as special reserve according to the demand for the business or relevant regulations. After the distribution of earnings, the remaining earnings and prior years‟ undistributed earnings may be appropriated according to a resolution of the Board of Directors adopted in the shareholders‟ meeting.
196 -
B. To well design a long term financial plan and stabilize the operation, the company chose a residual dividend policy to plan the future capital fund needs based on capital investment budget. First to appropriate the retained earnings to get capital funds fulfilled and residual earnin gs will be paid off as dividends. The steps are:
(A) Define an optimized capital budget.
(B) Define the fund needs to fulfill one capital budget.
(C) Define how much fund shall be fulfilled by retained earnings. (Unfulfilled part shall be fulfilled by fund raising or bond issuing.)
(D) To reserve a certain amount of residual earnings, then dividends shall be paid off to shareholders. According to the dividend policy of the company, cash dividend ratio shall not be lower than 20% of total dividends.
C. Except for covering accumulated deficit, increasing capital or payment of cash in proportion to ownership percentage, the legal reserve shall not be used for any other purpose. The amount capitalized or the cash payment shall be limited to the portion of legal reserve which exceeds 25% of the paid-in capital.
D. In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the end of the financial reporting period before distributing earnings. When debit balance on other equity items is reversed subsequently, the reversed amount could be included in the distributable earnings.
E. As resolved by the shareholders on June 13, 2018 and June 23, 2017, the deficit in 2017 and 2016 shall be compensated by legal reserve for $74,217 and $162,088.
F. On March 20, 2019, the Board of Directors proposed that total dividends for the distribution of earnings for the year of 2018 were $194,083 at $0.834 (in dollars) per share.
G. For the information relating to employees‟ compensation (bonuses) and directors‟ and supervisors‟ remuneration, please refer to Note 6(20).

`(14)` Other equity items

January 1 Effect on retrospective application Foreign currency conversion difference: December 31				2018
		investment
	3,756 $ 3,756) ( - - $

197 -

2017

			2017
January 1 Valuation adjustment Foreign currency conversion difference: December 31	Available-for-sale investment		Foreign currency translation Total 5,719 $ 35,582) ($ - 45,057 1,732 1,732 7,451 $ 11,207 $
	41,301) ($ 45,057 - 3,756 $

(15) Operating revenue

perating revenue
Revenue from contracts with customers	2018
	1,448,393 $

A. Disaggregation of revenue from contracts with customers

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

For the year ended December 31, 2018 Revenue from contracts with customers Timing of revenue recognition At a point in time	Taiwan 990,055 $ 990,055 990,055 $	Asia 439,912 $ 439,912 439,912 $	Others 18,426 $ 18,426 18,426 $	Total
				1,448,393 $
				1,448,393
				1,448,393 $

B. Contract liabilities

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

liabilities:
		December 31, 2018
Contract liability	$	21,857
C.Related disclosures for the year ended December 31, 2017 operating
revenue are provided in Note 12(5).

198 -

`(16)` Other income

(17)
(18)
(19) Other gains and losses
Finance costs
Expenses by nature
2018
2017
Interest income：
Bank deposits
300
2,634
Interest income from financial assets at
amortised cost
797
-
Other interest income
6,389
2,995
Total
7,486
5,629
Rent income
9,968
12,408
Dividend income
4,170
-
Other income-Other
8,474
2,599
Total
30,098
$ 20,636
$ 2018
2017
Gains(Loss) on disposal of investments
47
$ 2,445
$ Currency exchange gains(loss)
6,154
10,474)
(
Gains(Loss) on financial assets at fair
value through profit or loss
29,253)
(
1,139
Reversal of impairment loss(Impairment
loss) recognised in profit or loss, financial
3,735
18,415)
(
Other expenses
391)
(
-
Total
(19,708)
$ (25,305)
$ 2018
2017
Interest expense
$ 3,187 $ 0
Other finance expense
353
-
$3,540
$25
2018
2017
Employee benefit expenses
204,944
$ 138,257
$ Depreciation charges on property, plant
and equipment
117,535
122,381
Amortisation charges on intangible assets
897
1,197
Total
323,376
$ 261,835
$

199 -

`(20)` Employee benefit expense

Wages and salaries Labour and health insurance fees Pension costs Other personnel expenses	2018 178,068 $ 12,741 6,921 7,214 204,944 $	2017
		114,008 $ 11,928 6,246 6,075
		138,257 $

A. According to the Articles of Incorporation of the Company, the current year‟s profit shall be used first to cover accumulated deficit, if any, and then the remaining balance shall be distributed as follows: no less than 10% as employees‟ compensation, and no more than 2% as directors‟ remuneration.
B. For the year ended December 31, 2018, employees‟ compensation was accrued at $25,884, respectively; directors‟ and supervisors‟ remuneration was accrued at 5,108, respectively. The aforementioned amounts were recognized in salary expenses. In 2017, due to accumulated losses, there were no employee bonus and the compensation of the directors were estimated.

`(21)` Income tax

A. Income tax expense

Components of income tax expense:

Current tax: Current tax on profits for the year Previous income tax low (high) estimate Total current tax Deferred tax: Origination and reversal of temporary differences Impact of change in tax rate Total deferred tax Income tax expense		2018 17,981 $ 1,858) ( 16,123 11,939 1,657) ( 10,282 26,405 $	2017
			13,311 $ -
			13,311
			3,474 -
			3,474
			16,785 $

200 -
B. Reconciliation between income tax expense and accounting profit

							2018			2017	2017
Income tax calculated based on profit
before tax and statutory tax rate				$			45,122			($		8,819)
Fees that should be excluded
according to the tax law				(			6,322)					22,030
Deferred income tax asset
achievability assessment changes				(			8,880)					3,574
Prior year income tax (over)
underestimation				(			1,858)					-
Effect from changes in tax regulation				(			1,657)					-
Income tax expenses				$			26,405			$		16,785
Amounts of deferred	tax assets or liabilities as a								result of		temporary
differences and tax losses are as follows:
							2018
						Recognized in
							other
			Recognized in			comprehensive			Recognized in
January1			profit or		loss		income			equity	December 31
Temporary differences:
- Deferred income tax
assets: g p g
institutions investment
gains and losses $	4,900	($			4,900)	$	-	$		-	$	-
Benefit liabilities	4,490	(			4,490)		-			-		-
Unrealised exchange
loss	144	(			138)		-			-		6
Total $	9,534	($			9,528)	$	-	$		-	$	6
-Deferred income tax
liabilities:
Unrealised exchange
gain ($	145)	($			754)	$	-	$		-	($	899)
Total $	9,389	($		10,282)		$	-	$		-	($	893)

C. Amounts of deferred tax assets or liabilities as a result of temporary differences and tax losses are as follows:
201 -

2017

Temporary differences: - Deferred income tax assets: Foreign operating institutions investment gains and losses Benefit liabilities Others Total -Deferred income tax liabilities: Others Total	January1 6,919 $ 6,765 645 14,329 $ 1,466) ($ 12,863 $	Recognized in profit or loss 2,019) ($ 2,275) ( 501) ( 4,795) ($ 1,321 $ 3,474) ($	Recognized in other comprehensive income - $ - - - $ - $ - $	Recognized in equity - $ - - - $ - $ - $	December 31 4,900 $ 4,490 144 9,534 $ 145) ($ 9,389 $

D. The amounts of deductible temporary difference that are not recognized as deferred tax assets are as follows:

Can deduct temporary differences	December 31, 2018 148,468 $	December 31, 2017 137,842 $

E. The Company‟s income tax returns through 2016 have been assessed and approved by the Tax Authority.
F. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company‟s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Company has accessed the impact of the change in income tax rate.
202 -

`(22)` Earnings per share

ings per share
Basic loss per share Loss attributable to ordinary shareholders of the parent Diluted earnings per share Profit attributable to ordinary shareholders of the parent Assumed conversion of all dilutive potential ordinary shares -employees’ compensation Employee benefit expenses Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares Basic loss per share Loss attributable to ordinary shareholders of the parent		2018		Earnings per share (in dollars)
	Amount after tax	Weighted average number of ordinary shares outstanding (share in thousands)
	199,203 $ 199,203 $ - 199,203 $		195,632 195,632 1,411 197,043 $ 2017 ~~g~~ ~~g~~	1.02 $ 1.01 $ Earnings per share (in dollars)
	Amount after tax	number of ordinary shares outstanding (share in thousands)
	74,177) ($		225,910	0.33) ($

The weighted average number of shares outstanding in 2018, which has been deducted from the number of shares held by the subsidiary company, Yu Chuag Investment (shares) company, which are regarded as treasury shares of the company (the number of shares is calculated according to the shareholding ratio of the company).

The weighted average number of outstanding foreign shares in 2017 has b een deducted from the number of shares held by the subsidiary company, Suichang Investment Co., Ltd., which holds shares of the company as treasury shares (the number of shares is calculated based on the shareholding ratio of the company). In addition, due to the loss of the above-mentioned various periods, the employee's compensation has an anti-dilution effect, so the diluted loss per share is equal to the basic loss per share.

203 -

`(23)` Operating leases

The Company leases in land and building assets under non -cancellable operating lease agreements. The lease terms from 2017 to 2034. The Company recognized rental expenses of $14,661 and $14,695 in profit or loss for the years ended December 31, 2018 and 2017, respectively. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

leases are as follows:
No more than 1 year More than 1 year but not more than 5 years More than 5 years	`$` `$`	December 31, 2018 `13,521` `54,084` `60,083` `127,688`	`$`	December 31, 2017 `13,985` `55,939` `67,244`
			`$`	`137,168`

`(24)` Supplemental cash flow information

Investing activities with partial cash payments:

Investing activities with partial cash payments:	Investing activities with partial cash payments:	Investing activities with partial cash payments:
ges in liabilities from financing activities 2018 Acquisition of property, plant and equipment 131,962 $ $ Plus: Equipment payable at the beginning of the period 4,629 Prepayment equipment at end of the period 131,048 Less: Equipment payable at the end of the period 75,620) ( ( Prepaid equipment at the beginning of the period 45,828) ( ( Cash payment in the current period 146,191 $ $ Short-term borrowings Deposits received January 1, 2018 - $ 27 $ Changes in cash flow from financing 591,000 9 December 31, 2018 591,000 $ 36 $				2017 156,632 4,865 45,828 4,629) 79,381) 123,315 Total liabilities from financing activities

			$

January 1, 2018 Changes in cash flow from financing December 31, 2018
	- $ 591,000 591,000 $	27 $ 9 36 $		27 $ 591,009 591,036 $

(25) Changes in liabilities from financing activities

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related arties Relationshi with the Grou p p p Miracle Technology CO., LTD. Subsidiary Weida Hi-Tech Subsidiary Youe Win Capital Corporation Subsidiary Youe Chung Capital Corporation Subsidiary Innova Vision INC. Subsidiary － Taiwan Mask Corp. USA Subsidiary MIKO Technology company LTD Subsidiary Innova Vision Kabushiki Kaisha Subsidiary Maxchip Electronics Corporation The director of the company is the chairman of the company MACROBLOCK, INC. The company's subsidiaries are directors of the company WishRich Technology Co., Ltd. The director of the subsidiary of the company is the chairman of the company Other Related Parties President

(2) Significant related party transactions
A. Operating revenue:

Operating revenue:
Purchases: Sales of goods: Subsidiaries Other related parties Purchases of goods: Subsidiaries	2018 59,142 $ 7,730 66,872 $ 2018 635 $	2017
		21,385 $ -
		21,385 $
		2017
		3,962 $

B. Purchases:

C. Receivables from related parties:
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Trade receivables: Subsidiaries Other related parties Total Other receivables: Subsidiaries Total	December 31, 2018 6,436 $ 326 6,762 16,236 22,998 $	December 31, 2017 15,496 $ -
		15,496
		16,389
		31,885 $

D. Loans to /from related parties:
i. Outstanding balance:

Loans to /from related parties: i.Outstanding balance: Other receivables: Subsidiaries Total	16,236 22,998 $	16,389 31,885 $
ii. Interest income: Subsidiaries Subsidiaries	December 31, 2018 370,490 $ 2018 6,368 $	December 31, 2017 100,000 $
		2017 2,995 $

The conditions for related companies are loans and repayment within one year. Interests are charged at an annual interest rate of 2.616% in 2018 and 2017.

E. Property transactions:
(A) Acquisition of office equipment:

			2018		2017
Other	related parties		$	1,790	$	-
Acquisition of financial assets:
				Year	ended December 31,	2018
		No. of
	Accounts	shares	Objects		Consideration
Other	Investment which
Related	is adopting equity	141,103	Shares of Weida Hi-Tech	$		1,646
Parties	method

(B) Acquisition of financial assets:

The year ended December 31, 2017:None.

