C.C.P. Contact Probes Co., Ltd. Annual Report 2018

C.C.P. Contact Probes Co., Ltd.

Annual Report 2018

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 and Chinese versions, the Chinese version shall prevail.

Annual Report Website

Market Observation Post System: http://mops.twse.com.tw

C.C.P. Website: http://www.pccp.com.tw

Publish Date: May 15, 2019

Stock Code

6217

Spokesman and Agent Spokesman

1.Spokesman: Huo-Liang Chen

Position: Chief Financial Officer

Telephone: (02) 2961-2525 Ext.228

E-mail: [email protected]

2. Agent Spokesman: Hao-Fan Yang

Position: Deputy Director

Telephone: (02) 2961-2525 Ext.316

E-mail: [email protected]

Main Company & Factory Contact Information

Head office:

Address: 5F., No.8, Lane 24, Ho Ping Rd., Panchiao District New Taipei City 220, Taiwan R.O.C.

Telephone: (02) 2961-2525

Fax: (02) 2961-0355

Stock Transfer Agency

Title: KGI Securities Co., Ltd.

Address: 4F., No.2, Sec. 1, Chongqing S. Rd., Zhongzheng District Taipei City 100, Taiwan R.O.C.

Telephone: (02) 2314-8800 Ext.6507

Website: www.kgi.com.tw

Most Recent Annual Financial Report Auditors

Title: PricewaterhouseCoopers Taiwan

Auditors: HSU, SHENG-CHUNG and FENG, MIN-CHUAN

Address: 27F, No.333, Keelung Road, Taipei City, Taiwan R.O.C.

Telephone: (02) 2729-6666

Website:www.pwc.tw

Non-Domestic Trading Center and Information Database for the Company’s Internationally

Traded Stocks: None.

C.C.P. company website: www.pccp.com.tw

Contents

I. Letter to Shareholders---------------------------------------------------------------------------------------1

1.1. Operating Performance 2018------------------------------------------------------------------------------2

1.2. Plan for 2019-------------------------------------------------------------------------------------------------3

1.3. Future Company Development Strategy-----------------------------------------------------------------4

1.4. External Environment, Legal Environment and the Overall Operating Environment-------------4

II.Company Profile---------------------------------------------------------------------------------------------5

2.1 Date of Incorporation----------------------------------------------------------------------------------------5

2.2 Company History--------------------------------------------------------------------------------------------5

III. Corporate Governance Report--------------------------------------------------------------------------8

3.1 Organization--------------------------------------------------------------------------------------------------8

3.2 Directors, Supervisors and Management Team--------------------------------------------------------12

3.3 Implementation of Corporate Governance--------------------------------------------------------------23

3.4 Information Regarding the Company’s Audit Fee and Independence-----------------------------47

3.5 Change of Independent Auditors-------------------------------------------------------------------------48

3.6 The Company’s Chairman, General Manager, or any Managerial Officer in Charge of Finance or

Accounting Matters Has in the Most Recent Year Held a Position at the Accounting Firm of Its

CPA or at an Affiliated Enterprise-----------------------------------------------------------------------48

3.7 Changes in Shareholding of Directors, Supervisors, Managers and Major Shareholders--------48

3.8 Relationship among the Top Ten Shareholders--------------------------------------------------------49

3.9 Ownership of Shares in Affiliated Enterprises---------------------------------------------------------50

IV. Capital Overview-----------------------------------------------------------------------------------------51

4.1 Capital and Shares-----------------------------------------------------------------------------------------51

4.2 Corporate Bonds-------------------------------------------------------------------------------------------57

4.3 Preferred Shares--------------------------------------------------------------------------------------------57

4.4 Global Depository Receipts-------------------------------------------------------------------------------58

4.5 Employee Stock Options----------------------------------------------------------------------------------58

4.6 List of Executives Receiving Employee Stock Options and the Top Ten Employees with Stock

Options-------------------------------------------------------------------------------------------------------59

4.7 Issuance of new shares due to acquisition of shares of another company--------------------------60

4.8 Implementation of fund usage plan----------------------------------------------------------------------60

V. Operation Highlights--------------------------------------------------------------------------------------61

5.1 Business Activities-----------------------------------------------------------------------------------------61

5.2 Market and Sales Overview-------------------------------------------------------------------------------67

5.3 Human Resources During the Past Two Years----------------------------------------------------------73

5.4 Information on Environmental Protection Costs-------------------------------------------------------73

5.5 Labor Relations---------------------------------------------------------------------------------------------75

5.6 Important Contracts-----------------------------------------------------------------------------------------77

VI. Financial Information------------------------------------------------------------------------------------77

6.1 Five -Year Financial Summary----------------------------------------------------------------------------77

6.2 Five - Year Financial Analysis----------------------------------------------------------------------------81

6.3 Supervisor’s Report in the Most Recent Year-----------------------------------------------------------85

6.4 Consolidated Statements and Report of Independent Auditor ---------------- ----85

6.5 Impact on the Company’s financial status if Company or its affiliates experience financial

difficulty-------------------------------------------------------------------------------------------------------85

VII. Review of Financial Conditions, Operating Results, and Risk Management---------------86

7.1 Analysis of Financial Status------------------------------------------------------------------------------86

7.2 Analysis of Operation Results----------------------------------------------------------------------------87

7.3 Analysis of Cash Flow------------------------------------------------------------------------------------88

7.4 Major Capital Expenditure Items: None----------------------------------------------------------------88

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

Investment Plans for the Coming Year------------------------------------------------------------------88

7.6 Analysis and Evaluation of Risk Matters--------------------------------------------------------------89

7.7 Other Significant Matters: -------------------------------------------------------------------------------92

VIII. Special Disclosure-------------------------------------------------------------------------------------93

8.1 Summary of Affiliated Companies----------------------------------------------------------------------93

8.2 Private Placement Securities in the Most Recent Year and as of the Date of this Annual Report:

8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year and as

of the Date of this Annual Report------------------------------------------------------------------------96

8.4 Other Necessary Supplement: None. ------------------------------------------------------------------96

IX. Any Events in the Most Recent Year and as of the Date of this Annual Report that Had

Significant Impacts on Shareholders’ Right or Security Prices as Stated in Item 3 Paragraph 2

of Article 36 of Securities and Exchange Law of Taiwan--------------------------------------------96

Attachment I. Consolidated Statements and Report of Independent Auditort-----------------97

- 1 -

I. Letter to Shareholders Dear Shareholders,

According to the development of the global political and economic situation in 2018,

since the beginning of 2017, President Trump’s "US priority" policy led to a rise in global

trade protectionism. In March 2018, the China-US trade war broke out. Under its influence,

manufacturers in China will face cost pressures and companies are beginning to consider

investing in other countries to reduce risks. However, China still has advantages, complete

supply chain. After the negotiations in early 2019, the United States has suspended a new

action in trade warfare. The situation should still be noted that enterprises should be

prepared for change.

Beside the risks of China-US trade war, the European debt problem may also come

back. The International Monetary Fund (IMF) pointed out that seven countries in Belgium,

Spain, France, Italy, Hungary, Portugal and the United Kingdom were warned of possible

financial turmoil. The deadline for Britain to leave the EU is imminent; the EU-UK

negotiation agreement remains unresolved. The global economy maybe affected by

EU-UK economic relatives. Other side, North Korea in talks with US President Trump,

although no agreement, but has opened the door to communication, the regional tension

has a little release.

The most important thing is the changes in China's economic. In recent years, China's

economic growth and international influence has been continuously enhanced. China's the

slowing pressure is accompanied by the impact of the CNY exchange rate, coupled with

factors such as its internal economic structure and local debt, which lead to an increase in

corporate risk.

Taiwan’s economy is closely related to China and the United States, and has

performed well in the first half of the year. However, since the third quarter, the effect of

China-US trade war has broke out. In the second half of the year, all parties and the

industry has turned conservative and influencing Taiwan's economic growth. But the

government has promised to actively solve the problems of enterprises and began to face

up to the attraction and introduction of international talents, and cooperate with the policy

of direction and encourage long-term investment of enterprises. Business changes and the

expansion of new markets, so in the field of Taiwan's original specialization, high-tech

industries such as semiconductors, consumer electronics, displays, etc., are expected to

continue to grow.

Although the investment has rebounded, the China-US trade war has continued. The

international forecasting agencies consider that global trade growth in 2019 will not be as

good as that in 2018.

The China-US trade war and China's manufacturing costs continue to rise; the global

manufacturing focus sector has begun to move to other countries. The trend of

manufacturing globalization diversifies risks and also brings new market development

- 2 -

opportunities. For the market, a lack of killer applications in consumer electronics resulted

in the slow growth rate in shipment. The markets in 5G, AI, robots, drones, and autopilot,

and so on, have great potential instead. Consequently, the consumption of chips inside the

products increases. C.C.P. attempts to develop innovative products for IC test as a

countermeasure. Automatic production line is going to be proposed as a necessary option

for cost reduction to meet costumers' needs. Electric vehicle as a solution to PM2.5

pollution must become a new battlefield. C.C.P. applies for patents for the overall

arrangement in this vital field. C.C.P. can earn the most profit for our investors by our

innovative products and existing technique which are valid.

1.1. Operating Performance 2018

С.С.P's net sales ended at 1,773,756 thousand NTD compared to last year 1,892,314

thousand NTD (6.27% reduced). Gross profit equals 627,428 thousand NTD (11.08%

reduced). Earnings before tax is 92,786 thousand NTD which reduced 48.35% from 2018.

EPS after tax reached 0.95 NTD, showed reduced of 58.33% compare to 2.28 NTD in 2017.

Forecasting 2019, company expects better performance in sales and profit, under the precise

performance index and the environment where global economy grows.

2018 Business Result and Financial and Profitability Ratio are as below:

1. 2018 Business Result

Unit：Thousand NTD

Account 2018 2017 Difference Rate

Operating Revenues 1,773,756 1,892,314 (6.27)

Cost of Goods Sold 1,146,328 1,186,695 (3.40)

Gross Profit 627,428 705,619 (11.08)

Operating Expenses 564,357 501,835 12.46

Operating Income 63,071 203,784 (69.05)

Income Before Tax 92,786 179,636 (48.35)

2. Financial and Profitability Ratio

2018 2017

Finance Structure

(%)

Debt to Asset ratio 29.27 27.12

Long-term fund to property, plant and equipment assets ratio 444.57 576.97

Solvency (%) Current Ratio 313.82 360.53

Quick Ratio 254.57 313.50

Profitability (%)

Return on Assets Ratio 2.55 6.91

Return on Equity Ratio 3.54 9.53

Earnings Per Share (NTD) 0.95 2.28

- 3 -

3. Research and Development

The laser module and ToF module with the high operating frequency and high

data rate for detection become necessary with the raise of autopilot and 5thG

communications. The IC probe technology that we own now must be updated in

time even ahead to meet these harsh test needs. According to rapid charging

demand, the corresponding connector has to tolerate higher current via special

structure design, specific materials selection, and new plating layer development.

Although the China-US trade war has effected the China IC companies. We still

cannot ignore that the chip manufacturing capability of China has advanced

considerably. In other words, the demands of IC test instruments such as probes,

sockets, and probe cards are going to increase massively in several years. C.C.P.

is ready for this opportunity.

Following the instruction given by the C.C.P.'s chairman, we always focus on

the differentiation of our products. To employ our patents properly as powerful

weapons, an intellectual property team has established inside C.C.P. this year.

Besides the team, the personnel from external research institutions have been

included in strategy to tune the patents we own for maximum effect. We believe that

C.C.P. will dominate the harsh market with this innovative arrangement by keeping

the products unique.

1.2. Plan for 2019

1. Operating Direction

i. Vision: To be the leading brand of high quality and reliable customized connectors

in the world.

ii. Strategy:

a. Conduct strategic alliances and mergers and acquisitions.

b. Introduce new technologies and develop new products and new markets.

c. Facilitate the improvement of organizational structure and the integration of

human and system resources.

2. Production and Marketing Policies

i. Through the functional adjustment, revealing that C.C.P. attaches importance to

quality and customer experience. And to strengthen the production and quility

control.

ii. Develop high profits products and next generation products (with partners) to

distance from opponents and increase profit margins.

iii. Establish automated production lines for major products to expanding production

capacity, increasing yields, and reducing costs.

- 4 -

iv. Establish overseas bases and cooperate with international famous companies and

local industries to expand market share, especially in the region of development

after China-US trade war.

v. Increase the expansion of products in industrial applications such as electric

vehicles, medical electronics and energy industries.

1.3. Future Company Development Strategy

C.C.P. manufactures testing probes and probe-like connectors. We produce

highly efficient, customized, creative, and low-cost products. The future company

growth strategy with regards to product development is to cooperate closely with

world-class consumer electronics products manufacturers to reach targets: high

precision, diversity and high quality. In terms of business, with the development of

globalization, C.C.P. has established bases in Europe, Japan, Southeast Asia and

India to expand business. In addition, C.C.P. is also preparing for the corresponding

products for the rise of the automotive electronics and energy industries. In operating

management, company will be more competitive through close cooperation among

each business group, production automation and enhanced cost management. In the

future, C.C.P. will consistently be disciplined, studious, creative, and efficient getting

through all the difficulties. C.C.P.'s abundant experience and accumulated knowledge

will allow the company to deliver outstanding products to its customers, and give the

fruit back to all our respectable shareholders and colleagues.

1.4. External Environment, Legal Environment and the Overall Operating

Environment

The China-US trade war that broke out at the beginning of 2018 led to rapid

changes in the global bussiness enveriment, which brought risks and opportunities.

Thanks to the help of wise management team industrious employees, and loyal

shareholders, C.C.P. has successfully entered stable growth stage. In the area of

changing laws and regulations, C.C.P. will take necessary responses, both externally

and internally, to guarantee that the company stays internationally competitive. C.C.P.

aims to expand its customer base, increase its resources, and ultimately become a

leader in the industry. Special thanks and recognition to the shareholders who have

given feedback and supports to the company; the help C.C.P. has received is

invaluable.

I wish you good health and great fortune.

Sincerely,

Chen Chi-Feng

Chairman

- 5 -

II.Company Profile

2.1 Date of Incorporation

C.C.P. was officially established on Jan. 22nd, 1986.

2.2 Company History

Year Milestones

1986 C.C.P Industrial., Ltd established, initial capital of $6 million NTD, specializes in contact probe manufacturing and sales.

1996 Passed UK BSI ISO 9002 test, international quality proven; officially reached a new milestone.

1997 Awarded “Taiwan’s Model Enterprise” in the small and medium firm category by the

ministry of economics.

1998 Cash investment of $52 million NTD; corporate capital totaled $58 million NTD. Company restructure, name changed to “C.C.P Contact Probe Co., Ltd”.

1999

Cash investment of $32 million NTD, total capital at $90 million NTD. Became a sales agent for Japan’s company EIGHT, sold DVD and SDD static reduction equipment Invention of production technology, manufacturing costs effectively lowered.

2000

Additional $60 million NT added to corporate capital, also reinvested earnings of $14.66 million NT; corporate capital valued at $1.65 billion NTD. Innovation of new manufacturing technology, lower processing time, material needed, and operating costs. Obtained approval from the investment commission, set up Dongguan Contact Probe Co., Ltd..

2001

Public offering approved in May.. Ranked 61st in the list of “100 Fastest Growing Mid-size Companies” in Common Wealth Magazine, August issue. General fund transfer and reinvested earnings total $27,566,530 NTD; accumulated capital of $1.92 billion NTD

2002

Obtained UK BSI ISO 9001 (2000 version); establish electronic material department, product diversification to the cable industry. Cash investment of NT$21 million, general fund transfer and reinvested earnings of $7.05 million NTD, total NT $28.05 million; accumulated capital of $2.2 billion NTD.

2003 Stock publically traded on January 9. Earnings reinvestment of NT $23.5 million; accumulated capital of NT $2.43 billion.

2004 November 9, Earnings reinvestment of NT $30 million; accumulated capital of NT

$2.74 billion.

2005

October 7, Private placement of 13,000 thousand shares at $7.8 NTD per share; total privately raised capital $1.01 billion from Hanil Cement Company. December 16, Election of directors and supervisors in extraordinary meeting of shareholders, Hanil Cement obtained two director seats and 1 supervisor seat.

2006 January 11, Privately raised capital of $1.01 billion NTD; change in capital of $4.04

billion NTD.

2007 October 5, Investment reduction of 500 thousand treasury stocks.

2008 January 15, Inauguration of chairman Chih-Feng Chen . March 12, Investment

reduction of 446 thousand treasury stocks.

- 6 -

Year Milestones

2009 August 31, Issuance of secured convertible corporate bond approved by the Board of

Directors.

2010

September 30, Issuance of employee stock option approved by the Board of Directors.

October 1, Official adoption of SAP corporate material management system. December 3, The Board of Directors approved the case that joint venture with Liang Haw Technology and the amount of investment is NTD 50 million.

2011

March 14, Second issuance of secured convertible corporate bond approved by the Board of Directors. Awarded the Deloitte Technology Fast 500 Asia Pacific Praise in 2010.

April 29, The Board of Directors approved to release the dividend of 2010. April 29, Capital increasing via issuing new shares of 1,308,655 by retained earnings. June 17, Increasing investment NTD 50 million to Mega Master Technology Co., Ltd.. December 26, The Board of directors approved to set up a Remuneration Committee.

2012

April 10, Establish a Planning Office and Industrial Safety Office. April 10, The Board resolved an NTD 150,000 thousand investment to sub-subsidiary

Dongguan C.C.P. Contact Probes Co., Ltd. April 26, The Board of Directors approved to release the dividend of 2011. April 26, Capital increasing via issuing new shares of 2,257,199 by retained earnings.

Awarded The Deloitte Technology Fast 500 Asia Pacific Praise in 2011. April 26, Disclosure the items of the financial statement influence by IFRS. May 7, Third issuance of Unsecured convertible corporate bond approved by the

Board of Directors. May 21, Obtained UK BSI ISO 14001 (2004 version). August 1, Adoption of Enterprise Information Portal system to enhance e-business.

2013

Awarded the Deloitte Technology Fast 500 Asia Pacific Praise in 2012.

March 22, The Board of Directors approved to release the dividend of 2012.

March 22, Capital increasing via issuing new shares of 481,034 by retained earnings.

May 20, Sold invested company MegaMaster shares.

2014

Industrial connector and high current connector product lines start contributed revenue after long development. Combined with booming revenue growth from Pogo Pin connectors, 2014 consolidated revenue and net income achieved historical high. April 25, The Board of Directors approved to release the dividend of 2013. April 25, The Board of Directors approved capital increasing via issue new shares of

489,019 by retained earnings.

2015

April 24, The Board of Directors approved to release the divined of 2014. April 24, The Board of Directors approved capital increasing via issue new shares of

509,648 by retained earnings. April 24, The Board of Directors approved to C.C.P. plans to set up subsidiary

(named C.C.P. U.S.A.) to become the U.S. customers’ contact window. The capital of the subsidiary will be controlled within 250,000USD.

June 29, Chih-Feng Chen and 32 people purchased C.C.P. securities. July 3, Hanil Cement Investment – Yuanta Bank, Director and major shareholders,

was discharged from the office of director because it transferred more than one half of the company's shares being held by its at the time it is elected.

October 14, The Board of Directors approved to set up the audit committee. October 5, Directors Election ( including independent directors). November 12, The Board of Directors approved to resolved an NTD 200,000

thousand investment to sub-subsidiary Shang Chuan Investment Co., Ltd..

- 7 -

Year Milestones

2016

March 24, The Board of Directors approved to release the divined of 2015. March 24, The Board of Directors approved capital increasing via issue new shares

of 2,377,809 by retained earnings. May 12, The Board of Directors approved to issue shares of 1,500,000 by restricted

stock for employees. November 8, The Board of Directors approved to issue shares of 4,000,000 by issue

of employee stock option certificates.

2017

March 17, The Board of Directors approved capital increasing via issue new shares of 632,130 by retained earnings.

March 17, The Board of Directors approved to release the dividend of 2016. May 11, C.C.P.'s subsidiary company, Shang Chuan Investment Co., Ltd., invested

NTD 30 million to Apex Probes Technology Co., Ltd. and got approved for the establishment of registration.

June 25, C.C.P.'s subsidiary company, Apex Probes Technology Co., Ltd.,has increased its capital in cash by issuing 20,000,000 new shares on June 25, 2017. C.C.P.'s subsidiary company, Shang Chuan Investment Co., Ltd., did not subscribe for 40% shares, thereby becoming a 60% shareholder.

2018

March 23, The Board of Directors approved to write off the restricted employee rights to 18,000 new shares.

March 23, The Board of Directors approved to release the cash divined of 2017. March 23,The Board of Directors approved, the company has comprehensive

re-elected the directors (including independent directors),at the 2018 Annual Shareholders’ Meeting.

April 27, The Board of Directors approved to IndependentDirector qualification case June 15, The Board of Directors approved Chih-Feng ChenDirector be the chairman. July 30, DirectorThe Board of Directors approved to buy shares of 24,000 by

restricted stock from employees. Auguest 14, The company invested in MEGA CRYSTAL LTD., with an investment

amount of 15 million holding 100% equity. Auguest 14, MEGA CRYSTAL LTD., a subsidiary of the Company, invested in

Dongguan Tongxing Precision Components Co., Ltd. with an investment amount of 15 million and holds 100% equity.

October 11, One Test Systems Co., Ltd., an investment subsidiary of Shangquan Investment Co., Ltd., a subsidiary of the Company, has an investment amount of RMB 24,271 and holds 73.39% of the shares.

Deceber 14, One Test Systems, an investment company of One Test Systems Co., Ltd., the company's investment company, has an investment of 7.7 million and holds 100% of the shares.

Deceber 20, One Test Systems Co., Ltd., an investment company of the company's grand company, is a wholly-owned company with an investment of 15 million and holds 100% of the shares.

2019

February 1,The Board of Directors approved to issue shares of 1,500,000 by restricted stock for employees.

March 20, The Board of Directors approved to choose one of IndependentDirector. March 20, The Board of Directors approved to IndependentDirector qualification

case. May 14, The Board of Directors resolved to cancel the purchase of 4,500 new shares

of employees with restrictions on employee rights.

- 8 -

III. Corporate Governance Report 3.1.Organization

(1)Organizational Chart

Chairman

President

President Office

Planning Office

Audit Committee

Remuneration Committee

Project Team

Shareholders’Meeting

Sales- Semiconductor

Board Of Directors

Chairman Office

Audit Office

Sales- Connector

R&D Quality

Assurance Manufacturing Material Addministration Financial

R & D Center

Probe Research Center

Engineering Safety Section

- 9 -

3.1.2 Major Corporate Functions

Department Functions

Chairman Office

1. Responsible for major strategic planning of corporate governance.

2. The overall financial planning and investment management development.

3. Evaluation on new technologies along with the risk and opportunities of investment.

Audit Committee

1. Fair presentation of the financial reports of this Corporation.

2.The hiring (and dismissal), independence, and performance of certificated public accountants of this Corporation.

3.The effective implementation of the internal control system of this Corporation.

4. Compliance with relevant laws and regulations by this Corporation.

5. Management of the existing or potential risks of this Corporation.

Remuneration Committee

1.Responsible for assisting the board of directors’ implementation and evaluation of whole corporate remuneration and welfare policy.

2. Regularly review the remuneration of directors, supervisors and managers.

Audit Office 1. Ensure the efficiency of the internal control system.

2. Audit planning and execution.

President Office

1. Control of sales and execution, adjustment of supplies, operating target and related plans and execution; oversee all departments and their operations.

2. Assist the President in managing and planning for every department to ensure tasks are carried out efficiently and achieve operational goals.

R & D Center

1. New technology assessment and research and development. 2. Formulate new product and project development progress. 3. Develop medium and long-term research and development plans. 4. Assist the chairman of the board to coordinate and horizontally link technical

issues.

Planning Office

1.Research internal, corporate, as well as global market trends and competitive analysis.

2. Promote and implement operating policies.

3. Establishment of medium and long term strategic planning, implementation and review.

Industrial Safety Office

1.Responsible for overall planning, supervision and implementation of workplace safety and environment related matters.

2. Fire equipment maintenance, waste and waste-water treatment.

3. Ensure that the company implements standards for environmental protection regulations and occupational safety and health regulations.

Manufacturing Department

1. Plan, develop and improve in production process.

2. Execute capacity expansion plan to achieve operational goals of company.

3. Execute routine inspection and maintenance for production facilities.

4. Assist R&D in sample manufacturing, assembly and inspection operations.

- 10 -

Sales Department - Connector

1. Understand domestic and international market demand; to increase sales volume considering a particular period of time and continuously expand market share.

2. Develop domestic and international business relations, meet the customer demand with appropriate supply and also project follow-up.

3. Obligated in customer credit management, order and also payment management.

4. Emerging market development, explore customers’ potential demands and set up marketing strategy.

Sales Department -Semiconductor

1. Understand domestic and international market demand; to increase sales volume considering a particular period of time and continuously expand market share.

2. Develop domestic and international business relations, meet the customer demand with appropriate supply and also project follow-up.

3. Obligated in customer credit management, order and also payment management.

4. Emerging market development, explore customers’ potential demands and set up marketing strategy.

Research & Development Department

1. Keep up with the market changes and new trends; develop competitive products and appropriate mass production.

2. Bring innovative technologies into manufacturing process to enhance competitive edge.

3. Automated production technology development and adaptation.

4. Product patent applications and maintenance.

5. Provide technology assessment and function verification for new products.

Quality Assurance Department

1. Inspection of raw materials as well as unfinished and finished products.

2. Continue improving inspection methods and inspectors’ efficiency, product quality and establish the reliable quality management system.

3. Timely solutions for abnormal quality issues and customer complaints.

4. Examine, maintain, and recalibrate testing equipment.

5. Implement ISO9001 and 14001 quality policy.

6. Implement green product systems and forbid using controversial minerals to build up a Green Supply Chain.

Material Department

1. Purchase raw materials, components, work-in-process or finished products, machine equipment, and maintain qualified vendor relationship as well as adding new vendors to get up with market trends. In addition, manage material supplies stable and shorten delivery time.

2. Total purchasing, labor cost and raw material cost analysis.

3. Capacity planning, material requirement control, warehouse storage, transportation, and inventory management.

4. Comprehensive utilization of manufacturing sources to enhance production capacity.

- 11 -

Finance Department

1. Complete financial statements and disclose the related information to public.

2. Control budget, plan cash flows, and manage financial risk.

3. Build accounting systems; maintain account books, tax filing and planning.

4. Maximize financial interests by means of investment tools and financial planning.

5. Verify and file work of the cashier and all accounting vouchers, and manage the property list.

6. Provide timely accounting information for top management’s consideration for business strategy.

Administration Department

1. Management system setup, policy declaration and notice release.

2. General administration, human resources, on-job training, maintenance of public facilities and the environment.

3. Development and security management for MIS, network infrastructure, hardware/ software management and maintenance.

4. Corporate legal affairs and contract management.

5. Board of Directors, shareholder meeting, stock affairs and other activities preparation.

Project Team

1. Control the overall progress of the company's sales projects.

2. Effective allocation of resources for key projects.

3. Inter-departmental coordination and horizontal communication.

4. Provide business product marketing information and materials.

- 12 -

3.2 Directors, Supervisors and Management Team 3.2.1 Directors and Supervisors (1) Directors and Supervisors

As of April 29,2019 Unit:share

Title

Nationality/

Country of

Origin

Name Gender Date Elected Term

(Years)

Date First

Elected

Shareholding when Elected Current shareholding Spouse & Minor

shareholding

Shareholding by

Nominee

Arrangement Experience (Education) Other position

Executives, Directors or

Supervisors who are spouses or

within two degrees of kinship

Shares % Shares % Shares % Shares % Title Name Relation

Chairman Republic

of China

Chih-Feng

Chen Male 2018/06/15 3 2005/10/26 3,585,679 6.03% 3,776,397 5.92% 0 0.00% 0 0.00%

MBA of American

Graduate School of

International Management

MasterLink Securities

Corporation Deputy

General Manager

General Manager of

C.C.P. Contact Probe Co.,

Ltd. Chairman of Amass

Star Venture Capital Co.,

Ltd. Chairman of Apex

Probes Technology Co.,

Ltd

None None None

Director Republic

of China

Li-Chi

Investment

Co., Ltd.

