TXC — AGM Information 2019

Jun 26, 2019

TXC Corporation

2019 Annual Shareholders' Meeting Procedure

I. Call Meeting to Order

II. Chairman's Address

III. Report Matters

• IV. Recognition Matters

• V. Discussion Matters

• VI. Election Matters

• VII. Other Matters

VIII. Special Motions

• IX. Meeting Adjourned

TXC Corporation

2019 Annual Shareholders' Meeting Agenda

Time: 9:30 a.m., June 12[th] , 2019 (Friday)

Place: No.4, KungYeh 6[th] Rd., Pingzhen Industrial District, Taoyuan City (Meeting Room)

1. Call meeting to order

2. Chairman's Address

3. Report Matters:

(1) To report the business of 2018

(2) Audit Committee’s review report

(3) To report 2018 employees’ profit sharing bonus and directors’ compensation

4. Recognition Matters

(1) To accept 2018 Business Report and Financial Statements

(2) To approve the proposal of distribution of 2018 earnings

5. Discussion Matters

(1) To Revise the "Articles of Incorporation"

(2) To Revise the "Procedures for Acquisition or Disposal of Assets"

(3) To Revise the "Procedures for Financial Derivatives Transactions"

(4) To Revise the "Procedures for Lending Funds to Other Parties"

(5) To Revise the "Procedures for Endorsement & Guarantee"

6. Election Matters

(1) To elect eleven Directors (including four independent directors)

7. Other Matters

(1)To remove the restriction of non-compete agreement of newly elected directors

8. Special Motion

9. Meeting Adjourned

Report Matters

Report matter (1)

Subject： To report the business of 2018

Description：

1. The company's 2018 consolidated revenue was NT$8,156,268 thousand, a decrease of 7.12% over last year. Net income was NT$ 644,350 thousand, a decrease of 33.07% over last year.

2. Business report and related financial statements please refer to Attachment (1) and (3).

Report matter (2)

Subject： Audit Committee’s review report

Description：

1. TXC’s 2018 financial Statements were reviewed by Audit Committee and audited by independent auditors, Ms. Lin Yi Hui and Mr. Wong Bo Ren of Deloitte & Touche.

2. Request audit committee to read audit report and please refer to Attachment (2).

Report matter (3)

Subject： To report 2018 employees’ profit sharing bonus and directors’ compensation

Description：

1. The 2018 pretax profit before deducting employees’ profit sharing bonus and directors’ compensation is NT$767,471,304, according to the Article 19 of Articles of Incorporation, the Board of Directors approved 2018 employees’ profit sharing bonus is NT$69,072,417 (9%) and directors’ compensation is NT$11,512,070(1.5%) which are to be distributed in cash. The employees eligible to the employee’s remuneration include the full time employees of parent company and subsidiary.

2. They are no different from the expenses acknowledge of 2018.

Recognition Matters

Recognition matter (1) Proposed by the Board of Directors

Subject：To accept 2018 Business Report and Financial Statements

Description：

1. 2018 business report and financial statements please refer to Attachment (1) and (3).

2. The above business report and financial statements were approved by the board of directions and reviewed by audit committee. The financial statements were audited by independent auditors, Ms. Lin Yi Hui and Mr. Wong Bo Ren of Deloitte & Touche.

3. Please accept the aforementioned.

Resolution：

Recognition matter (2) Proposed by the Board of Directors

Subject： To approve the proposal of distribution of 2018 earnings

Description：

1. Net profits for 2018 were NT$644,350,008. After the legal reserve and special reserve were allocated according to law and the undistributed profit at the beginning of the year was added, the profit available for distribution is NT$2,574,634,538. In consideration of capital utilization and to avoid capital inflation, a shareholder dividend issue of NT$619,514,080 (a cash dividend of NT$ 2.0 per share) is proposed. After distribution, the undistributed profit will be NT$1,955,120,458.

2. According to distribution ratio, cash dividend was calculated up to dollar. Total amount of undistributed fractional shares would be recognized in non-operating income.

3. The total amount of common shares outstanding is subject to change and the ultimate cash dividend to be distributed to each common share will be adjusted accordingly should TXC subsequently buyback of company shares or transfer or cancellation of treasury stock or capital increase by cash, a proposal shall be made at the shareholders' meeting to authorize the board of directors to handle related matters.

4. The profit distribution proposal is listed as below. Please approve.

Resolution：

Distribution of 2018 Earnings

Unit ： NT$

	Unit：NT$	Unit：NT$
Item	Amount
	Sub-total	Sum
Beginning period undistributed profits	(619,514,080)	1,896,725,285 102,956,722 __ 1,999,682,007 37,943,132 (171,660) (10,619,972) __ 2,026,833,507 644,350,008 (64,435,001) (32,113,976) __ 2,574,634,538 (619,514,080) ___ 1,955,120,458
Effect of retrospective application
Adjusted beginning period undistributed profits
Disposal of equity instruments at fair value through
other comprehensive income. Total gain of disposal
transferred from other equity to retained earnings.
Adjusted retained earnings from investments
accounted for using equity method
Remeasurement of defined employee benefit plans to
retained earnings
Adjusted undistributed profits Net profit after tax for this year Setting aside 10% legal reserve Setting aside special reserve Profits available for distribution Distribution Item: Cash Dividends (NT$2.0 per share) End period of undistributed profits

Note: (1) Allocation of 2018 undistributed profit shall be given priority for the above profit distribution.

Chairman: Paul Lin Manager: Peter Lin Accounting Supervisor: Hong Guan-wen

Resolution:

Discussion Matters

Discussion Matter (1) Proposed by the Board of Directors

Subject：To Revise the "Articles of Incorporation"

Description：

1. It is proposed that certain articles of TXC’s ‘’the Articles of Incorporation’’ should be revised to comply with rule No.1070037184 issued by Executive Yuan on October 26[th] , 2018.