F. Rental income

F. Rental income
ey management compensation Subsidiaries Salaries and short-term employee benefits Post-employment benefits Total	2018 9,968 $ 2018 10,749 $ 20,886 31,635 $	2017
		12,408 $
		2017
		6,729 $ -
		6,729 $

`(3)` Key management compensation

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8. PLEDGED ASSETS

The Company‟s assets pledged as collateral are as follows:

Asset item Time deposits(Financial assets at amortised cost- Non current) Time deposits(Other non- current assets) Land and buildings Machinery and equipment	December 31, 2018 December 31, 2017 29,413 $ - $ - 45,409 - 264,613 - 30,240 29,413 $ 340,262 $ Book value	Purpose
	December 31, 2018 29,413 $ - - - 29,413 $
		Outbound cargo guarantee and lease deposit Outbound cargo guarantee and lease deposit Long-term borrowings Long-term borrowings

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT COMMITMENTS

`(1)` Contingencies

Subidiary - Innova Vision International Inc. (IVKK) imported contact lenses in March 2015 contained anti-UV material, which did not match up with the materials disclosed in the certification issued by Japanese government. Japanese government issued an oral order to ask IVKK make announcements on the newspapers about the material unmatched and stopped the selling activities in Japan. IVKK then discussed with its major agents to return the goods and negotiated a “return and change of the goods plan”. Some of the agents have already returned the goods one after plan.

(2) Commitments
A. Signed but not yet paid equipment maintenance contracts

B. Operating leases contracts Please see Note 6(23). Machine maintenance	December 31, 2018 33,765 $	December 31, 2017 43,303 $

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENTS AFTER THE END OF THE FINANCIAL REP ORTING

PERIOD

The company's subsidiary, Yu Chuan Investment Co., Ltd. (hereinafter referred to as " Yu Chuan Investment") is a long-term investment. On March 18, 2019, the board of directors of the Yu Chuan Investment decided to participate in the subscrip tion of the private equity of Aptos Technology Co., Ltd. The shares of NT$4 obtained Aptos Technology Co., Ltd. obtained 16,250 shares with a total amount of $65,000.

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12. OTHERS

`(1)` Capital management

The Company‟s objectives when managing capital are to safeguard the Company‟s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The Company monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including „current and non-current borrowings‟ as shown in the separate balance sheet) less cash and cash equivalents. Total capital is calculated as „equity‟ as shown in the separate balance sheet plus net debt.

During the year ended December 31, 2018, the Company‟s strategy, which was unchanged from 2017, was to maintain the gearing ratio within reasonable security range. The gearing ratios at December 31, 2018 and 2017 were as follows:

Total Loans Less:Cash and cash equivalents ( Net debt Total equity Total capital Debts ratio	December 31, 2018 December 31, 2017 591,000 $ - $ 204,750) 173,577) ( 386,250 173,577) ( 2,558,494 2,405,630 2,944,744 $ 2,232,053 $ 13.12% 0.00%

`(2)` Financial instruments

A. Financial instruments by category

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Financial assets Financial assets measured at fair value through profit or loss Financial assets mandatorily measured at fair value through profit or loss Fair value through profit or loss financial assets Financial assets at fair value through other comprehensive income Available-for-sale financial assets Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Financial assets at amortised cost Debts investment without active market Notes receivable Trade receivables Other receivables Refundable deposits Other financial assets Financial liabilities Financial liabilities at amortised cost Short-term borrowings Short-term notes and bills payable Notes payables Trade payables Other payables Lease account payable Guarantee deposits	December 31,2018 194,099 $ - 204,750 54,413 1,151 344,055 394,442 3,170 - 1,196,080 $ 591,000 $ - - 66,879 231,520 7,339 36 896,774 $	December 31,2017
		- $ 83,331 173,577 - 1,751 257,070 125,531 2,698 -
		643,958 $
		- $ - - 49,550 136,175 - 27
		185,752 $

B. Financial risk management policies

(A) The daily operations of the Company are subject to a number of financial risks, including market risks (including exchange rate risk, interest rate risk, and price risk), credit risk and liquidity risk. The Company's overall risk management policy focuses on unpredictable events in the financial markets and seeks to mitigate potential adverse effects on the Company's financial position and financial performance.

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(B) Risk management is carried out by a central treasury department (Company treasury) under policies approved by the Board of Directors. Company treasury identifies, evaluates and hedges financial risks in close co-operation with the Company‟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 and credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
C. Significant financial risks and degrees of financial risks
(A) Market risks
- i. Foreign exchange risk

The Company‟s businesses involve some non-functional currency operations (the Company‟s functional currency: NTD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

(Foreign currency: functional currency) Financial assets Financial assets Monetary items USD:NTD JPY:NTD Financial liabilities Monetary items USD:NTD JPY:NTD		December 31,2018	December 31,2018	December 31,2018
		Foreign currency amount (In dollars)	Exchange rate 30.715 0.2782 30.715 0.2782	Book value (NTD)
	USD 6,037 JPY 66,040 USD 2,378 JPY 113,352			185,412 $ 18,372 73,027 31,534

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(Foreign currency: functional currency) Financial assets Financial assets Monetary items USD:NTD JPY:NTD Financial liabilities Monetary items USD:NTD JPY:NTD	Book value Exchange rate (NTD) USD 5,864 29.76 174,502 $ JPY 10,821 0.2642 2,859 USD 641 29.76 19,073 JPY 110,578 0.2642 29,215 December 31,2017 Foreign currency amount	December 31,2017	December 31,2017	December 31,2017
		Foreign currency amount	Exchange rate 29.76 0.2642 29.76 0.2642	Book value (NTD)
				174,502 $ 2,859 19,073 29,215

ii. The total exchange gain (loss), including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Company for the years ended December 31, 2018 and 2017, amounted to $6,154 and ($10,474).
iii. Analysis of foreign currency risk arising from significant foreign exchange variation:

	Effect on Profit or (Loss) Effect on Other Comprehensive Income(Loss) 1,854 $ - $ 184 - (730) - (315) - 2018 SensitivityAnalysis	Effect on Profit or (Loss) Effect on Other Comprehensive Income(Loss) 1,854 $ - $ 184 - (730) - (315) - 2018 SensitivityAnalysis

Extent of Variation	Effect on Profit or (Loss)
1% 1% 1% 1%	1,854 $ 184 (730) (315)	- $ - - -

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	Effect on Profit or (Loss) Effect on Other Comprehensive Income(Loss) 1,745 $ - $ 29 - 191) ( - 292) ( - 2017 SensitivityAnalysis	Effect on Profit or (Loss) Effect on Other Comprehensive Income(Loss) 1,745 $ - $ 29 - 191) ( - 292) ( - 2017 SensitivityAnalysis

Extent of Variation	Effect on Profit or (Loss)
1% 1% 1% 1%	1,745 $ 29 191) ( 292) (	- $ - - -

i. The Company‟s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss and available-for-sale financial assets.
ii. The Company mainly invests in equity instruments comprised of shares and open-end funds. The value of equity instruments are susceptible to market price risk arising from uncertainties about future performance of equity markets. Assuming a hypothetical increase of 1% in the price of the aforementioned financial assets at fair value through profit or loss while the other conditions remain unchanged could increase the Company‟s non-operating revenue for the year ended December 31, 2018 and 2017 by $1,941 and $0, respectively. A change of 1% in the price of the aforementioned available-for-sale financial instruments could increase the Company‟s other comprehensive income for the year ended December 31, 2018 and 2017 by $0 and $833, respectively.

Cash flow and fair value Interest rate risk

i. The Company‟s main interest rate risk arises from short-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. During 2018, the Company‟s borrowing at variable rate was mainly denominated in New Taiwan dollars.
ii. The Company‟s borrowings are measured at amortized cost. The borrowings are periodically contractually reprised and to that extent are also exposed to the risk of future changes in market interest rates.
iii. If the borrowing short term interest rate had increased/decreased by 1% with all other variables held constant, profit, net of tax for the years ended December 31, 2018 and 2017 would have increased/decreased by $5,910 and $0, respectively. The main factor is that changes in interest expense result in floati ng-rate borrowings.
212 -
(B) Credit risk
i. Credit risk refers to the risk of financial loss to the Company arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of debt instruments stated at amortized cost and fair value through profit or loss.
ii. According to the Company‟s credit policy, each operating entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors, and the utilization of credit limits is regularly monitored.
iii. The Company refers to the forecast ability of global economic indicators to adjust the loss rate which is based on historical and current information when assessing the future default possibility of contract assets, accounts receivable and other receivables. The provision matrix as of December 31, 2018 is as follows:

December 31, 2018 Not past due More than 30 days Between 31 and 90 days Between 91 and 180 days Between 181 and 360 days More than 360 days Total	Expected loss rate		Total book value		Loss allowance
	0% 0% 5% 35% 50% 100%		262,325 $ 70,170 11,816 498 22 - 344,831 $		- $ - 591 174 11 - 776 $

iv. Movement in relation to the Company applying the simplified approach to provide loss allowance for notes and trade receivable is as follows:
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2018

Trade receivables January 1_IAS 39 2,710 $ Adjustments under new standards - January 1_IFRS 9 2,710 Provision for impairment (reversal) 361) ( Amount that was written off due to uncollectible 1,573) ( December 31 776 $	Contract asset
	- $ -
	- - -
	- $

(C) Liquidity risks
i. Cash flow forecasting is performed in the operating entities of the Company and aggregated by the Company treasury. The Company treasury monitors rolling forecasts of the Company‟s liquidity requirements to ensure it has sufficient cash to meet operational needs.
ii. The surplus cash generated by each operating entities of the Company will be gathered back to the Company treasury. The Company treasury then invests surplus cash in demand deposits, time deposits, financial assets at fair value through profit or loss and debt investments in no active market (time deposits with 3-12 months period), choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. At the year ended December 31, 2018 and 2017, the Company held financial assets at monetary market of $229,750 and $173,577, respectively. Those are expected to readily generate cash inflows for managing liquidity risk.
iii. Non-derivative financial liabilities:

Fixed rate: Expiring within one year	December 31, 2018 249,000 $	December 31, 2017
		- $

iv. The table below analyses the Company‟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 non- derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.
Non-derivative financial liabilities:
214 -

Less than 1year December 31, 2018 Short-term borrowings 591,000 $ Accounts payable 66,879 Other payables 231,520 Lease account payable 2,245 Less than 1year December 31, 2017 Accounts payable 49,550 Other payables 136,175	Over 1year - $ - - 5,094 Over 1year - -	Total
		591,000 $ 66,879 231,520 7,339 Total
		157,789 173,071

(3) Fair value information
A. 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 takes place with sufficient frequency and volume to provide pricing information on an ongoing basis.
- Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
- Level 3: Unobservable inputs for the asset or liability, including financial assets available for sale in the Company.
B. Financial instruments not measured at fair value

The carrying amounts of cash and cash equivalents, notes and trade receivables, other receivables, short-term borrowings, notes and trade payables, and other payables are reasonably approximate to the fair values.