- 2018/06/15 3 2015/10/05 2,320,126 3.95% 2,437,060 3.82% 0 0.00% 0 0.00% None Chairman of Harvatek

Corporation None None None

Director Republic

of China

Li-Yi

Investment

Co., Ltd.

- 2018/06/15 3 2018/06/15 2,000,000 3.13% 2,000,000 3.13% 0 0.00% 0 0.00% None

INTERNATIONAL

CARBIDE TECHNOLOGY

CO., LTD.

None None None

Director Republic

of China Ching-Yu Lin Male 2018/06/15 3 2015/10/05 202,679 0.34% 203,803 0.32% 0 0.00% 0 0.00%

Thunderbird School of

Globel Managemnet

General Manager of Dong

guan C.C.P. Contact

Probes Co., Ltd.

TMOT INNOVATION INC

Director

XTRANS CREATIVE

INC.) Director

None None None

Director Republic

of China

Tsung-Ming

Tsai Male 2018/06/15 3 2015/10/05 122,542 0.21% 294,957 0.46% 0 0.00% 0 0.00%

Graduate institute of

Finance of National

Central University Yau

Thai Venture Capital

Investment Manager

General Manager of

DongGuan C.C.P. Contact

Probe Co., Ltd.

None None None

Director Republic

of China

Bor-Chen

Tsai Male 2018/06/15 3 2015/10/05 242,435 0.41% 254,851 0.4% 0 0.00% 0 0.00%

Graduate institute of

Engineering Science of

National Cheng Kung

University ITRI Deputy

Manager

General Manager of

C.C.P. Contact Probe Co.,

Ltd.

General Manager of Apex

Probes Technology Co.,

Ltd.

None None None

- 13 -

Title

Nationality/

Country of

Origin

Name Gender Date Elected Term

(Years)

Date First

Elected

Shareholding when Elected Current shareholding Spouse & Minor

shareholding

Shareholding by

Nominee

Arrangement Experience (Education) Other position

Executives, Directors or

Supervisors who are spouses or

within two degrees of kinship

Shares % Shares % Shares % Shares % Title Name Relation

Independe

nt Director

Republic

of China

Kang-Chi

Chou Male 2018/06/15 3 2015/10/05 0 0.00% 0 0.00% 0 0.00% 0 0.00%

The University of St.

Thomas St. Paul,

Minnesota Master of

International Business

Management Concord

Securities Co., Ltd.

Chairman Capital

Securities Corp. General

Manager、Senior Advisor

ROC Co., Ltd. Deputy

Chairman and General

Manager PharmaEngine,

Inc. Independent Director

Radium Life Tech. Co.,

Ltd. Independent Director

Chant Sincere

Independent Director

None None None

Independe

nt Director

Republic

of China

Chao-Meng

Huang Male 2015/10/05 3 2015/10/05 0 0.00% 0 0.00% 0 0.00% 0 0.00%

Ph.D., Master of Public

Administration, Florida

State University, USA

Lawyer, School of Law

and Business, Zhongxing

University (Department of

Public Administration)

National Policy Research

Foundation Consultant, Yi

Xin (share)

None None None None

Independe

nt Director

Republic

of China

Long-Zhen

Lin Male 2018/06/15 3 2016/06/24 0 0.00% 0 0.00% 0 0.00% 0 0.00%

Micrel,Inc., San Jose,

California Vice President

KENDIN Operation, San

Jose, California Vice

Design President

None None None None

Note : C.C.P. has established Audit committee to replace Supervisor in October of 2015.

- 14 -

(2) Professional qualifications and independence analysis of directors and supervisors As of April 29, 2019

Note: Please tick the corresponding boxes that apply to the directors or supervisors during the two years prior to being

elected or during the term of office.

1. Not an employee of the Company or any of its affiliates.

2. Not a director or supervisor of the Company or any of its affiliates. Not applicable in cases where the person is an

independent director of the Company, its parent company, or any subsidiary in which the Company holds, directly or

indirectly, more than 50% of the voting shares.

3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children,

or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding

shares of the Company or ranking in the top 10 in holdings.

4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of

the persons in the preceding three subparagraphs.

5. Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number

of outstanding shares of the Company or who holds shares ranking in the top five holdings.

6. Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or

institution which has a financial or business relationship with the Company.

7.Not a professional individual who is an owner, partner, director, supervisor, or officer of a sole proprietorship,

partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the

Company or to any affiliate of the Company, or a spouse thereof. These restrictions do not apply to any member of the

remuneration committee who exercises powers pursuant to Article 7 of the “Regulations Governing the Establishment

and Exercise of Powers of Remuneration Committees of Companies whose Stock is Listed on the TWSE or Traded on

the TPEx“.

8. Not having a marital relationship, or a relative within the second degree of kinship to any other director of the Company.

9. Not been a person of any conditions defined in Article 30 of the Company Law.

10. Not a governmental, juridical person or its representative as defined in Article 27 of the Company Law.

Criteria

Name

Meet One of the Following Professional Qualification Requirements, Together with at Least Five Years Work

Experience Independence Criteria(Note 4)

Number of Other Public Companies in

Which the Individual is Concurrently Serving as an Independent

Director

An Instructor or Higher Position in a Department of Commerce, Law, Finance, Accounting, or Other Academic Department Related to the Business Needs of the Company in a Public or Private Junior College, College or University

A Judge, Public Prosecutor, Attorney, Certified Public Accountant, or Other Professional or Technical Specialist Who has Passed a National Examination and been Awarded a Certificate in a Profession Necessary for the Business of the Company

Have Work Experience in the Areas of Commerce, Law, Finance, or Accounting, or Otherwise Necessary for the Business of the Company

1 2 3 4 5 6 7 8 9 10

Chih-Feng Chen N N Y √ √ √ √ √ √ X

Li-Chi Investment Co.,

Ltd. Representative person： Owen

Wang

N N Y √ √ √ √ √ √ √ √ √ √ X

Li-Yi Investment

Co., Ltd

Representative

person：Su-Jin Li

N N Y √ √ √ √ √ √ √ √ √ √ X

Ching-Yu Lin N N Y √ √ √ √ √ √ √ √ √ √ X

Tsung-Ming Tsai N N Y √ √ √ √ √ √ √ √ X

Bor-Chen Tsai N N Y √ √ √ √ √ √ √ √ √ X

Kang-Chi Chou N N Y √ √ √ √ √ √ √ √ √ √ 3

Chao-Meng

Huang Y N N √ √ √ √ √ √ √ √ √ √ X

Long-Zhen Lin N N Y √ √ √ √ √ √ √ √ √ √ X

- 15 -

Table I：Major Shareholders of the institutional shareholders

As of Apr i l 29,2019 Name of institutional

shareholders

Major shareholders of the institutional

shareholders %

Li-Chi Investment Co., Ltd. WANG,BING-LONG 90%

WANG,YU 10%

Li-Yi Investment Co., Ltd

Su-Jin Li 10%

Li-Fu, Chen 10%

Li-xin, Chen 10%

Yu-xin, Tsai 10%

Table II：Training of Directors and Supervisors

Position

Title Name

Training

Date Organizers Course Name

Training

Time

Meets the listed

company directors and supervisors

training implement

Chairman Chih-Feng

Chen 11/13/2018

Foundation

for Securities

and Futures

Market

Development

1. Discussion on the influence of China-US trade disturbance on Chinese enterprises 2. Introduction and influence of company law

6 Y

Director WANG,YU

(Note1) 11/13/2018

Foundation

for Securities

and Futures

Market

Development

1. Discussion on the influence of China-US trade disturbance on Chinese enterprises

2. Introduction and influence of

company law

6 Y

Director Su-Jin Li

(Note 2) 11/09/2018

Corporate

Governance

Association

1. Discussion on the legal issues

of instant messaging

2. The impact and response of

the latest company law

amendments to the company and

Director

6 Y

Director Ching-Yu

Lin 11/13/2018

Foundation

for Securities

and Futures

Market

Development



company law

6 Y

Director Tsung-Ming

Tsai 11/13/2018

Foundation

for Securities

and Futures

Market

Development



company law

6 Y

Director Bor-Chen

Tsai 11/13/2018

Foundation

for Securities

and Futures

Market

Development



company law

6 Y

Independent

Director

Kang-Chi

Chou

05/08/2018

07/27/2018

Taiwan Stock

Exchange

Foundation

for Securities

and Futures

Market

Development

1. The new version of the

Corporate Governance Blueprint

Summit

2. The public offering company's

insider equity transaction law

compliance announcement

meeting

6 Y

- 16 -

Independent

Director

Long-Zhen

Lin 11/13/2018

Foundation

for Securities

and Futures

Market

Development



company law

6 Y

Note 1：Wang Yu is the representative of Li-Chi Investment Co., Ltd..

Note 2：Su-Jin Li is the representative of Li-Yi Investment Co., Ltd..

Note 3：C.C.P. has established Audit committee to replace Supervisor in October of 2015.

- 17 -

3.2.2. Management Team As of April 29, 2019 Unit: share

Title Nationality/ Country of

Origin Name

Gender

Date Effective

Shareholding Spouse & Minor

Shareholding

Shareholding by Nominee

Arrangement Experience（Education） Other Position

Managers who are Spouses or Within Two Degrees of

Kinship

sharing % sharing % sharing % Title Name Relation

General Manager/

Vice President

Republic of China

Bo-Chen Tsai

Male 107/09/01 254,851 0.4% 0 0.00% 0 0.00%

Graduate institute of Engineering Science of National Cheng Kung University ITRI Deputy

Manager

General Manager of Apex Probes

Technology CO., Ltd. None None None

Vice President

Republic of China

Yan-Da, Peng

Male 108/02/01 0 0.00% 0 0.00% 0 0.00%

Department of Industrial Engineering,

Yuanzhi University GOGORO TAIWAN

SALES AND SERVICES LIMITED

Specialist

None None None None

Chief Financial Officer

Republic of China

Huo-Liang Chen

Male 100/10/15 105,959 0.17% 0 0.00% 0 0.00%

Executive Master of Business

Administration, NCTU Financial manager of Syncomm technology

None None None None

Note: The general manager of the company, the manager responsible for the financial or accounting affairs, has not worked in the current account of the current accountant or its

affiliated enterprise within the last year.

Table I：Company manager training situation

Title Name Training Date Organizers Course Title Training Time

Chairman Chih-Feng Chen

107/11/13 Securities & Futures Institute Discussion on the Influence of China-US Trade Disputes on

Chinese Enterprises 3

107/11/13 Securities & Futures Institute Introduction of company law and influence 3

President Bo-Chen Tsai 107/11/13

Securities & Futures Institute Discussion on the Influence of China-US Trade Disputes on

Chinese Enterprises 3

107/11/13 Securities & Futures Institute Introduction of company law and influence 3

Chief

Financial

Officer

Huo-Liang Chen 107.11.22

107.11.23

Accounting research & Development

Foundation

Issuer Securities Dealer Stock Exchange Accounting

Supervisor 12

Audit

supervisor Xue-Gui Yang

107.8.14 Accounting research & Development

Foundation

New IFRS15 income accounting under the internal control

practice 6

107.8.20 Accounting research & Development

Foundation New. One case of a break & fraud internal control 6

- 18 -

3.2.3. Remuneration of Directors, Supervisors, President and Vice President (1) Remuneration of Directors

As of December 31, 2018 Unit: NT$ Thousands

Title Name

Remuneration Ratio of Total

Remuneration

(A+B+C+D) to Net

Income (%) (Note

10)(%)

Relevant Remuneration Received by Directors Who are Also Employees Ratio of Total

Compensation

(A+B+C+D+E+F+G ) to

Net Income

(Note 10) (%)

Compensati

on Paid to

Directors

from an

Invested

Company

Other than

the

Company’s

Subsidiary

(Note11)

Base

Compensation (A)

(Note2)

Severance Pay

(B)

Bonus to Directors

(C)(Note3)

Allowances

(D)(Note4)

Salary, Bonuses, and

Allowances (E)( Note 5)

Severance Pay

(F)

Profit Sharing- Employee Bonus (G) (Note 6)

The

compa

ny

All

compani

es in the

consolid

ate d

financial

stateme

nts

(Note7)

The

comp

any

Compani

es in the

consolid

ate d

financial

stateme

nts

(Note 7)

The

company

Compani

es in the

consolid

ate d

financial

stateme

nts (Note

7)

The

comp

any

Compani

es in the

consolid

ate d

financial

stateme

nts (Note

7)

The

comp

any

Compani

e s in the

consolid

at ed

financial

stateme

nts

(Note 7)

The

company

Compani

es in the

consolid

ated

financial

stateme

nts

(Note 7)

The

compa

ny

Compani

es in the

consolid

ate d

financial

stateme

nts

(Note 7)

The company

Companies in the

consolidated

financial

statements

(Note 7) The

company

Compani

e s in the

consolid

ate d

financial

statemen

ts

(Note7)

Cash Stock Cash Stock

Chairman Chih-Feng Chen

1,790 1,790 0 0 1,990 1,990 155 155 6.59 6.59 11,601 16,603 0 0 1,041 0 1,701 0 27.76 37.25 0

Director

Li-Chi Investment Co., Ltd.

Director

Li-Yi Investment Co., Ltd.

Director Tai-Sung Lo

Director Ching-Yu Lin

Director Tsung-Ming Tsai

Director Bor-Chen Tsai

Independ

ent

Director

Kang-Chi Chou

*Except from the content of the table above, all director’s services for the corporation inside the financial report (such as non-employee adviser) ：None

Note: Remuneration of year 2018 for director and employees has not been issued, the number within this report are estimated.

- 19 -

Range of Remuneration table

Range of Remuneration

Name of Directors

Total of (A+B+C+D) Total of(A+B+C+D+E+F+G)

The company

(Note8)

Companies in the

consolidated

financial statements

(Note9) I

The company

(Note8)

Companies in the

consolidated financial

statements (Note9)

Under NT$2,000,000

Chih-Feng Chen

Bor-Chen Tsai

Li-Chi Investment

Co., Ltd

Representative：

Owen Wang

Li-Yi Investment Co.,

Ltd

Representative：Su-Jin Li

Tai-Sung Lo

Ching-Yu Lin

Tsung-Ming Tsai

Kang-Chi Chou

Chao-Meng Huang

Long-Zhen Lin

Total10 people

Chih-Feng Chen

Bor-Chen Tsai

Li-Chi Investment

Co., Ltd

Representative：

Owen Wang


Ltd


Tai-Sung Lo

Ching-Yu Lin

Tsung-Ming Tsai

Kang-Chi Chou

Chao-Meng Huang

Long-Zhen Lin

Total 10 people

Li-Chi Investment

Co., Ltd

Representative：Owen Wang


Ltd


Tai-Sung Lo

Ching-Yu Lin

Tsung-Ming Tsai

Kang-Chi Chou

Chao-Meng Huang

Long-Zhen Lin

Total 8 people

Li-Chi Investment Co.,

Ltd

Representative：Owen

Wang


Ltd

Representative：Su-Jin

Li

Tai-Sung Lo

Ching-Yu Lin

Tsung-Ming Tsai

Kang-Chi Chou

Chao-Meng Huang

Long-Zhen Lin

Total 8 people

NT$2,000,001～NT$5,000,000 Bor-Chen Tsai Bor-Chen Tsai

NT$5,000,001～NT$10,000,000 Chih-Feng Chen Chih-Feng Chen

NT$10,000,001～NT$15,000,000

NT$15,000,001～NT$30,000,000

NT$30,000,001～NT$50,000,000

NT$50,000,001～NT$100,000,000

Over NT$100,000,000

Total 10 people 10 people 10 people 10 people

- 20 -

(2)Remuneration of Supervisors: Remuneration of Supervisors: C.C.P. has established Audit committee to replace Supervisor in October of 2015, so it is not applicable

(3) Remuneration of the President and Vice President

As of December 31, 2018 Unit: NT$ thousands

Title Name

Salary(A)

(註 2) Severance Pay (B)

Bonuses and

Allowances (C) (Note3) Profit Sharing- Employee Bonus (D) (Note4)

Ratio of total compensation

(A+B+C+D) to net income

(%)(Note 8)

Whethe

r or not to

receive remuner

ati on from

investing abroad (Note9)

The company

Companies in the consolida

ted financial

statements (Note 5)

The company

Companies in the

consolidated

financial statements (Note 5)

The company

Companies in the

consolidated


The company

Companies in the consolidated


The company

Companies in the consolidated


(Note 5) Cash Stock Cash Stock

General

Manager

Chih-Feng

Chen(Note 1)

5,103 5,959 0 0 3,821 3,828 1,900 0 1,900 0 18.13 19..57 0 General

Manager/ Vice

President

Bor-Chen

Tsai(Note2)

Note: Employees' remuneration for the year 2018 is not yet paid, and the amounts are all proposed.

Note 1：Chih-Feng Chen resesign the position of General Manager on Sepeber 1, 2018.

Note 2：Bor-Chen Tsai promote the position of General Manager on Sepeber 1, 2018.

- 21 -

(4) Managers Responsible for the Distribution of Employee Bonus Compensation

As of December 31, 2018 Unit: NT$ thousands

Title Name Employee Bonus -

in Stock (Fair Market Value)

Employee Bonus - in Cash

Total Rat io of Tota l Amount to Net

Income (%)

Ex

ec

utiv

e

Off

ice

rs

Chairman/ General Manager

Chih-Feng Chen

0 2,450 2,450 4.10% .

GM/ Vice President

Bor-Chen Tsai

Associate Vice President

Wei-Hao Liu (Note 1)


Huo-Liang Chen

Note: The Company's remuneration for the year 2018 is not yet paid and the amounts are all proposed.

Note1：Wei-Hao Liu resign on Janaury, 2019

3.2.4 Comparison of remuneration for directors, supervisors, presidents and vice presidents in the most recent two fiscal years by its dollar ratio to net profit after tax on income statement with analysis and explanations of the remuneration policy, standard and combination, and the procedure for remuneration policy establishment, which are related to management performance and future business risk.

(1) Proportion of the total compensation to net profit after tax %

Title

Proportion of the total compensation to net profit after tax %

2018 (Note1) 2017

The company All companies

within the financial report

The company All companies

within the financial report

Director 27.76%% 27.25% 22.49% 24.26%

Supervisor (Note2)

0.00% 0.00% 0.00% 0.00%

General Manager and Vice President

18.13% 19.57% 10.28% 10.28%

Range of Remuneration

Name of President and Vice President

The company Companies in the consolidated


Under NT$2,000,000

NT$2,000,001~5,000,000 Bor-Chen Tsai Bor-Chen Tsai

NT$5,000,001~10,000,000 Chih-Feng Chen Chih-Feng Chen

NT$10,000,001~15,000,000

NT$15,000,001~30,000,000

NT$30,000,001~50,000,000

NT$50,000,001~NT$100,000,000

Over NT$100,000,000

Total 2 people 2 people

- 22 -

Note 1: The Company's remuneration and employee remuneration for the year 2018 are not yet paid, and the amounts are all proposed.

Note 2: C.C.P. has established Audit committee to replace Supervisor in October of 2015, so it is not applicable.

(2) The policies, standards and combinations of payment of remuneration, the procedures for

determining remuneration, the relevance to business performance and future risks. If the annual accounts of the company still have surplus, after all taxes shall have been

paid in accordance with law, the remaining surplus shall be conducted as per the following order:

i. To make up loss. ii. Secondly, set aside ten percent of such profits as a legal reserve, however, if the legal

reserve should have reached the capital amount of the company, that shall not be subject to this limit.

iii. To allocate for legal reserve by law, or a certain proportion in its earnings as special reserve in accordance with the law.

iv.The remained surplus will be combined with beginning non-allocated retained earnings as the allocable cumulated profits to shareholders, the Board of Director shall prepare a surplus allocation proposal, and submit the said proposal to shareholders’ meeting for resolution of allocation.

The bonus policy of the company shall deem the situation of industry environment and to meet the long term financial planning, and under the premise of sustainable management steady development, and maximum protection of shareholders’ benefit can be obtained, the bonus allocation shall consider the future capital expenditures budget and the demand of fund, except that the allocable surplus of the current year, stipulated in sub-paragraph 4, paragraph 1 of this article, is less than 5% of the collected capital, the company may allocate no less than 15% of the allocable surplus of the current year, and also can be executed by cash dividend or stock dividend, where the allocation proportion of stock dividend can not be higher than 50% of total dividends.

To encourage the employees and management team, if earnings available when income before tax deducting employees’ compensation and remuneration of the directors, and covering the losses, the company shall distribute the earnings 8% to 20% as employees’ bonus, and no more than 4% to remuneration of directors and supervisors.

If the bonus allocated to employees is to be granted by stock or cash, and the remuneration of directors and supervisors is to be granted by cash only, the allocation shall be subject to the resolution by the board of directors wieh more than two-third appearance and concurrence of majority; desired to be reported to the meeting of shareholders.

The subordinated companies’ employees could be qualified for the bonus allocation; the terms and conditions of qualification shall be established by Board of Directors.

The remuneration of the directors, general manager and deputy general manager of the Company is handled in accordance with the relevant articles of association and personnel regulations. In addition to reference to the overall operating performance of the Company, we also refer to the individual achievement rate and the contribution to the performance of the company. The difference between the total amount of remuneration in the last two years and the net profit ratio after taxation is mainly due to the "limited employee rights new shares" recognized by IFRS in accordance with IFRS 2.

In summary, there is no risk of risk assessment.

- 23 -

3.3 Implementation of Corporate Governance

3.3.1 Board of Directors

A total of 5 (A) meetings of the Board of Directors were held in the previous period. The attendance of director and supervisor were as follows:

As of December 31, 2018

Title Name

Attendance

in Person

(B)

By

Proxy

Attendance

Rate (%) 【Ｂ/Ａ】

Remarks

Chairman Chih-Feng Chen 5 0 100% October5,2015 elected

Director

Li-Chi Investment Co., Ltd

Representative:Owen

Wang

5 0 100% October5,2015 elected

Director Li-Yi Investment Co., Ltd

Representative:Su-Jin Li 3 0 60% April27,2018 elected

Director Tai-Sung Lo 0 1 0% June 15, 2018 resigned

Director Ching-Yu Lin 4 1 80% October5,2015 elected

Director Tsung-Ming Tsai 5 0 100% October5,2015 elected

Director Bor-Chen Tsai 4 1 80% October5,2015 elected

Independent

Director Kang-Chi Chou 5 0 100% October5,2015 elected

Independent

Director Chao-Meng Huang 3 1 60%

Auguest 1, 2018

resigned

Independent

Director Long-Zhen Lin 5 0 100% June24,2016 elected

- 24 -

Other mentionable items:

1、The operation of the board of directors shall, if any of the following circumstances, specify the date,

period, the contents of the board of directors, the opinions of all independent directors and the treatment of the opinions of the independent directors.

(1) Items listed in Article 14-3 of the Securities Exchange Act

Board of Directors

Meeting Date Period The Contents of the Motion

Independent Directors’ Opinions

The Treatment of the Opinions

of the Independent

Directors

107/03/23 The 19th

time of the

7th

1. It is proposed to update the operating

procedures and control priorities of

the internal control system

"management operations of the audit

committee operations".

2. The board of directors nominates

candidates for independent

directors.

None Not

applicable

107/04/27 The 20th

time of the

7th

1. The company borrowing endorsement

guarantee of the Dong guan C.C.P.

Contact Probes Co., Ltd..

2. The company's manager salary

adjustment proposal.

3. The company's 2017 manager

performance bonus distribution

case.

4. Review of IndependentDirector

Qualifications.

None Not

applicable

107/06/15 The 1st time

of the 8th

1. Appointment of the Remuneration

Committee.

2. Appointment of the Second Audit

Committee.

None Not

applicable

107/07/30 The 2nd

time

of the 8th

1. The company's 2017 profit distribution

of the Director's compensation

distribution case.

2. Appoint a manager.

None Not

applicable

107/11/13 The 3rd

time

of the 8th

1. It is proposed to amend the Procedure

1.2 of “Production Cycle – Finished

Semi-finished Goods Storage”.

2. It is proposed to amend the Procedure

2.4 of “Sale and Collection

Cycle-Out or Delivery Management

Operations”.

3. It is proposed to amend the "Financing

Cycle - Petty Cash Operating

Procedures"

4. General Manager Bor-Chen Tsai 's

salary discussion.

None Not

applicable

2、 The implementation of the avoidance of the conflict of interests of the directors in the motion should

specify the name of the directors, the contents of the motion, the reasons for the avoidance of interests and participation in the voting situation:

(一)Director of the implementation of the avoidance of the interest bill is as follows

1.March23, 2018 The 19th time of the 7

th the content of the boarding meeting：The board of

- 25 -

directors nominates candidates for independent directors.

The avoidance of the directors:Kang-Chi Chou、Chao-Meng Huang、 Long-Zhen Lin

Directors；Reasons of the avoidance: Conflict of self-interests; Participation in voting: No

vote.

2. Arpil 27, 2018The 20th

time of the 7th Director the content of the boarding meeting：The

company's manager salary adjustment proposal.

The avoidance of the directors：Chi-Feng, Chen、Tsung-Ming Tsai Directors；Reasons of the

avoidance: Conflict of self-interests; Participation in voting: No vote.

3. Arpil 27, 2018 The 20th


company's 2017 manager performance bonus distribution case.

The avoidance of the directors：Chi-Feng, Chen、Tsung-Ming Tsai Directors；Reasons of the

avoidance: Conflict of self-interests; Participation in voting: No vote.

4. Arpil 27, 2018 the 20th

time of the 7th Director the content of the boarding meeting：Review of

IndependentDirector Qualifications.

The avoidance of the directors ： Kang-Chi Chou 、 Chao-Meng Huang 、 Long-Zhen

LinIndependentDirector；Reasons of the avoidance: Conflict of self-interests; Participation in

voting: No vote.

5.June 15, 2018 the 1st time of the 8

th Director the content of the boarding meeting：Appointment

of the Remuneration Committee.


LinIndependent Director；Reasons of the avoidance: Conflict of self-interests; Participation in

voting: No vote.

6. June 15, 2018 the 1st time of the 8

th Director the content of the boarding meeting：

Appointment of the second audit committee case.


LinIndependentDirector；Reasons of the avoidance: Conflict of self-interests; Participation in

voting: No vote.

7.July 30, 2019 the 2nd


company's 2017 profit distribution of the Director's compensation distribution case.

8. July 30, 2019 the 2nd

time of the 8th Director the content of the boarding meeting：Appoint a

manager.