2. The comparison tables for the ‘aforementioned are attached hereto as Attachment (4)-Chinese version.

3. Please refer to Attachment (10) -Chinese version for the "Articles of Incorporation” prior to amendments.

4. Please approve.

Resolution：

Discussion Matter (2) Proposed by the Board of Directors

Subject：To Revise the "Procedures for Acquisition or Disposal of Assets"

Description：

1. It is proposed that certain articles of TXC’s ‘’Procedures for Acquisition or Disposal of Assets’’ should be revised to comply with rule No.10703410725 issued by the Financial Supervisory Commission R.O.C (Taiwan) Securities and Futures Bureau on November 26[th] , 2018.

2. The comparison tables for the aforementioned are attached hereto as Attachment (5) -Chinese version.

3. Please refer to Attachment (11) -Chinese version for the ‘’Procedures for Acquisition or Disposal of Assets’’ prior to amendments.

4. Please approve.

Resolution：

Discussion Matter (3) Proposed by the Board of Directors

Subject：To revise the’’ Procedures for Financial Derivatives Transactions’’

Description：

1. It is proposed that certain articles of TXC’s ‘’Procedures for Financial Derivatives Transactions’’ should be revised to comply with rule No.10703410725 issued by the Financial Supervisory Commission R.O.C (Taiwan) Securities and Futures Bureau on November 26[th] , 2018.

2. The comparison tables for the aforementioned are attached hereto as Attachment (6) -Chinese version.

3. Please refer to Attachment (12) -Chinese version for TXC’s ‘’Procedures for Financial Derivatives Transactions’’ prior to amendments.

4. Please approve.

Resolution：

Discussion Matter (4) Proposed by the Board of Directors

Subject：To revise the’’ Procedures for Lending Funds to Other Parties’’

Description：

1. It is proposed that certain articles of TXC’s ‘’Procedures for Financial Derivatives Transactions’’ should be revised to comply with rule No.1080304826 issued by the Financial Supervisory Commission R.O.C (Taiwan) Securities and Futures Bureau on March 7[th] , 2019.

2. The comparison tables for the aforementioned are attached hereto as Attachment (7) -Chinese version.

3. Please refer to Attachment (13) -Chinese version for TXC’s ‘’Procedures for Lending Funds to Other Parties’’ prior to amendments.

4. Please approve.

Resolution：

Discussion Matter (5) Proposed by the Board of Directors

Subject：To revise the ‘’Procedures for Endorsement & Guarantee’’

Description：

1. It is proposed that certain articles of TXC’s ‘’Procedures for Financial Derivatives Transactions’’ should be revised to comply with rule No.1080304826 issued by the Financial Supervisory Commission R.O.C (Taiwan) Securities and Futures Bureau on March 7[th] , 2019.

2. The comparison tables for the aforementioned are attached hereto as Attachment (8) -Chinese version.

3. Please refer to Attachment (14)-Chinese version for TXC’s ‘’Procedures for Endorsement & Guarantee’’ prior to amendments.

4. Please approve.

Resolution：

Election Matters

Election Matter (1) Proposed by the Board of Directors

Subject：To elect eleven Directors (including four independent directors)

Description：

1. The term of directors of the Company is expiring on June 6[th] 2019 and it is required to re-elect totally pursuant to Clause 195 of the Company Act.

2. Following the provision of Articles of Association of the Company, there shall be eleven directors elected in this election (incl. four independent directors). The election system is Candidates Nomination System and shareholders shall elect directors from the list of candidates and they are for a term of 3 years, from June 12[th] 2019 to June 11[th] 2022. List of Candidate for Director Election (including independent directors) has been reviewed by and passed resolution in Board Meeting of the Company, and shareholders shall elect the directors for next term from the list of candidates.

3. List of Candidates for Directors (including Independent Directors) is given below.

4. Please vote.

Director Candidate List

As of 04/13/2019

Title	Name	Educational background	Experience	Holding Shares
Director	Lin, Jin-Bao	MBA, West Texas A&M	Chairman of TXC Corporation	6,071,263
		University,USA
		Master in Management,
Director	Lin, Wan-Shing	National Taiwan University of	Director and President of	4,980,722
			TXC Corporation
		Science and Technology
Director	Chen Chueh,	Master of management,	Director and Vice President of	282,212
	Shang-Hsin	ZhejiangUniversity	TXC Corporation
Director	Kuo, Ya-Ping	Boston University ,MBA	Vice President of Management Center	300,000
			of TXC Corporation
			Chairman of Kang-Shuo
		M.S. degree - Electrical and
Director	Hsu, Hsing-Hao	Computer Engineering,	Investment Corporation	2,601,352
		Colorado State University	R&D Manager of Chan-Yu Corporation
Director	TLC Capital	None	Director of TXC Corporation	1,977,991
	Co.,LTD
		State University of New York
Director	Huang, Hsiang-Lin	at Albany, Master of Business	Sales Director of Marketing Center of	4,097,399
			TXC Corporation
		Administration(MBA)
			Independent Director of
			TXC Corporation
Independent		PhD
	Yu, Shang-Wu	..,	Director of business and management	0
Director		Birmingham University
			college of Jinwen University of Science
			and Technology
			Independent Director of
Independent	Tsai, Song-Qi	Ph.D., Accounting Department	TXC Corporation	0
Director		of Shanghai University	Certified accountant and Executive
			Director of KMPG Taiwan
		Master in Industrial	Independent Director of
Independent
	Su Yan-Syue	Management of Carnegie	TXC Corporation	0
Director
		Mellon University,USA	CIO of Pegatron corporation
			Independent Director of
Independent
	Wang Chuan -Fen	Master in Law of Columbia	TXC Corporation	0
Director		University, USA
			Partner of Chen & Lin law firm

Reason of continuing to nominate candidates who have served consecutively as independent directors for three consecutive terms as independent directors of the company

The company continued to nominate Yu, Shang-Wu as independent director candidate for the fourth terms for the following reason: Yu, Shang-Wu is professional in finance and industrial

management, and is familiar with business and corporate governance laws and practices. TXC will rely on his relevant knowledge and management vision to continuously improve the corporate governance of board of directors and play the supervisory function of the audit committee.