C. The related information on 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:
215 -

December 31, 2018 Level 1 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities 176,669 Total 176,669 $ December 31, 2017 Level 1 Assets Recurring fair value measurements Financial assets at fair value through profit or loss Equity securities 53,331 $ Total 53,331 $	Level 2 - - $ Level 2 - $ - $	Level 3 17,430 17,430 $ Level 3 30,000 $ 30,000 $	Total
			194,099
			194,099 $
			Total
			83,331 $
			83,331 $

D. The methods and assumptions the Company used to measure fair value are as follows:
(A) The instruments the Company used market quoted prices as their fair values (that is, Level 1) are listed below by characteristics:

Listed and OTC stocks 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 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 financial reporting date.
(C) The output of valuation model is an estimated value and the valuation technique may not be able to capture all relevant factors of the Company‟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. In accordance with the Company‟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 sheets. The pricing and inputs information used during valuation are carefully assessed and adjusted based on current market conditions.
216 -
(D) The Company adjusted credit risks assessment into fair value calculation of financial and non-financial instruments to reflect the credit risk of counterparty and quality of the Company.
E. There was no transfer into or out between Level 1 and Level 2 for the year ended December 31, 2018 and 2017.
F. The following chart is the movement of Level 3 for the year ended December 31, 2018 and 2017:

December 31, 2018 and 2017:
		Equitysecurities
January 1, 2018	$	30,000
The invested company reduces the capital	(	16,026)
Disposal of investment	(	12)
Recognized in profit (loss)	(	267)
Reversal of impairment		3,735
December 31, 2018	$	17,430
		Equitysecurities
January 1, 2017	$	55,185
The investment capital is refunded in this period	(	14,080)
Recognized in profit (loss)		2,446
Provision for impairment	(	13,551)
December 31, 2017	$	30,000

G. 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:

December 31, 2018

December 31, 2018
Unlisted and non-OTC Non-Derivative December 31, 2017 Unlisted and non-OTC Non-Derivative	Fair value	Valuation technique	Significant unobservable input	Range (weighted average)	Relationship of inputs to fair value
			Net asset value Significant unobservable input	- Range (weighted average)	The higher the net asset value, Relationship of inputs to fair value
			Net asset value	-	The higher the net asset value,

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H. The Company has carefully assessed the valuation models and assumptions used to measure fair value; therefore, the fair value measurement is reasonable. However, use of different valuation models or assumptions may result in a different outcome. For financial assets and liabilities classified as Level 3, if the factors of assessment changed, then the impact to income or other comprehensive income is:

December 31, 2018

recognized in other Recognized in profit or comprehensive profit or loss loss Movem Favorable Unfavorabl Favorable Unfavorabl Inputs ent change e change change e change Financial asset Equity Net asset ± 1% $ 174 $ (174) $ - $ - instruments value December 31, 2017

Inputs Financial asset Equity instruments Net asset value	Inputs	Movem ent		Recognized in profit or loss	Recognized in profit or loss	Recognized in profit or loss	recognized in other comprehensive profit or loss	recognized in other comprehensive profit or loss	recognized in other comprehensive profit or loss	recognized in other comprehensive profit or loss
				Favorable change	Unfavorabl e change			Favorable change	Unfavorabl e change
		± 1%		- $		- $		300 $		(300) $

(4) Effects on initial application of IFRS 9 and information on application of IAS 39 in 2017
A. Summary of significant accounting policies adopted in 2017
- (A) Financial assets at fair value through profit or loss
  - i. Financial assets designated as at fair value through profit or loss on initial recognition. Financial assets are classified in this category of held for trading if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as financial assets held for trading unless they are designated as hedges.
  - ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognized and derecognized using trade date accounting.
  - iii. Financial liabilities at fair value through profit or loss are initially recognized at fair value. Related transaction costs are expensed in profit or loss. These financial liabilities are subsequently premeasured and stated at fair value, and any changes in the fair value of these financial liabilities are recognized in profit or loss.
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(B) Available for sale financial assets
i. They are non-derivatives that are either designated in this category or not classified in any of the other categories.
ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognized and derecognized using trade date accounting.
iii. They are initially recognized at fair value plus transaction costs. These financial assets are subsequently re-measured and stated at fair value, and any changes in the fair value of these financial assets are recognized in other comprehensive income.
(C) Loans and receivables
i. Accounts receivable
- Accounts receivable are loans and receivables originated by the entity. They are created by the entity by selling goods or providing services to customers in the ordinary course of business. They are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. However, short-term accounts receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.
ii. Investment in debt instrument without active market
- Investments in debt instrument without active market held by the Company are those time deposits with a short maturity period b ut do not qualify as cash equivalents, and they are measured at initial investment amount as the effect of discounting is immaterial.
(D) Impairment of financial assets
i. The Company assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired as a result of one or more even that occurred after the initial recognition of the asset (a „loss event‟) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
ii. The criteria that the Company uses to determine whether there is objective evidence of impairment loss is as follows:
- (i) Significant financial difficulty of the issuer or debtor;
- (ii) A breach of contract, such as a default or delinquency in interest or principal payments;
- (iii) The Company, for economic or legal reasons relating to the borrower‟s financial difficulty, granted the borrower a concession that a lender would not otherwise consider;
- (iv) It becomes probable that the borrower will enter bankruptcy or other financial reorganization;
- (v) The disappearance of an active market for that financial asset because of financial difficulties;
- (vi) Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial asset in the group, including adverse changes in the payment status of borrowers in the group or national or local economic conditions
219 -

that correlate with defaults on the assets in the group;

(vii) Information about significant changes with an adverse effect that have taken place in the technology, market, economic or legal environment in which the issuer operates, and indicates that the cost of the investment in the equity instrument may not be recovered;
(viii) A significant or prolonged decline in the fair value of an investment in an equity instrument below its cost.
iii. When the Company assesses that there has been objective evidence of impairment and an impairment loss has occurred, accounting for impairment is made as follows according to the category of financial assets:

Available-for-sale financial assets

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

Measured at fair value through profit or loss	Available-for- sale－equity	Held-to- maturity	Investments in Debt Securities with No Active Market	Other Non- Current Assets	Total	Eff	ects
	Measured at fair value through other comprehensive income - equity	Amortized cost				Unappropriated retained earnings	Other equity
- $ 83,331 -	83,331 $ 83,331) ( - - $	- $ - 45,409 45,409 $	- $ - - - $	93,935 $ - 45,409) ( 48,526 $	177,266 $ - -	539,080 $ 3,756 - 542,836 $	11,207 $ 3,756) ( -
83,331 $					177,266 $		7,451 $

Under IAS 39, because the cash flows of debt instruments, which were classified as: available for-sale financial assets and other non-current assets, amounting to $83,331and $45,409, respectively, do not meet the condition that it is intended to settle the principal and interest on the outstanding principal balance, they were reclassified as "financial assets at fair value through profit or loss" amounting to $83,331 and “financial assets at amortized cost” amounting to $45,409. Increased retained earnings and reduced other equity interest in the amounts of $3,756 and $3,756 on initial

220 -

application of IFRS 9.

C. The significant accounts as for the year ended December 31, 2017, are as follows:
(A) Financial assets at fair value through profit or loss

ows: Financial assets at fair value through profit or loss
Item Current items`：` Financial assets held for trading Beneficiary certificate Financial assets held for trading Valuation adjustment Total	`December 31, 2017`
	`-` `$` `-`
	`-` `$`

i. The Company recognised net profit amounting to $1,139 on financial assets held for trading for the year ended December 31, 2017.
ii. No financial assets at fair value through profit or loss held by the Company were pledged to others.
(B) Available-for-sale financial assets

Item Non-current items`：` Listed and OTC stocks Unlisted and non-OTC stocks Valuation Adjustment On Available- for-Sale Financial Assets Accumulated Impairment - Available-for-Sale Financial Assets ( Total	December 31,2017 46,942 $ 52,067 6,389 22,067) 83,331 $

  - i. The Company recognized $45,057 in other comprehensive income for fair value change for the year ended December 31, 2017.

  - ii. The Company recognized accumulated impairment loss of $22,067 on bond investments—as of December 31, 2107.

  - iii. As of December 31, 2017, no available-for-sale financial assets held by the Company were pledged to others.

D. Credit risk information for the year ended December 31, 2017:
(A) Credit risk refers to the risk of financial loss to the Company arising from default by the client or counterparties of financial instruments on the contract obligations. According to the Company‟s credit policy, each local entity in the Company is responsible for managing and analyzing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the Board of Directors. The utilization of credit limits is regularly monitored. Credit risk arises from cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail customers, including
221 -

outstanding receivables. For banks and financial institutions, only independently rated parties with a minimum rating of 'A' are accepted.

(B) For the year ended December 31, 2017, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.
(C) The credit quality information of financial assets that are neither pas t due nor impaired is as follows ：

due nor impaired is as follows`：`
Group 1`：`Domestic customers. Group 2`：`Foreign customers. Group 1 Group 2	December 31,2017
	147,719 $ 38,135
	185,854 $

(D) The ageing analysis of financial assets that were past due but not impaired is as follows:

						December	December	31,2017
Up to 30 days						$		51,838
31 to 90 days								19,159
91 to 180 days								195
Over 180 days								24
						$		71,216
(E) Movements	in	the	provision	for	impairment		of	accounts
receivable for the year ended December				31,	2017:

	2017
Individualprovision 1,573 $ - 1,573 $	Group provision - $ 1,137 1,137 $	Total
		1,573 $ 1,137
		2,710 $

(5) Effects of initial application of IFRS 15 and information on application of IAS 11 and IAS 18 in 2017

A. The significant accounting policies applied on revenue recognition for the year ended December 31, 2017:

Sales of goods

The Company manufactures and sells mask products. Revenue is measured at the fair value of the consideration received or receivable taking into account of business tax, returns, rebates and discounts for the sale of goods to external customers in the ordinary course of the Company‟s activities. Revenue arising from the sales of goods is recognized when the Company has delivered the goods to the customer, the amount of sales revenue can be measured reliably and it is probable that the future economic benefits associated with the transaction will flow to the entity. The delivery of goods is completed when the significant risks and rewards of ownership have been

222 -

transferred to the customer, the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, and the customer has accepted the goods based on the sales contract or there is objective evidence showing that all acceptance provisions have been satisfied.

B. The revenue recognized by using above accounting policies for the year ended December 31, 2017 are as follows:

2017

Operating Revenue $ 1,427,073

A. C. The effects and description of current balance sheet and comprehensive income statement if the Company continues adopting the above accounting policies for the year ended December 31, 2018 are as follows:

			December 31,2018
			Balance by using		Effects from
Balance sheet items	Description	Balance by using IFRS 15	previous accounting		chages in accounting
			policies		policy
Contract liabilities	(1)	21,857	-		21,857
Advance sales receipts	(1)	-	21,857	(	21,857)

Note (1): Recognize contract liabilities related to sales contracts in accordance with IFRS 15, expressed as advance receipts under the original accounting policy.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information
A. Loans to others: Please refer to table 1.
B. Provision of endorsements and guarantees to others: None.
C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures):
D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or 20% of the Company‟s paid-in capital: Please refer to table3.
E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: None.
F. Disposal of real estate properties at prices of at least NT$300 million or 20% of the paid-in capital: None.
G. Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital: None.
H. Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: None.
223 -
I. Trading in derivative instruments undertaken during the reporting periods: None.
J. Intercompany relationships and significant intercompany transa ctions: Please refer to table 4.
(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： Please refer to table 5.

`(3)` Information on investments in Mainland China

Please refer to table 6.

14. SEGMENT INFORMATION

Not applicable.

224 -

TAIWAN MASK CORPORATION

FINANCINGS PROVIDED

FOR THE YEAR ENDED DECEMBER 31, 2018

Table 1

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

No.	Financing Company	Counterparty	Financial Statement Account	Related Party	Maximum Balance for the	Ending Balance	Amount Actually Drawn	Interest Rate (%)	Nature for Financing	Transacti on Amounts	Reason for Financing	Loss Ending Balance	Collateral	Collateral	Financing Limits for Each Borrowing	1,023,398 $ 1 1,023,398 1 1,023,398 1 20,327 2 16,261 2 20,327 2 Financing Company’s Total Financing Note
													Item	Value
0 0 0 1 1 1	TAIWAN MASK CORPORATIO N TAIWAN MASK CORPORATIO N TAIWAN MASK CORPORATIO N Innova Vision INC. Innova Vision INC. Innova Vision INC.	Miracle Technology CO., LTD. Youe Chung Capital Corporation Innova Vision INC. Innova Vision Shenzen Innova Technology Company Innova Vision Kabushiki Kaisha	Other receivable Other receivable Other receivable Other receivable Other receivable Other receivable	Y Y Y Y Y Y	200,000 $ 300,000 200,000 - - -	200,000 $ 300,000 200,000 - - -	65,780 $ 138,000 160,000 8,281 16,990 56,171	- - - - - -	The need for short-term financing The need for short-term financing The need for short-term financing The need for short-term financing The need for short-term financing The need for short-term financing	- $ - - 465 35,256 18,726	- - - - - -	- $ - - - - -	- - - - - -	- $ - - - - -	1,023,398 $ 1,023,398 1,023,398 20,327 16,261 20,327

225 -

Table2

TAIWAN MASK CORPORATION

MARKETABLE SECURITIES HELD

(EXCLUDING INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES)