The avoidance of the directors：Bor-Chen Tsai等Director；Reasons of the avoidance: Conflict

of self-interests; Participation in voting: No vote.

9.Noveber 13, 2019 the 3rd


general manager of the company Bor-Chen Tsai salary discussion.

The avoidance of the directors：Bor-Chen Tsai Director；Reasons of the avoidance: Conflict

of self-interests; Participation in voting: No vote.

3、The year and the latest year to strengthen the objectives of the Board of Directors and the

implementation of the situation assessment:

The Board of Directors passed the resolution on 2012/12/27 that the Remuneration Committee should formulate the "Distribution of Remuneration of Directors and Supervisors" and the "Manager's Performance Bonus and Employee Dividends", and on 201311/08 passed the Remuneration Committee's proposal to amend the " People's performance bonuses and employee bonus payment methods. By doing so, we could uphold the principle of fair distribution of the remuneration to the supervisors and managers. The Company has purchased liability insurance for directors and supervisors since 2004. The insured amount is USD 3 million. The current period of the directors' reimbursement is from March 22, 2018 to March 22, 2019 (the Company has since October 2015 set up the Audit Committee to replace the supervisor's authority), and increase the insurance coverage to USD 5 million.

- 26 -

3.3.2 Attendance of Audit Committee at Board Meetings

A total of 4 (A) Audit Committee meetings were held in the previous period. The

attendance of the independent directors was as follows:


Title Name

Attendance

in Person

(B)

By Proxy

Attendance

Rate (%)【B/A】

Remarks

IndependentDirector Kang-Chi Chou 4 0 100% October5,2015

elected

IndependentDirector Chao-Meng Huang 2 1 50% Auguest 1, 2018

resignation

IndependentDirector Long-Zhen Lin 4 0 100% June24,2016

elected


1、The operation of the Audit Committee is one of the following circumstances, should

specify the date of the board, period, the contents of the motion, the results of the

resolutions of the Audit Committee and the handling of the opinions of the Audit

Committee.

(1) Items listed in Article 14-5 of the Securities Exchange Act:

The Audit Committee

Meeting Date

Period The Contents of the Motion The Audit Committee

Review results

The Treatment

of the Opinions of the Audit

Committee

March 23, 2018

The 15th

time of the

1st

1. The company's 2017annual individual financial statements and consolidated financial statements.

2. Completion of the “Internal Control Self-Inspection Report” for the year of 2017

3. It is proposed to update the operating procedures and control priorities of the internal control system "management operations of the audit committee operations".

4.Director will nominate the IndependentDirector candidate.

All of the company’s attending members did not objection to the approval of the case

Not applicable.

April 27, 2018

The 16th

time of the

1st

1. The company intends to endorse

the loan endorsement of

Dongguan C.C.P. Contact Probes

Co., Ltd.

2. The company's manager salary

adjustment proposal.

3. The company's 106-year manager

performance bonus distribution

case.

4. Review the IndependentDirector

qualification.


Not applicable.

July 30, The 1st 1. The company's 2017 profit All of the company’s Not

- 27 -

2018 time of the 2

nd

distribution of the Director's

compensation distribution case.

2. Appoint a manager's case.

attending members did not objection to the approval of the case

applicable.

Noveber 12, 2018

The 2nd

time of the

2nd

1. It is proposed to amend the

Procedure 1.2 of “Production

Cycle – Finished Semi-finished

Goods Storage”.


Procedure 2.4 of “Sale and

Collection Cycle-Out or Delivery

Management Operations”.


"Financing Cycle - Petty Cash

Operating Procedures".

4. The company's general manager

Bor-Chen Tsai salary

discussion.


Not applicable.

(2) Except for the foregoing, other unapproved by the Audit Committee, and more than two-thirds of all directors agreed to the matter：None.

2. If there is any avoidance of motions in conflict of interest by Independent Director, the Independent Directors’ names, contents of motions, causes for avoidance and voting should be specified:

(1.) March23, 2018 The 16th time of the 1st the content of the audit Committee

meeting：The board nominated the IndependentDirector candidate.

The avoidance of the directors：Kang-Chi Chou、Chao-Meng Huang、Long-Zhen

LinDirector；Reasons for avoiding interests: self-interest relationship; participation in

voting: not participating in the voting.

(2.) April 16, 2018 The 16th time of the 1st the content of the audit Committee meeting：

Review the IndependentDirector Qualification.

The avoidance of the directors：Kang-Chi Chou、Chao-Meng Huang、Long-Zhen Lin等

IndependentDirector ； Reasons for avoiding interests: self-interest relationship;

participation in voting: not participating in the voting.

3. The communication between the independent director and the internal audit manager and the accountant(should include the company’s financial, business conditions to communicate matters, methods and results):

3.1.IndependentDirector communication with internal audit supervisor

(1)Communication between independent directors and internal auditor: The auditing section is an independent section that is attached to board of directors, which gives reporting routinely on board meeting. All departments execute self-auditing, including all operations are executed and followed documents to assure quality. The auditing result will be checked by their own department and reported to auditing section and the board of directors.

IndependentDirector communication with internal audit supervisor

The Meeting Date The Point of the Communication The Result of the

Execution

- 28 -

March 20, 2019 The Company's 2018 Annual

Internal Control Self-Inspection

Report has been completed.

None

(2)Communication between independent directors and accountant: Accountant communicates with independent directors by auditing section at regular financial year, according auditing standards, number 39, [Communication with unit under auditing]

- 29 -

3.3.3 Corporate Governance Implementation Status and Deviations from “the Corporate Governance Best-Practice Principles

for TWSE/TPEx Listed Companies”

Evaluation Item

Implementation Status Deviations from “the Corporate

Governance Best-Practice

Principles for TWSE/TPEx

Listed Companies” and

Reasons

Yes No Abstract Illustration

1. Does the company establish and disclose the

Corporate Governance Best-Practice Principles based

on “Corporate Governance Best-Practice Principles for

TWSE/TPEx Listed Companies”?

v The Company has established shareholder meeting rules of

procedure, board meeting rules of procedures and other

principals base on “Corporate Governance Best-Practice

Principles for TWSE/TPEx Listed Companies”. The

Company continually monitor top 10 shareholders’ holding

and pledge status; set up individual directors , remuneration

committee and audit committee ; use MOPS and

corporate website to provide real time information to

shareholders.

None

2. Shareholding structure & shareholders’rights

(1) Does the company establish an internal operating

procedure to deal with shareholders’suggestions,

doubts, disputes and litigations, and implement

based on the procedure?

(2) Does the company possess the list of its major

shareholders as well as the ultimate owners of those

shares?

(3) Does the company establish and execute the risk

management and firewall system within its

conglomerate structure?

(4) Does the company establish internal rules against

insiders trading with undisclosed information?

v

v

v

v

(1) The Company has spokesman, deputy spokesman and

professional stock transfer agents response

shareholders questions. To follow new corporate

governance regulation, The Company will revise related

internal control procedurals and sent for Board of

Directors approval.

(2) Stock transfer agent also monitor top 10 shareholders’

holding and pledge status. According to regulation, all

insider, including board members, supervisors,

managers, and over 10% shareholder have to declare

share holding status at MOPS every month.

(3)Rules and obligations are strictly regulated. Besides

Operating Procedures for Supervision of Subsidiaries,

Operating Procedures for Trading with Related-parties,

internal auditor also regularly monitor daily execution.

(4)To protect shareholders’ rights and fairly treat

shareholders, the Company has established the internal

rules to forbid insiders trading on undisclosed

Not yet disclose internal

control procedurals

None

None

None

- 30 -

Evaluation Item





Reasons


information. This rules has been disclosed on corporate

website.

3. Composition and Responsibilities of the Board of

Directors

(1) Does the Board develop and implement a

diversified policy for the composition of its

members?

(2) Does the company voluntarily establish other

functional committees in addition to the

Remuneration Committee and the Audit

Committee?

(3) Does the company establish a standard to

measure the performance of the Board, and

implement it annually?

(4) Does the company regularly evaluate the

independence of CPAs?

v

v

v

v

(1) Current board members has diversified experience such

as business, legal, finance, accounting, and corporate

related business management professionals.

(2) The Company has established Remuneration

Committee, Audit Committee and individual directors

according to law regulation, and provided related

proposals for Board of Directors approval. In the

future, other functional committees will be set up by

regulation or real needs requirements.

(3) Due to new announced regulation, The company will

formulate rules and procedures for evaluating the

Board’s performance in near future.

(4) The Company evaluates CPAs by independence and

profession, and selected by Board of Directors. Finance

Department also evaluate the actual execution and

verify the satisfaction.

None

None

Not yet disclose rules and procedures for evaluating the Board’s performance.

Not yet disclose rules and procedures for evaluating the CPAs.

4. Is the OTC Company listed in the Corporate

Governance Fulltime (Part-time) unit or person

responsible for corporate governance related

matters (Including but not limited to providing

information required by directors and supervisors to

perform their business, to handle matters related to

the meetings of the Board of Directors and the

v

There is management section on company’s website. Kinds

of management stuffs are charged by administration and

planning departments under duties assigned. Meanwhile,

legal department of company is responsible for providing all

needed documents to board of directors and functional

executive committee. And legal department deals stuffs

between board of directors and shareholders under law,

None

- 31 -

Evaluation Item





Reasons


Shareholders' Meeting in accordance with the law,

for company registration and change registration,

production of Board of Directors and Shareholders'

Meeting)?

take company registration and change of registration, take

record of meeting between board of directors and

shareholders.

5. Does the company establish a communication

channel and build a designated section on its

website for stakeholders, as well as handle all the

issues they care for in terms of corporate social

responsibilities?

v

The Company provides website contact function as direct

communication channel for customers, suppliers,

shareholder, and other stakeholders. The Company also

has spokesman and deputy spokesman to answer all kinds

of topics and questions for better communication.

None

6.Does the company appoint a professional

shareholder service agency to deal with shareholder

affairs?

v

The Company designates KGI Securities to deal with

shareholder affairs.

None

7. Information Disclosure

(1) Does the company have a corporate website to

disclose both financial standings and the status of

corporate governance?

(2) Does the company have other information

disclosure channels (e.g. building an English

website, appointing designated people to handle

information collection and disclosure, creating a

spokesman system, webcasting investor

conferences)?

v

v

The Company has set up a Chinese/English website

(www.pC.C.P..com.tw), and also leverage MOPS to disclose

information regarding the Company’s financials, business

and corporate governance status.

The Company has assigned an appropriate person to

handle information collection and disclosure. Investor

conference information is disclosed on the corporate

website.

None

None

8. Is there any other important information to facilitate a

better understanding of the company’s corporate

governance practices (e.g., including but not limited to

employee rights, employee wellness, investor

relations, supplier relations, rights of stakeholders,

directors’ and supervisors’ training records, the

implementation of risk management policies and risk

evaluation measures, the implementation of customer

relations policies, and purchasing insurance for

v

(1)The Company regularly arranges continuing courses for board directors (including independent directors) . And keep board directors (including independent directors)aware the update to date corporate governance status.

(2)The Company has assigned responsible person on risk

management and evaluation to make sure execution well.

None

- 32 -

Evaluation Item





Reasons


directors and supervisors)?

(3)The Company and stakeholders can communicate via

corporate website and contact window. Now the communication is more than satisfied.

(4)Unless special situation, both board directors (including

independent directors) will attend board meeting. If any member is related to proposal, he/she will not join vote for benefit conflict concern.

(5)The Company has purchased Board Member/Supervisor

liability insurance since 2004,and since 2007, the

amount of insurance for directors (including

independent directors) has increased from USD 3

million to USD 5 million.

9. Please review the results of the corporate governance evaluation issued by the Corporate Governance Center of the Taiwan Stock Exchange Co., Ltd. in

recent years, and to give priority to matters and measures that have not yet been improved:

(1) The results of the corporate governance evaluation issued by the Corporate Governance Center of the Taiwan Stock Exchange Co., Ltd.: C.C.P. is

evaluated top 6%-20% companies in years of 2018, and information transparence will be enhanced more.

(2) To give priority to matters and measures that have not yet been improved: Corporate Governance and Social Responsibility sections are added in the

company’s website. All information disclosure is under law. Meanwhile, the company will promote social responsibility.

- 33 -

3.3.4 Composition, Responsibilities and Operations of the Remuneration Committee

The Remuneration Committee assists the Board in discharging its responsibilities relating to the Company’s compensation and benefits policies, plans and programs, and the evaluation of the directors’ and executives’ compensation. The Chairman of the Remuneration Committee convened twenty-five regular meetings in 2018 The Remuneration Committee Charter is available on the Company’s corporate website.

(1) Professional Qualifications and Independence Analysis of Remuneration

Committee Members.

Title

Criteria

Name

Meets One of the Following Professional Qualification Requirements, Together with at Least Five Years’ Work Experience

Independence Criteria（Note）

Number of Other Public

Companies in Which

the Individu

al is Concurr

ently Serving as an

Remuneration

Committee

Member

Remarks

An instructor or higher position in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the Company in a public or private junior college, college or university

A judge, public prosecutor, attorney, Certified Public Accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the Company

Has work experience in the areas of commerce, law, finance, or accounting, or otherwise necessary for the business of the Company

1 2 3 4 5 6 7 8

Independent

Director

Kang-Chi Chou

N N Y √ √ √ √ √ √ √ √ 3 x

Independent

Director

Chao-Meng

Huang Y N N √ √ √ √ √ √ √ √ x

201808/01resign

ation

Independent

Director

Long-Zhen Lin

N N Y √ √ √ √ √ √ √ √ x x

committee

Sheng-Yu Tsai

N Y Y √ √ √ √ √ √ √ √ x x

Note:Please tick the corresponding boxes that apply to a member during the two years prior to being elected or during the term(s) of office.

1. Not an employee of the Company or any of its affiliates. 2.Not a director or supervisor of affiliated companies. Not applicable in cases where the person is an independent

director of the parent company, or any subsidiary in which the Company holds, directly or indirectly, more than 50% of the voting shares.

3. Not a natural-person shareholder who holds shares, together with those held by the person’s spouse, minor children, or held by the person under others’ names, in an aggregate amount of 1% or more of the total number of outstanding shares of the Company, or ranking in the top 10 in holdings.

4. Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three sub-paragraphs.

5. Not a director, supervisor, or employee of a corporate shareholder who directly holds 5% or more of the total number of outstanding shares of the Company, or who holds shares ranking in the top five holdings.

6. Not a director, supervisor, officer, or shareholder holding 5% or more of the shares of a specified company or institution which has a financial or business relationship with the Company.

7. Not a professional individual, who is an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the Company, or a spouse thereof.

8. Not a person of any conditions defined in Article 30 of the Company Law.

- 34 -

(2)Attendance of Members at Remuneration Committee Meetings:

There are 3 members in the Remuneration Committee. A total of 4 (A) Remuneration Committee meetings were held in the previous period. The attendance record of the Remuneration Committee members was as follows:


Title Name Attendance in

Person(B) By Proxy

Attendance Rate

(%) 【Ｂ/Ａ】 Remarks

Convener Kang-Chi Chou 4 0 100% October 14, 2015

elected

Committee

Member Chao-Meng Huang 2 2 50% Auguest 1,2018

resignation

Committee

Member Long-Zhen Lin 4 0 100% June 24,2017

elected

Committee

Member Sheng-Yu Tsai 1 0 25% Auguest 1,2018

elected


1. If the board of directors declines to adopt or modifies a recommendation of the remuneration committee, it

should specify the date of the meeting, session, content of the motion, resolution by the board of

directors, and the Company’s response to the remuneration committee’s opinion (eg., 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): None.

2. Resolutions of the remuneration committee objected to by members or subject to a qualified opinion and

recorded or declared in writing, the date of the meeting, session, content of the motion, all members’

opinions and the response to members’ opinion should be specified: None.

- 35 -

3.3.5 Corporate Social Responsibility

Evaluation Item


Social Responsibility BestPractice

Principles for TWSE/TPEx Listed

Companies” and Reasons

Yes No Abstract Explanation

1. Corporate Governance Implementation

(1)Does the company declare its corporate social

responsibility policy and examine the results of the

implementation?

(2)Does the company provide educational training on

corporate social responsibility on a regular basis?

(3)Does the company establish exclusively (or

concurrently) dedicated first-line managers authorized

by the board to be in charge of proposing the corporate

social responsibility policies and reporting to the board?

(4)Does the company declare a reasonable salary

remuneration policy, and integrate the employee

performance appraisal system with its corporate social

responsibility policy, as well as establish an effective

reward and disciplinary system?

v

v

v

v

Although C.C.P. has not declared the corporate social

responsibility policy, C.C.P. already do all best in the

execution, and see social responsibility as a major topic

in corporate long-term development plan.

C.C.P. has no regular education on CSR. Instead, C.C.P.

continually host employee family visit, charities donation,

community charities donation, community services, and

volunteer services in nursing home.

Administration Department is the concurrent department

of CSR, and executes CSR related items with

authorization. No direct report to Board of Directors in

current stage.

Now C.C.P. has Service Regulation and The Regulation

of Award and Punishment as the system manages award

and punishment issues. C.C.P. encourage employee

participate CSR relay activities, but not directly linked

these activities with performance evaluation.

None

No regular education on CSR.

No direct report to Board of

Directors in current stage.

C.C.P. encourage employee

participate CSR relay activities, but

not directly linked these activities

with performance evaluation.

2. Sustainable Environment Development

(1)Does the company endeavor to utilize all resources

more efficiently and use renewable materials which

have low impact on the environment?

(2)Does the company establish proper environmental

management systems based on the characteristics of

their industries?

v

v

None of C.C.P. produced products has materials that

classified as hazardous substance under RoHS

regulation. Business activities have very low impact on

the environment.

Industrial swage from platting lab has obtain official

approval to be stored and processed by professional

recycle company. Meanwhile, each factory has refuse

classification equipment for the resource recycle

purpose.

None

None

None

- 36 -

Evaluation Item






(3)Does the company monitor the impact of climate

change on its operations and conduct greenhouse gas

inspections, as well as establish company strategies for

energy conservation and carbon reduction?

v

C.C.P. has energy saving regulation as the rule of

energy conservation and carbon reduction activities. Ex:

In production line, air condition can only operated above

25℃, and non production area can only enjoy air

condition above 28℃

3. Preserving Public Welfare

(1)Does the company formulate appropriate management

policies and procedures according to relevant

regulations and the International Bill of Human Rights?

(2)Has the company set up an employee hotline or

grievance mechanism to handle complaints with

appropriate solutions?

(3)Does the company provide a healthy and safe working

environment and organize training on health and safety

for its employees on a regular basis?

(4)Does the company setup a communication channel with

employees on a regular basis, as well as reasonably

inform employees of any significant changes in

operations that may have an impact on them?

(5) Does the company provide its employees with career

development and training sessions?

(6) Does the company establish any consumer protection

mechanisms and appealing procedures regarding

research development, purchasing, producing,

v

v

v

v

v

v

The related policies and procedures are not be

formulated in current stage.

C.C.P. has regular Labor-Management meeting to

provide direct communication channel to handle

complaints with effective solutions.

C.C.P. provides employees a clean working environment

and appropriate protection equipment for safety and

healthy purpose. Management team and ISO team in

charge of timely check. C.C.P. also provides health

check service to all employees and fully supports a

healthy and sate working environment.

Management team regularly interview direct report

employees and provide an effective mutual

communication channel.

C.C.P. now has job rotation system for talent employees

as career development plan. Allow those high potential

employees accumulate more experience in different job

function.

C.C.P. has several function welled communication

channel with customers, and provide clear and fast

customer complain handling procedures.

No be formulated in current stage

None

None

None

None

None

- 37 -

Evaluation Item






operating and service?

(7) Does the company advertise and label its goods and

services according to relevant regulations and

international standards?

(8) Does the company evaluate the records of suppliers’

impact on the environment and society before taking on

business partnerships?

(9) Do the contracts between the company and its major

suppliers include termination clauses which come into

force once the suppliers breach the corporate social

responsibility policy and cause appreciable impact on

the environment and society?

v

v

v

Due to C.C.P.'s products are components but not

commercial goods, no specific regulation is related to

current products, but all products follow international

standards.

C.C.P. has supplier audit system and requests all

suppliers provide guarantee that make sure all materials

are involved with conflict minerals and hazardous and

noxious substances.

C.C.P.'s contract with major suppliers already includes

Declaration of Minerals Conflict-Free.

No specific regulation

None

None

4. Enhancing Information Disclosure

(1) Does the company disclose relevant and reliable

information regarding its corporate social responsibility

on its website and the Market Observation Post System

(MOPS)?

v

C.C.P. has disclosed CSR related activities on the

corporate website, annual report, prospectus.

None

5. If the Company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx

Listed Companies”, please describe any discrepancy between the Principles and their implementation: C.C.P.'s corporate social responsibility principles are under

preparing.

- 38 -

Evaluation Item






6. Other important information to facilitate better understanding of the company’s corporate social responsibility practices：

Environmental Protection

1. Green Product Environmental Certification : C.C.P.'s product obtained QC0800000 GP certification on 2008. Now regularly update SGS qualification.

2. Implement energy-saving and carbon reduction : C.C.P. highly care about environment issue and do all the best of energy saving and carbon reduction. Related

internal management regulations such as manufacturing department sets the air conditioning facility when the indoor temperature exceeds 25°C, and the

non-manufacturing manufacturing department exceeds 28°C when the indoor temperature exceeds 28°C. , Turn on air-conditioning facilities, leave the office, turn

off the air-conditioning, lighting and equipment, and strengthen the promotion of water conservation. The company's internal documents are printed on the use of

recycled paper, garbage classification and resource recovery are performed, old lamp tubes are replaced, and energy-saving and longevity are used. Long LED

lamps instead, Establish an EIP (enterprise portal site) system and implement paperless operations.

Safety and Health

To prevent occupational injury and secure labor safety and healthy, C.C.P. follows the "Occupational Safety and Health Act" stipulating that the number of workers is

less than 300 and the number of workers is more than 100. Specialized labor safety and health experts are assigned to take charge of all related activities. According

to Occupational Safety and Health Act Clause 25 and Enforcement Rules of the Occupational Safety and Health Act Clause 27, Clause 28, and Clause 29, C.C.P. set

up occupational safety and healthy principle for the equipment maintains and checking. For new employees and labors participate potential risk task, C.C.P. will

provide necessary safety and healthy education. Regularly provide training of first aid emergency treatment and fire drill. Correct all non-safe activities and non-safe

environment. Target to have zero injury in all factories.

7. A clear statement shall be made below if the corporate social responsibility reports were verified by external certification institutions: None.

- 39 -

3.3.6 Ethical Corporate Management

Evaluation Item

Implementation Status Deviations from “the Ethical

Corporate Management

BestPractice Principles for

TWSE/TPEx Listed



1. Establishment of ethical corporate management policies and

programs.

(1)Does the company declare its ethical corporate management

policies and procedures in its guidelines and external

documents, as well as the commitment from its board to

implement the policies?

(2) Does the company establish policies to prevent unethical

conduct with clear statements regarding relevant

procedures, guidelines of conduct, punishment for violation,

rules of appeal, and the commitment to implement the

policies?

(3) Does the company establish appropriate precautions

against high-potential unethical conducts or listed activities

stated in Article 2, Paragraph 7 of the Ethical Corporate

Management Best-Practice Principles for TWSE/TPEx

Listed Companies?

v

v

v

(1) C.C.P. has declared ethical corporate management policies in procedures and external documents as below: a. C.C.P. has employee service regulations to regulate employees not allowed to leverage position power for personal benefits, or any un-ethical behavior that will damage corporate image. b. Any person has below situation is not allowed to be hired: who is under deprivation of civil right; be sentenced to a non-completed imprisonment; declared to be under interdiction; offenses of breach of trust; offenses of criminal conversion; guilt for malfeasance; bribery, corruption and defalcation. c. Board directors, supervisors are all signed Consent to Act as Director/Supervisor. Under Corporate Law Clause 23rd, all directors and supervisors have to exercise the due care of a good administrator. Any violation causes company or third party damages need to be liable for damages. d. Company financial statements and annual report have to upload to MOPS under regulation.

(2)Employee has to sign Non-Disclosure and Non-compete Agreement. Non-regularly provide education to prevent unethical conducts. Any activities damage company image and benefits will be punished or fired under service regulations.

(3) Company follows the most updated internal audit

principles and treats corporate operation, employee

behaviors, and board of directors’ executions as

major risk assessment items. All these items under

regularly checking to prevent abuse of position

power for personal benefits.

None

None

None

- 40 -

Evaluation Item




TWSE/TPEx Listed



2. Fulfill operations integrity policy

(1) Does the company evaluate business partners’ ethical

records and include ethics-related clauses in business

contracts?

(2) Does the company establish an exclusively (or

concurrently) dedicated unit supervised by the Board to be

in charge of corporate integrity?

(3) Does the company establish policies to prevent conflicts of

interest and provide appropriate communication channels,

and implement it?

(4) Has the company established effective systems for both

accounting and internal control to facilitate ethical corporate management, and are they audited by either internal auditors or CPAs on a regular basis?

v

v

v

v

(1) All ethics-related clauses are listed in business

contracts or Supplier CSR requirements in

undertaking that regulate and monitor suppliers’

ethical behaviors.

(2) Administration Department in charge of internal

audit and risk management. C.C.P.'s risk

management can be classified into three levels:

Checking and prevention in execution business

unites; evaluation and improvement directions from

high level management team; internal audit

investigation and tracking as the final level. Internal

auditor direct report to board of directors, and ensure

the corporate integrity.

(3) Provide an Employee Options function in corporate

internal website. Labor-Management Meetings are

hosted by quarterly. Employees has multiple

channels to communicate with executive levels and

HR. In Meeting Regulation of Board of Directors,

board directors and other represented legal entities

need to avoid participate in interest-related topic

voting or discussion.

(4) Follow FSC recognized accounting rules and set up

independent accounting business unit. All financial

reports are audited by authorized external auditors.

Internal audit system is operated under annual audit

plan that required by government. In the mean time,

for specific topic, there will be project audit for

checking, and no significant finding after the

execution.

None

None

None

None

- 41 -

Evaluation Item




TWSE/TPEx Listed



(5) Does the company regularly hold internal and external

educational trainings on operational integrity?

v

(5)C.C.P. so far has no regular internal or external

education training about operational integrity. But

Service Regulations already include operational

integrity clauses and has related penalty.

The Company has no regular

internal or external train for

operational integrity

3. Operation of the integrity channel

(1)Does the company establish both a reward/punishment

system and an integrity hotline? Can the accused be

reached by an appropriate person for follow-up?

(2)Does the company establish standard operating

procedures for confidential reporting on investigating

accusation cases?

(3)Does the company provide proper whistleblower

protection?

v

v

v

(1)C.C.P. has an email account for employees to report

and exchange opinions in corporate internal website,

and set up Employee Opinion Process Regulation as

the communication channels. All process result need

to feedback to appellants by regulation. If there were

any integrity violation case, the employee has to be

punished or fired by Service Regulation.C.C.P. also

has HR committee to evaluate punishment cases and

release the result to all employees.

(2)Even though C.C.P. has not set up investigation

procedure and whistleblower protection, but any

impeachment has been processed with related

business unit. The in charge person has been

followed information securities and protection rule for

whistleblower.

(3)C.C.P. has HR committee to investigate serious

cases. The investigation process will see the

evidence and find out the real truth.