Result of Election：

Other Matters

Other Matter (1) Proposed by the Board of Directors Subject：To remove the restriction of non-compete agreement of newly elected directors Description：

1. Pursuant to Article 209 of the Company Act, “a director engaging, either for himself or on behalf of another person that are within the scope of the company's business, shall explain to the meeting of shareholders the essential details of such activities and secure its approval.”

2. It is proposed the shareholders' meeting remove the restriction of non-compete agreement of new directors.

3. For newly elected directors, please refer to Attachment (9).

4. Please approve.

Special Motions

Meeting Adjourned

Attachment (1)

TXC Corp. Business Report

In 2018, the global economy was almost the most turbulent year since the financial crisis. In addition, the US tariff policy and the corresponding retaliatory measures of other economic entities have also slowed down the overall economic growth. Only the United States still has strong economic performance, be an important engine for global growth; in the case of Japan’s failure of monetary policy, the economy has not improved significantly; emerging countries have been forced to bear pressure with the appreciation of the dollar; in the Eurozone, Brexit, the impact of Italy's confrontation with the EU, some crisis incrementally emerged. The overall economic environment does not seem optimistic. There are also many unfavorable changes in the company's operations. For example, market competition has led to an increase in the volume of existing product mix, but prices have fallen, imbalances in supply and demand have led to unreasonable price cuts and alternative competition in the industry, product application technology has been accelerate replaced, tariff disputes impact customers’ strategy for production base. The demand of handset industry has stagnated due to no new product application to stimulate consumption, Networking and information products market demand is not as expected, trade war affects the overall automotive supply chain and consumption, coupled with the failure of the company's new products to be developed in time and in line with customer needs, has led to a decline in our revenue and profitability.

• I. 2018 Operation Results

• Consolidated revenue and net income

The company's 2018 consolidated revenue was NT$8,156,268 thousand, a decrease of 7.12% over last year, and then resulted to achieving the operation target of 90.38%. Net income was NT$ 644,249 thousand, a decrease of 33.07% over last year. The basic EPS is NT$2.08, decreased from EPS NT$3.11, -33.12% from previous year.

1. Product development

   • The company continuously enhancing Temperature Compensating Control Quartz Oscillator 、 、

   • (TCXO) Temperature Sensing Quartz Crystal (TSX) Miniature Constant Temperature Control Quartz Crystal Oscillator (OCXO), Miniature Quartz Crystal (XO) 、 Miniature Mobile Device 、

   • Crystal(Crystal) Light sensors…etc. The development of miniaturized products focuses on the technologies such as wafer design and manufacturing and packaging testing, in response to the demand for high-drive, high-frequency and high-stability products. The development of new Sensor products will be developed towards miniaturization, integration and feature optimization to meet the needs of customers and the market. In terms of market development, we will focus resources on developing high-end products including AOM (high frequency), ACAP (vehicle products) and Sensors (sensing components), including new applications, new industries, new customers, and new product opportunities, in order to optimize product mix and increase growth momentum, and actively deploy the relevant customers of the 5G industry and the Internet of Things application, laying the foundation for the subsequent market growth momentum..

2. II 2019 Business Plan Summary

3. 1 Strengthening industrial deployment and increasing market share: Consolidate existing markets to enhance competitiveness and maintain market share, actively develop new markets, new industries, new applications, and new products, deepen China and strengthen the European, American and Japanese markets.

4. 2 Optimize product mix and increase profitability: Combine production cost advantages to provide the best product mix and drive high-end, high-margin product sales. Through intelligent technology and big data analysis, we can instantly integrate information from various production bases to improve production yield and reduce quality costs.

5. 3 Technical cooperation, strategic alliances, mergers and acquisitions and integration: The future competitive market, shortened product life cycle, technology transfer and learning speed, accelerate the transfer of key technologies or capabilities and new technologies through technical cooperation, strategic alliances, mergers and acquisitions and integration The development speed of products and new processes can effectively enter new markets, enabling enterprises to have competitive

advantages and expand the application of existing technologies or products to create synergies.

Looking forward 2019, with intelligent production, lean management and light asset management, the company hopes to face the challenges of this year with innovative thinking and efficient execution! Although the overall economic environment is still steep, we are convinced that the company with the efforts of the management team, we will be able to break through the status quo, open up new opportunities, and move forward.

Chairman: Paul Lin Manager: Peter Lin Accounting Supervisor: Hong Guan-wen

Attachment (2)

TXC Corporation Audit Committee’s Review Report

Board of Directors of the company has made business report of 2018, consolidated financial statements, the individual financial statements and proposal of earnings distribution, of which the consolidated financial statements and the individual financial statements have been audited by independent auditors Ms. Lin Yi Hui and Mr. Wong Bo Ren of Deloitte & Touche. The business report, consolidated financial statements, the individual financial statements and proposal of earnings distribution have been recognized by Audit Committee according to Article 14-4 of the Securities Exchange Act and Article 219 of the Corporate Act. Pleas examine.

2019 shareholder meeting of the company

Convener of Audit Committee Yu Shang Wu

2019, April 25[th]

Attachment (3)

TXC Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2018 and 2017 and Independent Auditors’ Report

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

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 Financial Reporting Standards 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 do not prepare a separate set of consolidated financial statements of affiliates.

Very truly yours,

TXC CORPORATION

By

PAUL LIN Chairman March 27, 2019

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders TXC Corporation

Opinion

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

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 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 for the year ended December 31, 2018. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Company’s consolidated financial statements for the year ended December 31, 2018 are stated as follows:

Key Audit Matter

Inventory of the Group as of December 31, 2018 was NT$1,816,896 thousands, accounted for 14% of the total assets in the consolidated financial statements. The valuation of inventory is subjected to fluctuation of market demand and technology changing rapidly. It may result in the impairment of inventory. The management determines the inventory book value and the allowance for inventories at lower of cost or net realize value in accordance with IAS 2 “Inventory”. Since the value of inventory is subject to management’s judgement and significant in the consolidated financial statements, the inventory valuation is identified as a key audit matter.