FOR THE YEAR ENDED DECEMBER 31, 2018

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Held Company Name	Marketable Securities Type and Name	Relationship with the Company	Financial Statement Account		DECEMB	ER 31,2018		Note
				Shares	CarryingValue	%	Fair Value
TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION SunnyLake Park International Holdings,Inc. SunnyLake Park International Holdings,Inc. SunnyLake Park International Holdings,Inc. SunnyLake Park International Holdings,Inc. Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation	Wk Technology Fund-Common Stock Tech Alliance Corp.-Common Stock Furun Investment Co., Ltd.-Common Stock Unicon Optical Co., Ltd.-Common Stock Spirox Corporation-Common Stock MechanicNet Group,Inc.-Preferred Stock MechanicNet Group,Inc.-Common Stock Telegraph Hill Partners II,L.P.-Fund Telegraph Hill Partners III,L.P.-Fund Orgchem Technologies, INC.-Common Stock Spirox Corporation-Common Stock Macroblock, INC.-Common Stock Aptos Technology-Common Stock TAIWAN MASK CORPORATION-Common Stock	None None None None None None None None None None None The company is a director of the company None Subsidiary	Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current	806,400 $ 652,129 1,743,000 10,000,000 2,229,000 759,999 166,666 - - 1,453,288 3,421,000 3,647,609 4,964,216 37,081,440	- $ - 17,430 117,600 59,069 - - - USD 2,759,169 19,074 90,656 330,838 12,411 680,444	1.89% 2.07% 10.53% 2.06% 2.06% `特別股` 3.74% 1.74% 0.85% 2.66% 3.31% 9.12% 8.74% 14.67%	- $ - 17,430 117,600 59,069 - - - USD 2,759,169 19,074 90,656 330,838 12,411 680,444

226 -

TAIWAN MASK CORPORATION

MARKETABLE SECURITIES ACQUIRED AND DISPOSED OF AT COSTS OR PRICES OF AT LEAST NT$300 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2018

Table3

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Company Name	Marketable Securities Type and Name (Note 1)	Financial Statement Account	Counter -party `（`Note 2`）`	Nature of Relationship (Note 2)	BeginningBalance	BeginningBalance	Acquisition(Note 3 and 4)	Acquisition(Note 3 and 4)		Disposal(Note 3)	Disposal(Note 3)		EndingBalance	EndingBalance
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Value	Gain/Loss on Disposal	Shares	Amount(Note 5)
Youe Chung Capital Corporation	Macroblock, INC- Stock	Financial assets at fair value through profit or loss - non- current	-	-	-	$ -	3,647,609	$ 305,669	-	$ -	$ -	$ -	3,647,609	$ 330,838

Note1: The securities referred to in this table refer to stocks, bonds, beneficiary certificates and securities derived from the above projects.

Note2: Investors using the equity method in the securities account must fill in the two columns.

Note3: The cumulative purchase and sale amount should be calculated separately according to the market price to reach NT$300 million or 20% of the paid-up capital.

Note4: The acquisition in this period include the purchase of 3,500,000 shares and 147,609 shares of stock dividends.

227 -

TAIWAN MASK CORPORATION

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS

FOR THE YEAR ENDED DECEMBER 31, 2018

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

No. (Note 1) Table4	CompanyName	Related Party	Nature of Relationship (Note 2)	(Amounts in thousand	s of new Taiwan dollars and foreign currenc IntercompanyTransactions	s of new Taiwan dollars and foreign currenc IntercompanyTransactions	ies,Unless Specified Otherwise)
				Financial Statements Account	Amount	Terms	Percentage of Consolidated Net Revenue or Total Assets(Note 3)
0 0 0 0 0 0 0 0 1 1 1 1 1 1 1 1 2 2 3 3	TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION TAIWAN MASK CORPORATION Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Miracle Technology CO., LTD. Miracle Technology CO., LTD. Miko Technology co., Ltd. Miko Technology co., Ltd.	Innova Vision INC. Innova Vision INC. Innova Vision INC. Youe Chung Capital Corporation Youe Chung Capital Corporation Miracle Technology CO., LTD. Miracle Technology CO., LTD. Miko Technology co., Ltd. Miko Technology co., Ltd. Innova Technology Company Innova Technology Company Innova Technology Company Innova Vision Kabushiki Kaisha Innova Vision Kabushiki Kaisha Innova Vision Kabushiki Kaisha Innova Vision Shenzen Miko Technology co., Ltd. Miko Technology co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd.	1 1 1 1 1 1 1 1 3 3 3 3 3 3 3 3 3 3 3 3	Other receivables Interest income Rental income Other receivables Interest income Other receivables Sales Sales Trade receivables Sales Trade receivables Other receivables Sales Trade receivables Other receivables Other receivables Sales Other payables Sales Trade receivables	182,946 $ 3,181 8,618 138,000 2,282 65,780 7,863 49,321 5,810 33,388 22,570 16,990 18,978 3,160 56,171 8,281 3,120 43,218 62,158 18,671	Pay by agreed time Pay by agreed time Pay by agreed time Pay by agreed time Pay by agreed time Pay by agreed time Month-end 60 days Month-end 60 days Month-end 60 days Month-end 90 days Month-end 90 days Pay by agreed time Month-end 30 days Month-end 30 days Pay by agreed time Pay by agreed time Month-end 30 days Pay by agreed time Month-end 30 days Month-end 30 days	4.73% 0.11% 0.30% 3.57% 0.08% 1.70% 0.27% 1.71% 0.15% 1.16% 0.58% 0.44% 0.66% 0.08% 1.45% 0.21% 0.11% 1.12% 2.15% 0.48%

Note 1: TAIWAN MASK CORPORATION and its subsidiaries are coded as follows:

a. TAIWAN MASK CORPORATION is coded 0.
b.The subsidiaries are coded consecutively beginning from 1 in the order presented in the table above.

Note 2: Transactions are categorized as follows:

a. The parent company to subsidiary.
b. Subsidiary to parent company.

c. Subsidiary to subsidiary.

Note 4: The price of the sales (purchase) is 85%~95% of the general sales price of the parent company, and the actual collection days are 30 to 90 days.

Note 5: Only transactions with a total amount of NT$1 million or more will be disclosed, and the transaction will not be disclosed separately.

228 -

TAIWAN MASK CORPORATION

Table5

(Amounts in thousands of new Taiwan dollars and foreign currencies,Unless Specified Otherwise)

Investor Company	Investee Company	Location	Main Businesses	Original Inves	tment Amount	Balance	as of December 3	1,2018	Net Income (Loss) of the Investee	Share of Profit/Loss of Investee Note
				December 31, 2018	December 31, 2017	Shares	Percentage of Ownership	Carrying Value
Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Taiwan Mask Corporation Youe Chung Capital Corporation Youe Chung Capital Corporation Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision INC. Innova Vision (B.V.I.) Inc. Miracle Technology CO., LTD. Miracle Technology CO., LTD. MIRACLE(SAMOA)CO.,LTD Jingjing Investment Co., Ltd. Weida Hi-Tech Weida Hi-Tech Smart Touch Co.,Ltd.	SunnyLake Park International Holdings, Inc. Youe Chung Capital Corporation Innova Vision INC. Advagene Biopharma Co., Ltd. Miracle Technology CO., LTD. Weida Hi-Tech Innova Vision INC. Advagene Biopharma Co., Ltd. Innova Technology Company Calaview International Holding Company Limited Innova Vision (B.V.I.) Inc. Innova Vision Kabushiki Kaisha Innova Vision Kabushiki Kaisha Jingjing Investment Co., Ltd. Miracle(Samoa)Co.,Ltd. Misun Technology Co., Ltd. Miko Technology Co., Ltd. Smart Touch Co.,Ltd. Central Star Ltd. Central Star Ltd.	British Virgin Islands Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Seychelles British Virgin Islands Japan Japan Taiwan British Virgin Islands British Virgin Islands Hong Kong British Virgin Islands Seychelles British Virgin Islands	Investing in communication business Investing in communication business Medical device manufacturing, wholesale and trading Medical, research and development, manufacturing Electronic component manufacturing, wholesale of electronic materials and precision instruments, power component design, etc. Research, design, development, manufacturing and sales of display panel control chips and modules Medical device manufacturing, wholesale and trading Medical, research and development, manufacturing Contact lens sales Investing in communication business Investing in communication business Contact lens sales Contact lens sales Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business Investing in communication business	203,026 1,697,627 52,040 165,691 252,651 293,371 55,146 65,719 5,000 - 60,157 8,349 56,420 10,012 10,215 10,215 37 14,602 4,076 13,714	191,183 300,000 190,706 98,700 252,651 - 50,785 30,000 5,000 - 60,157 - 56,420 10,012 10,215 10,215 37 15,847 7,657 13,714	6,344,000 142,329,470 5,203,956 12,549,652 10,527,143 25,510,500 5,514,596 3,550,223 500,000 1,000,000 1,000,000 600 5,900 1,400,000 - - 10,000 4,573 129,200 450,000	100 100 30.26 28.48 100 100 32.06 9.85 100 100 100 8.06 90.77 100 100 100 100 100 22.3 77.7	84,774 413,877 12,301 98,808 313,715 233,623 13,035 27,952 35,322) ( 7,834) ( 45,678) ( 4,662) ( 45,847) ( 160,700 20,275 20,275 64,863 3 - 1	65) ( 325,699) ( 130,110) ( 111,323) ( 56,132 40,964) ( 130,110) ( 111,323) ( 9,020) ( 2,319) ( 6,953) ( 7,161) ( 7,161) ( 55,889 3,094 3,094 28,115 1,842) ( 1,023) ( 1,023) (	65) ( 43,736) ( 39,368) ( 32,924) ( 61,787 21,495) ( 36,520) ( 7,432) ( 9,020) ( 2,319) ( 6,953) ( 206) ( 6,955) ( 55,889 3,094 3,094 28,115 1,842) ( 228) ( 795) (

229 -

TAIWAN MASK CORPORATION

INFORMATION ON INVESTMENT IN MAINLAND CHINA

FOR THE YEAR ENDED DECEMBER 31, 2018

Investee Company Table6	Main Businesses	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Beginning Balance of Accumulated Outflow of Investment	Outflow Inflow Ending Balance Accumulated Outflow of Investment Investment Flows (Amounts in thou	Outflow Inflow Ending Balance Accumulated Outflow of Investment Investment Flows (Amounts in thou	Net Income (Loss) of the Investee Company sands of new	Percentage of Ownership (%) Taiwan dolla	Carrying Amount as of December 31, 2018 Ending Balance of Accumulated Inward Remittance of Note Investment Income (Loss) Recognized in Current Period (Note 2 ) rs and foreign currencies,Unless Specified Otherwise)	Carrying Amount as of December 31, 2018 Ending Balance of Accumulated Inward Remittance of Note Investment Income (Loss) Recognized in Current Period (Note 2 ) rs and foreign currencies,Unless Specified Otherwise)	Carrying Amount as of December 31, 2018 Ending Balance of Accumulated Inward Remittance of Note Investment Income (Loss) Recognized in Current Period (Note 2 ) rs and foreign currencies,Unless Specified Otherwise)
					Outflow Inflow
Miko-China Enterprise (Shanghai) Co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Innova Vision Shenzen Touch Hi-Tech Company Name	Electronic component manufacturing, wholesale of electronic materials and precision instruments, power Electronic component manufacturing, wholesale of electronic materials and precision instruments, power IC product design, production and sales Medical device manufacturing, wholesale and tradin Research, design, development, manufacturing and sales of display Ending Balance of Accumulated Investment in Mainland China	3,283 $ 10,215 11,618 4,337 5,743 Investment Amounts Authorized by Investment Commission, MOEA	2 2 2 2 2 Upper Limit on Investment Authorized by Investment Commission, MOEA	3,283 $ 10,215 - - 4,109	- $ - $ - - - - - - 1,634 -	3,283 $ 10,215 - - 5,743	27,480 $ 3,094 5,054) ( 2,319) ( 8,079) (	100% 100% 100% 100% 100%	27,480 $ 3,094 2,967) ( 2,319) ( 5,215) (	109,719 $ - $ 20,275 - 25,380 - 7,860) ( - 2,045 -	`註`2(2)B `註`2(2)B `註`2(2)B `註`2(2)B `註`2(2)B
Miko-China Enterprise (Shanghai) Co., Ltd. Miracle International Enterprise(ShanHai) Co., Ltd. Sichuan Miracle Power Technology Co., Ltd. Innova Vision Shenzen Touch Hi-Tech	3,283 $ 10,215 - - 5,743	3,283 $ 10,215 - 4,337 5,743	$ 166,564 166,564 166,564 24,392 100,027

Note 1 ： The methods for engaging in investment in Mainland China include the following:

a. Direct investment in Mainland China.

b. Indirectly investment in Mainland China through companies registered in a third region (Please specify the name of the company in third region).

c. Other methods.

a. The financial report was audited and certified by an international accounting firm in cooperation with an R.O.C. accounting firm.
b. The financial statements was audited and certificated by independent auditors of the parent company in Taiwan.

c. Others.

Note 3: The relevant figures in this table should be listed in NTD.