None None None

4. Strengthening information disclosure

(1) Does the company disclose its ethical corporate

management policies and the results of its implementation

on the company’s website and MOPS?

v

(1) In order to establish a corporate culture and sound

development of integrity management, and to

establish a reference framework for good business

operations, the Company has formulated this Code in

accordance with the “Code of Integrity of Listed Companies” and related laws and regulations in the

8th Director.

None

5. If the company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx

Listed Companies, please describe any discrepancy between the policies and their implementation:None.

- 42 -

Evaluation Item




TWSE/TPEx Listed



6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies):

Actively participate Information Disclosure Evaluation to increase the transparency of financial performance, corporate governance, board of directors operations,

and shareholding structure. Keep updated with ethical management regulation changes and development as the base of future improvement of corporate integrity

policy.

- 43 -

3.3.7 Corporate Governance Guidelines and Regulations Inquiry of corporate governance code and regulation (1) Article of Incorporation. (2) Process of acquiring or disposing assets. (3) Operating Procedures Governing Fund Lending. (4) Process of Endorsement. (5) Procedures for Financial Derivatives Transactions. (6) Regulation on the Prevention and Control of Insider Trading. (7) Adoption of Codes of Ethical Conduct. (8) Organization and Operation of Risk Management. (9) Corporate Social Responsibility Best Practice Principles. (10) Procedures for reporting cases of illegal and unethical or dishonest conduct.

All company rules and regulations are readily available on Market Observation Post System http://mops.twse.com.tw and C.C.P. website at http://www.pC.C.P..com.tw.

3.3.8 Other Important Information Regarding Corporate Governance

Other important information for furthering understanding of company should also be disclosed. Please check other information of monthly revenue, annual audit report, and stock information from the content “Investment Service” on C.C.P. Website at http://www.pC.C.P..com.tw.

3.3.9 Status of Implementation of Internal Control System

(1) Statement of internal control system

- 44 -


Statement of Internal Controls

Date: March 20,2019

According to the examination on internal control system done by the company itself in 2018, we hereby states as follows: i.The company’s board of directors and management team understand their responsibilities of

developing, implementing and maintaining the company’s internal control system, and such a system has been established. The purpose of establishing the internal control system is to reasonably assure the following objectives: (a) The effectiveness and efficiency of business operation( including earnings, operation performance and the safeguard of company assets); (b) The reliability of the financial and related reports; and (c) The compliance of the relevant laws/regulations and company policies.

ii.Due to the innate limitation in designing a faultless internal control system, this

system can only assure the reasonableness of the above three objectives have been fairly achieved. In addition, the effectiveness of internal control system could alter over time due to the change of business environment or situation. Since the company’s internal contro l system has include self-examination capability, the company will make immediate corrections when errors are detected.

iii.The evaluation of effectiveness of the internal control system design and

implementation is made in accordance with the “Guidelines for the Establishment of Internal Control Systems by Public Companies” (the Guidelines). The Guidelines are made to examine the following five factors during the management and control process: (1) control environment, (2) risk assessment and response, (3 ) control activities, (4) information and communication,and (5) supervision. Each factor also includes several items. Details of each factor can be found in the Guidelines.

iv.The company has examined the effectiveness of each respected area int the internal

control system based on the Guidelines. v.The examination result indicated that the company’s internal control system( including

subsidiary governance) dated December 31, 2018 has effectively assured that the following objectives have been reasonably achieved during the assessing period: (a) The degree that effectiveness and efficiency of business operation; (b) The reliability of the financial and related reports; (c) The compliance of the relevant laws/regulations and company policies.

vi.This statement is a significant part of the company’s annual report and prospectus

available to the general public. If it contains false information or omits any material content, the company is in violation of article 20, article 32, article 171 and article 174 set forth in the Taiwan’s Security and Exchange Act.

vii.The company hereby declares that this statement had been approved by the Board

of Directors on March 20, 2019. Among the 8 attending directors, no one raised any objection to the contents of this statement.


Chairman: Chih-Feng Chen

President: Bor-Chen Tsai

- 45 -

(2) The company is required by the Security and Futures Bureau to hire an accountant to audit the company’s internal control system and disclose the audit report made by accountants: None.

3.3.10 Regulatory Authorities’ Legal Penalties to the Company, and the Company’s Resulting Punishment on Its Employees: None.

3.3.11 Major Resolutions of Shareholders’ Meeting and Board Meetings

(1) Shareholders’ Meeting

Date Resolutions Execution Status

2018/06/15

Important resolutions of the 107 annual shareholders' meeting:

Reporting matters: 1.2017 Annual business and financial status report. 2. The Audit Committee reviews the report of the 106 final

accounts. 3.106 Annual employee compensation and director

compensation distribution report. 4. Amend the "Director Rules of Procedure" report. Discussion items: 1. The company completely re-elected the Director

(including IndependentDirector) case. 2. Dismissed the company's newly elected Director (including IndependentDirector) and its representative's non-competition restrictions.

(1) 2018/07/14 has been established as the

benchmark date for allotment of interest,

and cash dividends are issued on

2018/07/27.

(2) It has operated in accordance with the

revised method.

(2) Board Meetings

Date Case Result

The number of independent

directors personally involved

2018/03/23

1. The company's 2017 annual business report.

2. The company's 2017 annual individual financial statements and consolidated

financial statements.

3.106 Annual employee and director compensation distribution case.

4.106 annual surplus distribution case.

5. The company's 2017 consolidated group budget.

6. Set the limit for employee rights to be repurchased by the company.

7. It is proposed to amend the "Organization Rules for the Compensation

Committee of China Probe Co., Ltd."

8. It is proposed to formulate the “Rules of Duties for the Independent Director

of China Probe Co., Ltd.”.

9. The Company's 106th Annual Internal Control Self-Inspection Report has

been completed.

10. It is proposed to add and revise the internal audit implementation rules.

11. It is proposed to update the operating procedures and control priorities of

the internal control system "management operations of the audit committee

operations".

12. The company completely re-elected the Director (including

IndependentDirector) case.

13.Director will nominate the IndependentDirector candidate.

14. It is proposed to cancel the company's newly elected Director (including

IndependentDirector) and its representative's non-competition restrictions.

15. The company's 2018 shareholder standing meeting convened related

matters.

All attendees

have no

objection.

3 people

- 46 -

Date Case Result



2018/04/27

1. The authorization to change the company's 2017 surplus distribution date,

the distribution date and the adjustment of the dividend rate will be changed

to Director's long-term license.

2. The company intends to endorse the loan endorsement of Dongguan C.C.P.

Contact Probes Co., Ltd.

3. The company handles the renewal of the quota with the financial institution.

4. It is proposed to revise the use management procedures for seals.

5. The company's manager salary adjustment proposal.

6. The company's 2017 manager performance bonus distribution case.

7. Review the IndependentDirector qualification.

All attendees

have no

objection.

2 people

2018/06/15

1. Elect a Director long case.

2. Appointment of the Remuneration Committee.

3. Appointment of the Second Audit Committee.

All attendees

have no

objection.

3 people

2018/07/30

1. Proposed appointment of a member of the Compensation and Remuneration

Committee.

2. The company's 2017 profit distribution of the Director's compensation

distribution case.

3. Set the limit for employee rights to be repurchased by the Company.

4. Appoint a manager.

5. Adjust the organizational chart of the company.

All attendees

have no

objection.

3 people

2018/11/13

1. It is proposed to amend the Procedure 1.2 of “Production Cycle – Finished

Semi-finished Goods Storage”.

2. It is proposed to amend the Procedure 2.4 of “Sales and Collection Cycles –

Shipping and Transportation Management Operations”.

3. It is proposed to amend the "Financing Cycle - Petty Cash Operating

Procedures".

4. Develop a 2019 audit plan.

5. The company intends to handle the amount of the case with the financial

institution.

6. The company intends to appoint a manager.

7. The company intends to adjust the organization chart.

8. The company intends to acquire land use rights in Jinjiang City, Fujian

Province.

9. The general manager of the company Bor-Chen Tsai salary discussion.

All attendees

have no

objection.

2 people

2019/02/01

1. The company's 2019 consolidated group budget.

2. According to the Order of the Financial Supervisory Committee of the

Republic of China on November 26, 2007, the Financial Supervisory

Committee issued the certificate No. 10703410172, it is proposed to amend

the rules for handling the disposal of assets and the procedures for checking

the handling of assets handled by internal audits.

3. The company intends to issue new shares that limit employee rights.

4. It is proposed to amend the Company's approval form.

5. The company intends to appoint a manager.

All attendees

have no

objection.

2 people

- 47 -

Date Case Result



2019/03/20

1. The company's 2018 annual business report.

2. The company's 2018 annual individual financial statements and consolidated

financial statements.

3. The company's 2018 employees and Director's compensation distribution

case.

4. The company's 2018 annual surplus distribution case.

5. The Company's 2018 Annual Internal Control Self-Inspection Report has

been completed.

6. It is proposed to amend the articles of association of the company.

7. It is proposed to formulate the “Code of Integrity Management of China

Probe Co., Ltd.”.

8. The company intends to endorse the loan endorsement of Dong Guan C.C.P.

Contact Probes Co., Ltd.

9. The company intends to apply for a renewal of the financing amount to the

financial institution.

10. The company is a candidate for the IndependentDirector.

11. Director will nominate the IndependentDirector case.

12. It is proposed to lift the newly elected IndependentDirector's

non-competition restrictions.

13. The company's 2019 shareholders' meeting convened a related matter.

All attendees

have no

objection.

2 people

2019/05/14

1. It is proposed to amend the Company's "finance loan and other people's

operating procedures".

2. It is proposed to amend the Company's "endorsement guarantee method".

3. The company's 2018 annual manager performance bonus allocation case.

4. Set the limit for employee rights to be repurchased by the Company.

All attendees

have no

objection.

2 people

3.3.12 The most recent year and as of the date of report publication the directors have different opinions and record or written statements by the board of directors through important resolutions, its main content: None.

3.3.13 The most recent year and as of the date of report publication, the person related with the Company’s Key Individuals, Including the Chairman, CEO, and Heads of Accounting, Finance, Internal Audit and R&D: None.

3.4 Information Regarding the Company’s Audit Fee and Independence

3.4.1 Audit Fee

CPA Firm Name of CPA Period Covered by

CPA’s Audit Remarks

PricewaterhouseCoopers

Taiwan

Sheng-Zhong

Xu

Ming-Chuan

Fung 2018/01/01~2018/12/31 None

Items

Range Audit Fee Non-Audit

Fee Total

1 Under NT$2,000,000 √ 2 NT$2,000,000~NT$4,000,000 √ √ 3 NT$4,000,000~NT$6,000,000 4 NT$6,000,000~NT$8,000,000 5 NT$8,000,000~NT$10,000,000 6 Over NT$10,000,000

- 48 -

3.4.2 The Non-Audit Fee Paid to Certified Accountant, CPA’s Accounting Firm, and Affiliated Companies Accounts for Over 1/4 to Audit Fee. It Should Disclose Audit and Non-audit fees and Service: None

3.4.3 Change of Accounting Firm and the Audit Fee of the Changing Year is less than Previous Year, the Amount of Audit Fee Respectively and the Reason of Change Shall Disclosed: None.

3.4.4 A Decrease over 15% than Previous Year for Audit Fee, the Amount, Percentage and Reason Shall be disclosed: None.

3.5 Change of Independent Auditors: None.

3.6 The Company’s Chairman, General Manager, or any Managerial Officer in Charge of Finance or Accounting Matters Has in the Most Recent Year Held a Position at the Accounting Firm of Its CPA or at an Affiliated Enterprise: None.

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

(1) Changes in Equity: Unit: share

(2) Information on equity transfer: The counterparties of equity transfer are not related parties.

(3) Information on equity pledge: The counterparties of share pledges are not related parties

Title Name

2018 April 29, 2019

Number of shares held

Pledged shares Number of shares held

Pledged shares

Chairman & General Manager

Chih-Feng Chen 10,000 891,000 0 0

Director & General Manager &Vice

President Bor-Chen Tsai 0 0 36,000 0

Director Tsung-Ming Tsai (24,000) 0 36,000 0

Director Li-Chi Investment Co., Ltd 0 0 0 0

Director Representative

Owen Wang 0 0 0 0

Director Li-Yi Investment Co., Ltd 2,000,000 0 0 0

Director Representative

Su-Jin Li 0 0 0 0

Director Ching-Yu Lin 0 0 0 0

IndependentDirector Kang-Chi Chou (2,119,183) 0 / /

IndependentDirector Long-Zhen Lin 0 0 0 0


Huo-Liang, Chen 0 0 0 0

- 49 -

3.8 Relationship among the Top Ten Shareholders

As of Apr i l 29 , 2019; Un i t : share

Name Current Shareholding

Spouse’s/minor’s

Shareholding

Shareholding by

Nominee

Arrangement

Name and Relationship

Between the Company’s

Top Ten Shareholders,

or Spouses or Relatives

Within Two Degrees

Remarks

shares % shares % shares % Name Relationship

Chih-Feng Chen 3,776,397 5.92% 0 0.00% 0 0.00% None None None

Li-Chi Investment

Co., Ltd 2,437,060 3.82% 0 0.00% 0 0.00% None None None

Li-Chi Investment

Co., Ltd

Representative ：

Owen Wang

0 0.00% 0 0.00% 0 0.00% None None None

Tai-Sung Lo 2,119,183 3.32% 0 0.00% 0 0.00% None None None

Li-Yi Investment

Co., Ltd 2,000,000 3.13% 0 0.00% 0 0.00% None None None

Wu Sentian 1,000,000 1.57% 0 0.00% 0 0.00% None None None

Lee Ying

Investment Co.,

Ltd.

852,924 1.34% 0 0.00% 0 0.00% None None None

Wang Jianwei 847,672 1.33% 0 0.00% 0 0.00% None None None

ShengYu

Investment Co.,

Ltd.

847672 1.33% 0 0.00% 0 0.00% None None None

Meng Lingshi 640,000 1.00% 0 0.00% 0 0.00% None None None

Wang Huixu 583,189 0.91% 0 0.00% 0 0.00% None None None

- 50 -

3.9 Ownership of Shares in Affiliated Enterprises Unit: shares/ %

Affiliated Enterprises

（Note1）

Ownership by the Company

Direct or Indirect Ownership

by Directors, Supervisors,

Managers

Total Ownership

Shares % Shares % Shares %

Great Esteem Services Limited

12,762,342 100.00% 0 0.00% 12,762,342 100.00%

World Success Group Limited

0 0.00% 12,634,136 100.00% 12,634,136 100.00%

C.C.P. International (H.K.) Limited

0 0.00% 1,000,000 100.00% 1,000,000 100.00%

E-Plan International Limited

0 0.00% 1 100.00% 1 100.00%

Forefront International Limited

0 0.00% 1 100.00% 1 100.00%

DONGGUAN C.C.P Contact Probes Co., Ltd.

0 0.00% 13,135,512 100.00% 13,135,512 100.00%

C.C.P. Connection Platform, Inc.

500,000 100.00% 0 0.00% 500,000 100.00%

Shang Chuan Investment Co., Ltd.

10,000,000 100.00% 0 0.00% 10,000,000 100.00%

Apex Probes Technology Co., Ltd.

0 0.00% 3,000,000 60.00% 3,000,000 60.00%

MEGA CRYSTAL LTD. 500,000 100.00% 0 0.00% 500,000 100.00%

Dongguan Tongxing precision components Ltd.

0 0.00% 500,000 100.00% 500,000 100.00%

One Test Systems Co., Ltd.

0 0.00% 660,525 73.39% 660,525 73.39%

One Test Systems 0 0.00% 250,000 100.00% 250,000 100.00%

OTS Co., Ltd. 0 0.00% 1,500,000 100.00% 1,500,000 100.00%

Note1: C.C.P. investment accounted for using equity method.

- 51 -

IV. Capital Overview 4.1 Capital and Shares

4.1.1 Source of Capital

(1) Issued Shares April 29, 2019 Unit: share, NT$

Month/ Year

Par Value (NT$)

Author i zed Capi ta l Paid- in Capi ta l Remarks

Shares Amount

(NT$ thousands)

Shares Amount

(NT$ thousands)

Sources of Capi ta l

CapitalIncreased by Assets Other than Cash

Other

1986.01 10 600,000 6,000 600,000 6,000 Capital None

1998.06 10 5,800,000 58,000 5,800,000 58,000 Capital increase NT$5,2000,000 by cash

None

1999.08 10 15,000,000 150,000 9,000,000 90,000 Capital increase NT$32,000,000 by cash

None

2000.11 10 20,864,112 208,641 16,466,028 164,660

Capital increase NT$60,000,000 by cash Capital increase NT$13,860,000 by Earnings Capital increase NT$800,280 by Employee bonus

None

2001.09 10 20,864,112 208,641 19,222,681 192,226

Capital increase NT$20,762,620 by Earnings Capital increase NT$2,867,500 by Employee bonus Capital increase NT$3,936,410 by capital reserve

None

2002.09 10 25,518,644 255,186 22,027,745 220,277

Capital increase NT$2,260,860 by Earnings Capital increase NT$3,205,920 by Employee bonus Capital increase NT$1,583,860 by capital reserve Capital increase NT$21,000,000 by cash

None

2003.06 10 25,518,644 255,186 24,379,180 243,791 Capital increase NT$17,622,200 by Earnings Capital increase NT$5,892,150 by Employee bonus

None

2004.06 10 39,900,000 399,000 27,421,200 274,212 Capital increase NT$24,379,180 by Earnings Capital increase NT$6,041,020 by Employee bonus

None

2005.10 7.8 75,000,000 750,000 40,421,200 404,212 Capital increase NT$101,400,000 by private placement

None

2007.10 10 75,000,000 750,000 39,921,200 399,212 Capital reduction 500,000 by Treasury Stocks

None

2008.04 10 75,000,000 750,000 39,475,200 394,752 Capital reduction 446,000 by Treasury Stocks

None

2010.04 21.7 75,000,000 750,000 40,166,441 401,664 CB1：691,241 None

2010.08. 21.7 75,000,000 750,000 43,042,004 430,420 CB1：2,875,563 None

2010.10 12 75,000,000 750,000 43,042,004 436,143 Stock options： 572,315 None

2011.01 12 75,000,000 750,000 43,621,819 436,218 Stock options：7,500 None


2011.10 10 75,000,000 750,000 44,946,974 449,469 Capital increase NT$13,086,550 by Earnings

None

2011.11 11.6 75,000,000 750,000 45,073,474 450,734 Stock options： 126,500 None



2012.07 11.6 75,000,000 750,000 45,166,474 451,664 Stock options：1,000 None


None

- 52 -

2012.10

38.5

75,000,000 750,000 47,965,536 479,655

CB3：376,613

None

11 Stock options:165,250

2013.02

39

75,000,000 750,000 48,103,437 481,034

CB2：48,717

None

38.5 CB3：64,934

11 Stock options：24,250

2013.04 11 75,000,000 750,000 48,107,437 481,074 Stock options：4,000 None


None


2014.04 37.7

75,000,000 750,000 49,096,845 490,968 CB2：132,624

None

35.8 Stock options：62,250

2014.07

37.7

75,000,000 750,000 49,969,868 499,698

CB2：798,395

None

37.2 CB3：16,128



None

2014.11 37.2

75,000,000 750,000 50,706,920 507,069 CB3：139,783

None


2015.02 36.2

75,000,000 750,000 50,964,841 509,648 CB3：38,671

None


2015.05

34.9 75,000,000 750,000 54,288,495 542,884

CB3：2,707,154 None


2015.08

34.9 75,000,000 750,000 57,180,572 571,805

CB3：2,745,827

None


2015.11

34.9 75,000,000 750,000 58,751,246 587,512

CB3：1,061,026 None


2016.02 33.3 75,000,000 750,000 59,445,246 594,452 Stock options：694,000 None


None

2016.12 10 75,000,000 750,000 63,213,055 632,130 Restricted employee Shares：

1,390,000 None

2017.09 10 75,000,000 750,000 63,845,185 638,451 Capital increase NT$632,130 by Earnings

None

2018.04 10 75,000,000 750,000 63,827,185 638,271 18,000 shares of registered employee limited rights.股 None

2018.08 10 75,000,000 750,000 63,803,185 638,031 24,000 shares of registered employee limited rights.

None -

(2) Type of Stock April 29, 2019 Unit:share

Share Type

Authorized Capital

Remarks Issued Shares Un-issued Shares Total Shares

Common

shares 63,803,185 11,172,815 75,000,000 OTC Stock

(3) Information for Shelf Registration: None. 4.1.2 Status of Shareholders

- 53 -

April 29, 2019 Unit:person, share, %

4.1.3 Shareholding Distribution Status

(1) Common Shares April 29, 2019 Unit:person, share, %

Class of Shareholding (Unit:

Share)

Number of

Shareholders

Shareholding

(Shares) Percentage

1~999 9,720 406,033 0.64%

1,000~ 5,000 4,923 9,913,015 15.54%

5,001~10,000 935 6,482,298 10.16%

10,001~15,000 365 4,285,590 6.72%

15,001~20,000 167 2,968,880 4.65%

20,001~30,000 173 4,271,464 6.69%

30,001~40,000 68 2,351,749 3.69%

40,001~50,000 45 2,008,857 3.15%

50,001~100,000 72 5,054,802 7.92%

100,001~200,000 34 4,532,501 7.10%

200,001~400,000 15 4,028,344 6.31%

400,001~600,000 6 2,978,744 4.67%

600,001~800,000 1 640,000 1.00%

800,001~1,000,000 4 3,548,268 5.56%

1,000,001 or over 4 10,332,640 16.20%

Total 16,532 63,803,185 100.00%

(2) Preferred Shares: Not applicable.

Item Government

Agencies

Financial

Institutions

Other Juridical

Persons

Domestic

Natural Persons

Foreign

Institutions &

Natural

Persons

Total

Number of

Shareholders 0 0 161 16,361 10 16,532

Shareholding

(shares) 0 0 7,374,836 56,382,465 45,884 63,803,185

% 0 0 11.55% 88.38% 0.07% 100.00%

- 54 -

4.1.4 List of Major Shareholders April 29, 2019 Unit:person, share, %

Shareholder's Name Shares Percentage

Chih-Feng Chen 3,776,397 5.92%

Li-Chi Investment Co., Ltd 2,437,060 3.82%

Tai-Sung Lo 2,119,183 3.32%

Li-Yi Investment Co., Ltd 2,000,000 3.13%

SEN-TIEN WU 1,000,000 1.57%

Lee Ying Investment Co., Ltd. 852,924 1.34%

JIAN-YI WANG 847,672 1.33%

Sheng-yu Investment 847,672 1.33%

Meng Lingshi 640,000 1.00%

Wang Huixu 583,189 0.91%

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share Unit: NT$/thousand share

Year Item

2017 2018 Current year to

March 31,2019(Note 8)

Market price per share(Note 1)

Highest 41.00 35.10 23.95

Lowest 32.45 18.00 18.00

Average 37.29 27.82 21.58

Equity per share (Note 2)

Before disturbution 23.47 22.87 23.51

After disturbution 21.87 Note 9 Note 10

Earnings per share

Weighted average shares 62,483 63,015 63,386

Earnings per share (Note 3)

Before adjustment 2.28 0.95 0.35

After adjustment 2.28 Note 9 Note 10

Dividends per share

Cash Dividends 1.60 0.70 Note 10

Stock Dividends

Stock dividends appropriated from retained earnings

0.00 0.00 Note 10

Stock dividends appropriated from capital reserve

0.00 0.00 Note 10

Accumulated unappropriated dividends(Note 4)

0.00 0.00 0.00

Investment return analyses

Price / Earnings Ratio(Note 5) 16.36 29.28 Note 10

Price / Dividend Ratio(Note 6) 23.31 39.74 Note 10

Cash Dividend Yield Rate(Note 7)

4.29% 2.52% Note10

＊If there is a surplus or capital reserve to the capital increase, and should disclose the number of shares issued by

the retrospective adjustment of the market price and cash dividend information. Note 1: List the highest and lowest market prices of ordinary shares for each year, and calculate the average annual

- 55 -

market price according to the annual turnover and turnover. Note 2: Please refer to the number of shares issued at the end of the year and according to the distribution of the

resolution of the annual shareholders' meeting. Note 3: If there is any need to retrospect the adjustment due to the circumstances such as the free placement of shares,

should be adjusted before and after adjustment of earnings per share Note 4: Interest securities issuance conditions If the provisions of the year did not issue the dividend accumulated to

the annual surplus of the issuer, should be exposed as of the year to accumulate the unpaid dividends Note 5: Price / Earnings Ratio = Average Market Price / Earnings per Share Note 6: Price / Dividend Ratio = Average Market Price / Cash Dividends per Share Note 7: Cash Dividend Yield Rate = Cash Dividends per Share / Average Market Price Note 8: The net value per share, the earnings per share, shall be recorded in the last quarter as of the date of

publication of the annual report. The remaining fields shall include the annual data as of the date of publication of the annual report.

Note 9: The dividend distribution for the year 2005 was passed by the board of directors and has not yet been resolved by the shareholders' meeting.

Note 10: Earnings not yet completed.

4.1.6 Dividend Policy and Implementation Status

(1) Dividend Policy

If the annual accounts of the company still have has surplus, after all taxes shall have been paid in accordance with law, the remaining surplus shall be conducted as per the following order:

i. To make up loss. ii. Secondly, set aside ten percent of such profits as a legal reserve, however, if

the legal reserve should have reached the capital amount of the company, that shall not be subject to this limit.

iii.To allocate for legal reserve by law, or a certain proportion in its earnings as special reserve in accordance with the law.

iv.The remained surplus will be combined with beginning non-allocated retained earnings as the allocable cumulated profits to shareholders, the Board of Director shall prepare a surplus allocation proposal, and submit the said proposal to shareholders’ meeting for resolution of allocation.

(2) Distribution of stock dividends at this shareholders’ meeting

Shareholder cash dividend: The company allotted NT$44,662,230 from the earnings of 2018 as cash dividend, with NT$0.7 for each share. After obtaining the approval of the regular shareholders’ meeting, the board of directors shall formulate the base day for distribution.

3. Description of the expected changes in the dividend policy: no such situation.

4.1.7 The Impact of the Planned Issuance of Bonus Shares on the Company’s Business Performance and Earnings Per Share: None.

4.1.8 Employee Bonus and Directors' and Supervisors' Remuneration(C.C.P. has established Audit committee to replace Supervisor in October of 2015.)

(1) Information on remuneration to employees, directors, and supervisors, as set forth in the Company’s Articles of Incorporation: To encourage the employees and management team, if earnings available when income before tax deducting employees’ compensation and remuneration of the directors, and covering the losses, the company shall distribute the earnings 8% to 20% as employees’ bonus, and no more than 4% to remuneration of directors and supervisors. If the bonus allocated to

- 56 -

employees is to be granted by stock or cash, and the remuneration of directors and supervisors is to be granted by cash only, the allocation shall be subject to the resolution by the board of directors with more than two-third appearance and concurrence of majority; desired to be reported to the meeting of shareholders.

The subordinated companies’ employees could be qualified for the bonus allocation; the terms and conditions of qualification shall be established by Board of Directors.