Refer to Notes 4, 5 and 15 for a summary of the significant accounting policies.

Our key audit procedures performed in respects of the above area included the following:

1. Tested the net realized value of inventories on the balance sheet date. Sampled testing the price on the latest purchase order and sales order to verify whether the net realized value of inventories is reasonable.

2. Verified the accuracy of the inventory aging report by testing the inventory’s aging details. Obtained the list of inferior goods and spoilage to understand the slow moving inventory and evaluate whether the impairment for inventories is appropriate.

3. Performing physical count, in order to assess the appropriateness regarding write-downs of the inventories.

Other Matter

We have audited the accompanying financial statements of TXC Corporation as of December 31, 2018 and 2017 on which we have issued an unmodified opinion.

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 International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the 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.

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

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 auditors’ 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 auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2018 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Yi-Hui Lin and Po-Jen Weng.

Deloitte & Touche Taipei, Taiwan Republic of China March 27, 2019

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2018 AND 2017

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Note 6) Financial assets at fair value through profit or loss - current (Note 7) Available-for-sale financial assets - current (Note 10) Held-to-maturity financial assets - current (Note 11) Financial assets at amortized cost - current (Note 9) Notes receivable (Note 14) Trade receivables (Note 14) Trade receivables from related parties (Notes 14 and 33) Other receivables Other receivables from related parties (Note 33) Current tax assets(Note 28) Inventories (Note 15) Prepayment for lease (Note 21) Non-current Assets Held for Sale(Note 16) Debt investments with no active market - current (Note 13) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Note 7) Financial assets at fair value through other comprehensive income - non-current (Note 8) Available-for-sale financial assets - non-current (Note 10) Financial assets measured at cost - non-current (Note 12) Investments accounted for using equity method (Note 18) Property, plant and equipment (Note 19) Investment properties (Note 20) Other intangible assets Deferred tax assets (Note 28) Prepayment for equipment Long-term prepayment for lease (Note 21) Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans (Note 22) Financial liabilities at fair value through profit or loss - current (Note 7) Notes payable Trade payables Trade payables to related parties (Note 33) Other payables (Note 23) Other payables to related parties (Note 33) Current tax liabilities (Note 28) Current portion of long-term borrowings and bonds payable (Note 22) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 22) Deferred income tax liabilities (Note 28) Net defined benefit liabilities - non-current (Note 24) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT (Note 25) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unrealized gain on Financial assets at fair value through other comprehensive income Unrealized loss on available-for-sale financial assets Total other equity Total equity attributable to owners of the company NON-CONTROLLING INTERESTS Total equity TOTAL		2018 Amount % $ 1,305,402 10 902,869 7 - - - - 189,588 2 85,661 1 2,631,163 21 8,995 - 112,451 1 796 - 5,245 - 1,816,896 15 2,323 - - - - - 55,900 - 7,117,289 57 30,975 - 494,242 4 - - - - 396,390 3 4,110,722 33 160,088 1 21,831 - 36,574 - 87,174 1 93,868 1 12,573 - 5,444,437 43 $ 12,561,726 100 $ 30,715 - - - - - 1,326,822 11 97 - 563,676 4 3,117 - 3,647 - 139,020 1 21,766 - 2,088,860 16 1,482,346 12 145,490 1 68,033 1 26,157 - 1,722,026 14 3,810,886 30 3,097,570 25 1,665,116 13 1,349,083 11 222,793 2 2,671,184 21 4,243,060 34 (359,923) (3) 105,017 1 - - (254,906) (2) 8,750,840 70 - - 8,750,840 70 $ 12,561,726 100		2017
				Amount % $ 2,331,366 18 1,007,122 8 39,657 - 45,680 - - - 65,656 1 2,578,552 19 6,735 - 147,077 1 772 - - - 1,504,066 11 2,371 - 60,816 1 39,200 - 154,122 1 7,983,192 60 - - - - 512,967 4 197,202 1 96,189 1 4,369,810 33 49,957 - 8,013 - 48,199 - 23,139 - 98,184 1 15,947 - 5,419,607 40 $ 13,402,799 100 $ 549 - 1,265 - 276 - 1,226,991 9 24 - 700,743 6 1,821 - 30,043 - 286,362 2 28,728 - 2,276,802 17 1,696,875 13 182,393 1 62,024 1 20,114 - 1,961,406 15 4,238,208 32 3,097,570 23 1,665,224 12 1,252,818 9 222,793 2 2,767,383 21 4,242,994 32 (264,137) (2) - - 381,048 3 116,911 1 9,122,699 68 41,892 - 9,164,591 68 $ 13,402,799 100

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

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

SALES (Note 26) COST OF GOODS SOLD (Note 27) GROSS PROFIT OPERATING EXPENSES (Note 27) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss reversed on trade receivables Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Note 27) Other gains and losses (Note 27) Finance costs (Note 27) Share of profits of associates and joint venture (Note 18) Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 28) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) Item that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized loss on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income of associates accounted for using the equity method		2018 Amount % $ 8,156,268 100 (6,328,642) (77) 1,827,626 23 442,479 6 332,453 4 519,906 6 (513) - 1,294,325 16 533,301 7 145,629 2 64,841 1 (20,400) (1) 10,126 - 200,196 2 733,497 9 (89,248) (1) 644,249 8 (10,620) - (140,093) (2) (257) - (150,970) (2)		2017
				Amount % $ 8,781,552 100 (6,595,475) (75) 2,186,077 25 466,267 6 377,505 4 540,249 6 - - 1,384,021 16 802,056 9 109,835 1 173,361 2 (21,937) - 11,618 - 272,877 3 1,074,933 12 (123,916) (1) 951,017 11 (15,255) - - - (187) - (15,442) - (Continued)