230 -

TAIWAN MASK CORPORATION STATEMENT OF CASH AND CASH EQUIVALENTS DECEMBER 31, 2018

STATEMENT 1 Item Cash in Bank Cash in banks -NTD -Foreign Currency Time deposits - NTD	In Thousands of New Taiwan Dollars Description Amount 106,206 $ USD 1,791,309.32 @30.715 55,020 JPY 66,040,341 @0.2782 18,372 SGD 15,640.03 @22.48 352 24,800 204,750 $

231 -

TAIWAN MASK CORPORATION STATEMENT OF NOTES AND ACCOUNTS RECEIVABLE DECEMBER 31, 2018

STATEMENT 2

In Thousands of New Taiwan Dollars

Description
Amount
Client
Vanguard International
Semiconductor Corporation
29,680
$
Michael Page International
Co., Ltd.
28,191
DB HiTeK Co., Ltd
23,725
SYNIC SOLUTION CO. LTD
17,299
Other
239,174
338,069
Less: Allowance for doubtful accounts
776)
(
337,293
$
Related Parties
Miko Technology Co., Ltd.
5,810
$
Miracle Technology Corp.
625
Others
327
6,762
Less: Allowance for doubtful accounts
-
6,762
$
Client Name Remark

The amount of individual
client included in others
does not exceed 5% of the
account balance.
The accounts receivable
past due over one year
amounted to NT$0
The amount of individual
client included in others
does not exceed 5% of the
account balance.
The accounts receivable
past due over one year
amounted to NT$0

232 -

TAIWAN MASK CORPORATION STATEMENT OF INVENTORIES DECEMBER 31, 2018

STATEMENT 3

In Thousands of New Taiwan Dollars

Item Description `Raw materials` `Work in process` `Finished goods` `Less:Allowance for` `valuation loss` `(`	`Cost` `Value` `Remark` `99,364` `$` `99,137` `$` `Net Realizable Value` `10,608` `10,301` `Net Realizable Value` `23,318` `44,942` `Net Realizable Value` `133,290` `154,380` `$` `4,966)` `128,324` `$` `Amount`	`Cost` `Value` `Remark` `99,364` `$` `99,137` `$` `Net Realizable Value` `10,608` `10,301` `Net Realizable Value` `23,318` `44,942` `Net Realizable Value` `133,290` `154,380` `$` `4,966)` `128,324` `$` `Amount`
	`Cost` `99,364` `$` `10,608` `23,318` `133,290` `4,966)` `128,324` `$`

233 -

TAIWAN MASK CORPORATION

STATEMENT OF FINANCIAL ASSET AT FAIR VALUE THROUGH PROFIT OR LOSS FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 4

In Thousands of New Taiwan Dollars

Name	Beginning	Balance	Acquisition	Acquisition	Disposal	Disposal	Shares/Units CarryingValue 806,400 - $ 652,129 - - - - - 1,743,000 17,430 2,229,000 59,069 10,000,000 117,600 194,099 $ EndingBalance	Collateral
	Shares/Units 1,152,000 652,129 7,660 711 3,000,000 2,129,000 -	CarryingValue	Shares/Units - - - - - 100,000 10,000,000	Amount	Shares/Units 345,600) ( - 7,660) ( 711) ( 1,257,000) ( - -	Amount	Shares/Units 806,400 652,129 - - 1,743,000 2,229,000 10,000,000
Wk Technology Fund-Common Stock Tech Alliance Corp.-Common Stock ZOWIE Technology Corporation-Common Stock Silicongear Corporation-Common Stock Furun Investment Co., Ltd.-Common Stock Spirox Corporation-Common Stock Unicon Optical Co., Ltd.-Common Stock Total		- $ - - - 30,000 53,331 - 83,331 $		- $ - - - - 5,738 150,000 155,738 $		- $ - - - 12,570) ( - 32,400) ( 44,970) ($		None None None None None None None

234 -

STATEMENT 5

TAIWAN MASK CORPORATION STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD FOR THE YEAR ENDED DECEMBER 31, 2018

In Thousands of New Taiwan Dollars

Name	BeginningBalance	Acquisition	Acquisition	Disposal	EndingBalance	EndingBalance	CarryingValue	CarryingValue	Collateral Note None None None None None None None None
	Shares/Units Amount 5,000,000 502) ($ 5,960,000 70,774 4,000,000 212,600 30,000,000 255,246 14,525,401 53,968 9,870,000 66,397 10,527,143 255,996 - - 914,479 $	Shares/Units 3,283,666 384,000 - 112,329,470 - 2,679,652 - 25,510,500	Amount	Shares/Units Amount 8,283,666 9,712,422) ($ - 65) ( 4,000,000 212,600) ( - 44,775) ( 9,321,445 41,863) ( - 36,554) ( - 4,095) ( - 60,815) ( 10,113,189) ($	Shares/Units Percentage of Ownership	Amount	Unit Price	Amount
Taiwan Mask Corp.-USA SunnyLake Park International Holdings, Inc. Youe Win Capital Corporation Youe Chung Capital Corporation Innova Vision INC. Advagene Biopharma Co., Ltd. Miracle Technology CO., LTD. Weida Hi-Tech Total			9,712,924 $ 14,065 - 203,406 196 68,965 61,814 294,438 10,355,808 $		- 0% 6,344,000 100% - 0% 142,329,470 100% 5,203,956 30.26% 12,549,652 28.48% 10,527,143 100% 25,510,500 100%	- $ 84,774 - 413,877 12,301 98,808 313,715 233,623 1,157,098 $	- $ - - - - - - -	- $ - - - - - - -

235 -

TAIWAN MASK CORPORATION STATEMENT OF CHANGES IN PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 6

In Thousands of New Taiwan Dollars

Item Buildings (Land) Machinery and equipment Transportation Office Equipment Construction in progress and equipment under installation		Beginning Balance 1,439,964 $ 1,882,717 8,092 11,707 10,666 3,353,146 $	Acquisition 42,394 $ 73,002 3,634 7,665 5,266 131,961 $	Disposal - $ - - - - - $	Transferred 586 $ - - - 586) ( - $		EndingBalance	Collateral	Note
							1,482,944 $ 1,955,719 11,726 19,372 15,346 3,485,107 $	None None None None None

236 -

TAIWAN MASK CORPORATION

STATEMENT OF CHANGES IN ACCUMULATED DEPRECIATION PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 7

In Thousands of New Taiwan Dollars

Beginning

		Beginning
Item Buildings Machinery and equipment Transportation Office Equipment		Balance 960,474 $ 1,546,637 608 4,720 2,512,439 $	Acquisition 37,479 $ 72,986 3,569 3,501 117,535 $	Disposal - $ - - - - $	Transferred - $ - - - - $		EndingBalance	Note
							997,953 $ 1,619,623 4,177 8,221 2,629,974 $

237 -

TAIWAN MASK CORPORATION STATEMENT OF NET REVENUE FOR THE YEAR ENDED DECEMBER 31, 2018

In Thousands of New Taiwan Dollars


STATEMENT 8 Item Mask	Quantity 43,381	In Thousands of New Taiwan Dollars Amount Note 1,448,393 $

238 -

TAIWAN MASK CORPORATION STATEMENT OF COST OF REVENUE FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 9

In Thousands of New Taiwan Dollars

Item
Amount
Raw materials used
Balance, beginning of year
90,712
$ Raw material purchased
418,216
Raw materials, end of year
99,364)
(
Less: transferred to expense
16,369)
(
Subtotal
393,195
Direct labor
78,693
Manufacturing expenses
511,669
Manufacturing cost
983,557
Work in process, beginning of year
7,565
Work in process, end of yea
10,608)
(
Cost of finished goods
980,514
Finished goods, beginning of year
30,560
Finished goods, end of year
23,318)
(
Subtotal
987,756
Other cost of revenue
Reversal for inventory valuation and
obsolescence loss
10,591)
(
Total
977,165
$

Note

239 -

TAIWAN MASK CORPORATION STATEMENT OF MANUFACTURING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 10

In Thousands of New Taiwan Dollars

Item	Summary		Amount	Note
Contract Maintenance fee Depreciation Water and Electricity costs Repair and Maintenance fee Other			219,834 $ 110,116 55,576 20,885 105,258 511,669 $	The amount of each item in others does not exceed 5% of the account balance.

240 -

TAIWAN MASK CORPORATION

STATEMENT OF SELLING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 11

In Thousands of New Taiwan Dollars

Item	Summary		Amount	Note
Export customs declaration fee Payroll and related expense Freight Water and electricity costs Other			12,610 $ 11,102 8,816 3,970 5,739 42,237 $	The amount of each item in others does not exceed 5% of the account balance.

241 -

TAIWAN MASK CORPORATION STATEMENT OF GENERAL AND ADMINISTRATIVE EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 12

In Thousands of New Taiwan Dollars

Item	Summary		Amount	Note
Payroll and related expense Water and electricity costs Professional service fees Depreciation Other			29,723 $ 7,659 5,807 5,474 16,152 64,815 $	The amount of each item in others does not exceed 5% of the account balance.

242 -

TAIWAN MASK CORPORATION STATEMENT OF RESEARCH AND DEVELOPMENT EXPENSES FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 13

In Thousands of New Taiwan Dollars

Item	Summary		Amount	Note
Payroll and related expense Repair and Maintenance fee Research experiment fee Water and electricity costs Other			25,096 $ 22,325 14,951 5,074 9,528 76,974 $	The amount of each item in others does not exceed 5% of the account balance.

243 -

TAIWAN MASK CORPORATION STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION FOR THE YEAR ENDED DECEMBER 31, 2018

STATEMENT 14

In Thousands of New Taiwan Dollars

Function	Year Ended December 31,2018	Year Ended December 31,2018	Year Ended December 31,2018	Year Ended December 31,2017	Year Ended December 31,2017	Year Ended December 31,2017
	Classified as Cost of Revenue	Classified as Operating Expenses	Total	Classified as Cost of Revenue	Classified as Operating Expenses	Total
Employee Welfare Costs
Salary and Bonus	$ 108,723	$ 64,237	$ 172,960	$ 68,833	$ 45,175	$ 114,008
Labor and Health Insurance	9,246	3,495	12,741	8,332	3,596	11,928
Pension	4,726	2,194	6,920	3,564	2,682	6,246
Board Compensation	-	5,108	5,108	-	-	-
Others	5,588	1,627	7,215	4,283	1,792	6,075
Depreciation	110,116	7,419	117,535	104,843	17,538	122,381
Amortization	150	747	897	210	987	1,197

Note: As of December 31, 2018 and 2017, the Company had 236 and 199 employees, respectively. There were 7 non-employee directors for both years.

244 -

6. Financial difficulties encountered by the Company and/or its affiliates in the recent yearand as of the publication date of the annual report `：` None.