(2) The estimation basis of the remuneration amount to employees, directors, and supervisors for the current period; the estimation basis of the number of shares of stock dividend to employees; and the the accounting treatment of the discrepancy, if any, between the actual distributed amount of employees’ stock bonus and estimated figure thereof: i. The profit of our company in 2018 (the pretax profit deduction of the employees' and

directors' remuneration) is NT$99,513,871 (after deducting the accumulated loss of NT $0). 8.4% of them amount to NTD$8,359,165 will be distributed as remuneration of the employees and 2% of them amount to NTD$1,990,277 will be distributed as directors' remuneration. They will all be distributed in cash.

ii. The difference between the amount of the actual allotment and the estimated amount will be treated as the current profit and loss.：The amount of employees and

directors recognized by the Company in the year of 2018 is NT$7,961,110 and RMB1,990,277, respectively. The amount of the allotment is different from the estimated annual amount of the recognition fee. The total difference is NT$398,055. The difference will be adjusted. Profit and loss to 2019.

(3) Information on the amount of compensation for distribution and the calculation of earnings per share as approved by the Board of Directors are as follows:

i. The remuneration of the employees,the directors and supervisors in cash or shares. If there is any difference in the amount of the estimated annual expenses, should reveal the number of differences, the reasons and how to deal with.

After the resolution of the Board of Directors hold on March 20, 2019, the distribution of 2018 surplus compensation for employees and directors' remuneration is as follows:

8.4% of them amount to NTD$8,359,165 will be distributed as remuneration of the employees and 2% of them amount to NTD$1,990,277 will be distributed as directors' remuneration. They will all be distributed in cash.

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4.1.9 Buyback of Treasury Stock:

May 15, 2019

Buy back period The first time The second time

Buy back

In accordance with the Company's Regulations on the Issuance of New Share Issuance Procedures for Restricting the Rights of Employees in the year 2016, new stocks that do not meet the vested conditions and limit employee rights will be deemed to have lost their statutory qualifications on the date of resignation. The company will buy off its shares at the original issue price and cancel the shares.

Buy back period 2018/01 2018/04

Buy Back Interval Price (NTD) 10 10

The type and quantity of shares bought back

Common shares；18,000

shares


shares

Amount of shares bought back (NTD) 180,000 150,000

The number of shares that have been sold out and transferred

18,000 15,000

Accumulation of the number of shares held by the company

18,000 33,000

Cumulative holding of shares of the company as a percentage of the total number of issued shares (%)

0.03% 0.05%

May 15, 2019

Buy back period The third time The fourth time

Buy back

In accordance with the Company's Regulations on the Issuance of New Share Issuance Procedures for Restricting the Rights of Employees in the year 2016, new stocks that do not meet the vested conditions and limit employee rights will be deemed to have lost their statutory qualifications on the date of resignation. The company will buy off its shares at the original issue price and cancel the shares.

Buy back period 107/05 108/05

Buy Back Interval Price (NTD) 10 10

The type and quantity of shares bought back


shares


shares

Amount of shares bought back (NTD) 90,000 45,000

The number of shares that have been sold out and transferred

9,000 0(Note 2)

Accumulation of the number of shares held by the company

42,000 46,500

Cumulative holding of shares of the company as a percentage of the total number of issued shares (%)

0.07% 0.07%

Note 1: It is expected that the date of cancellation of the registration: the Ministry of Economic Affairs will change the registration of the approval of the date of cancellation of registration. Note2:The total number of issued shares was 63,803,185 shares on May 15,2019.

4.2 Corporate Bonds: None.

4.3 Preferred Shares: None.

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4.4 Global Depository Receipts: None.

4.5 Employee Stock Options

4.5.1 Issuance of Employee Stock Option

May 15,2019

Type of Stock Option First Issue Employee Stock Option

Approval date 2016/12/09

Issue date 2017/05/15

Units issued The number of issuers is 2,400,000 shares

Shares of stock options to be

issued as a percentage of

outstanding shares

3.76%

Duration 2017/05/15~2022/05/14

Conversion measures Issuance of New Shares

Conditional conversion periods and

percentages

50% stock option exercisable after two years

75% stock option exercisable after three

years 100% stock option exercisable after

four years

Converted shares 0 shares

Exercised amount 0 NTD

Number of shares yet to be converted

2,400,000 shares

Adjusted exercise price for those who have yet to exercise their rights

30.20

Unexercised shares as a percentage of total issued shares

3.76%

Impact on possible dilution of shareholdings

In the expression of the financial statements, the Company will be subject to the International Financial Reporting Standards. Only Employees who have been granted the stock options for at least two years may exercise them. Stock options granted in less than two years time cannot be exercised and thus will not affect share values or cause any significant dilution.

Note: The total number of issued shares was 63,803,185 shares

May 15,2019

Type of Stock Option Second Issue Employee Stock Option


Issue date 106年 12月 07日

Units issued The number of issuers is 1,600,000 shares

Shares of stock options to be

issued as a percentage of

outstanding shares

2.51%

Duration 2017/12/07~2022/12/06

Conversion measures Issuance of New Shares

Conditional conversion periods and

percentages

50% stock option exercisable after two years

75% stock option exercisable after three

years 100% stock option exercisable after

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four years

Converted shares 0 shares

Exercised amount 0 NTD

Number of shares yet to be

converted 1,600,000 shares

Adjusted exercise price for those

who have yet to exercise their

rights

31.10 NTD

Unexercised shares as a

percentage of total issued shares 2.51%

Impact on possible dilution of

shareholdings

In the expression of the financial statements, the Company will be subject to the International Financial Reporting Standards. Only Employees who have been granted the stock options for at least two years may exercise them. Stock options granted in less than two years time cannot be exercised and thus will not affect share values or cause any significant dilution.


4.5.2 List of Executives Receiving Employee Stock Options and the Top Ten Employees with Stock Options: Not applicable.

4.6 List of Executives Receiving Employee Stock Options and the Top Ten Employees with Stock Options

4.6.1 Issuance of Restricted Employee Shares

May 15,2019

Type of Restricted Employee Shares First Issue Restricted Employee Shares


Issue date 2016/12/12

Units issued Approval of units to be issued is 1,500,000 shares The number of issuers is 1,390,000 shares

Issue Price Paid subscription The issue price of NT $ 10 per share

Unexercised shares as a percentage of total issued shares(%)

2.18%

Conditional execution periods and percentages

40% Restricted Stock exercisable after one years 70% Restricted Stock exercisable after two years 100% Restricted Stock exercisable after three years

Restricted Employee Shares Restricted Rights Description

Please refer to Article 6 of the "105 Annual Restrictions on Employee Rights New Shares

- 60 -

Custody of Employee Restricted Stock The issuance of employee restricted stock, stock trust custody for the way, by the company on behalf of employees and stock trust custody agency signed a trust contract

After the employee has received or subscribed for the stock, The description of the disposable conditions

Shall be dealt with in accordance with Article 5 (4) (1) of the"105 Annual Restrictions on Employee Rights New Shares

Has withdrawn or bought Restricted Employee Shares

42,000 shares

The number of shares that have lifted Restricted Employee Shares

907,000 shares

The number of shares that did not lift the Restricted Employee Shares

441,000 shares

Unrestricted shares as a percentage of total issued shares

1.28%

On the impact of shareholders' equity As the future revenue forecast will continue to grow, the overall assessment will have no significant adverse effect on future earnings per share and shareholders' equity.


4.7 Issuance of new shares due to acquisition of shares of another company: None.

4.8 Implementation of fund usage plan: None.

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V. Operation Highlights

5.1 Business Activities

1. Main Scope of Business (1) Main Focus

i. Business operation, processing, and manufacturing of pogo pin connectors (spring-loaded connectors).

ii. Business operation, processing, and manufacturing of semiconductor IC test probes. iii. Business operation, processing, and manufacturing of a variety of contact probes. iv. Business operation, processing, and manufacturing of contact probes related testing

platforms, PCB boards, and terminal block equipment. v. Business operation, processing, and manufacturing of high current pins and high

current connectors. vi. Business operation, processing, and manufacturing of computer related testing

platforms. vii. Business operation, processing, and manufacturing of raw materials and 3C

electronic products.

(2) Sales Segment Unit: Thousands NTD; %

Year

Main Products

2018

Net Sales Percentage (%)

Contact Probes 1,508,553 85.05

Other (Note) 265,203 14.95

Total 1,773,756 100.00

Note: Mainly indirect purchase of probes, fixtures, pin trays and accessories

(3) Main Products The main products of the company are pogo pin connectors and high-end IC test

probes. The pogo pin connectors are extensively used in mobile phone, tablet, notebook, gaming consoles, charging dock, smart watch and walking talkie products. The test probes acts as a medium of connection between the tested part and the testing equipment. The tests probes can be used quite extensively, in PCB boards, wafer testing, IC packaging testing, communication products, and LCD panel testing equipment.

(4) New Products

(1) High-frequency test fixture: In response to the demand trend of high-frequency IC mass production testing, we are committed to improving the design of high-frequency fixtures.

The test signal is more stable, the maintenance is more convenient, and the user's needs are met.

(2) Macro high-frequency test fixture: In view of the trend of IC packaging technology towards miniaturization, high specification and high frequency,

Committed to the development of test vehicles to meet the technical needs of the market.

(3) Quick-release high-current test probe: In order to improve the convenience of customer maintenance, the company has invested in research and development of quick-release high-current test probes.

And the development of special materials and coatings to improve product performance.

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(4) Microtube manufacturing technology: The demand for microprobes continues to increase, and the performance of its probes continues to challenge the limits.

In order to optimize quality and performance, we started to develop microtube manufacturing technology.

(5) Pogo Pin anti-corrosion technology: With the booming wearable devices, the major manufacturers are vying to use the Pogo Pin company.

With the technology, the corrosion resistance of the Pogo Pin surface has become the standard for customer performance, so the development of special materials continues.

satisfy customer's request.

2. Industry Overview (1) Current Industry Status and Developments

C.C.P.’s main products are pogo pin connectors and test probes, the structure is made of a copper barrel, a metal plunger, and a spring. With compressibility and surface plating treatments, pogo pin can maintain a certain contact pressure, and use surface plating treatments. The test probes are mainly used: (1) in various electronics for power and signal connections.(2) Acts as a medium between the testing platform and electronic products.(3) To meet different customization requirements set by related industry standards.

The test probes industry and electronics industry are closely related, Taiwan’s electronics industry is booming, has already developed a complete supply chain and remains in an important position in the international market. Our company’s pogo pin connectors and test probes closely follow the demands of electronics and semiconductor industries. At the same time, pogo pin connectors are becoming more diverse, to save space plus extreme low and high working height requirements, our company works closely with our customers to develop higher-end products to provide fast, customized, and high quality services.

In line with smaller and lighter trend of consumer electronics design, pogo pin connectors and test probes spec requirements geared towards more sophisticated development trend, plus various special usage customized probes, such as high-frequency probes, high current probes, recharging probes, and are used more extensively in different areas.

(2) Industry’s Upstream, Midstream, and Downstream Supplier Relationsh The raw materials used in C.C.P.’s pogo pin connectors and test probes

productions are provided by upstream suppliers. These raw materials are then processed by the company to produce the plunger, inner barrel, outer barrel, and the spring that made up the test probe, and are widely used in printed circuit board, semiconductor and electronic components, telecommunication components industry related products open/short and functional test and consumer electronics connector usage, which includes the lower end supplier such as printed circuit board manufacturers, electronic components manufacturers, LCD, laptop, mobile phone, and GPS manufacturers, and IC package testing companies, and wafer testing ODM.

(3) Product Development Trends As stated above, products developed by C.C.P. are aimed to be smaller in size, deliver higher frequency signals, be able to withstand higher current flow and have lower contact resistance, and be fast and flexible so to be able to meet our customer’s performance requirements. In the field of semiconductor testing, due to an increase in the mercerization of semiconductors, test probes produced by normal-level automatic machine cannot be used for testing, and to gain a dominant position in the future market,

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to create more added-value.

(4) Forecast of Industrial Applications As conventional PCB testing probes are no longer able to contribute a high profit

growth, we have decided to steadily turn it into a second-line product. Looking into the future, our company anticipates focusing on semiconductor IC, microelectronic modules, and biomedical technology testing probes and equipment. Our company hopes to accumulate our research and development abilities to break through technical barriers and increase the company’s revenue and profit. In addition, pogo pin connector will be focused on mobile phones, laptops, tablet PC, wearable devices and other consumer electronics connectors, the company estimates that the above areas are estimated to have high growth. In addition, automobile connector product line has tangible results after many years of accumulation and medical electronics product line has several ongoing cases in domestic and overseas. All these new product lines will become the fundamentals for the next wave of high growth.

(5) Overall economic and industrial development trends and commodity competition With the rosy prospect in wearable devices, IOT(Internet of Things), IOV(Internet of Vehicles) and the demand for modulized products, we have seen the pogo pin connectors play an critical role in this trend. C.C.P. takes advantage of its core competence in customization and impeccable product quality to expand its market share and mind share in customers, and we grow together with our customers.Due to the stable demand in DRAM, NAND FLASH and Logic IC, IC assembly and testing industry is still with a growth momentum. In semi-con testing probe industry, C.C.P. will keep emphasizing its market differentiation strategy to expand its market share.

3. Research and Development Operation (1) Ratio of R&D Expense In Total Operating Cost During Recent Years Unit: Thousands NTD

Year

Invested Amount 2017 2018 As of end of Q1,2019

R&D 132,220 151,332 38,596

Operating Revenue 1,892,314 1,773,756 462,202

Ratio/ 6.99% 8.53% 8.35%

(2) Research and Development Achieveme

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(3) Future Research and Development plans and estimated Research and Development expense.

Year T e c h n o l o g y o r P r o d u c t N a m e

2018

1. 77 GHz composite coaxial high-frequency test fixture, completed development.

2. 250W water-cooled heat-dissipating hand cover for development.

4. The 90A replaceable high current test probe was developed.

5. 800Hv high hardness / high wear resistance composite coating technology,

completed development.

6. 168Hr anti-artificial sweat corrosion coating, completed development.

7. 480Hv high wear-resistant insulation fixture material, completed development

2017

1. Fully automatic probe assembly machine is developed and imported into production.

2. The battery probe specially designed for high current has been developed and

become a standard product.

3. Completed the research and development of anti-corrosion materials, and imported

the wearable connector contacts.

4. The probe of differential structure was developed for IC Test/Burn-in components.

2016

1. Complete automatic pin inserter development.

2. Developed many types IC test probes for board to board connectors.

3. Plating layer for high temperature test probe development.

2015

1. Complete 013 probe development.

2. Continue to develop probe head for different needs.

3. Complete high frequency probe development

4. Complete new coating material for specific needs

2014

1. Complete several 010 and 015 probe development

2. Complete probe head development

3. Complete high current probe development

4. Improve the turning process and coating material

2013

1. Complete surface treatment material, to increase product competitiveness and raise

entry barriers.

2. Complete IC test probes related automatic equipments.

3. Complete 010 probe development to provide fine pitch solution to customer and also

raise entry barrier.

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4. Long Term / Short Term Business Development Plans (1) Short Term Business Development Plans i. Direction of Product Development

a. Continuously develop products for pogo pin connectors, spring connectors, BGA package type boards, high frequency telecommunication probes, and IC product testing probes, to create higher profit margins. b. Strengthen the developments and sales of the above related products testing instruments and equipments.

ii. Marketing Area

a. Domestic

Improve relationships between domestic electronics manufacturers, work with the customers while in the development stage to come up with pogo pin connectors that meet their specification requirements.

Continue to improve in new product applications other than that of GPS, PDAs and mobile phones.

Provide IC testing companies with high quality products, win over customers with cost advantages and quick response, and develop smaller test probes using

b. Overseas

Project Schedule Investment

cost

Estimated

complete date Success factors

Macro high

frequency

Test Fixture

The key technology pre-study has

been completed, and sample

preparation and measurement can be

started. After constructing the

high-frequency measurement

platform, verification can be

performed.

NT$ 3 million August, 2019

Mastered the key

technology would

be no risk

Pogo Pin

Anti-corrosion

technology

The key technologies of anti-corrosion

technology have been confirmed, and

this part of the technical research has

been continuously strengthened to

break through the existing technology.

NT$ 3 million June, 2019

Mastered the key

technology would

be no risk

Microtube

Manufacturing

Technology

The more difficult burr-free cutting

technology has been overcome, and

the pipe manufacturing technology is

also completed in the engineering

phase.

Subsequent research and

development of mass production

technology can confirm its quality and

performance.

NT$ 10 million October, 2019

Mastered the key

technology would

be no risk

Quick release

type high current

test

pin( Continuation

plan)

The mass production has been

verified, the product design conforms

to the technical specifications, and the

research continues to improve the

current resistance of the probe and

the series of products.

NT$ 5 million July, 2019

Mastered the key

technology would

be no risk

Automatic

equipment

( Continuation

plan)

Continuous development of

assembly/production automation

equipment, micro-recovery technology

has been overcome, and continuous

improvement in alignment accuracy

can improve production yield.

NT$ 10 million Noveber, 2019

Mastered the key

technology would

be no risk

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Using C.C.P.’s previous pogo pin connectors experience, to develop new markets in Europe, America, and Japan.

Develop an online marketing system, to allow customers more convenient access to our products, and place PO.

Direct faster service in development and manufacturing of customized and mass produced products for customers.

iii. Production a. Medium and low-density products and standard products are manufactured in

mainland China; special orders and high precision products are manufactured in the parent company in Taiwan.

b. Shorten the delivery time of customized and standard products. iv. Operation Scale and Financials

Create a steady increase in operation scale with improvements in financial management functions.

(2) Long-term Business Development Plans

i. Direction of Product Development

a. Improve relationship with customers and joint development of technology to further enhance product applications.

b. Product research and development focuses on high growth consumer electronics, communications products, and semiconductor tests needs.

ii. Marketing

a. Using the Asia market as a base, and expand to markets in Europe and America.

b. Actively cooperate with international customers to explore business opportunities.

iii. Production

a. Taiwan factory: focus on production of semiconductor testing devices and high-end custom ordered test probes.

b. Mainland China factory: focus on production of all types of pogo pin connectors.

iv. Operating Scope and Financial Cooperation

Believe in the philosophy of a continuous service and continue to expand the scale of operation with a steadily built up base.

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5.2 Market and Sales Overview

1. Market Overview and Analysis

(1) Sales Breakdown of Main Products

Unit: Thousands NTD, %

Year Sales Region

2016 2017 2018

Amount % Amount % Amount %

Domestic 284,920 15.13 277,736 14.68 328,654 18.53

Inte

rna

tio

nal

Sale

s

Asia 1,191,270 63.24 1,246,677 65.88 1,210,927 68.27

Others 407,363 21.63 367,901 19.44 234,175 13.20

Total 1,598,633 84.87 1,614,578 85.32 1,445,102 81.47

Total Net Sales 1,883,553 100.00 1,892,314 100.00 1,773,756 100.00

(2) Market Share In the pogo pin connectors industry, primary overseas competitors are: Yokowo Japan, QA Probes US, ECT, IDI, and Mill-Max from the U.S., and also Preci-Dip Switzerland. Domestically, there is almost nowhere to compare as a competitor. In the area of IC contact probe, overseas competitors are: Yokowo from Japan, ECT and IDI from the US, and Leeno from Korea. In terms of the pogo pin connector on the 3C market, there are around 10 rivals, such as ICT, Foxconn, and Foxlink.

(3) Future Market Prospects and Growth Opportunities Probe products can be used in a wide range of applications, including PCB test, wafer test, IC package test, communication products, passive components and LCD panel test equipment. Test probes are used in connectors, except for mainstream consumption. In addition to notebooks, mobile phones, tablet PCs, GPS and other products in the electronic field, in recent years, the application of probe connectors has also been introduced on mobile devices such as sports bracelets, smart watches and wireless headphones, and the semiconductor industry continues to grow in the future. With the trend of consumer electronics such as notebooks, mobile phones, tablets and smart mobile devices, these two blocks will become the driving force for the continued growth of China's probe performance. In addition, mastering the trend of environmental protection and green energy, high-current terminals and high-current connectors have been used in electric steam locomotives, charging guns/piles, etc., and have been in mass production. In addition, driven by new energy vehicles, lithium battery testing devices It is also an area where Chinese probes are focused on development.

(4) Competitive Niche Despite fluctuating business cycle and price wars, C.C.P. has not failed to expand

and prosper. C.C.P.’s success comes from variety of factors, some listed below: i. Competent Research and Development

A strong, capable R&D team has always been a significant component of C.C.P.’s success. Having realized this strength, C.C.P. will continue to invest and discover new talent to further bolster its research development and experience.

ii. Strong Company Foundation and Brand Recognition Being the first domestic company to specialize in test probes, C.C.P.’s wealth of research and production experience as well as its long cultivation in the field of test probes enables it to meet the diversified demand of customers and to provide professional after-sales assistance. With such strong fundamentals, C.C.P. has successfully established itself as a reputable supplier and a capable industry leader.

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iii. Complete Product List and Competitive Product Quality C.C.P. provides a great and extensive variety of products. Furthermore, every step of production is put under the scrutiny of a stringent quality control system, the quality control department has some state-of-the-art inspection machines, including: pin lifetime testers, hardness testers, thickness testers, X-rays, salt spray tester, hot-air reflow machines, horizontal style CCD, thermal shock machines, multi-purpose spring force/contact resistance testers, and network analyzers, etc. All product components must go through rigorous stages of testing as well, to ensure the delivery of the best quality test pins and fixtures, in order to keep the customers’ faith in the quality of the products, which will become an advantage for the company in the competitive market.

iv. Outsource to China to Reduce Production Cost In 2000, with the completion of C.C.P.’s production factory in Humen, Dongguan in China, C.C.P. has concentrated on product development in Taiwan, while outsourcing its production to China. The outsourcing allows the company to be more price-competitive, and also to decrease delivery time to many local customers.

Actively deploy the world and expand overseas bases China Probe established a sales subsidiary in Silicon Valley in the United States in 104, successfully strengthening the service to major US customers, and can continue to develop new customers and new orders, showing that the localization service has achieved remarkable results, so since 107 years onwards China probes will set up sales subsidiaries in Germany, Japan and Singapore, and actively deploy the global market. (5) Developmental Increments, Impediments, and Potential Countermeasures Category Increments Impediments Countermeasures

Industry Growth

Wide applications of products to be used in various industries, ranging from computer, mobile phone, electronic instruments, medical devices. Industry growth moves in sync with many other electronics industry, information systems, communications, and consumer electronics growth.

Product cycle shortens, must continuously produce new products to meet the market’s changing demand.

1.Make research and development more efficient in terms of both cost and time. 2.Diversify product availability, not only including test probes and sockets equipments.

Business Environment

1.Globalization. 2.Gain experience to meet customer needs. 3.Focus on long-term marketing strategy, put emphasis on developing strong relationship with its customers and suppliers.

1.Outsourcing through Southeast Asia, etc.; rise of price competition. 2.Difficulty in recruiting capable technical personnel.

1.Improve process capability and business efficiency. 2.Improve product quality, lower costs and raise business standard. 3.Outsource production to China to be cost competitive.

Internal Business Control

1.Meet ISO-9001、ISO14001

and TS-16949 standard and continue to improve internal management, to meet client needs. 2.Provide more employment benefits to motivate employees.

No apparent impediments

1.Provide more employee training; improve overall human resource efficiency. 2.Improve global operating efficiency.

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Product Technology

Development

1.Obtaining more patents in the RD department. 2.Management with technical background; detect market trend and assist development.

Consistently decrease product size while increasing performance with high frequency function.

1.Develop smaller, higher frequency-enabled products. 2.Continuous research and innovation; invest in more sophisticated equipments to aid development of niche products.

Sales Ability

1.Encompassing product specifications; timely delivery; strong research and development; professional customer service 2.Expansion of customer network, establish domestic and non-domestic sales department to provide services to the China area and the global market

Price competition 1.Improve production process and lower costs 2.Expand customer base and market area 3.Continue to innovate and shorten delivery time to increase competitiveness

2. Production Process of Main Products

(1) Purpose of Main Products

Main products of the company and their main usage and purposes

Industry Product Name Purpose

3C Electronics Test probes and connector PCB bare and full board testing and other electronic component testing Power and signal pogo pin connector

Semiconductors Wafer testing probes and sockets

Carrier board, IC, wafer, logic circuit testing

Communications Coaxial high-frequency pins

Communications testing, high-speed signal transmission

Pogo pin connectors Used in wireless products such as mobile phones, headphones, PDAs, and chargers

Batteries High-current probes Battery activation and battery testing equipment resistant to high-current flow.

Automobile Industry

Pogo pin connectors GPS、audio connectors

(2) Production Process of Main Products

i.Pogo Pin

Single Pin

Plunger

Plating Plating

Inner Barrel Spring

Housing+CAP

Assembly

Finished Product

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ii. PCB Testing Probe

Test Probe

Components

Casing

Assembly

Plunger Inner Barrel

Spring

Casing Square or round PIN

OK Wire

Plating Plating

Plating Plating

Heat Treatment

Turning

Shapping Outsource

Split Head Barrel

Material

Turning

Turning Barrel

Material

Plunger Material

Turning

Barrel material

Heat

Split Head

Plunger Material

Turning

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iii. Semiconductor Testing Probes

iv. Fixture

3. Situation of Main Raw Material Supply The company’s raw materials are mainly bought from outside vendors. Each type of raw

materials has at least two external suppliers. Because of the vast number of suppliers, there is no fear for the lack of raw materials and the company has been signing long-term contracts with any specific raw material suppliers. Listed below are the raw materials used in C.C.P.’s test probes, which includes the plunger, the spring, the barrel material, and the wires.

Plunger：Mainly imported from overseas suppliers with a long-term cooperation. Material is

processed in the main plants and then outsourced to processing companies. All materials are restocked when needed.

Barrel：Developed long-term relationships with many outer and inner barrel suppliers.

Spring：There are numerous domestic and overseas spring supplies, but their product

capabilities are incomparable. Domestic suppliers mainly produce springs using stainless steel wire with the size of φ0.035mm. On the other hand, overseas suppliers mainly produce springs using plated piano wire material with the size under φ0.035mm.

Wire：Both domestic and oversea suppliers are able to firmly meet the company’s demand,

but taking cost into consideration, our company mainly procures from domestic suppliers.

In sum all the above materials can be processed within the company’s plants or outsourced to processing companies, and can be restocked whenever needed.

NC Drilling Structure

Assembly Part

Assembly Circuit

Assembly Fixture

Finished Product

Turning

Barrel Material

Plunger

Plating

Heat Treatment

Plunger Material

Turning

Plating

Inner Barrel

Spring

Assembly

Plunger

Plating

Heat Treatment

Plunger Material

Turning

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4. Major Sales and Customers In The Past Two Years

(1) Information of Major Suppliers in the Past Two Years Unit：Thousands NTD; %

2017 2018 As of end of Q1, 2019

Item Name Amount

Ratio to the

total net

annual purchase〔%〕

Relation

ship with

issuer

Name Amount

Ratio to the

total net


Relation

ship with

issuer

Name Amount

Ratio to the total

net annual purchase〔%〕

Relation

ship with

issuer

1 Sheng Ya Precision 69,084 11.78 None

Sheng Ya

Precision 12,375 2.05 None

Sheng Ya

Precision 1,762 1.21 None

Others 517,222 88.22 Others 590,006 97.95 Others 143,796 98.79

Total Net

Purchases 586,306 100.00

Total Net

Purchases 602,381 100.00

Total Net

Purchases 145,558 100.00

(2) Information of Major Customers in the Past Two Years Unit：Thousands NTD; %

2017 2018 As of end of Q1, 2019

Item Name Amount

Ratio to the

total net


Relation

ship with

issuer

Name Amount

Ratio to the

total net


Relation

ship with

issuer

Name Amount

Ratio to the total

net annual purchase〔%〕

Relation

ship with

issuer

1 A Company (Note)

308,032 16.28 None A Company (Note)

169,744 9.57 None A Company (Note)

49,708 10.75 None

Others 1,584,282 83.72 Others 1,604,012 90.43 Others 412,494 89.25

Total Net

Purchases 1,892,314 100.00

Total Net

Purchases 1,773,756 100.00

Total Net

Purchases 462,202 100.00

Note: The setting out the last two years more than 10% of total sales of the customer name and sales amount and proportion, but the contract agreement does not disclose customer name

or transaction is a personal, non-related person, to whom the code .