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Item that maybe reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Unrealized loss on available-for-sale financial assets Share of the other comprehensive income of associates accounted for using the equity method Other comprehensive loss for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 29) From continuing and discounted operations Basic Diluted		2018 Amount % $ (94,043) (1) - - (1,743) - (95,786) (1) (246,756) (3) $ 397,493 5 $ 644,350 8 (101) - $ 644,249 8 $ 397,594 5 (101) - $ 397,493 5 $2.08 $2.06		2017
				Amount % $ (101,905) (1) (573,997) (7) (944) - (676,846) (8) (692,288) (8) $ 258,729 3 $ 962,655 11 (11,638) - $ 951,017 11 $ 270,367 3 (11,638) - $ 258,729 3 $3.11 $3.07

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

(Concluded)

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2017 Appropriation of 2016 earnings Legal reserve Cash dividends distributed by the company Net profit for the year ended December 31, 2017 Other comprehensive income (loss) for the year ended December 31, 2017, net of income tax Total comprehensive income (loss) for the year ended December 31, 2017 BALANCE AT DECEMBER 31, 2017 Effect of retrospective application and retrospective restatement BALANCE AT JANUARY 1, 2018 AS RESTATED Appropriation of 2017 earnings Legal reserve Cash dividends distributed by the company Net profit for the for the year ended December 31, 2018 Other comprehensive loss for the for the year ended December 31, 2018, net of income tax Total comprehensive income (loss) for the for the year ended December 31, 2018 Other changes in capital surplus Actual disposal or acquisition of interest in subsidiaries Disposal of equity instruments at fair value through other comprehensive income Changes in capital surplus from investment in associates and joint ventures accounted for using the equity method BALANCE AT DECEMBER 31, 2018			Equity Attributable to Owners of the Parent	Equity Attributable to Owners of the Parent	Non-controlling Total Interests $ 9,719,652 $ 53,530 - - (867,320) - 962,655 (11,638) (692,288) - 270,367 (11,638) 9,122,699 41,892 5,048 - 9,127,747 41,892 - - (774,393) - 644,350 (101) (246,756) - 397,594 (101) - (41,791) - - - - (108) - $ 8,750,840 $ -	Total Equity $ 9,773,182 - (867,320) 951,017 (692,288) 258,729 9,164,591 5,048 9,169,639 - (774,393) 644,249 (246,756) 397,493 (41,791) - - (108) $ 8,750,840
		Shares (In Thousands) Share Capital Capital Surplus 309,757 $ 3,097,570 $ 1,665,224 - - - - - - - - - - - - - - - 309,757 3,097,570 1,665,224 - - - 309,757 3,097,570 1,665,224 - - - - - - - - - - - - - - - - - - - - - - - - - - (108) 309,757 $ 3,097,570 $ 1,665,116	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 1,151,202 $ 222,793 $ 2,789,106 101,616 - (101,616) - - (867,320) - - 962,655 - - (15,442) - - 947,213 1,252,818 222,793 2,767,383 - - 102,957 1,252,818 222,793 2,870,340 96,265 - (96,265) - - (774,393) - - 644,350 - - (10,792) - - 633,558 - - - - - - - - 37,944 - - - $ 1,349,083 $ 222,793 $ 2,671,184	Others Unrealized Gain (Loss) on Exchange Financial Assets Unrealized Differences on at Fair Value Gain (Loss) on Translating Through Other Available-for- Foreign Comprehensive sale Financial Operations Income Assets $ (161,346) $ - $ 955,103 - - - - - - - - - (102,791) - (574,055) (102,791) - (574,055) (264,137) - 381,048 - 283,139 (381,048) (264,137) 283,139 - - - - - - - - - - (95,786) (140,178) - (95,786) (140,178) - - - - - - - - (37,944) - - - - $ (359,923) $ 105,017 $ -

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

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation expenses Depreciation expenses of investment properties Amortization expenses Amortization of prepayments for lease Expected credit loss reversed on trade receivables Impairment loss reversed on accounts receivables Net gain on fair value change of financial assets and liabilities at fair value through profit or loss Finance costs Interest income Dividend income Share of profit of associates and joint ventures Loss on disposal of property, plant and equipment Gain on disposal of investment property Gain on disposal of non-current assets held for sales Gain on disposal of investment Impairment loss recognized on financial assets Write-down of inventories Impairment loss reversed on property, plant and equipment Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Financial asset held for trading Notes receivable Trade receivables Trade receivables from related parties Other receivables Other receivables from related parties Inventories Other current assets Financial liabilities held or trading Financial liabilities mandatorily classified as at fair value through profit or loss Notes payable Trade payables Trade payables to related parties Other payables Other payables to related parties Other current liabilities Net defined benefit liabilities Cash generated from operations	2018 $ 733,497 788,289 25,742 2,121 2,354 (513) - (29,802) 20,400 (21,088) (1,527) (10,126) (2,016) (26,629) (3,152) - - 6,763 (2,961) 123,407 - (20,006) (51,997) (2,288) (5,282) (24) (319,450) 52,241 - (1,265) (276) 99,831 73 (136,822) 1,296 (6,962) (4,611) 1,209,217	2017 $ 1,074,933 808,352 3,973 2,722 2,338 - (2,437) (47,211) 21,937 (18,607) (2,288) (11,618) (1,754) (50,061) - (228,666) 9,971 - (3,202) - 306,430 (14,414) 447,529 2,914 (1,914) (63) 16,241 (37,444) (13,445) - (480) (168,666) (1,578) (174,648) 849 (16,272) (9,542) 1,893,879 (Continued)