245 -

VII. Review of financial position, financial performance and risk management

1. Financial Position

(1) Comparison of financial position analysis

==> picture [393 x 224] intentionally omitted <==

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

Unit ： NTD$ thousand
Year Increase (decrease)
2017 2018
Item Amount %
Current Assets 1,623,242 1,734,383 111,141 6.85
Fixed Assets 989,220 966,563 (22,657) (2.29)
Other Assets 497,687 1,163,372 665,685 133.76
Total Assets 3,110,149 3,864,318 754,169 24.25
Current Liabilities 556,083 1,238,297 682,214 122.68
Non-Current Liabilities 74,926 52,210 (22,716) (30.32)
Total Liabilities 631,009 1,290,507 659,498 104.51
Capital 2,527,136 2,527,136 0 0
Paid-in Capital 212,948 169,431 (43,517) (20.44)
Retained Earnings 539,080 738,815 199,735 37.05
Other Equity 11,207 7,853 (3,354) (29.93)
Treasury Stock (884,741) (884,741) 0 0
Non-Controlling Equity 73,510 15,317 (58,193) (79.16)
Total Equity 2,479,140 2,573,811 94,671 3.82
----- End of picture text -----

(2) Aanlysis of financial ratio changes
A. Other assets increased 133.76% ： Subsidiary of Youe Chung Capital Corporation's investment listed stocks more then previous period; it is due to the higher value of financial assets through profit or loss measure of fair value.
B. Total assets increased by 24.25% ： This was due to the increase in assets after the merger of subsidiaries.
C. The increase in current liabilities by 122.68% was due to the adjustment of the operational physique and the increase in short-term borrowings to enrich working capital.
D. Non-current liabilities decreased by 30.32% due to financial planning considerations and early settlement of long-term borrowings.
E. Total liabilities increased 104.51 %, Taiwan Mask Corporation increase short-term borrowings and liabilities due to the increase Weida Hi-Tech in the consolidated financial statements.
F. Paid-in Capital to reduce 20.44%, this year is recognized to reduce the number of changes in ownership interest in subsidiaries due.
G. Retained earnings increased by 37.05%, due to the Company's active increase in production capacity, the net profit for the period was a surplus, so the retained earnings increased.
H. Other equity reduction 29.93%, was due to reduce other equity 3,756 (thousand) with IFRS9 caused.
I. The Group's non -controlling interests decreased by 79.16%, although the Group's shareholdings in the non-controlling interests of the Group were held unchanged, the Group's non-controlling interests decreased due to subsidiaries continued to lose losses.
246 -

2. Financial Performance

(1) Comparison of financial performance analysis

Unit ： NTD$ thousand

==> picture [459 x 219] intentionally omitted <==

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

Year Increase
2017 2018 Changes （％）
Item (decrease)
Sales Revenue 1,427,073 2,885,982 1,458,909 102.23
Cost of Goods Sold 1,183,400 2,256,974 1,073,574 90.72
Gross Margin 243,673 629,008 385,335 158.14
Operation Expense 251,577 369,472 117,895 46.86
Operation Income (7,904) 259,536 267,440 3,383.60
Non-Operation Income and Loss (57,365) (55,890) (1,475) 2.57
Net Income from continued operation (88,553) 145,820 234,373 264.67
Net other comprehensive income or loss 293,804 1,299 (292,505) (99.56)
Total comprehensive income 205,251 147,119 (58,132) (28.32)
----- End of picture text -----

(2) Analysis of the increase (decrease) of ratio changes
A. Sales Revenue increased by 102.23% and Cost of Goods Sold increased by 90.72% , which was due to the increase in production capacity of Taiwan Mask Corporation and the increase in efficiency after the merger of Miracle Technology CO., LTD. and Weida Hi-Tech.
B. Gross Margin increased by 158.14% , mainly due to the continuous improvement of production efficiency and the increase of gross profit margin.
C. Operating expenses increased by 46.86%, mainly due to the increase in expenses after the merger of Miracle Technology CO., LTD. and Weida Hi-Tech.
D. Operation Income increased by 3,383.60%, mainly due to the continuous improvement of production efficiency and gross profit of the Company, resulting in a decrease in operating losses.
E. Net Income from continued operation increased by 264.67% in this year. The main reason was that the Company continued to improve production efficiency, and the gross profit margin and gross profit increased, resulting in an increase in net profit.
F. Net other comprehensive income or loss decreased by 99.56% in the current period. The main reason was that unrealized valuation profit or loss of available for sale financial assets was recognized in other comprehensive interests in 2017. After the adoption of the new new standards, interpretations and amendments in 2018, the evaluation of profit and loss was recognized into non-operating income and expenses.
G. The total comprehensive income of the current period decreased by 28.32%, reason please refers to
(3) The expected sales volume and its basis, the possible impact on the company's future financial business and the response plan
In order to the trend of high-end IC process technology in the future, the mature technology equipment owned by the company is not enough to meet the needs of IC design companies. Therefore, it is planned to purchase high-end technology mask equipment to meet customers' demand, and improve the overall competitiveness of the company, it is estimated that the number of mask sales in the year of 2019 is expected to increase by 12% compared with the 2018. The company will also reduce costs and expenses, and continue to develop and upgrade technology to improve operations and increase profitability.
247 -

3. Analysis of cash flows

(1) Analysis of cash flow changes in recent 2 years

ysis of cash flows nalysis of cash flow changes in recent 2 years	ysis of cash flows nalysis of cash flow changes in recent 2 years
Year Item 2017		2018	Changes %
Cash flow ratio	107.31	(12.88)	(112.00%)
Cash flow adequacy ratio	190.86	115.66	(39.440%)
Cash reinvestment ratio	11.11	(3.34)	(130.06%)

(2) Ananlysis of the ration changes
A. Cash flow ratio ： The main reason is the cash inflow from business activities in 2018 is lower than in 2017.
B. Cash flow adequacy ratio ： The main reason is the decrease in net cash inflow from business activities in 2018.
C. Cash reinvestment ratio ： The main reason is that the cash inflow from business activities in 2018 is lower than in 2017.
(3) Improvement plan for insufficient liquidity

The Group does not have insufficient liquidity and does not apply.

(4) Liquidity analysis for the coming year

Unit ： NTD$ thousand

C. Cash reinvestment ratio`：`The main reason is that the cash inflow from business activities 2018 is lower than in 2017. Improvement plan for insufficient liquidity The Group does not have insufficient liquidity and does not apply. Liquidityanalysis for the coming year	C. Cash reinvestment ratio`：`The main reason is that the cash inflow from business activities 2018 is lower than in 2017. Improvement plan for insufficient liquidity The Group does not have insufficient liquidity and does not apply. Liquidityanalysis for the coming year	C. Cash reinvestment ratio`：`The main reason is that the cash inflow from business activities 2018 is lower than in 2017. Improvement plan for insufficient liquidity The Group does not have insufficient liquidity and does not apply. Liquidityanalysis for the coming year	C. Cash reinvestment ratio`：`The main reason is that the cash inflow from business activities 2018 is lower than in 2017. Improvement plan for insufficient liquidity The Group does not have insufficient liquidity and does not apply. Liquidityanalysis for the coming year	C. Cash reinvestment ratio`：`The main reason is that the cash inflow from business activities 2018 is lower than in 2017. Improvement plan for insufficient liquidity The Group does not have insufficient liquidity and does not apply. Liquidityanalysis for the coming year	C. Cash reinvestment ratio`：`The main reason is that the cash inflow from business activities 2018 is lower than in 2017. Improvement plan for insufficient liquidity The Group does not have insufficient liquidity and does not apply. Liquidityanalysis for the coming year
Unit`：`NTD$ thousand
Beginning Cash Balance(1)	Expeceted net cash flow from operating activities(2) Expeceted net cash flow from investment and financing activities(3) Expected residual (deficit) cash balance (1)+(2)+(3)			Corrective Actions
				Investment Plan	Financing Plan
563,408	500,000	(200,000)	863,408	-	-

A. Operating activities ： The estimated cash generated sales of plus depreciation and non-cash outflow of and so on.
B. Investment activities ： Due to the expected purchase of equipment, investment activities will have a net cash outflow situation.

4. Impact of major capital expenditures on finance and business

(1) Fund source and implementation plan of major capital expenditures

Unit ： NTD$ thousand

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Actual or estimated Actual implementation
Item
fund source 2017 2018
1 、 Exposure equipment
2 、 Inspection equipment
3 、 Measuring equipment
Operating income 150,511 205,618
4 、 Process equipment
5 、 Repair equipment
6 、 Environmental equipment
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248 -

(2) Expected benefit

A. Estimated increased production/selling quantity, amount and gross margin

					Unit`：`pcs`；`NTD$ thousand	Unit`：`pcs`；`NTD$ thousand
Year	Item	Unit	Production	Selling	Sales Amount	Gross Margin
2020	Mask	PCS	10,500	10,500	348,050	104,400
2021	Mask	PCS	12,000	12,000	406,550	121,900

B. Other benefit

(A) Continuous investment and development of large-size and special mask, increase market share and improve the yield rate, and the other with the industrial development, the development of more subtle process technology needed to support the development of the IC industry.
(B) In the sub-micron required mask, the need for more sophisticated equipment, the purchased equipment can be tested for even smaller defects, to provide better quality mask for downstream fabs, thereby improving the good wafer manufacturing rate.
(C) Since the establishment of the company, the environmental protection has been ranked as the first priority. The environmental equipment use the most advanced wastewater treatment equipment in the world, and the wastewater and exhaust emissions are within the standard.

5. Policies, reasons for gain or loss and action plan in regard to investment plans in current year and the next year

Taiwan Mask Corporation transferred the investment is a strategic investment. The investment loss recognized by the equity method in 2018 consolidated financial statements was NTD$ 43,946. In the future, Taiwan Mask Corporation will continue to carefully evaluate the transfer investment plan.

249 -

6. Risk management

(1) The impact to net income of interest rate, exchange rate and inflation rate in recent years and

future correspondence.

management he impact to net income of interest rate, exchange rate and inflation rate in recent years and future correspondence.	management he impact to net income of interest rate, exchange rate and inflation rate in recent years and future correspondence.	management he impact to net income of interest rate, exchange rate and inflation rate in recent years and future correspondence.
Item Impact on company profit and loss Future active
Interest rate change Interest expense NTD$4,508thousand in 2018. NTD$3,091thousand in 2019 Q1. The cash generated by the operation, the Company may also use the capital increase or long-term borrowing as a source of funds for the company's operations and purchase of machinery and equipment. The cash held are sufficient to meet the needs of the company's future operations. In the future, interest rate changes will be adjusted the use of cash and hedging policies to reduce the impact on profit and loss.
Exchange rate changes Profit in exchange rate NTD$12,654 thousand in 2018. NTD$1,909thousand in 2019Q1. Continuous monitoring of foreign exchange market information, risk-averse strategy, can effectively control the company'sprofit and loss situation.
Inflation	No effect	The recent inflationary situation in the current year has limited impact on the Company's profit and loss, and continues to pay attention to changes in the domestic and international economic situation.

(2) Investment in high risks, high leverage target; loan to others; endorsement to others; policy for

derivatives transactions, the reason of profit or loss and correspondence.

A. High-risk, high-leverage investment, endorsement guarantee and derivative commodity trading in the most recent year and the annual report deadline: None.
B. Money loans and others.

			Unit`：`NTD$ thousand	Unit`：`NTD$ thousand
Loan and object	Relationship	Nature	2018/12/31	2017/03/31
Innova Vision INC.	The company is not 100%owned by the company	Cash flow	200,000	200,000
Youe Chung Capital Corporation	The company is not 100%owned by the company	Cash flow	300,000	300,000
Miracle Technology CO., LTD.	The company is not 100%owned by the company	Cash flow	200,000	200,000

(3) Future research and development plans and expenditures

To maintain the market share and competition power, the Company would move forward to develop advanced technology like 90nm masks. The annual research and development cost for 2018 is NTD$ 113,965 thousand. We will invest in manpower and technology development to penetrate in advanced technology market and keep the leading position in this market.

250 -
(4) The impact and correspondence of rules and regulations changes in different countries to finance and business
The company follows national policies and decrees, and relevant units are able to pay attention to important policies and legal changes at any time, and coordinate with the company's internal systems and business activities to ensure smooth operation of the company.
(5) The imact and correspondence of technology and industry changes to finance and business
A. Technology progress in semiconductor industry is unlimited, mask technology moves forward to advanced technology accordingly. The Company will invest in equipment to enlarge our capacity to meet the demand from market. Therefore, the imact of technology and industry changes to finance and business of the Company is quite limited.
B. Security Risk Assessment
- (A) Information Security Risk Management Framework
  - To enhance information security management, the company dedicated to the information security unit ”Information Management Department” management Department and full-time charge of information security governance of the Company, planning, supervision and promotes the implementation, in order to construct a full range of information security defense capabilities and Colleagues have a good sense of information security.
- (B) Information security policy and specific management plan
  - Establish operational procedures for handling information system management to protect computer and network security, and implement information security management through processes such as strengthening concepts, preventing problems, behavior records, proactive early warning and regular auditing.
  - Establishing a management approach to the notification of incidents of security risks, giving relevant personnel the necessary responsibilities to handle information security incidents quickly and effectively.
  - Establish a change management notification mechanism for information facilities and systems to avoid loopholes in system security.
  - Handle and protect personal information in a prudent manner in accordance with the relevant provisions of the Personal Data Protection Act.
  - Establish system backup facilities, regularly perform necessary data, software backup and backup operations, in case of disaster or storage media failure, can quickly return to normal operations. However, there is no guarantee that the computer system will completely avoid third-party attacks by illegal network virus attacks. Serious network attacks may cause system problems to interfere with the company's operations or snoop on confidential information. These attacks may result in the company being compensated for the loss of the customer due to delays or interruptions, or the need to pay for the reconstruction of system security.
- (C) Security risk incident

The company did not find a security risk incident in 2018.