(3) Reason for Changes

Incoming Goods: C.C.P's major suppliers didn’t change a lot in the years of 2017 and 2018. Sold Goods: C.C.P's major Customers didn’t change a lot in the years of 2017 and 2018.

- 73 -

5. Production Volume In The Past Two Years Unit: Thousands PCS, thousands NTD

Note: Indirect purchase of probes, fixtures, pin trays and accessories

6. Sales Volume In The Past Two Years Unit：Thousands pcs, thousands NTD

Year/ Production Value/

Main Products

2017 2018

Domestic Sales Overseas Sales Domestic Sales Overseas Sales

Amount Value Amount Value Amount Value Amount Value

Test Probe 15,802 219,751 327,800 1,444,500 15,289 273,028 261,679 1,235,526

Others (Note ) 2,223 57,985 20,572 170,078 1,989 55,626 58,563 209,576

Total 18,025 277,736 348,372 1,614,578 17,278 328,654 320,242 1,445,102

Note: Indirect purchase of probes, fixtures, pin trays and accessories

5.3 Human Resources During the Past Two Years

Year 2017 2018 As of May

15 ,2019

Number of Employees

Direct Labor 73 92 96

Indirect Labor 123 117 121

Total 196 209 217

Average Age 37.41 37.73 36.17

Average Years of Service 6.77 5.15 5.26

Academic Distribution Ratio (%)

Doctorate 0.51 1.44 1.38

Masters 13.78 17.22 15.67

Bachelor 54.08 49.76 49.77

High School 27.04 28.23 29.95

Under High School

4.59 3.35 3.23

5.4 Information on Environmental Protection Costs

5.4.1 According to the law, the company should apply for pollution facilities to set up a permit, or pollution emissions permit, or pay pollution control costs, or should set up environmental protection expert.

Year/ Production Volume/ Main Products (or

departments

2017 2018

Capacity Output Production

Value Capacity Output

Production Value

Test Probes 1,610,955 1,167,256 1,690,775 1,479,057 1,046,151 1,681,847

Others (Note ) 0 0 0 0 0 0

Total 1,610,955 1,167,256 1,690,775 1,479,057 1,046,151 1,681,847

- 74 -

The company's industry is required to apply for permits related to water pollution

prevention and waste disposal in accordance with the environmental protection laws,

and the following environmental pollution related licenses are obtained (including

changes):

As of May 15, 2019

Item License License number Date of acquisition

Water pollution control

(Factory)

Water pollution control

permit (Including

storage permit)

(change)

New Taipei City

Environmental Water Word

No. 04603-03

03/22/2019

Waste clean up

(Factory)

Waste cleanup plan

(change)

North Environmental

WasteWord No.

1062389827

Approval number:

F09210030001

12/12/2017

Waste clean up (One

factory)

Waste cleanup plan

(new)

North Environmental

WasteWord

No. 1071844917

Approval number:

F10112170001

10/25/2018

Waste clean up (Two

factory)

Waste cleanup plan

(new)

North Environmental

WasteWord

No. 1071844918

Approval number:

F10112170002

10/25/2018

Waste clean up (Three

factory)

Waste cleanup plan

(new)

North Environmental

WasteWord

No. 1071844919

Approval number:

F10311250003

10/25/2018

5.4.2 the company's investment in the prevention and control of environmental pollution, the main equipment and its use and potential benefits.

Unit: Thousand NTD

Environmental protection item Year Fee Use and possible benefits

Electroplating waste treatment 2018 3,206

To avoid plating waste liquid pollution of the

environment, commissioned to remove the

disposal of business waste, in line with

relevant laws and regulations.

Sum 3,206

5.4.3 In the last two years and as at the date of publication, the Company has improved its environmental pollution

In April 2019, the company obtained ISO14001 certificate, continued to promote

ISO14001 environmental management system, control and management of business

activities in the environment have significant impact on the consideration and improve

the production of pollution sources to reduce environmental impact and improve

environmental performance.

5.4.4 The total amount of losses and fines caused by pollution of the environment

- 75 -

5.4.5 Expected significant environmental capital expenditure over the next two years

1. Current pollution situation: None.

2. To improve the impact on corporate earnings, competitive position and capital

expenditure: None.

3. Expected significant environmental capital expenditure over the next two years:

None.

5.5 Labor Relations

5.5.1 The welfare measures, training, retirement and the implementation of the employee's welfare measures, as well as the agreement between the employers and employees and the maintenance measures of the employees' rights and interests 1. Employee benefits measures

In accordance with the Employee Benefits Regulations, the Company has a staff welfare committee and is provided with funds for the promotion of welfare measures, including employee wedding gifts, scholarships, birth certificates, ceremonies, emergency relief, cultural and recreational activities Festival gifts, annual tourism and so on.

2. Staff training and training implementation C.C.P. uphold the "talent is the company's largest resources" concept, for the cultivation of talent to life-long learning, career development of education and training philosophy, is committed to improving the company's human quality, storage management and management personnel to create a higher business Performance.

The Year Education and Training Statistics of the Company in 2018:

Item Number of

training Total people Total hours Total Cost

Corporate

Governance 2 16 6 $54,000

Management

course 12 72 85 $165,632

Auditing course 5 5 49 $18,900

Financial Course 5 5 49 $24,200

Professional and

technical courses 40 273 215 $625,900

Innovation, Trend

Curriculum 15 223 80 $189,640

Industrial Safety

Course 15 48 130 $29,700

Item 2018 As of May 15, 2019

1. Pollution status (type, degree) No No

2. The object of compensation or the unit

of punishment

No No

3. The amount of compensation or the

disposition

No No

4. Other losses No No

- 76 -

3. The Company and the financial information of the relevant personnel, the competent authorities to obtain the relevant circumstances of the license

(1)Republic of China Accountant: None. (2)The rest of the staff did not obtain a license.

4. Retirement system and its implementation (1)The Company has a Labor Retirement Reserve Board, which is responsible for the

management and use of the retirement reserve, with rules of work, and 6% of the total paid salary. Starting from April 1998, the monthly retirement payment reserve is set aside by 2% of the total paid amount of money paid by the Labor Remuneration Committee.

Retirement conditions: A. Normal retirement

a. Those who have served for more than 15 years and are over 55 years of age. b. Service for more than 25 years. c. Those who have served for more than 10 years and have reached the age of 60

years. B. ordered to retire

a. People 65 years of age or older. b. Loss of mind or physical disability competent workers.

(2)As from July 1st, 2005, the Company has established a retirement scheme for the employees under the Labor Pension Regulations. The Company chooses to apply the Labor Pension Scheme section of the Labor Pension Ordinance to pay a monthly pension of 6% of the salary to the employee's personal account and the employee's pension. Of the amount of the pension account and the amount of the accumulated proceeds shall be paid on a monthly pension or a pension.

5. The agreement between employers and employees and the maintenance measures of employee benefits

C.C.P. is a rational and harmonious management of the operation of the concept, and labor relations of the new or corrective measures, both employers and employees have agreed to communicate the full agreement to safeguard the rights and interests of employees, so no labor disputes occurred.

5.5.2 The loss suffered as a result of labor disputes in the latest and as of the date of publication, and to disclose the estimated amount and contingency measures that may occur at present and in the future: None.

5.5.3 The working environment and staff personal safety protection measures

The company in the main entrances and exits with security personnel throughout the day stationed, through the registration of visitors, accompanied by strict control of access to personnel, and the company floor entrance with access control card device to protect the safety of employees. At the same time the Company in accordance with labor safety and health laws and regulations, for the safety and health work, such as: mechanical and electrical or fire equipment (such as fire alarms or fire extinguishers, etc.) regular maintenance or repair. In the operation of the risk of the machine are added to the work of the slogan to pay attention to the safety of the work, and the other year employees on a regular basis to implement physical health checks for employees to have their own health awareness.

5.5.4 employee care activities 1. Employee's children's education grant: the establishment of cash with the hi donation

box and invoice gift box, and regularly by the audit, legal co-open by the volunteers to check the invoices, the proceeds are deposited in the staff of the staff education

- 77 -

account for children.

2. Family visits: Since 1997, the Company has launched a family care visit for the staff and provided the necessary assistance to the family needs. At the same time, the employees' families understand the development of the company and implement the corporate culture of the Company's home and filial piety.

3. Caring staff: from time to time by the volunteers on behalf of the staff to the production line of hard nuts and nutritional supplements.

5.6 Important Contracts

Nature of contract Party The contract starts Date Main content Restrictions

A lease contract Gui-chun Lin, Yu-cheng Fang, Yu-ting Fang

2015/01/01~2019/12/31 Plant rental None

A lease contract Giant rong industrial co., Ltd

2015/01/10~2019/12/31 Plant rental None

VI. Financial Information

6.1 Five -Year Financial Summary

6.1.1 Concise Summary of Financial Position Statements 1. IFRS-Consolidated

Unit: Thousand NTD

Year

Accounts

Financial Data for the Recent Five

Years(Note1) As of March 31,

2019(Note 4) 2014 2015 2016 2017 2018

Current assets 1,400,272 1,674,698 1,683,491 1,736,541 1,619,557 1,645,845

Property, plant &

equipment 312,404 290,963 286,966 277,116 354,102 364,224

Intangible assets 22,143 13,364 12,641 19,731 21,597 20,036

Other assets 38,670 35,068 33,022 47,157 95,039 113,305

Total assets 1,773,489 2,014,093 2,016,120 2,080,545 2,090,295 2,143,410

Current

Liabilities

Before

Distribution 659,942 500,097 514,104 481,659 516,077 520,215

After

Distribution 761,872 642,766 621,566 583,782 Note2 Note 3

Non-current liabilities 53,794 63,498 61,960 82,600 95,720 106,954

Total

liabilities

Before

Distribution 713,736 563,595 576,064 564,259 611,797 627,169

After

Distribution 815,666 706,264 683,526 666,382 Note 2 Note 3

Equity attributable to

owners of parent 1,059,753 1,450,498 1,440,056 1,497,883 1,459,181 1,499,644

Capital 509,648 594,452 632,131 638,452 638,032 638,032

Capital reserve 160,864 364,460 396,236 405,524 419,892 423,424

Retained

Earnings

Before

Distribution 361,999 473,271 466,167 494,333 443,626 465,581

After

Distribution 260,069 330,602 358,705 392,210 Note 2 Note 3

Other equity interest 27,242 18,315 (54,478) (40,246) (42,369) (27,348)

Treasury shares 0 0 0 (180) 0 (45)

Non-controlling interests 0 0 0 18,403 19,317 16,597

- 78 -

Total equity Before

Distribution 1,059,753 1,450,498 1,440,056 1,516,286 1,478,498 1,516,241

After

Distribution 957,823 1,307,829 1,332,594 1,414,163 Note 2 Note 3

Note 1: The above annual financial data has been audited by CPA accountants.

Note 2: Until March 31, 2018, the earnings per share of 2017 were not yet admitted by the Shareholders’ Meeting.

Note 3: Not yet distributed.

Note 4: The financial data of Q1,2019 has been reviewed by CPA accountants.

2. IFRS-Unconsolidated Unit: Thousand NTD

Year

Accounts

Financial Data for the Recent Five Years(Note 1) As of March 31,

2019 2014 2015 2016 2017 2018

C u r r e n t a s s e t s 770,289 925,967 824,334 749,100 765,156

Not a

pplic

ab

le

Property, plant &

e q u i p m e n t 163,202 135,257 142,532 118,584 120,369

Intangible assets 14,384 8,190 8,705 15,535 13,039

O t h e r a s s e t s 564,312 630,379 747,063 867,505 887,044

T o t a l a s s e t s 1,512,187 1,699,793 1,722,634 1,750,724 1,785,608

Current

Liabilities

Before

distributi

on

398,640 185,797 223,208 174,272 232,759

After

distributi

on

500,570 328,466 330,670 276,395 註 2

N o n - c u r r e n t

l i a b i l i t i e s 53,794 63,498 59,370 78,569 93,668

Total

liabilities

Before

distributi

on

452,434 249,295 282,578 252,841 326,427

After

distributi

on

554,364 391,964 390,040 354,964 註 2

Equity belong to

mother company 1,059,753 1,450,498 1,440,056 1,497,883 1,459,181

C a p i t a l 509,648 594,452 632,131 638,452 638,032

Cap i ta l reserves 160,864 364,460 396,236 405,524 419,892

Retained

Earnings

Before

distributi

on

361,999 473,271 466,167 494,333 443,626

After

distributi

on

260,069 330,602 358,705 392,210 註 2

Other equity interest 11,233 18,315 (54,478) (40,246) (42,369)

T r e a s u r y s h a r e s 0 0 0 (180) 0

N o n - c o n t r o l l i n g

i n t e r e s t s 0 0 0 0 0

Total equity Before

distributi

on

1,059,753 1,450,498 1,440,056 1,497,883 1,459,181

After

distributi

on

957,823 1,307,829 1,332,594 1,395,760 註 2

Note 1: The above annual financial data has been audited by CPA accountants. Note Note2: The earnings per share of 2018 were not yet admitted by the Shareholders’ Meeting.

- 79 -

6.1.2 Concise Summary of Comprehensive Income Statements 1. IFRS- Consolidated

Unit: Thousand NTD Year

Account

Financial Data for the Recent Five Years(Note1) As of March 31,

2019(Note2) 2014 2015 2016 2017 2018

Operating revenue 1,427,800 1,770,017 1,883,553 1,892,314 1,773,756 462,202

Gross profit 567,661 698,173 694,336 705,619 627,428 163,521

Net operating income

(loss) 193,782 251,519 204,701 203,784 63,071 25,802

Non-operating income

and expenses 22,162 32,479 240 (24,148) 29,715 1,377

Profit before tax 215,944 283,998 204,941 179,636 92,786 27,179

Profit from continuing

operations 165,455 219,404 159,379 140,821 52,979 19,228

Loss from

discontinued

operations

0 0 0 0 0

0

Profit (loss) 165,455 219,404 159,379 140,821 52,979 19,228

Other comprehensive

income, net 15,588 (10,033) (40,978) (6,196) (10,302) 14,193

Comprehensive

income 181,043 209,371 118,401 134,625 42,677 33,421

Profit (loss),

attributable to owners

of parent

165,455 219,404 159,379 142,407 59,708 21,955

Profit (loss),

attributable to

non-controlling

interests

0 0 0 (1,586) (6,729) (2,727)

Comprehensive

income attributable to

owners of parent

181,043 209,371 118,401 136,211 49,406 36,141

Comprehensive

income attributable to

noncontrolling

interests

0 0 0 (1,586) (6,729) (2,720)

Basic earnings per

share 3.11 3.71 2.55 2.28 0.95 0.35


Note 2: The financial data of Q1,2019 has been reviewed by CPA accountants.

- 80 -

2.IFRS- Unconsolidated Unit: Thousand NTD

Year Account

Financial Data for the Recent Five Years(Note) As of March 31, 2019

2014 2015 2016 2017 2018

Operating revenue 1,029,467 1,204,011 1,183,735 1,149,362 1,058,619

No

t Ava

ilable

Gross profit 345,467 389,194 353,765 340,525 329,816

Net operating income (loss)

151,176 175,066 130,050 85,811 53,351

Non-operating income and expenses

57,179 97,605 68,877 85,835 36,211

Profit before tax 208,355 272,671 198,927 171,646 89,562

Profit from continuing operations

165,455 219,404 159,379 142,407 59,708

Loss from discontinued operations

0 0 0 0 0

Profit (loss) 165,455 219,404 159,379 142,407 59,708

Other comprehensive income, net

15,588 (10,033) (40,978) (6,196) (10,302)

Comprehensive income

181,043 209,371 118,401 136,211 49,406

Profit (loss), attributable to owners of parent

165,455 219,404 159,379 142,407 59,708

Profit (loss), attributable to non-controlling interests

0 0 0 0 0

Comprehensive income attributable to owners of parent

181,043 209,371 118,401 136,211 49,406

Comprehensive income attributable to noncontrolling interests

0 0 0 0 0

Basic earnings per share

3.11 3.71 2.55 2.28 0.95


- 81 -

3. Name of Accounting Firm and Individual Audits and Opinion

Year Accounting Firm Name of the Auditor Auditor Opinion

2014 PricewaterhouseCoopers Taiwan Ming-Chuan Fung

Sheng-Zhong Xu None


Sheng-Zhong Xu None


Sheng-Zhong Xu None


Sheng-Zhong Xu None


Sheng-Zhong Xu None

6.2 Five - Year Financial Analysis

6.2.1 Financial analysis 1. IFRS-Consolidated

Year

Analysis(Note)

Financial Analysis for the Past Five Years As of March 31,

2019 2014 2015 2016 2017 2018

Financial Structure

Debt to asset ratio (%) 40.24 27.98 28.57 27.12 29.27 29.26

Long-term fund to property, plant and equipment assets ratio (%)

356.44 520.34 523.41 576.97 444.57 445.66

Solvency Current ratio (%) 212.18 334.87 327.46 360.53 313.82 316.38 Quick ratio (%) 185.23 284.83 272.28 313.50 254.57 254.42 Interest cover (times) 25.18 111.51 1,667.19 241.80 440.74 138.27

Asset Utilizatio

n

Receivables turnover (times) 3.14 3.09 2.74 2.60 2.67 2.95 Average days of collection 116 118 133 140 137 124 Inventory turnover (times) 3.91 4.54 4.25 4.14 4.01 3.85 Average payables turnover 4.22 3.51 3.67 3.76 3.46 3.67 Average days of sales 93 80 86 88 91 95 Property, plant and equipment assets turnover

4.48 5.87 6.52 6.71 5.62 5.15

Total assets turnover 0.85 0.93 0.93 0.92 0.85 0.87

Profitability

Return on assets (%) 10.31 11.70 7.91 6.91 2.55 3.66

Return on equity (%) 17.30 17.48 11.03 9.53 3.54 5.14 Paid-in capital 42.37 47.77 32.42 28.14 14.54 17.04 Net income ratio (%) 11.59 12.40 8.46 7.44 2.99 4.16 Earnings per share (NTD) 3.11 3.71 2.55 2.28 0.95 0.35

Cash and

Cash Flow

Cash flow ratio(%) 55.05 48.39 9.55 72.62 36.32 4.59

Cash flow adequacy ratio (%) 1.95 1.70 1.22 1.52 1.21 0.90 Cash reinvestment ratio (%) 24.68 7.80 (5.12) 12.40 4.44 1.21

Leverage

Operating leverage 2.53 2.35 2.69 2.80 7.3 5.06

Financial leverage 1.05 1.01 1.00 1.00 1.00 1.01

Please explain the variance of financial ratio for the most recent two years. (The analysis can be waived if the variance is less than 20%):

1. The Interest cover (times) increased compared to 2017, mainly due to the increased in interest expense 2. The Cash flow ratio, Cash flow adequacy ratio and Cash reinvestment ratio increased compared to 2017,

mainly due to the imcrease in net cash flow provided by operating activities.

- 82 -

Note: Financial ratio formulas

(1) Financial str Long-term fund to property, plant and equipment assets ratio =

(Total equity＋Long-term liabilities)/ Total property, plant and equipment assets

Current ratio = Current assets/ Quick ratio = (Current assets – inventory – Interest cover = Net income before tax and interest/Interest expense

Receivables turnover (including note receivables resulted from normal operations) =

Net sales / average receivables (including note receivables resulted from normal operations) Account payable turnover (including accounts payable and notes payable resulted from

business operation) = operating cost of goods sold / average balance of account payable (including accounts payable and notes payable resulted from business operation)

Average da Total property, plant and equipment assets turnover = Net sales / Average net property, plant

Total asset turnover = Net sales / Average total asset

(4) Profitability Return on assets = [Net Income + interest expense x (1 – interest rate) ] / Average total asset Earnings per share = (profit and loss attributable to owners of parent －Preferred stock

dividend ) / Weighted average of shares outstanding

Cash flow ratio ＝

Cash flow adequacy ratio ＝last five years’ net cash flow from operating activities / sum of last

Cash reinvestment ratio = Net cash flow from operating activities – Cash dividends) / (Gross

property, plant and equipment assets + Long-term investment + other assets + working capital)

Operating leverage = (Net operating income – Changes in operating costs and expenses)/

Operating profit Financial leverage = Operating profit / (operating profit – interest expense)

- 83 -

2. IFRS- Unconsolidated

Year

Analysis

Financial Analysis for the Past Five Years As of March

31, 2019

2014 2015 2016 2017 2018

Financial

Structure

Debt to asset ratio (%) 29.92 14.67 16.40 14.44 18.28

Not A

va

ilab

l

Long-term fund to property, plant and equipment assets ratio (%)

682.31 1,119.35 1,051.99 1,329.40 1,290.07

Solvency

Current ratio (%) 193.23 498.38 369.31 429.85 328.73

Quick ratio (%) 177.18 458.22 330.44 389.06 292.88

Interest cover (times) 26.50 116.88 1,618.29 1,145.31 472.38

Asset

Utilization

Receivables turnover

(times)

3.26 3.68 3.36 3.41 3.38

Average days of collection 112 99 109 107 108

Inventory turnover (times) 6.28 7.50 6.82 6.25 5.68

Average payables turnover 7.62 10.35 8.71 8.62 7.25

Average days of sales 58 49 54 58 64

Fixed assets turnover 5.90 8.07 8.52 8.80 8.86

Total assets turnover 0.69 0.75 0.69 0.66 0.60

Profitability Return on assets (%) 11.55 13.78 9.32 8.21 3.39

Return on equity (%) 17.30 17.48 11.03 9.69 4.04

Paid-in capital 40.88 45.87 31.47 26.88 14.04

Net income ratio (%) 16.07 18.22 13.46 12.39 5.64

Earnings per share (NTD) 3.11 3.71 2.55 2.28 0.95

Cash and

Cash Flow

Cash flow ratio(%) 52.52 114.48 47.57 74.00 67.37

Cash flow adequacy ratio

(%)

2.76 2.29 1.32 1.17 1.09

Cash reinvestment ratio

(%)

13.80 6.52 (2.13) 1.19 3.05

Leverage Operating leverage 2.14 2.04 2.39 3.36 4.91

Financial leverage 1.06 1.01 1.00 1.00 1.00

- 84 -

Note: Financial ratio formulas (1) Financial structure Debt to asset ratio = Total debts/total assets Long-term fund to property, plant and equipment assets ratio =

(Total equity＋Long-term liabilities)/ Total property, plant and equipment assets

Current ratio = Current assets/current liabil Quick ratio = (Current assets – inventory – Interest cover = Net income before tax and interest/Interest expense

(3) Asset utilization Receivables turnover (including note receivables resulted from normal operations) = Net sales /

Account payable turnover (including accounts payable and notes payable resulted from business operation) = operating cost of goods sold / average balance of account payable (including

Average days of sales Total property, plant and equipment assets turnover = Net sales / Average net property, plant and

Total asset turnover = Net sales / Average total asset

Return on assets = [Net Income + interest expense x (1 – interest rate) ] / Average total asset

Earnings per share = (profit and loss attributable to owners of parent －Preferred stock

dividend ) / Weighted average of shares outstanding

Cash flow ratio ＝

Cash flow adequacy ratio ＝last five years’ net cash flow from operating activities / sum of last

Cash reinvestment ratio = Net cash flow from operating activities – Cash dividends) / (Gross property, plant and equipment assets + Long-term investment + other assets + working capital)

Operating leverage = (Net operating income – Changes in operating costs and expenses)/

Financial leverage = Operating profit / (operating profit – interest expense)

- 85 -

6.3 Supervisor’s Report in the Most Recent Year

The Board of Directors has prepared the Company’s 2017 Business Report, Financial Statements, and proposal for allocation of profits. The CPA firm of PricewaterhouseCoopers, Taiwan was retained to audit C.C.P.’s Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and profit allocation proposal have been reviewed and determined to be correct and accurate by the Audit Committee members of C.C.P. CONTACT PROBES CO., LTD. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.

C.C.P. CONTACT PROBES Co., Ltd.

Chairman of the Audit Committee：

On the Date of March 20, 2019

6.4 Consolidated Statements and Report of Independent Auditor: Please refer to Page 97~241

6.5 Impact on the Company’s financial status if Company or its affiliates experience financial difficulty: None.

- 86 -

VII. Review of Financial Conditions, Operating Results, and Risk Management 7.1 Analysis of Financial Status

Unit: Thousand NTD

Year

I t em 2018 2017

D i f f e rences

Am oun t %

Cur ren t asse ts 1,619,557 1,736,541 (116,984) (6.74)

P roper t y , p lan t &

equ ipm en t 354,102 277,116 76,986 27.78

In tang ib le asse ts 21,597 19,731 1,866 9.46

O the r asse ts 95,039 47,157 47,882 101.54

T o ta l asse ts 2,090,295 2,080,545 9,750 0.47

Cur ren t l i ab i l i t i es 516,077 481,659 34,418 7.15

Long- te rm l i ab i l i t i es 95,720 82,600 13,120 15.88

T o ta l l i ab i l i t i es 611,797 564,259 47,538 8.42

Share cap i ta l 638,032 638,452 (420) (0.07)

Cap i ta l r ese rve 419,892 405,524 14,368 3.54

Re ta ined e a rn ings 443,626 494,333 (50,707) (10.26)

O the r equ i t y i n t e res t (42,369) (40,246) (2,123) (5.28)

T reasu ry s tock 0 (180) 180 (100.00)

Non -con t ro l l i ng

in te res ts 19,317 18,403 914 4.97

T o ta l sha reho lde r ’ s

equ i t y 1,478,498 1,516,286 (37,788) (2.49)

- 87 -

7.2 Analysis of Operation Results

7.2.1 Comparison of the recent 2 years Unit: Thousand NTD

7.2.2 Gross Profit Analysis Unit: Thousand NTD

Item/ Year Operating

revenues

Cost of good

sold Gross profit

Gross profit

margin

Rate of gross profit margin(%)

2018 1,773,756 1,146,328 627,428 35% (5.41)

2017 1,892,314 1,186,695 705,619 37% 0.00

Analysis of deviation over 20%: None.