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

Interest paid Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through profit or loss Proceeds from sale of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Proceeds from financial assets at amortized cost Proceeds from sale of debt investments with no active market Proceeds from sale of available-for-sale financial assets Purchase of sale of financial assets measured at cost Proceeds from sale of financial assets measured at cost Purchase of investment accounted for using equity method Payments for property, plant and equipment Proceeds from Investment property Proceeds from disposal of property, plant and equipment Payments for intangible assets Decrease in other noncurrent assets Increase in prepayment for equipment Proceeds from disposal of non-current assets held for sale Interest received Dividends received from associates Other dividends received Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term borrowings Repayments of short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refund of guarantee deposits received Dividends paid to owners of the Company Decrease in non-controlling Net cash used in financing activities EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	2018 $ (20,645) (120,099) 1,068,473 - - 53,886 (191,646) 89,480 - - - - (294,842) (774,529) 38,897 58,136 (15,994) 3,374 (15,126) 97,837 21,701 3,205 1,527 (924,094) 30,166 - 409,611 (776,604) 6,043 - (774,393) (41,791) (1,146,968) (23,375)	2017 $ (21,902) (208,503) 1,663,474 (2,246,052) 2,824,366 - - - (39,200) 214,181 (161,587) 87,237 (26,540) (997,727) 56,653 7,312 (1,281) 3,972 - - 18,685 6,067 2,288 (251,626) - (19,731) 500,000 (693,535) - (21,079) (867,320) - (1,101,665) (71,714) (Continued)

TXC CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

2018 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (1,025,964) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 2,331,366 CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 1,305,402 The accompanying notes are an integral part of the consolidated financial statements.	2017 $ 238,469 2,092,897 $ 2,331,366 (Concluded)

Attachment (3)

TXC Corporation

Financial Statements for the Years Ended December 31, 2018 and 2017 and Independent Auditors’ Report

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders TXC Corporation

Opinion

We have audited the accompanying financial statements of TXC Corporation (the Company), which comprise the balance sheets as of December 31, 2018 and 2017, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended 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 auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. 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 financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

Inventory of the Company as of December 31, 2018 was NT$997,780 thousands, accounted for 8.3% of the total assets in the financial statements. The valuation of inventory is subjected to fluctuation of market demand and technology changing rapidly. It may result in the impairment of inventory. The management determines the inventory book value and the allowance for inventories at lower of cost or net realize value in accordance with IAS 2 “Inventory”. Since the value of inventory is subject to management’s judgement and significant in the financial statements, the inventory valuation is identified as a key audit matter.

Refer to Notes 4, 5 and 15 for a summary of the significant accounting policies and refer to Note 15 for the amount of the allowance for inventories.

Our key audit procedures performed in respects of the above area included the following:

1. Tested the net realized value of inventories on the balance sheet date. Sampled testing the price on the latest purchase order and sales order to verify whether the net realized value of inventories is reasonable.

2. Verified the accuracy of the inventory aging report by testing the inventory’s aging details. Obtained the list of inferior goods and spoilage to understand the slow moving inventory and evaluate whether the impairment for inventories is appropriate.

3. Performing physical count, in order to assess the appropriateness regarding write-downs of the inventories.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance, including the audit committee, are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ 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 the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the 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 auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

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

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

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2018 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Yi Hui Lin. and Po-Jen Weng.

Deloitte & Touche Taipei, Taiwan Republic of China March 27, 2019

Notice to Readers

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

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail.

TXC CORPORATION

BALANCE SHEETS DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss - current (Notes 4 and 7) Available-for-sale financial assets - current (Notes 4 and 10) Held-to-maturity financial assets - current (Notes 4, 5 and 11) Financial assets at amortized cost - current (Note 9) Notes receivable (Notes 4, 5 and 14) Trade receivables (Notes 4, 5 and 14) Trade receivables from related parties (Notes 4, 5, 14 and 30) Other receivables (Notes 4 and 14) Other receivables from related parties (Notes 4 and 30) Current tax assets (Note 25) Inventories (Notes 4 and 15) Debt investments with no active market - current (Note 13) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through profit or loss - non-current (Notes 4 and 7) Financial assets at fair value through other comprehensive income - non-current (Notes 4 and 8) Available-for-sale financial assets - non-current (Notes 4 and 10) Financial assets measured at cost - non-current (Notes 4 and 12) Investments accounted for using equity method (Notes 4 and 16) Property, plant and equipment (Notes 4 and 17) Investment properties (Notes 4 and 18) Other intangible assets (Note 4) Deferred tax assets (Notes 4, 5 and 25) Prepayment for equipment Refundable deposits Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loans (Note 19) Financial liabilities at fair value through profit or loss - current (Notes 4 and 7) Notes payable Trade payables Trade payables to related parties (Note 30) Other payables (Note 22) Other payables to related parties (Note 30) Current tax liabilities (Notes 4 and 25) Current portion of long-term borrowings and bonds payable (Note 19) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Note 19) Deferred tax liabilities (Notes 4 and 25) Net defined benefit liabilities - non-current (Notes 4 and 21) Guarantee deposits received Total non-current liabilities Total liabilities EQUITY (Note 22) Share capital Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Exchange differences on translating foreign operations Unrealized gain on Financial assets at fair value through other comprehensive income Unrealized gain or loss on available-for-sale financial assets Total other equity Total equity TOTAL		2018 Amount % $ 557,442 5 86 - - - - - 68,946 1 1,293 - 2,121,827 18 110,001 1 17,784 - 6,458 - 5,245 - 997,780 8 - - 9,352 - 3,896,214 33 30,975 - 330,925 3 - - - - 5,604,216 47 1,894,487 16 115,474 1 170 - 28,654 - 50,827 - 1,008 - 8,056,736 67 $ 11,952,950 100 $ - - - - - - 577,266 5 635,993 5 354,404 3 3,221 - - - 46,875 1 8,486 - 1,626,245 14 1,350,000 11 145,490 1 68,033 1 12,342 - 1,575,865 13 3,202,110 27 3,097,570 26 1,665,116 14 1,349,083 11 222,793 2 2,671,184 22 4,243,060 35 (359,923) (3) 105,017 1 - - (254,906) (2) 8,750,840 73 $ 11,952,950 100		2017
				Amount % $ 798,761 6 - - 39,657 - 45,680 1 - - 1,083 - 2,072,532 16 69,939 1 14,425 - 19,782 - - - 956,153 8 39,200 - 11,721 - 4,068,933 32 - - - - 512,967 4 37,322 - 5,786,886 46 2,109,112 17 137,132 1 543 - 42,271 - 6,940 - 2,728 - 8,635,901 68 $ 12,704,834 100 $ 549 - 1,265 - 276 - 428,413 3 702,531 6 395,778 3 2,974 - 23,239 - 62,500 1 10,984 - 1,628,509 13 1,696,875 13 182,393 1 62,024 1 12,334 - 1,953,626 15 3,582,135 28 3,097,570 24 1,665,224 13 1,252,818 10 222,793 2 2,767,383 22 4,242,994 34 (264,137) (2) - - 381,048 3 116,911 1 9,122,699 72 $ 12,704,834 100