(6) The impact and correspondence of coporate image change to risk management ： None.
(7) The expected effect, risk and correspondence of merger
The Company merged Weida Hi-Tech in Aug., 2018 to integrate the supply chain in semiconductor industry. With resource restructuring, the scale of sales revenue is expected to be enlarged.
(8) The expected effect, risk and correspondence of operation plants enlargement ： None.
251 -
(9) The risk and correspondence of the concentration of sales or procurement ：
A. To satisfy the market demand, the supply chain shall maintain a certain degree of flexibility. Several qualified suppliers are kept in our list with stable delivery conditions. The Company will evaluate new supplier periodically and cooperate with all the suppliers to maintain a stable supply chain.
B. The major customers of the Company are all well-known companies with diverse sales revenue in different industries and no concentration risk is involved.
(10) The impact, risk and correspondence of mass change of the ownership from director (incl.independent director) or shareholder holding more than 10% ： None.
(11) The impact, risk and correspondence of management team change ： None.
(12) The company and the company's directors, general manager, substantive person in charge, shareholder with a shareholding ratio of more than 10% and subordinate company litigation or non-litigation ： None.
(13) Other major risk and correspondence ： None.
- Our philosophy

There is only one earth. Since the establishment of Taiwan Mask Corporation (TMC) in 1988, the company has been adhering to the business philosophy ofprotecting the global environment and pursuing sustainable development, and has always adhered to the principle of environmental protection and economy, continuously strengthening pollution prevention and continuous improvement of energy. We will establish environmental protection policies in four major directions:“energy saving and waste reduction, pollution prevention, compliance with regulations, and continuous improvement”, and implement environmental protection related operations and implementation rules. We have three factories passed the ISO14001 environmental management system and ISO9001 quality management system certification, "Planning - Do - Check - Action" model, combined with the company's internal audit; continue to promote environmental protection business. Taiwan's reticle actively participates in the task of environmental protection, implements the ban on the use of special hazardous chemicals and hazardous substances in electrical and electronic equipment, effectively implements the RoHS Act and REACH_SVHC in enterprises, and regularly commissions SGS for testing and obtains compliance reports. Environmental policy

A. Nergy saving and waste reduction

Through various systems to keep track of energy consumption situation, adjust parameters or add the drive, eliminating the switching equipment to achieve the effect of energy saving. Each system record established water flow, waste water quality analysis process of each system is supplied back to the process or treated wastewater can be reused recycling of cooling towers, scrubbers use, reducing the amount of replenishment water. Wastes are recycled and reused. If they are incinerated and cannot be recycled and are not suitable for incineration, they will be disposed of by landfill .Promote the classification of garbage collection, improve the recycling rate of resources, and improve the environmental protection concept of employees through education training and company system. The office promotes paperless operations and

252 -

replaces them with electronic sign-off systems. It requires double-sided printing on paper materials to reduce paper usage.

Water saving (2018)

TOMCO equipment DI water recycling project can recover about 72.58T water resources per day, saving about NTD$476 thousand per year.

Power saving (2018)

The clean room air conditioning pressure difference deployment and the closing of some air conditioners can save about 810,300 KW per year.

B. Pollution prevention

In order to avoid polluting the environment, effective precautions are taken to prevent wastes and harmful substances generated by raw materials orprocesses from leaking into the surrounding environment without treatment, resulting in environmental pollution.

Leak detection equipment set up reconnaissance, early detection to avoid the spread of contamination, affecting personnel, equipment, and the environment of safety.

Maintenance and improvement of control equipment, it is the operation of the wastewater generated by the process, waste gas, waste to be able to properly handle, each control equipment operating parameters are important and central monitoring system to connect real-time monitoring.

(A) Water pollution prevention, recycling and reuse

The operating parameters of the wastewater system are linked to the Siemens monitoring system of the plant, and the operating status of the system can be monitored at any time. Secondary prevention settings mining site with overflow tank and a detection device, to avoid system anomalies ordamaged tank, waste water overflow caused by environmental pollution, releasing water pools abnormal back flow system to avoid unqualified wastewater discharge Regular maintenance and maintenance, improve processing efficiency, reduce the dosage and proper handling capacity, and find that abnormal handling is early to maintain the normal operation of the system. The results of periodic inspections every six months show that they are lower than the discharge water standard.

(B) Air pollution prevention

The washing towers are regularly maintained, the Laxi ring and nozzles are replaced to ensure the control efficiency, the stability of the equipment is improved, the exhaust gas is in compliance with the regulatory requirements, and the important parameters are connected with theSiemens monitoring system of the factory, which can monitor the operating status in real time. The results of periodic tests show that theconcentration of each pollutant is far below the regulatory limit.

253 -

(C) Waste management

The waste storage area is set up in compliance with the regulations, avoiding open storage, and indeed packaging to avoid scattering. The wastes are all commissioned to clean up the qualified manufacturers, regulate the flow according to law, and require the processing plant to provide proper handling of the documents.

C. Compliance with regulations

TMC really understand the government's environmental protection regulations and related requirements, compile the legal registration form analysis and the company's legality, and actively participate in various legal briefings held by public organizations. Regular inspections in accordance with relevant regulations ensure compliance with environmental laws and regulations, and promote environmental protection policies and environmental protection policies with colleagues to ensure that the company's environmental policies can be effectively implemented.

D. Continuous improvement

Establish annual environmental goals and major implementation projects, review implementation results annually, ensure effective implementation of continuous improvement policies, and improve environmental quality.

l Safety and health management

Through the management spirit of planning, execution, inspection and action, the company has achieved the goal of preventing accidents, promoting employee safety and health, and protecting company assets through the safety and health management structure. The policy focuses on building a safe working environment, actively preventing occupational injuries and diseases, maintaining the physical and mental health of employees, and strengthening the awareness and responsibility of all employees for environmental safety and health, and at the same time shaping the environmental safety and hygiene culture of the mask company.

A. Education and Training

Safety and health education and training, such as contractor management, chemical safety management, personal protective equipment requirements and safety audit management, are regularly held, and field exercises are conducted to reduce the loss of employees and company assets and the society caused by disasters. Minimize environmental impact.

B. Environmental monitoring

In terms of working environment, an average of each half will be monitoring the operating environment, including the physical and chemical factor defined by regulations, such as hazardous chemical substances and the like of a predetermined concentration of carbon dioxide, illumination, noise, domestic legislation. After monitoring the operating environment, if there is any abnormality in the working environment, or the evaluation results show that it has an impact on the health of the employees, the plant unit will immediately observe and improve the operation behavior to ensure that the exposure risk of the hazard factors is reduced to an acceptable range.

254 -

C. Physical and mental health

For the protection and promotion of employees ' physical and mental health, regular free employee health checkups are held every year. This year's employee health check is better than the law enforcement project, and is in the company's industrial safety and environmental protection units, medical specialists and nurses. Under the cooperation, we will establish four major plans for labor health protection ( human factors hazard prevention plan, illegal infringement prevention plan, maternal health protection plan, and routine work load management plan ) , and the results of the company's employee personal health report will be carried out. for a medical consultation services, and is committed to the prevention ofcardiovascular prevention of brain diseases caused by the long period of time, night work, shift work and other employees and maternal health protection and management of project planning and implementation, and provide a number of body and mind from time to time in the future Health promotion resources and related activities, in addition to protecting employees from work hazards, are more proactive in promoting employee health.

7. Other important matters: None.

255 -

2018/12/31

VIII. Special Disclosures

1. Information of Related Parties

(1) Organization Chart of Related Parties

==> picture [793 x 270] intentionally omitted <==

256 -

2018/12/31

(2) Overview of the operation of each related enterprise

Unit ： NTD$ thousand

==> picture [760 x 381] intentionally omitted <==

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

Operating profit
Company Name Capital amount Total assets Total liabilities Total equity Operating income Net profit
and loss
Youe Chung Capital Corporation 1,423,295 1,220,719 140,325 1,080,394 0 (900) (325,699)
Innova Vision INC. 171,987 383,319 342,665 40,654 123,096 (78,012 (130,110)
Innova Technology
5,000 17,781 53,103 (35,322) 41,042 (9,471) (9,020)
Company
SunnyLake Park International Holdings,Inc 203,026 84,774 0 84,774 0 (69) (65)
Innova Vision Kabushiki Kaisha 388,875 11,741 62,081 (50,340) 48,937 (8,404) (7,161)
Innova Vision (B.V.I.) Inc 30,526 169 45,847 (45,678) 0 0 (7,161)
Miracle Technology CO., LTD. 182,872 523,449 245,842 277,607 764,067 43,902 56,132
Jingjing Investment Co., Ltd. 96,946 174,988 14,288 160,700 0 (46) 55,889
Miracle (SAMOA) Co.,Ltd 10,215 20,275 0 20,275 0 0 3,094
Misun Technology Co.,Ltd 10,215 20,275 0 20,275 0 0 3,094
Miko Technology Co.,Ltd 39 84,269 19,406 64,863 123,869 (5,131) 28,115
Miko-China Enterprise (Shanghai) Co., Ltd. 3,283 124,686 14,965 109,719 90,121 (37,535) 27,480
Miracle International Enterprise(ShanHai) Co., Ltd. 10,215 81,297 61,022 20,275 351,022 (9,689) 3,094
Calaview International Hoding Company Limited 4,337 26 7,860 (7,834) 0 0 (2,319)
Weida Hi-Tech 255,105 187,310 20,599 166,711 205,357 (47,875) (40,964)
Smart Touch Co.,Ltd 14,044 3 0 3 0 (1) (1,842)
Central Star Ltd 17,790 1 0 1 0 (1) (1,023)
Touch Hi-Tech 25,684 2,045 0 2,045 0 (8,155) (8,079)
Innova Vision Shenzen 4,337 399 8,259 (7,860) 1,517 (2,272) (2,319)
Sichuan Miracle Power Technology Co., Ltd. 32,529 37,026 11,646 25,380 27,627 (6,605) (5,054)
----- End of picture text -----

257 -

(3) Information on directors, supervisors and general managers of various related companies

==> picture [533 x 690] intentionally omitted <==

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

2018/12/31
Holding shares
Company Name Job title Name or representative
Number of shares %
Taiwan Mask Corporation
Chairman
representative:Parkson Chen
Taiwan Mask Corporation
Director
Youe Chung Capital representative:Shen, Mao-Tian
142,329,470 100%
Corporation Taiwan Mask Corporation
Director
representative: Chen, Yao-Lun
Taiwan Mask Corporation
Supervisor
representative: Liao, Sheng-Fu
Taiwan Mask Corporation
Chairman
representative: Parkson Chen
5,203,956 30.26%
Taiwan Mask Corporation
Director
representative: Guo, Sheng-Zhong
Jian-Fu investment CO., Ltd.
Director 75,982 0.44%
representative :Chen, Yao-Lun
Innova Vision INC.
Tang-PuTechnology CO.,
Director LTD.representative: Huang, 895,664 5.21%
Shi-Zhe
Director Tsai Yu-Shian 358,265 2.08%
Youe Chung Capital Corporation
Supervisor 5,514,596 32.06%
representative: Xu, Shi-Jia
Innova Vision INC.
Chairman
representative: Parkson Chen
Innova Vision INC.
Director
representative: Liao, Sheng-Fu
Innova Technology Company 500,000 100%
Innova Vision INC.
Director
representative: Guo, Sheng-Zhong
Innova Vision INC.
Supervisor
representative: Chen, Yao-Lun
Taiwan Mask Corporation
Director
SunnyLake Park International representative: Parkson Chen
6,344,000 100%
Holdings,Inc Taiwan Mask Corporation
Director
representative: Liao, Sheng-Fu
Director Parkson Chen
Qing Feng,
Director Innova Vision
Innova Vision Kabushiki Xian-Yi
(B.V.I.)Inc 5,900 90.77%
Kaisha Guo,
Director representative Sheng-Zhong
Supervisor Liao, Sheng-Fu
Innova Vision INC. Innova Vision
Director
INC.: Parkson Chen
Innova Vision(B.V.I.) Inc 1,000,000 100%
Innova Vision INC. Innova Vision
Director
INC.: Guo, Sheng-Zhong
Taiwan Mask Corporation
Chairman
representative:Xu, Chang-Ji
Taiwan Mask Corporation
Director
representative:Yam Chen
Miracle Technology CO., LTD 18,287,168 100%
Taiwan Mask Corporation
Director
representative:Vincent Tsai
Taiwan Mask Corporation
Supervisor
representative: Xu, Shi-Jia
----- End of picture text -----