Item 2018 2017 Amount Differences(%)

Net sales 1,773,756 1,892,314 (118,558) (6.27)

Cost of goods sold 1,146,328 1,186,695 (40,367) (3.40)

Gross profit 627,428 705,619 (78,191) (11.08)

Total operating expenses 564,357 501,835 62,522 12.46

Operating income 63,071 203,784 (140,713) (69.05)

Non-operating gains(loss) 29,715 (24,148) 53,863 (223.05)

Income before income tax 92,786 179,636 (86,850) (48.35)

Income tax expense 39,807 38,815 992 2.56

Net income 52,979 140,821 (87,842) (62.38)

1.Analysis of deviation over 20% and exceeding NT$10 million: 2.Corresponding plans for impact on C.C.P future finance and sales according to expected sales volume. The expected sales volume in the coming year depends on the industrial trend and changes in market supply and demand. C.C.P actively develops new products for preparing the complete product line with providing customer solutions to look forward future growth and development.

- 88 -

7.3 Analysis of Cash Flow

7.3.1 Cash Flow Analysis

Year

Item 2018 2017 Rate of change(%)

Cash flow ratio 36.32 72.62 (49.99)

Cash flow adequacy ratio 1.21 1.52 (20.39)

Cash reinvestment ratio 4.44 12.40 (64.19)

Explanations:

1.The Cash flow ratio and Cash flow adequacy ratio increased compared to 2017

7.3.2 Describe corrective measures to be taken in response to illiquidity: None

7.3.3 Cash Flow Forecast Unit: Thousand NTD

ash

Balance

Estimated Annual

Net Cash Flow

From operating

activities

Estimated

Annual Cash

outflow

Projected Cash

Balance Remedy to Cash Shortage

＋－ Investment plan Financial plan

587,165 97,115 210,180 474,100 None None

7.4 Major Capital Expenditure Items: None

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

Unit: Thousand NTD, shares

Acquisition

date

Investee companies Business

item Invest cost

Book value

Investment shares Net

value of sharehol

ding

Return on investment in 2018

shares Stockholders

(%)

Gain or loss from

investment

Main reason for gain or loss

Corrective plan

2000.08 Great Esteem Services Limited

General investme

nt 388,128 742,545 12,762,342 100% 753,844 25,554

Profit gained from subsidiary company

None

2015.09 C.C.P. Connection Platform, Inc.

Trading company

15,486 12,588 500,000 100% 14,157 (353) Operation loss None

2016.07 Shang Chuan Investment Co., Ltd.

General investme

nt 100,000 89,631 10,000,000 100% 89,631 (5,135)

profit lossed from subsidiary company

None

2018.08 MEGA CRYSTAL LTD.

General investme

nt 15,431 11,312 500,000 100% 11,312 (4,059)

profit lossed from subsidiary company

None

- 89 -

C.C.P. has set up management methods for investee companies, and will practice it in accordance with The Investee Companies Management Method .To improve investment results and ensure the shareholders’ rights, investee companies have to provide financial statements and business reports for review and analysis. Future investment plan is drafted according to C.C.P.s policy and executed by related investment methods.

7.6 Analysis and Evaluation of Risk Matters

7.6.1 The impact of changes in interest rates, exchange rate and inflation on corporate profits and losses and correspondence measures in future.

Unit: Thousand NTD

Items 2018

Net interest income(expense) 3,669

Net exchange income(loss) 13,704

Net interest income(expense)/net revenue 0.21%

Net interest income(expense)/pretax profit 3.95%

Net exchange income(loss)/ net revenue 0.77%

Net exchange income(loss)/ pretax proft 14.77%

1. The impact of interest rate changes on the profits and losses of the company and correspondence measures in future.

C.C.P.'s interest income (expenditure) accounted for the proportion of pretax profit is not high, it has little effect on profit and loss. We regularly assess bank borrowing rates and maintain good relations with banks to obtain more favorable borrowing rates

2. The impact of exchange rate changes on the profits and losses of the company and correspondence measures in future.

We are based on the principle of sound and conservative, unless use natural hedging to eliminate part of the exchange rate fluctuations risk, the relevant staffs of financial department will master and understand relevant information of exchange rate affection .And they will make the adjustment in timely of the foreign exchange holding part for the foreign bank account.

3. The impact of inflation on the profits and losses and the future measures of the company.

C.C.P.'s main raw materials is the copper rod.Its purchase price is mainly decided by the pricing strategy of the international company that sets copper price, market supply and demand and market competition

7.6.2 The main reason of the policy that we engaged in high-risk, high leverage investments, loans, endorsements, derivatives transactions and the profit or loss, and correspondence measures in future .

1. C.C.P. did not engage in high-risk, highly leveraged investments in 2018 and by the end of the date of issuing annual report

2. C.C.P. did not loan to others. 3. The endorsement of the C.C.P in 2018 After the resolution of the Board of Directors, Dongguan Contact Probe Co., Ltd.

borrowed USD$6.5 million dollars from the bank and C.C.P. endorsed for it. By the end of December 31, 2018, Dongguan Contact Probe Co., Ltd. actually used

- 90 -

USD$0 million dollars of the bank loan amount. In summary, C.C.P.'s endorsement for Dongguan Contact Probe Co., Ltd. is the financing requirements for operating. It all due to company's business needs. So this endorsement is necessary and we handle it according to "Endorsement Work Guarantee Measures". It is positive to C.C.P.'s future business development and C.C.P. have not yet found a major anomaly.

4. Derivatives transactions: None. 5. The main reason of the profit and loss of our company in 2018 and the

correspondence measures in future C.C.P. did not engage in high-risk, high leverage investments, every investment all was implemented after carefully assessment. Additional loans and endorsements were all handled according to the relevant procedures adopted by the board of directors and the shareholders' meeting. The operation of derivative goods is based on avoiding risk. All operations all operations are implemented after carefully considering risk conditions

7.6.3 Future Research and Development plans and estimated Research and Development expenses

7.6.4 The impact on corporation finance from the important policies and legal changes and its

Project Schedule Investment

cost

Estimated

complete date Success factors

Macro high

frequency

Test Fixture

1. Find the suitable and hard

material

2. Machinability validation

3. Apply this layer to product

NT$ 3 million Auguest, 2019

Mastered the key

technology would

be no risk

Pogo Pin

Anti-corrosion

technology

1. Application for recharge

battery

2. Differentiated technological

development

3. Sampling and test

NT$ 3 million June, 2019

Mastered the key

technology would

be no risk

Microtube

Manufacturing

Technology

The more difficult burr-free

cutting technology has been

overcome, and the pipe

manufacturing technology is

also completed in the

engineering phase.

Subsequent research and

development of mass

production technology can

confirm its quality and

performance.

NT$ 10 million October, 2019

Mastered the key

technology would

be no risk

Quick release type

high current test pin

( Continuation plan )

The mass production has been

verified, the product design

conforms to the technical

specifications, and the research

continues to improve the current

resistance of the probe and the

series of products.

NT$ 5 million July, 2019

Mastered the key

technology would

be no risk

Automatic device

development

( Continuation plan )

Continuous development of

assembly/production

automation equipment,

micro-recovery technology has

been overcome, and continuous

improvement in alignment

accuracy can improve

production yield.

NT$ 10 million Noveber,

2019

Mastered the key

technology would

be no risk

- 91 -

responding actions: C.C.P. follows the decree, and have finance, accounting, auditing and legal departments come up an assessment of important policies and legal changes and propose the action plans. Also coordinate and adjust internal control system and business operations to comply with the provisions of the regulation in order to reduce those impacts on the company’s finance.

7.6.5 Changes in technology and the impact of the industry on the company's financial business and responding actions:

With the popular of mobile phones, tablet PCs, wearable devices, and internet business era. The technology evolution continues to change our life cycle, and affects the industry's ecology. C.C.P. transforms into a consumer 3C devices, industrial and medical electronic component and connector company from a manufacturer of probe and fixture products. For high precision, low impedance, high frequency signal, waterproof, and high current technology, C.C.P. upholds the focus on technology upgrades, the concept of patent development to fully meet customer demand as the company's long-term development of competitiveness. In addition, the trend of environmental protection and green energy results in increase of demand on electric locomotive and solar power equipments. Therefore we have also seen the increase of sales from the high current terminals and high current connector products.

7.6.6 Corporate image changes impacts on the corporate crisis management and its response measures: The company so far has no major image changes caused by the situation of corporate crisis.

7.6.7 Expected Benefits, Possible Risks and Response Measures for M & A: There are no M & A plans for C.C.P..

7.6.8 Expansion of plant expected benefits, possible risks and response measures: The C.C.P. did not expand the plant in 2018 years.

7.6.9 Risk and response measures arising from the concentration of the purchase or sales volume:None.

7.6.10 The risk and response measures on the impact of the transfer or replacement of a large number of shares on the company from directors, supervisors or large shareholders holding more than 10% of the shares: C.C.P. did not occur a large number of shares transfer or replacement in 2018.

7.6.11 Changes in the ownership of the company's impact, risk and response measures: C.C.P. did not happen to change the ownership

7.6.12 Litigation or non-litigation, the company and the company’s directors, supervisors, general manager, the person in charge, the major shareholders with shares more than 10%, and affiliated companies have been determined or still in the process of litigation, the result may have significant influence on the shareholders' equity or the price of the securities, and shall disclose the facts of the dispute, the amount of the subject matter, the commencement date of the litigation, the main litigants and the processing date as of the annual report. In the case of litigation, non-litigation or administrative litigation in the process, there is no significant effect on the shareholders' equity or the securities price of the Company.

7.6.13 Other important risks and response measures: Organization and operation of risk management: 1. In accordance with the latest internal audit development and guidelines, the Company has strengthened its management of risk in recent years, which includes risk detection, reporting and handling the risky events. The risk control of the Company is divided into three levels (mechanism): the contractor and the organizer are the first

- 92 -

mechanism, and the original risk detection, assessment and control of the operation must be taken into account at this level. The second mechanism is the general manager and associate managers in charge of identifying and approving the priority of various risks and improvement of the risk control. The third mechanism is the review of the legal and auditing offices and the deliberations of the directors.

2. Organization Chart of Risk Management

Major Risk Risk control direct unit Risk audit and

control

Supervisors and

auditors

(1)Interest of exchange rate and financial risk

(2)High risk leveraged investment, loan to other parties, derivatives trading, financial investment

Financial

Financial

D

irecto

rs

B

oard

of d

irecto

rs. R

isk e

valu

atin

g a

nd fin

al c

ontro

l.

Auditin

g S

ectio

n, R

isk re

vie

w, e

valu

atin

g, s

uperv

isin

g, im

pro

vem

ent a

nd fo

llow

up

.

(3)RD planning

(4)Change of Policy and Law

(5)Change of Technology and Industry

(6)Change of the company imagination

(7)Investment, re-investment and merging benefit

R.D. Administration, Legal Production, R.D. Sales, GM office Financial, GM office

(8)Extension of plant and production (9)Concentration of purchasing and sale

Production, GM office Purchase, Sales

(10) Mass transfer and change of stock Administration, Stock affairs

(11)Change of management rights Stock affairs, Board of Directors

(12)Litigation and non- litigation issues Legal

(13)Other operating affairs GM office

(14)Moral and ethical conduct of personnel

Supervisors and Administration

(15)Comply with SOP and laws. Supervisors

(16)The order of board of directors Stock affairs, Administration, Board of Directors.

7.7 Other Significant Matters: None.

- 93 -



E-Plan International

Limited

C.C.P. INTERNATIONAL

(H.K.) LIMITED

100%


Forefront International

Limited

DONGGUAN C.C.P

Contact Probes Co.,

Ltd.

C.C.P. Connection

Platform, Inc.

Shang Chuan Investment Co.,

Ltd.

Apex Probes Technology

Co., Ltd.

MEGA CRYSTAL LTD.

Dongguan Tongxing precision

components Ltd.

One Test Systems Co.,

Ltd.

OTS Co., Ltd. One Test Systems

VIII. Special Disclosure 8.1 Summary of Affiliated Companies

8.1.1 Group organization structure

100% 100% 100%

100%

100% 100% 100% 100%

100% 60% 73.39%

100% 100%

- 94 -

8.1.2 Information of Company Affiliates Unit: Thousand USD; Thousand NTD

Company title Date of

Establishment

Address Paid-in Capital Main Operational

Goals and Products


89/07/03 Offshore Chambers, P.O. Box 217, Apia, Samoa

TWD388,128 Investment


89/08/15 Offshore Chambers, P.O. Box 217, Apia, Samoa

USD12,634 Investment

E-Plan International Limited 89/07/03 Offshore Chambers, P.O. Box 217, Apia, Samoa

TWD 0 Trading

DONGGUAN C.C.P Contact

Probes Co., Ltd. 89/12/08

NO.10, Nan Mian Auenue, Humen Town, Dongguan, Guangdong, China

USD13,135

Testing probes Receptacles, and Connectors Manufacturing

Forefront International Limited

96/01/29 Offshore Chambers,P.O.Box 217,Apia,Samoa

TWD 0 Investment

C.C.P. INTERNATIONAL (H.K.) LIMITED

97/10/25

Unit1, 12/F, No.31, Hung To Road, Billion Trade Center Kwun Tong, Kowloon, Hong Kong

USD128 Trading

C.C.P. Connection Platform, Inc.

104/09/16 3350 Scott Blvd., Bldg. #41-01, Santa Clara, CA

USD500 Trading

Shang Chuan Investment Co., Ltd.

105/07/26

5F., No.8, Lane 24, Ho Ping Rd., Panchiao District New Taipei City 220, Taiwan R.O.C

TWD100,000 Investment

Apex Probes Technology Co., Ltd

106/05/11 2F., No.22, Chenggong 13th St., Jhubei City, Hsinchu County 302, Taiwan R.O.C.

TWD50,000 Probe card

MEGA CRYSTAL LTD. 107/08/14

Suite 309, Capital City Building,Independence Avenue,Victoria, Mahe’, Republic of Seychelles.

USD500 Investment


107/08/14

4th Floor, No. 7, Second Road, Second Industrial Zone, Jiumenzhai, Humen Town, Dongguan City

USD500

Electronic test probes, bushings, testers, etc.

One Test Systems Co.,Ltd. 107/10/11

Suite 102,Cannon Place,North Sound Rd.,George Town,Grand Cayman,Cayman Islands

USD945 Investment

OTS Co., Ltd. 107/12/20

5F., No.8, Lane 24, Ho Ping Rd., Panchiao District New Taipei City 220, Taiwan R.O.C

TWD15,000 Trading

One Test Systems 107/12/14 3350 SCOTT BLVD BLDG 41-01, SANTA CLARA, CA 95054

USD250 Trading

8.1.3 According to Corporation Law Section 369-3 to See if There is Affiliate Relationship: None

8.1.4 Business Relation Illustration

1. Industries included in the enterprise business operation: (1) All kinds of connector’s manufacturing, processing, and merchandise. (2) Probe’s testing, PCB board, and fixture’s manufacturing, processing, and merchandise. (3) All computer testing equipment’s manufacturing, processing, and merchandise. (4) Import and Export business for the above-mentioned products.

- 95 -

(5) Investing business.

2. Business relationship between related business at the enterprise：

(1) Probes manufactured by C.C.P. are trading in the international markets through C.C.P. International (HK) Co., Ltd..

(2) C.C.P. invests in World Success Group Limited through Great Esteem Services Limited and re-invests in Dongguan C.C.P Contact Probe Co., Ltd., C.C.P Dongguan focus on connector manufacturing and sells parts of its products to C.C.P. through E-Plan International Limited and C.C.P. International (HK) Co., Ltd..

(3) C.C.P. sells part of low material to Dongguan C.C.P for its manufacture through E-Plan International Limited.

8.1.5 Information of Corporate Directors, Supervisors, and General Managers

Unit: Share, %

Company Title Position Name of Representative Shares held

Shares %

Great Esteem Services Limited Chairman C.C.P. representative: Chih-Feng Chen

12,762,342 100.00%

World Success Group Limited Chairman C.C.P. representative: Chih 12,634,136 100.00%

E-Plan International Limited Chairman C.C.P. representative: Chih 1 100.00%

DONGGUAN C.C.P Contact Probes Co., Ltd. Chairman C.C.P. representative: Chih 13,135,512 100.00%

Forefront International Limited Chairman C.C.P. representative: Chih 1 100.00%

C.C.P. INTERNATIONAL (H.K.) LIMITED

Chairman C.C.P. representative: Chih 1,000,000 100.00%

C.C.P. Connection Platform, Inc. Chairman C.C.P. representative: Chih 500,000 100.00%

Shang Chuan Investment Co., Ltd. Chairman C.C.P. representative: Chih 10,000,000 100.00%

Apex Probes Technology Co., Ltd. Chairman C.C.P. representative: Chih 3,000,000 60.00%

MEGA CRYSTAL LTD. Chairman C.C.P. representative: Chih 500,000 100.00%


Chairman MEGA CRYSTAL LTD.

representative: Jian Haowen 500,000 100.00%

One Test Systems Co.,Ltd. Chairman Shang Chuan Investment Co., Ltd.

representative：Chen-Lung Tsai 660,525 73.39%

OTS Co., Ltd. Chairman One Test Systems Co.,Ltd.

representative：Chen-Lung Tsai 1,500,000 100.00%

One Test Systems Chairman One Test Systems Co.,Ltd.

representative：Chen-Lung Tsai 250,000 100.00%

8.1.6 Business Operation for Related Parties

Unit: Thousand NTD

Name of the Company Capital Assets Liability Net Worth Revenue Operating

profit

Profit after

income tax

Great Esteem Services

Limited 388,128 753,844 0 753,844 0 0 28,171

World Success Group

Limited 384,229 736,411 0 736,411 0 0 26,747

E-Plan International Limited 0 29,686 23,434 6,252 67,913 1,234 1,383

DONGGUAN C.C.P Contact

Probes Co., Ltd. 400,152 1,120,405 383,994 736,411 1,273,842 31,130 26,747

Forefront International

Limited 0 3 3 0 0 0 0


(H.K.) LIMITED 3,899 130,229 119,070 11,159 586,360 438 40

- 96 -

C.C.P. Connection Platform,

Inc. 15,486 17,830 3,673 14,157 24,707 317 (353)

Shang Chuan Investment

Co., Ltd. 100,000 89,671 40 89,631 0 (44) (5,135)

Apex Probes Technology

Co., Ltd. 50,000 47,666 17,397 30,269 22,014 (15,518) (15,471)

MEGA CRYSTAL LTD. 15,431 11,378 66 11,312 0 (66) (4,059)


15,431 12,869 1,491 11,378 405 (4,051) (3,993)

One Test Systems Co.,Ltd. 24,171 27,333 240 27,093 0 (736) (2,033)

OTS Co., Ltd. 15,000 15,029 674 14,355 0 (645) (645)

One Test Systems 7,713 7,678 617 7,061 0 (606) (606)

8.1.7 Consolidated Financial Statement for Related Parties

The Company's Fiscal Year 208 (from January 1 to December 31 of the People's Republic of China) shall be included in the compilation of the consolidated financial statements in accordance with the Guidelines for the preparation of the consolidated financial statements and relational reports of the Relational Business Agreements. The Company shall be disclosed in accordance with the International Financial Reporting Standards No. 10, which shall be included in the consolidated financial report of the parent company, and the relevant information disclosed in the consolidated financial statements shall be disclosed in the consolidated financial statements of the Company. Therefore, no necessary to issue another consolidated financial statement of the related parties.

8.1.8 Related Business’s Endorsement Guarantee, Capital Loan to Others and Engaged in Derivative Market Transaction :

(1) Endorsement guarantee between C.C.P. and its related parties, please refer to the page 89 of the annual report.

(2) Capital loan to others and engaged in derivative market transactions between C.C.P. and its related parties: None.

8.2 Private Placement Securities in the Most Recent Year and as of the Date of this

Annual Report: None. 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent

Year and as of the Date of this Annual Report: None. 8.4 Other Necessary Supplement: None.

IX. Any Events in the Most Recent Year and as of the Date of this Annual

Report that Had Significant Impacts on Shareholders’ Right or Security Prices as Stated in Item 3 Paragraph 2 of Article 36 of Securities and Exchange Law of Taiwan: None

C.C.P. CONTACT PROBES CO., LTD. AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REPORT OF INDEPENDENT ACCOUNTANTS

DECEMBER 31, 2018 AND 2017

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

~1~

REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR 18004249

To the Board of Directors and Shareholders of C.C.P. CONTACT PROBES CO., LTD.

Opinion

We have audited the accompanying consolidated balance sheets of C.C.P. Contact Probes Co., Ltd. and

its subsidiaries (the “Group”) as at December 31, 2018 and 2017, and the related consolidated

statements of comprehensive income, of changes in equity and of cash flows for the years then ended,

and 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 at 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 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 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. 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 judgement, were of most significance in

our audit of the consolidated financial statements of the current period. These matters were addressed

~2~

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 of the current period are stated as

follows:

Key audit matter – Assessment of allowance for valuation of inventory loss

Description

Please refer to Note 4(12) for a description of the accounting policy on allowance for inventory

valuation losses. Please refer to Note 5(2) for accounting estimates and assumption uncertainty on

inventory fair value measurement. For details of assessment allowance for valuation inventory loss,

please refer to Note 6(5). As of December 31, 2018, inventory balance and allowance for valuation of

inventory loss amounted to NT$301,857 thousand and NT$76,162 thousand, respectively.

The Group is primarily engaged in testing contact probes and manufacturing and selling of pogo pin

connectors. Contact probes and pogo pin connectors are both components of electronic products. Due

to the short life cycle of electronic products and the highly competitive market nature, there is a high

risk of incurring inventory valuation losses or having obsolete inventory. The Group’s inventory policy

is lower of cost or net realizable value. Inventory valuation losses mainly consist of inventory

measured at lower of cost or net realizable value and inventory that was checked item by item then

classified as outdated or damaged inventory. Due to the vast variety and material amount of inventory,

classification of outdated or damaged inventory involves management’s subjective judgement and

accounting estimates are highly uncertain. We indicated that the assessment of allowance for inventory

valuation loss as one of the key areas of focus for this fiscal year.

How our audit addressed the matter

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

1. Obtained the Group’s policy applied to allowance for inventory valuation loss and assessing the

rationality of the policy. Assessing whether the allowance recognition policy is consistently applied

between comparative periods of the financial statements.

2. Obtained the net realizable value calculation and obsolescence losses report. Selected samples then

checked information on supporting documents and recalculated them in order to confirm the

accuracy of the reports. Assessed management’s assumption basis and rationality on determining

net realizable value.

3. Checked information obtained during physical inventory count. Interviewed with management and

~3~

inventory employees and observed whether obsolete, scrap, aging, outdated or damaged items were

all recorded in the inventory report.

Key audit matter – Assessment of allowance for uncollectible accounts

Description

Please refer to Note 4(10), for the accounting policy of impairment loss of accounts receivable. For

accounting estimation and uncertainty of assumption of accounts receivable impairment, please refer

to Note 5(2). For details of impairment loss of accounts receivable, please refer to Note 6(4). As of

December 31, 2018, accounts receivable and loss allowance amounted to NT$596,865 thousand and

NT$8,977 thousand, respectively.

The criteria that the Group uses to determine whether there is objective evidence of an impairment of

individual accounts receivable includes the aging of accounts receivable past due, financial situation of

customers, internal credit ranking, historical transaction records and subsequent collection situation,

also estimates the loss rate based on the past aging report and evaluates the expected credit loss by

considering industrial forecastability. Based on this criterion, the Group estimates the amounts of

allowance for accounts receivable that the Group has to provision. As the assessment involves

management’s judgement on impairment and the factors that affected the impairment losses involve a

high degree of uncertainty, these may have a material effect on the recoverable amounts of accounts

receivable. Thus, we consider the assessment of provision for impairment losses of significant

accounts receivable a key audit matter.

How our audit addressed the matter

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

1. Understood and assessed the reasonableness of the policy applied to provision for impairment

losses of accounts receivable.

2. Obtained the aging report used when management assessed the expected credit loss of accounts

receivable, assessed whether the logic of data source was consistently applied, and tested its

accuracy with proper documents.

3. Assessed the reasonableness of estimates used by management in calculating the expected credit

loss of accounts receivable and obtained supporting documents, including forecastability

adjustments, disputed accounts, overdue accounts, subsequent collection, economic conditions that

would affect sale customers, and other indications showed the customer would be unable to repay

on schedule.

~4~

Other matter – Parent company only financial reports

We have audited and expressed an unmodified opinion on the parent company only financial

statements of C.C.P CONTACT PROBES Co., Ltd. as at 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 audit committee, are responsible for overseeing the Group’s

financial reporting process.

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

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements

as a whole are free from material misstatement, whether due to fraud or error, and to issue 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.

~5~

As part of an audit in accordance with ROC GAAS, we exercise professional judgement 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 auditor’s

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 auditor’s 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 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

~6~

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 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 report because the adverse consequences of

doing so would reasonably be expected to outweigh the public interest benefits of such

communication.