The accompanying notes are an integral part of the financial statements.

TXC CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Note 23) Sales Less: Sales returns Less: Sales allowances Net operating revenue COST OF GOODS SOLD (Notes 15 and 24) GROSS PROFIT UNREALIZED INTER-COMPANY GAIN REALIZED GAIN ON INTER AFFILIATE ACCOUNTS REALIZED GROSS PROFIT OPERATING EXPENSES (Notes 4 and 24) Selling and marketing expenses General and administrative expenses Research and development expenses Expected credit loss reversed on trade receivables Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other income (Notes 4 and 24) Other gains and losses (Note 24) Finance costs (Notes 4 and 24) Share of profit of associates and joint ventures Total non-operating income and expenses PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Note 25) NET PROFIT FOR THE YEAR		2018 Amount % $ 6,657,254 101 17,427 - 82,921 1 6,556,906 100 5,542,656 84 1,014,250 16 (1,064) - 2,634 - 1,015,820 16 245,375 4 119,397 2 327,119 5 (513) - 691,378 11 324,442 5 54,715 1 6,580 - (12,443) - 313,593 5 362,445 6 686,887 11 42,537 1 644,350 10		2017
				Amount % $ 7,158,878 101 20,397 - 83,517 1 7,054,964 100 5,800,259 82 1,254,705 18 (2,634) - 4,718 - 1,256,789 18 283,204 4 152,821 2 367,948 5 - - 803,973 11 452,816 7 49,977 1 176,895 2 (15,267) - 361,249 5 572,854 8 1,025,670 15 63,015 1 962,655 14 (Continued)

TXC CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized loss on investments in equity instruments at fair value through other comprehensive income Share of the other comprehensive income of associates accounted for using the equity method Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Share of the other comprehensive income of associates accounted for using the equity method Unrealized loss on available-for-sale financial assets Other comprehensive (loss) income for the year, net of income tax TOTAL COMPREHENSIVE (LOSS) INCOME FOR THE YEAR EARNINGS PER SHARE (Note 26) From continuing and discontinued operations Basic Diluted		2018 Amount % $ (10,620) - (146,774) (2) 6,424 - (150,970) (2) (94,043) (2) (1,743) - - - (95,786) (2) (246,756) (4) $ 397,594 6 $ 2.08 $ 2.06		2017
				Amount % $ (15,255) - - - (187) - (15,442) - (101,905) (2) (944) - (573,997) (8) (676,846) (10) (692,288) (10) $ 270,367 4 $ 3.11 $ 3.07
		$		$

The accompanying notes are an integral part of the financial statements.

(Concluded)

TXC CORPORATION

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2017 Appropriation of 2016 earnings Cash dividends distributed by the Company Legal reserve Other comprehensive income (loss) for the year ended December 31, 2017, net of income tax Net profit for the year ended December 31, 2017 Total comprehensive loss for the year ended December 31, 2017 BALANCE AT DECEMBER 31, 2017 Effect of retrospective application and retrospective restatements BALANCE AT JANUARY 1, 2018 AS RESTATED Appropriation of 2017 earnings Legal reserve Cash dividends distributed by the Company Net profit for the for the year ended December 31, 2018 Other comprehensive loss for the for the year ended December 31, 2018, net of income tax Total comprehensive income (loss) for the year ended December 31, 2018 Disposal of equity instruments at fair value through other comprehensive income Changes in capital surplus from investment in associates and joint ventures accounted for using the equity method BALANCE AT DECEMBER 31, 2018	Shares (In Thousands) Share Capital Capital Surplus 309,757 $ 3,097,570 $ 1,665,224 - - - - - - - - - - - - - - - 309,757 3,097,570 1,665,224 - - - 309,757 3,097,570 1,665,224 - - - - - - - - - - - - - - - - - - - - (108) 309,757 $ 3,097,570 $ 1,665,116	Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 1,151,202 $ 222,793 $ 2,789,106 - - (867,320) 101,616 - (101,616) - - (15,442) - - 962,655 - - 947,213 1,252,818 222,793 2,767,383 - - 102,957 1,252,818 222,793 2,870,340 96,265 - (96,265) - - (774,393) - - 644,350 - - (10,792) - - 633,558 - - 37,944 - - - $ 1,349,083 $ 222,793 $ 2,671,184	Others Unrealized Gain (Loss) on Financial Assets at Fair Exchange Value Through Unrealized Gain Differences on Other (Loss) on Translating Comprehensive Available-for-sale Foreign Operations Income Financial Assets $ (161,346) $ - $ 955,103 - - - - - - (102,791) - (574,055) - - - (102,791) - (574,055) (264,137) - 381,048 - 283,139 (381,048) (264,137) 283,139 - - - - - - - - - - (95,786) (140,178) - (95,786) (140,178) - - (37,944) - - - - $ (359,923) $ 105,017 $ -	Total Equity $ 9,719,652 (867,320) - (692,288) 962,655 270,367 9,122,699 5,048 9,127,747 - (774,393) 644,350 (246,756) 397,594 - (108) $ 8,750,840

The accompanying notes are an integral part of the financial statements.