258 -

==> picture [533 x 534] intentionally omitted <==

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

Holding shares
Company Name Job title Name or representative
Number of shares %
Miracle Technology CO., LTD.
Jingjing Investment Co., Ltd. Chairman 9,694,613 100%
representative: Vincent Tsai
Miracle Technology CO., LTD.
Miracle(SAMOA)Co.,Ltd Chairman 750,000 100%
representative: Ding, Xian-Ren
Miracle(SAMOA)Co.,Ltd
Misun Technology Co.,Ltd Chairman 750,000 100%
representative: Ding, Xian-Ren
Jingjing Investment Co., Ltd.
Miko Technology Co.,Ltd Chairman 10,000 100%
representative:Vincent Tsai
Miracle International Jingjing Investment Co., Ltd.
Enterprise(ShanHai) Co., Ltd. [Chairman] representative: Vincent Tsai CNY696,466.20 100%
Miracle International Misun Technology Co., Ltd
Enterprise(ShanHai) Co., Ltd. [Chairman] representative: Vincent Tsai CNY2,483,070 100%
Executive
Sichuan Miracle Power Vincent Tsai
director CNY7,000,000 100%
Technology Co., Ltd.
Supervisor Marie Wu
Taiwan Mask Corporation
Chairman
representative:Yam Chen
Taiwan Mask Corporation
Director
representative:Hu Sen, Ba-Lan
Weida Hi-Tech 25,510,500 100%
Taiwan Mask Corporation
Director
representative: Chen, Shou-Shan
Taiwan Mask Corporation
Supervisor
representative: Xu, Shi-Jia
Smart Touch Co.,Ltd Director Weida Hi-Tech representative: 4,573 100%
Smart Touch Co.,Ltd
Central Star Ltd Director 579,200 100%
representative:
Weida Hi-Tech representative:
Chairman
Touch Hi-Tech Chen, Shou-Shan CNY5,743,206.4 100%
Weida Hi-Tech representative:
Supervisor
Xu, Shi-Jia
Calaview International Hoding
Legal
Company Limited representative:
representative
Guo, Sheng-Zhong
Innova Vision Shenzen CNY1,011,084.2 100%
Calaview International Hoding
CEO Company Limited representative:
Chen, Yao-Lun
Innova Vision
Calaview International Hoding
Director INC.representative: Parkson 1,000,000 100%
Company Limited
Chen
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259 -

(4) Basic information of affiliates

As of 12.31.2017

==> picture [528 x 550] intentionally omitted <==

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

Established
Company Name Address Paid-in capital Main Business Items
Date
No. 231-1, Wende Rd., Qionglin
Youe Chung Capital
2004/03/10 Township, Hsinchu County 307, NTD1,423,294,700 [Investing in]
Corporation communication business
Taiwan R.O.C.
No. 11, Innovation Rd. 1, Medical device
Innova Vision INC. 2000/01/21 Science-Based Industrial Park, NTD171,986,840 manufacturing,
Hsinchu, Taiwan R.O.C. wholesale and trading
No. 231-1, Wende Rd., Qionglin
Innova Technology
2003/05/29 Township, Hsinchu County 307, NTD5,000,000 [Medical device]
Company wholesale and trading
Taiwan R.O.C.
SunnyLake Park Citco Building,Wickhams Cay,
International 2000/10/17 P.O.Box662, Road Town,Tortola, USD6,344,000 [Investing in]
communication business
Holdings,Inc British Virgin Islands
Innova Vision 2001/05/16 [2-9-2 HigashiNihonbashi] JPY325,000,000 [Medical device]
Kabushiki Kaisha Chuo-ku,Tokyo,Japan wholesale and trading
OMC Chambers, Wickhams
Innova
2009/08/10 Cay1, Road Town, Tortola, USD1,000,000 [Investing in]
Vision(B.V.I.)Inc communication business
British Virgin Islands.
Electronic component
manufacturing,
No. 231-1, Wende Rd., Qionglin
Miracle Technology wholesale of electronic
1993/11/22 Township, Hsinchu County 307, NTD182,871,680
CO., LTD. materials and precision
Taiwan R.O.C.
instruments, power
component design, etc.
6F.-7, No. 472, Sec. 1, Guangfu
Jingjing Investment Co.,
2006/10/13 Rd., East Dist., Hsinchu City 300, NTD96,946,130 [Investing in]
Ltd. communication business
Taiwan R.O.C.
Vistra Corporate Services
Miracle(SAMOA) Centre,Ground Floor NPF
2002/11/21 USD300,000 [Investing in]
Co.,Ltd Building,Beach communication business
Road,Apia,Somoa
Suite 802, St James Court St
Misun Technology
2002/12/03 Denis Street,Port USD300,000 [Investing in]
Co.,Ltd communication business
Louis,Mauritius.
Electronic component
manufacturing,
Room 1203, 12/F., Tung Wah
Miko Technology wholesale of electronic
1997/12/08 Mansion, 199-203 Hennessy HK10,000
Co.,Ltd materials and precision
Road, Wanchai, Hong Kong.
instruments, power
component design, etc.
----- End of picture text -----

260 -

==> picture [528 x 634] intentionally omitted <==

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

Company Name [Established] Address Paid-in capital Main Business
Date Items
Electronic
component
manufacturing,
Room 301, Building #3, No. 1077, wholesale of
Miko-China
ZuChongZhi Road, ZhangJiang Hi-Tech electronic
Enterprise 2010/05/17 CNY696,466.20
Science Park, PuDong, Shanghai Zip: materials and
(Shanghai) Co., Ltd.
201203 precision
instruments, power
component design,
etc.
Miracle Room 204, Building #3, No. 1077,
IC product design,
International ZuChongZhi Road, ZhangJiang Hi-Tech
2004/02/09 CNY2,483,070 production and
Enterprise(ShanHai) Science Park, PuDong, Shanghai Zip:
sales
Co., Ltd. 201203
Research, design,
development,
Weida Hi-Tech 2010/07/16 [No. 11, Innovation Rd. 1, Science-Based] NTD255,105,000 manufacturing and
Industrial Park, Hsinchu, Taiwan R.O.C. sales of display
panel control chips
and modules
Investing in
Smart Touch 2014/09/17 [Jipfa Building, 3][rd][ Floor, Main Street, Road] USD457,250 communication
Co.,Ltd Town, Tortola, British Virgin, Islands
business
1 [st] Floor, #5 DEKK House, De Zippora Investing in
Central Star Ltd 2014/07/22 Street, Providence Industrial Estate, Mahe, USD579,200 communication
Republic of Seychelles business
Touch screen
Room 1324 , No. 498 , Guo Shoujing system hardware
design and
Touch Hi-Tech 2014/11/18 Road , Zhangjiang Hi-Tech Park, Pudong CNY5,743,206.4
software
New Area, Shanghai, China development and
production
Medical device Medical device
Innova Vision 2010/03/05 [Room 1905, Guidu Building, 52-56 Chunfeng] wholesale and wholesale and
Shenzen Road, Luohu District, Shenzhen, China
trading trading
Calaview
Investing in
International
2009/03/02 [No.24, Lesperance, Providence Industrial] USD149,000 communication
Hoding Company Estate,Mahe Seychelles
business
Limited
No. 598 , Yulong Road, Economic and
Sichuan Miracle Technological Development Zone, IC product design,
Power Technology 2017/06/06 CNY7,000,000 production and
Suining City
Co., Ltd. sales
Innovation Incubation Center, fifth floor
office5001-5002
----- End of picture text -----

261 -

(5) Affiliates Consolidated Financial Statements `：`

(7) Assumed with controlling or controlled relationship parties, the same shareholders’ information ： None.

2. Privately subscription of marketable securities in the most recent years ： None.

3. The stock shares of the Company held or disposed by the subsidiaries in the most recent years ：

==> picture [512 x 144] intentionally omitted <==

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

Unit：NTD$ thousand ； Share thousand ； %
Making of Loaning of
Name of Paid-in Source Shareholding Date of Sharesand Sharesand Investment Shareholding &amount as Equity endorsement fund to
Subsidiaries capital of fund ratio of theCompany or disposalAcquisition amount amount & lossprofit of the financial pledged / guarantee forsubsidiary by subsidiaryby the
acquired disposed report date the Company Company
Number of
Youe Chung 2018 and as shares:37,081
Capital 1,423,295 fundsOwn 100% of April 30, - - - Amount: - - 300,000
Corporation 2019 1,019,740
Note 1: The stated amount refers to the amount actually acquired or disposed.
Note 2: Impact on the company's financial performance and financial status: Not applicable.
----- End of picture text -----

4. Supplementary disclosures ： None.

5. Occurrence of events defined in Securities Transaction Law Article 36.2.2 that has great impact on shareholder’s equity or security price in the most recent years and up to the date of the report printed ： None.

262 -

Taiwan Mask Corporation

==> picture [51 x 27] intentionally omitted <==

Chairman K.J.Wu

==> picture [51 x 26] intentionally omitted <==

==> picture [97 x 94] intentionally omitted <==

AI assistant

TMC — Annual Report 2018

52014_rns_2019-07-12_054b993b-22e9-49a8-b6ec-69aa3fd2fbaa.pdf

Taiwan Mask Corporation

2018 Annual Report

Notice to readers

Taiwan Mask Corporation Table of Contents

VI. Financial information

I. Letter to Shareholders

(1) 2017 Business Report

B. Analysis for finance and profitability

(A) Finance

C. Research and production

A. Strategy

Chairman K.J.Wu

II. Company Profile

1. Date of establishment: 1988/10/21

2. History of the company:

III. Corporate Governance

1. Organization Chart

(2) Descriptions of department function

2. Directors, independent directors, president, vice president, manager of finance department

(2) Directors, independent directors

(3) Major Institutional Shareholders

2019/4/13

(4) Major Shareholders of Institutional Shareholders

3. The remunerations to the directors (and independent directors), president and vice president

(2) Remuneration Intervals for Directors (and Independent Directors)

(3) Remunerations for President and Vice President

Unit ： NTD$ thousand

(4) Remuneration Intervals for Presidents and Vice Presidents

4. Implementation of Corporate Governance

(1) Board of Directors’ Meeting

(2) Audit Committee’s Meeting

(3) Composition, responsibilities and operation of the remuneration committee

A. The Members of Compensation Committee:

B. Remuneration Committee

(A) Total members in remuneration committee are 3.

C. The duty of remuneration committee is:

(6) Fulfilling social responsibility

Implementing corporate governance

Developing a sustainable environment

Corporate social responsibility specific promotion situation

(7) Implementing integrity management

TAIWAN MASK CORPORATION

Declaration of Internal Control System

5. Fee of CPA

6. Information of Changing CPA

(2) Regarding succeeding CPA

7. Chairman, president, finance or accounting manager who had been served in the CPA firm or related firm in recent year ： None.

8. Information on Net Change in Shareholding and Net Change in Shares Pledged by Directors, Supervisors, Department Heads and Shareholders of 10% Shareholding or More

9. The relation of the top ten shareholders as the definition of related parties or relatives within second degree

10. Investment from directors, managers, and directly or indirectly controlled businesses

IV. Stock Subscription

1. Capital and Shares

(1) Capital History

(2) The types of outstanding shares as of the date this report is printed

(3) Shelf Registration ： None.

(4) Structure of Shareholders

(5) Dispersion of shareholding

A. Common shares

(6) Major Shareholders

(8) Dividend Policy and Status of Execution

A. Dividend Policy

D. The board of directors passed the 2018 remuneration allocated to employees and directors ：

2. Corporate bonds ： None.

3. Preferred stock ： None.

4. Issuance of global depository receipts ： None.

5. Employees stock option certificates ： None.

6. Merger and acquisitions or stock shares transferred with new stock shares issued ： None.

7. Fund implementation plan ： None.

V. Overview of Business Operation

1. Business overview

（ 2 ） Industry Overview

B. Future trend in mask industry

C. Overall economy, Industry development trend and Market competition

D. The upper, middle and lower course in the supply chain

（ 3 ） Overview of research and development

（ 4 ） Business plan

2. Market analysis and the condition of sale and production

TMC Annual Report 2018

Unit `：` NTD$ thousand

7. Chairman, president, finance or accounting manager who had been served in the CPA firm or related firm in recent year `：` None.

(3) Shelf Registration `：` None.

D. The board of directors passed the 2018 remuneration allocated to employees and directors `：`

2. Corporate bonds `：` None.

3. Preferred stock `：` None.

4. Issuance of global depository receipts `：` None.

5. Employees stock option certificates `：` None.

6. Merger and acquisitions or stock shares transferred with new stock shares issued `：` None.

7. Fund implementation plan `：` None.

`（` 2 `）` Industry Overview

`（` 3 `）` Overview of research and development

`（` 4 `）` Business plan

`（` 1 `）` Market analysis

`（` 2 `）` Application for main products and production process

`（` 3 `）` Supply of key materials

`（` 5 `）` The Production Value and Volume in the past two years

`（` 6 `）` The Sales Volume and Value in the past two years