TXC CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

		2018	2017
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax	$	686,887	$ 1,025,670
Adjustments for:
Depreciation expenses		294,404	367,396
Depreciation expenses of investment properties		21,658	22,255
Amortization expenses		558	1,255
Expected credit loss reversed on trade receivables		(513)	-
Impairment loss recognized on accounts receivables		-	(2,223)
Net (gain) loss on fair value change of financial assets and liabilities
designated as at fair value through profit or loss		(1,414)	306
Finance costs		12,443	15,267
Interest income		(8,103)	(7,217)
Dividend income		(1,527)	(2,288)
Share of profit of associates and joint ventures		(313,593)	(361,249)
Gain on disposal of property, plant and equipment		(1,232)	(66)
Gain on disposal of investment property		-	(50,061)
Gain on disposal of investment		-	(228,666)
Impairment loss recognized on financial assets		-	9,971
Write-down of inventories		4,995	-
Unrealized gain on the transactions with subsidiaries, associates and
joint ventures		1,064	2,634
Realized gain on the transactions with subsidiaries, associates and
joint ventures		(2,634)	(4,718)
Changes in operating assets and liabilities:
Financial assets mandatorily classified as at fair value through profit
or loss		10,010	-
Notes receivable		(211)	1,281
Trade receivables		(48,753)	351,689
Trade receivables from related parties		(40,090)	25,480
Other receivables		(9,217)	17,074
Other receivables from related parties		13,324	(18,765)
Inventories		(46,622)	(28,808)
Other current assets		2,369	47,073
Decrease in financial liabilities mandatorily classified as at fair
value through profit or loss		(1,265)	-
Financial liabilities held or trading		-	(13,445)
Notes payable		(276)	(480)
Trade payables		148,853	(176,762)
Trade payables to related parties		(66,538)	5,278
Other payables		(42,186)	(184,867)
Other payables to related parties		247	2,711
			(Continued)

TXC CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

Other current liabilities Defined benefit liabilities - non-current Cash generated from operations Interest paid Income taxes paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Proceeds on sale of financial assets at amortized co Increase in other financial assets Proceeds from sale of available-for-sale financial assets Proceeds on sale of financial assets at fair value through profit or loss Purchase of financial assets measured at cost Proceeds from sale of financial assets measured at cost Acquisition of associates Net cash outflow on acquisition of associates(Note 16) Net cash inflow on disposal of associates (Note 16) Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Proceeds from disposal of investment property Decrease in refundable deposits Payments for intangible assets Increase in prepayment for equipment Interest received Dividend received from associates Other dividends received Net cash generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Decrease in short-term borrowings Proceeds from long-term borrowings Repayments of long-term borrowings Proceeds from guarantee deposits received Refunds of guarantee deposits received Dividends paid to owners of the Company Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	2018 $ (2,498) (4,611) 605,529 (12,931) (64,010) 528,588 53,886 (71,004) 89,480 - - - - - (234,302) (1,746) 641,205 (104,393) 25,846 - 1,720 (185) (43,887) 8,716 3,205 1,527 370,068 (549) 400,000 (762,500) 8 - (774,393) (1,137,434) (2,541)	2017 $ (14,407) (9,542) 791,776 (14,828) (143,870) 633,078 - - - (39,200) 214,181 110,911 (1,772) 87,237 (26,540) - - (340,765) 1,272 56,674 11 - - 7,295 66,487 2,288 138,079 (19,731) 500,000 (512,500) - (13,973) (867,320) (913,524) 4,534 (Continued)

TXC CORPORATION

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars)

NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2018 $ (241,319) 798,761 $ 557,442	2017 $ (137,833) 936,594 $ 798,761

The accompanying notes are an integral part of the financial statements.

(Concluded)

Attachment (9)

Director candidates’ non-competitive activities list

Title	Name	Position for Other Companies	Position for Other Companies
Director	Lin, Jin-Bao	Liang Shing EcLife Corp.	Chairman
		Tai Shing Electronics Components Corporation	Director
		uPI Semiconductor Corp	Director
		Hantic precision technology , Inc	Juristic-person director representative
		Godsmith Sensor Inc.	Juristic-person director representative
Director	Lin, Wan-Shing	Tai Shing Electronics Components Corporation	Chairman
		NanjingInformation Corporation	Director
Director	Chen Chueh, Shang-Hsin	TSE Technology (Ningbo) Corporation	Chairman
		Tai Shing Electronics Components Corporation	Director
		Wei Lida TechnologyCo.,Ltd	Director
		Ningbo Longying Semiconductor Co., Ltd	Vice Chairman and Juristic-person director representative
Director	TLC Capital Co., LTD	Simplo Technology Co.,Ltd.	Director
Independent Director	Yu, Shang-Wu	Taisun Int’l (Holding) Corp.	Independent Director
Independent Director	Su Yan-Syue	Kinsus Interconnect Technology Corp.	Juristic-person director representative
		Zhong Yang Technology Co., Ltd	Independent Director

Attachment (17)

TXC Directors’ Shareholdings & Minimum Shareholdings Required

As of 04/13/2019	As of 04/13/2019	As of 04/13/2019
Title	Name	Holding Shares
Chairman	Lin, Jin-Bao	6,071,263
Director	Hsu, Der-Jun	4,304,603
Director	Lin, Wan-Shing	4,980,722
Director	Chen Chueh, Shang-Hsin	282,212
Director	Go, Tien-Chong	823,608
Director	TLC Capital Co., LTD	1,977,991
Director	Golden Talent Investment Holding co., Limited	1,588,000
Independent Director	Yu, Shang-Wu	0
Independent Director	Tsai, Song-Qi	0
Independent Director	Su Yan-Syue	0
Independent Director	Wang Chuan -Fen	0

Note:

1. TXC’s legal holding of all directors in number of shares are 12,390,281 shares.

2. As of April 13[th] 2019, the total shareholdings of all directors are 20,028,399 shares.