PricewaterhouseCoopers, Taiwan

March 20, 2019

Taiwan, Taipei

------------------------------------------------------------------------------------------------------------------------------------------------- The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of

~7~

China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice. As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

C.C.P. CONTACT PROBES CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

~8~

December 31, 2018 December 31, 2017 Assets Notes AMOUNT % AMOUNT %

Current assets

1100 Cash and cash equivalents 6(1) $ 587,165 28 $ 696,444 34

1110 Financial assets at fair value

through profit or loss - current

6(2)

6,344 - 30,526 1

1136 Current financial assets at

amortised cost, net

6(3) and 8

91,831 4 - -

1150 Notes receivable, net 6(4) and 8 29,811 2 39,552 2

1170 Accounts receivable, net 6(4) 587,888 28 653,658 31

1200 Other receivables 7,962 - 4,201 -

130X Inventories 6(5) 225,695 11 177,483 9

1410 Prepayments 80,095 4 49,059 2

1470 Other current assets 6(6) and 8 2,766 - 85,618 4

11XX Current Assets 1,619,557 77 1,736,541 83

Non-current assets

1510 Financial assets at fair value

through profit or loss - noncurrent

6(2)

32,666 2 - -

1600 Property, plant and equipment 6(7) 354,102 17 277,116 14

1780 Intangible assets 21,597 1 19,731 1

1840 Deferred income tax assets 6(21) 27,392 1 24,153 1

1900 Other non-current assets 34,981 2 23,004 1

15XX Non-current assets 470,738 23 344,004 17

1XXX Total assets $ 2,090,295 100 $ 2,080,545 100

(Continued)

C.C.P. CONTACT PROBES CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

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

~9~

December 31, 2018 December 31, 2017 Liabilities and Equity Notes AMOUNT % AMOUNT %

Current liabilities

2100 Short-term borrowings 6(8) $ 10,000 - $ - -

2130 Current contract liabilities 6(16) 3,987 - - -

2150 Notes payable 223,056 11 205,670 10

2170 Accounts payable 114,811 6 119,836 6

2200 Other payables 6(9) 147,848 7 140,035 7

2230 Current income tax liabilities 14,218 1 4,821 -

2300 Other current liabilities 2,157 - 11,297 -

21XX Current Liabilities 516,077 25 481,659 23

Non-current liabilities

2570 Deferred income tax liabilities 6(21) 84,864 4 71,253 3

2600 Other non-current liabilities 6(10) 10,856 - 11,347 1

25XX Non-current liabilities 95,720 4 82,600 4

2XXX Total Liabilities 611,797 29 564,259 27

Equity attributable to owners of

parent

Share capital 6(12)

3110 Share capital - common stock 638,032 30 638,452 31

Capital surplus 6(13)

3200 Capital surplus 419,892 21 405,524 19

Retained earnings 6(14)

3310 Legal reserve 96,323 5 82,083 4

3320 Special reserve 28,367 1 54,478 3

3350 Unappropriated retained earnings 318,936 15 357,772 17

Other equity interest 6(15)

3400 Other equity interest ( 42,369) ( 2) ( 40,246) ( 2)

Treasury stocks 6(12)

3500 Treasury stocks - - ( 180) -

31XX Equity attributable to owners

of the parent

1,459,181 70 1,497,883 72

36XX Non-controlling interest 19,317 1 18,403 1

3XXX Total equity 1,478,498 71 1,516,286 73

Significant contingent liabilities

and unrecognisied contract

9

3X2X Total liabilities and equity $ 2,090,295 100 $ 2,080,545 100

C.C.P. CONTACT PROBES CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

~10~

Years ended December 31 2018 2017

Items Notes AMOUNT % AMOUNT %

4000 Sales revenue 6(16) $ 1,773,756 100 $ 1,892,314 100

5000 Operating costs 6(5)(19)(20) ( 1,146,328) ( 65) ( 1,186,695) ( 63)

5950 Net operating margin 627,428 35 705,619 37

Operating expenses 6(19)(20)

6100 Selling expenses ( 238,994) ( 13) ( 203,116) ( 10)

6200 General and administrative

expenses

( 178,214) ( 10) ( 166,499) ( 9)

6300 Research and development

expenses

( 151,332) ( 9) ( 132,220) ( 7)

6450 Impairment loss determined

in accordance with IFRS 9

12(2)

4,183 - - -

6000 Total operating expenses ( 564,357) ( 32) ( 501,835) ( 26)

6900 Operating profit 63,071 3 203,784 11

Non-operating income and

expenses

7010 Other income 6(17) 15,338 1 10,761 -

7020 Other gains and losses 6(18) 14,588 1 ( 34,163) ( 2)

7050 Finance costs ( 211) - ( 746) -

7000 Total non-operating

income and expenses

29,715 2 ( 24,148) ( 2)

7900 Profit before income tax 92,786 5 179,636 9

7950 Income tax expense 6(21) ( 39,807) ( 2) ( 38,815) ( 2)

8200 Profit for the year $ 52,979 3 $ 140,821 7

(Continued)

C.C.P. CONTACT PROBES CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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


~11~

Years ended December 31 2018 2017

Items Notes AMOUNT % AMOUNT % Other comprehensive income Components of other

comprehensive income that will not be reclassified to profit or loss

8311 Actuarial gain (loss) on

defined benefit plan 6(10)

$ 649 - ($ 551) - 8349 Income tax related to

components of other comprehensive income that will not be reclassified to profit or loss

6(21)

( 288) - 94 - 8310 Components of other

comprehensive income that will not be reclassified to profit or loss

361 - ( 457) - Components of other

comprehensive income that will be reclassified to profit or loss

8361 Financial statements

translation differences of foreign operations

6(15)

( 14,610) ( 1) ( 6,914) - 8399 Income tax relating to the

components of other comprehensive income

6(21)

3,947 - 1,175 - 8360 Components of other

comprehensive loss that will be reclassified to profit or loss

( 10,663) ( 1) ( 5,739) - 8300 Total other comprehensive

loss for the year

($ 10,302) ( 1) ($ 6,196) -

8500 Total comprehensive income for the year

$ 42,677 2 $ 134,625 7

Profit (loss), attributable to: 8610 Owners of the parent $ 59,708 3 $ 142,407 7 8620 Non-controlling interest ( 6,729) - ( 1,586) - Total $ 52,979 3 $ 140,821 7

Comprehensive income attributable to:

8710 Owners of the parent $ 49,406 2 $ 136,211 7 8720 Non-controlling interest ( 6,729) - ( 1,586) - Total $ 42,677 2 $ 134,625 7

Earnings per share 6(22) 9750 Total basic earnings per

share

$ 0.95 $ 2.28

9850 Total diluted earnings per share

$ 0.94 $ 2.24

C.C.P. CONTACT PROBES CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Expressed in thousands of New Taiwan dollars,) Equity attributable to owners of the parent Retained earnings Other equity interest

Notes

Share capital - common stock

Capital surplus,

additional paid-in capital

Legal reserve

Special reserve

Unappropriated retained earnings

Financial statements translation

differences of foreign operations

Other equity - others

Treasury stocks

Total

Non-controlling interest

Total equity


~12~

2017 Balance at January 1 $ 632,131 $ 396,236 $ 66,145 $ 27,432 $ 372,590 ($ 22,628 ) ($ 31,850 ) $ - $ 1,440,056 $ - $ 1,440,056

Profit (loss) for the year - - - - 142,407 - - - 142,407 ( 1,586 ) 140,821 Other comprehensive loss for the year - - - - ( 457 ) ( 5,739 ) - - ( 6,196 ) - ( 6,196 )

Total comprehensive income - - - - 141,950 ( 5,739 ) - - 136,211 ( 1,586 ) 134,625

Appropriations of 2016 income 6(14) Legal reserve - - 15,938 - ( 15,938 ) - - - - - -

Special reserve - - - 27,046 ( 27,046 ) - - - - - - Cash dividends - - - - ( 107,463 ) - - - ( 107,463 ) - ( 107,463 )

Stock dividends 6,321 - - - ( 6,321 ) - - - - - - Compensation related to share-based payments6(11)(13)(15) - 5,922 - - - - 22,267 - 28,189 - 28,189

Redemption of restricted stock 6(11)(12) - 180 - - - - - ( 180 ) - - - Adjustment on recognition of restricted stock - 3,175 - - - - ( 2,296 ) - 879 - 879

Changes in owner’s equity of subsidiaries 6(12)(23) - 11 - - - - - - 11 - 11 Increase in non-controlling interests 6(23) - - - - - - - - - 19,989 19,989

Balance at December 31 $ 638,452 $ 405,524 $ 82,083 $ 54,478 $ 357,772 ($ 28,367 ) ($ 11,879 ) ($ 180 ) $ 1,497,883 $ 18,403 $ 1,516,286

2018 Balance at January 1 $ 638,452 $ 405,524 $ 82,083 $ 54,478 $ 357,772 ($ 28,367 ) ($ 11,879 ) ($ 180 ) $ 1,497,883 $ 18,403 $ 1,516,286

Effect of retrospective application and restatement

12(4) - - - - ( 5,890 ) - - - ( 5,890 ) - ( 5,890 )

Balance at January 1, after adjustments 638,452 405,524 82,083 54,478 351,882 ( 28,367 ) ( 11,879 ) ( 180 ) 1,491,993 18,403 1,510,396

Profit (loss) for the year - - - - 59,708 - - - 59,708 ( 6,729 ) 52,979

Other comprehensive loss for the year - - - - 361 ( 10,663 ) - - ( 10,302 ) - ( 10,302 )

Total comprehensive income - - - - 60,069 ( 10,663 ) - - 49,406 ( 6,729 ) 42,677

Appropriations of 2017 income 6(14) Legal reserve - - 14,240 - ( 14,240 ) - - - - - -

Reserval of special reserve - - - ( 26,111 ) 26,111 - - - - - - Cash dividends - - - - ( 102,123 ) - - - ( 102,123 ) - ( 102,123 )

Compensation related to share-based payments6(11)(13)(15) - 14,128 - - - - 8,540 - 22,668 - 22,668 Forfeiture of restricted stock awards 6(11)(12) - 240 - - - - - ( 240 ) - - -

Retirement of restricted stock awards 6(12) ( 420 ) - - - - - - 420 - - - Difference between consideration and carrying

amount of subsidiaries acquired or disposed 6(23)

- - - - ( 2,763 ) - - - ( 2,763 ) 2,763 -

Increase in non-controlling interests - - - - - - - - - 4,880 4,880

Balance at December 31 $ 638,032 $ 419,892 $ 96,323 $ 28,367 $ 318,936 ($ 39,030 ) ($ 3,339 ) $ - $ 1,459,181 $ 19,317 $ 1,478,498

C.C.P. CONTACT PROBES CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars) Years ended December 31

Notes 2018 2017

~13~

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax $ 92,786 $ 179,636 Adjustments Adjustments to reconcile profit (loss) Net gain on financial assets or liabilities at fair value

through profit or loss 6(2) and 12(4)

( 5,822 ) ( 326 ) Impairment loss (impairment gain and reversal of

impairment loss) determined in accordance with IFRS 9

12(2)(4)

( 4,183 ) 768 Depreciation expense 6(5)(19) 61,630 61,732 Amortization expense 6(19) 10,583 6,902 Loss on disposal of property, plant and equipment 729 511 Share-based payments 6(11) 22,668 28,189 Interest income 6(17) ( 3,880 ) ( 3,811 ) Dividend income ( 31 ) ( 32 ) Interest expense 211 746 Changes in operating assets and liabilities Changes in operating assets Decrease (increase) in financial assets at fair value

through profit or loss, mandatorily measured at fair value

24,180 ( 29,371 ) Decrease in notes receivable 8,898 13,720 Decrease in accounts receivable 64,998 40,401 Decrease (increase) in other receivable ( 3,761 ) 6,375 Decrease (increase) in inventories ( 48,212 ) 48,440 Decrease (increase) in prepayments ( 31,036 ) 8,709 Decrease (increase) in other current assets ( 2,340 ) 210 Decrease in other operating assets - 1,022 Changes in operating liabilities Decrease in contract liabilities ( 4,438 ) - Increase in notes payable 17,386 188,559 Decrease in accounts payable ( 5,025 ) ( 168,816 ) Increase (decrease) in other payables 4,906 ( 10,297 ) Increase (decrease) in other current liabilities ( 715 ) 3,532 Increase in operating liabilities 158 291 Cash inflow generated from operations 199,690 377,090 Interest received 3,880 3,811 Dividends received 31 32 Income taxes paid ( 16,181 ) ( 31,173 ) Net cash flows from operating activities 187,420 349,760

(Continued)

C.C.P. CONTACT PROBES CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars) Years ended December 31

Notes 2018 2017


~14~

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of financial assets at fair value through

profit or loss

($ 26,842 ) $ -

Acquisition of property, plant and equipment 6(24) ( 61,167 ) ( 48,265 )

Acquisition of intangible assets ( 12,618 ) ( 14,034 )

Decrease in other financial assets 18,260 9,442

Increase in other non-current assets ( 24,899 ) ( 58,907 )

Increase in refundable deposits ( 920 ) ( 617 )

Proceeds from disposal of property, plant and

equipment

727 -

Increase in prepayments for business facilities ( 91,589 ) ( 16,818 )

Net cash flows used in investing activities ( 199,048 ) ( 129,199 )

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in short-term loans 10,000 ( 32,250 )

Interest paid ( 211 ) ( 746 )

Payments for acquisition of treasury shares ( 420 ) -

Cash dividends paid 6(14) ( 102,123 ) ( 107,463 )

Change in non-controlling interests 6(23) 4,980 20,000

Net cash flows used in financing activities ( 87,774 ) ( 120,459 )

Effect of exchange rate changes on cash and cash

equivalents

( 9,877 ) ( 7,576 )

Net (decrease) increase in cash and cash equivalents ( 109,279 ) 92,526

Cash and cash equivalents at beginning of year 696,444 603,918

Cash and cash equivalents at end of year $ 587,165 $ 696,444

~15~

C.C.P. CONTACT PROBES CO., LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2018 AND 2017

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

1. HISTORY AND ORGANIZATION

C.C.P. CONTACT PROBES CO., LTD. (the “Company”) was incorporated as a company limited by

shares under the provisions of the Company Act of the Republic of China (R.O.C.). The Company and

its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in the business of

manufacturing, processing, purchasing and selling, and import and export of contact probes and testing

devices.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated 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 (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by FSC effective from 2018 are as

follows:

~16~

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 measured at fair value through other

comprehensive income or financial asset at amortised 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 present subsequent changes in the fair value of an

investment in an equity instrument that is not held for trading in other comprehensive

income.

(b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’

approach. An entity assesses at each balance sheet date whether there has been a significant

increase in credit risk on that instrument since initial recognition to recognise 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 has objective evidence of impairment, interest revenue after the impairment

would be calculated on the book value of net carrying amount (i.e. net of credit allowance).

New Standards, Interpretations and Amendments

Effective date byInternational Accounting

Standards Board

Amendments to IFRS 2, ‘Classification and measurement of share-basedpayment transactions’

January 1, 2018

Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with IFRS4, Insurance contracts’

January 1, 2018

IFRS 9, ‘Financial instruments’ January 1, 2018IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue fromcontracts with customers’

January 1, 2018

Amendments to IAS 7, ‘Disclosure initiative’ January 1, 2017Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised January 1, 2017Amendments to IAS 40, ‘Transfers of investment property’ January 1, 2018IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’

January 1, 2018

Annual improvements to IFRSs 2014-2016 cycle - Amendments to IFRS12,

January 1, 2017

Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28, ‘Investments in associates and joint ventures’

January 1, 2018

~17~

The Company shall always measure the loss allowance at an amount equal to lifetime

expected credit losses for trade receivables that do not contain a significant financing

component.

(c) The Group has elected not to restate prior period financial statements using the modified

retrospective approach under IFRS 9. For details of the significant effect as at January 1,

2018, please refer to Notes 12(4)B.and C.

B. IFRS 15, ‘Revenue from contracts with customers’ and amendments

(a) IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11, ‘Construction contracts’,

IAS 18, ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised

when a customer obtains control of promised goods or services. A customer obtains control

of goods or services when a customer has the ability to direct the use of, and obtain

substantially all of the remaining benefits from, the asset.

The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of

promised goods or services to customers in an amount that reflects the consideration to

which the entity expects to be entitled in exchange for those goods or services. An entity

recognises revenue in accordance with that core principle by applying the following steps:

Step 1: Identify contracts with customer.

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

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price.

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

Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an

entity to disclose sufficient information to enable users of financial statements to understand

the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts

with customers.

(b) The Group has elected not to restate prior period financial statements and recognised the

cumulative effect of initial application as retained earnings at January 1, 2018, using the

modified retrospective approach under IFRS 15.The significant effects of adopting the

modified transition as of January 1, 2018 are summarised below:

Contract liability

Under IFRS 15, liabilities in relation to unearned sales revenue are recognised as contract

liabilities, but were previously presented as advance sales receipts in the balance sheet. As of

January 1, 2018, the balance amounted to $8,425.

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

the Group

New standards, interpretations and amendments endorsed by FSC effective from 2018 are as

follows:

~18~

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.

IFRS 16, ‘Leases’

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard

requires lessees to recognise a 'right-of-use asset' and a lease liability (except for those leases with

terms of 12 months or less and leases of low-value assets). The accounting stays the same for

lessors, which is to classify their leases as either finance leases or operating leases and account for

those two types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by

lessors.

The Group expects to recognise the lease contract of lessees in line with IFRS 16. However, the

Group does not intend to restate the financial statements of prior period (collectively referred herein

as the “modified retrospective approach”). On January 1, 2019, it is expected that ‘right-of-use asset’

and lease liability will be increased by $25,409 and $25,409, respectively.



Standards Board

Amendments to IFRS 9, ‘Prepayment features with negative compensation’ January 1, 2019

IFRS 16, ‘Leases’ January 1, 2019Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ January 1, 2019

Amendments to IAS 28, ‘Long-term interests in associates and jointventures’

January 1, 2019

IFRIC 23, ‘Uncertainty over income tax treatments’ January 1, 2019Annual improvements to IFRSs 2015-2017 cycle January 1, 2019

~19~

(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:

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 SIGNIFICANTACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the periods presented, unless

otherwise stated.

(1) Compliance statement

The consolidated financial statements of the Group have been prepared in accordance with the

“Regulations Governing the Preparation of Financial Reports by Securities Issuers”, International

Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC

Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).

(2) Basis of preparation

A. Except for the following items, these consolidated financial statements have been prepared

under the historical cost convention:

(a) Financial assets and financial liabilities (including derivative instruments) at fair value

through profit or loss.

(b) 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 judgement in the

process of applying the Group’s accounting policies. The areas involving a higher degree of

judgement 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 recognised



Standards Board

Amendment to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition ofMaterial’

January 1, 2020

Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020

Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assetsbetween an investor and its associate or joint venture’

To be determined byInternational Accounting

Standards BoardIFRS 17, ‘Insurance contracts’ January 1, 2021

~20~

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 11 (‘IAS 11’), International Accounting Standard

18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5)

for details of significant accounting policies and details of significant accounts.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries

are all entities (including structured entities) controlled by the Group. The Group controls an

entity when the Group is exposed, or has rights, to variable returns from its involvement with

the entity and has the ability to affect those returns through its power over the entity.

Consolidation of subsidiaries begins from the date the Group obtains control of the

subsidiaries and ceases when the Group loses control of the subsidiaries.

(b) Inter-company transactions, balances and unrealized gains or losses on transactions between

companies within the Group are eliminated. Accounting policies of subsidiaries have been

adjusted where necessary to ensure consistency with the policies adopted by the Group.

(c) Profit or loss and each component of other comprehensive income are attributed to the

owners of the parent and to the non-controlling interests. Total comprehensive income is

attributed to the owners of the parent and to the non-controlling interests even if this results

in the 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 recognized directly in equity.

(e) When the Group loses control of a subsidiary, the Group remeasures any investment retained

in the former subsidiary at its fair value. That fair value is regarded as the fair value on initial

recognition of a financial asset or the cost on initial recognition of the associate or joint

venture. Any difference between fair value and carrying amount is recognized in profit or

loss. All amounts previously recognized in other comprehensive income in relation to the

subsidiary are reclassified to profit or loss 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 recognize in other comprehensive income in

relation to the subsidiary should be reclassified from equity to profit or loss, if such gains or

losses would be reclassified to profit or loss when the related assets or liabilities are disposed

of.

~21~

B. Subsidiaries included in the consolidated financial statements:

(Note 1) In May 2017, for the Company’s requirement of future operations, the Company

increased its investment by cash in subsidiary, CCP CONNECTION PLATFORM, INC.,

by $10,596.

(Note 2) In August 2018, the Company invested in MEGA CRYSTAL LTD., and held 100%

interest equity. This company was included in the consolidated financial statements

starting from investment date.

(Note 3) In August 2018, MEGA CRYSTAL LTD. invested in DONGGUAN TONGXING

PRECISION LTD., and held 100% interest equity. This investee company was included

in the consolidated financial statements starting from investment date.

(Note 4) In May 2017, the Company invested in Apex Probes Technology Co., Ltd. and held

100% interest equity. This investee company was included in the consolidated financial

statements starting from investment date. On June 25, 2017, Apex Probes Technology

Name of Name of Main business

investor subsidiary activities December 31, 2018 December 31, 2017 Description

C. C. P. ContactProbes Co., Ltd.

Great Esteem ServicesLimited

Investment 100% 100%


CCP CONNECTIONPLATFORM, INC.

Trading 100% 100% (Note 1)


Shang ChuanInvestment Co., Ltd.



MEGA CRYSTALLTD.

Investment 100% 0% (Note 2)

Great EsteemServices Limited

E-Plan InternationalLimited

Trading 100% 100%


World Success GroupLimited



ForefrontInternational Limited



C.C.P. International(H.K.) Limited

Trading 100% 100%

World SuccessGroup Limited

CCP-Dong Guan Manufacturing ofprobes and testingdevices

100% 100%

MEGA CRYSTALLTD.

DONGGUANTONGXINGPRECISIONCOMPONENTSLTD.

Manufacturing ofprobes and testingdevices

100% 0% (Note 3)

Shang ChuanInvesement Co.,Ltd.

Apex ProbesTechndogy Co., Ltd.

Electroniccomponentsproduction

60% 60% (Note 4)

Shang ChuanInvesement Co.,

One Test System Co.,Ltd.

Investment 73.39% 0% (Note 5)

One Test SystemCo., Ltd.

One Test System Trading 100% 0% (Note 6)

One Test SystemCo., Ltd.

OTS Co., Ltd. Trading 100% 0% (Note 7)

Ownership (%)

~22~

Co., Ltd. increased its capital through cash. However, the Company did not acquire new

shares in proportion to its original shareholding ratio and lost 40% shareholding ratio.

(Note 5) In October 2018, Shang Chuan Investment Co., invested in One Test System Co., Ltd.

and held 73.39% interest equity. This investee company was included in the

consolidated financial statements starting from investment date.

(Note 6) In December 2018, One Test System Co., Ltd. invested in One Test System and held

100% interest equity. This investee company was included in the consolidated financial

statements starting from investment date.

(Note 7) In December 2018, One Test System Co., Ltd. invested in OTS Co., Ltd. and held 100%

interest equity. This investee company was included in the consolidated financial

statements starting from investment date.

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: None.

(4) Foreign currency translation

Items included in the financial statements of each of the Group’s entities are measured using the

currency of the primary economic environment in which the entity operates (the “functional

currency”). The consolidated financial statements are presented in New Taiwan dollars, which is the

Company’s functional and the Group’s presentation currency.

A. Foreign currency transactions and balances

(a) Foreign currency transactions are translated into the functional currency using the exchange

rates prevailing at the dates of the transactions or valuation where items are remeasured.

Foreign exchange gains and losses resulting from the settlement of such transactions are

recognized in profit or loss in the period in which they arise.

(b) Monetary assets and liabilities denominated in foreign currencies at the period end are

re-translated at the exchange rates prevailing at the balance sheet date. Exchange differences

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

(c) Non-monetary assets and liabilities denominated in foreign currencies held at fair value

through profit or loss are re-translated at the exchange rates prevailing at the balance sheet

date; their translation differences are recognized in profit or loss. Non-monetary assets and

liabilities denominated in foreign currencies held at fair value through other comprehensive

income are re-translated at the exchange rates prevailing at the balance sheet date; their

translation differences are recognized in other comprehensive income. However,

non-monetary assets and liabilities denominated in foreign currencies that are not measured

at fair value are translated using the historical exchange rates at the dates of the initial

transactions.

(d) All foreign exchange gains and losses are presented in the statement of comprehensive

~23~

income within ‘other gains and losses’.

B. Translation of foreign operations

(a) The operating results and financial position of all the group entities 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, if 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.

(5) Classification of current and non-current items

A. Assets that meet one of the following criteria are classified as current assets; otherwise they are

classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realized, or are intended to be

sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes;

(c) Assets that are expected to be realized within twelve months from the balance sheet date;

(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are

to be exchanged or used to pay off liabilities more than twelve months after the balance sheet

date.

B. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise

they are classified as non-current liabilities:

(a) Liabilities that are expected to be paid off within the normal operating cycle;

(b) Liabilities arising mainly from trading activities;

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

(d) Liabilities for which the repayment date cannot be extended unconditionally to more than

twelve months after the balance sheet date. Terms of a liability that could, at the option of the

counterparty, result in its settlement by the issue of equity instruments do not affect its

classification.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits

~24~

that meet the definition above and are held for the purpose of meeting short-term cash commitments

in operations are classified as cash equivalents.

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

Effective 2018

A. Financial assets at fair value through profit or loss are financial assets that are not measured at

amortised 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

recognised and derecognised using trade date accounting.

C. At initial recognition, the Group measures the financial assets at fair value and recognises the

transaction costs in profit or loss. The Group subsequently measures the financial assets at fair

value, and recognises the gain or loss in profit or loss.

D. The Group recognises the dividend income when the right to receive payment is established,

future economic benefits associated with the dividend will flow to the Group and the amount of

the dividend can be measured reliably.

(8) Financial assets at amortised cost

Effective 2018

A. Financial assets at amortised cost are those that meet all of the following criteria:

(a) The objective of the Group’s business model is achieved by collecting contractual cash flows.

(b) The assets’ contractual cash flows represent solely payments of principal and interest.

B. On a regular way purchase or sale basis, financial assets at amortised cost are recognised and

derecognised using trade date accounting.

C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs.

Interest income from these financial assets is included in finance income using the effective

interest method. A gain or loss is recognised in profit or loss when the asset is derecognised or

impaired.

D. The Group’s time deposits which do not fall under cash equivalents are those with a short

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

immaterial.

(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 financial assets at amortised cost including

accounts receivable that have a significant financing component, at each reporting date, the Group

recognises the impairment provision for 12 months expected credit losses if there has not been a

significant increase in credit risk since initial recognition or recognises the impairment provision

~25~

for the lifetime expected credit losses (ECLs) if such credit risk has increased since initial

recognition after taking into consideration all reasonable and verifiable information that includes

forecasts. On the other hand, for accounts receivable or contract assets that do not contain a

significant financing component, the Group recognises the impairment provision for lifetime

ECLs.

(11) Derecognition of financial assets

The Group derecognises a financial asset when the contractual rights to receive the cash flows

from the financial asset expire.

(12) Inventories

Inventories are stated at the lower of cost and net realisable value. Standard cost is used at

recognition, differences arising in the period are amortised to inventory and cost of goods sold at

the end of the period. The cost of finished goods and work in process comprises raw materials,

direct labour, other direct costs and related production overheads (allocated based on normal

operating capacity). It excludes borrowing costs. The item by item approach is used in applying

the lower of cost and net realisable value. Net realisable value is the estimated selling price in the

ordinary course of business, less the estimated cost of completion and applicable variable selling

expenses.

(13) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost.

B. Subsequent costs are included in the asset’s carrying amount or recognised 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 derecognised. 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 balance sheet date. 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 3 ～ 61 years

Machinery and equipment 2 ～ 21 years

~26~

Office equipment 2 ～ 33 years

Transportation equipment 11 years

Molding equipment 3 ～ 9 years

Other equipment 2 ～ 14 years

(14) Operating leases (lessee)

Payments made under an operating lease net of any incentives received from the lessor are

recognised in profit or loss on a straight-line basis over the lease term.

(15) Intangible assets

A. Computer software

Computer software is stated at cost and amortised on a straight-line basis over its estimated

useful life of 3 to 9 years.

B. Patents

Patents are stated at cost and amortized on a straight-line basis over its estimated useful of 3 to

20 years.

(16) Impairment of non-financial assets

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 recognised 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 amortised historical cost would have been if the

impairment had not been recognised.

(17) Borrowings

A. Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised

initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at

amortised cost; any difference between the proceeds (net of transaction costs) and the

redemption value is recognised in profit or loss over the period of the borrowings using the

effective interest method.

B. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan

to the extent that it is probable that some or all of the facility will be drawn down. In this case,

the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is

probable that some or all of the facility will be drawn down, the fee is capitalised as a

pre-payment for liquidity services and amortised over the period of the facility to which it

relates.

(18) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes

~27~

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.

(19) Derecognition of financial liabilities

Financial liability is derecognised when the obligation under the liability specified in the contract

is discharged or cancelled or expires.

(20) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when

there is a legally enforceable right to offset the recognised amounts and there is an intention to

settle on a net basis or realise the asset and settle the liability simultaneously.

(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 rendered by employees in a period and should be

recognised as expenses in that period when the employees render service.

B. Pensions

(a) Defined contribution plans

For defined contribution plans, the contributions are recognised as pension expenses when

they are due on an accrual basis. Prepaid contributions are recognised 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 recognised 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 defined benefit

net 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.

ii. Remeasurement arising on defined benefit plans are recognised in other comprehensive

income in the period in which they arise and are recorded as retained earnings.

C. Employees’ remuneration and directors’ and supervisors’ remuneration

Employees’ bonus and directors’ and supervisors’ remuneration are recognised as expenses and

liabilities, provided that such recognition is required under legal or constructive obligation and

those amounts can be reliably estimated. If employee compensation is distributed by shares, the

Group calculates the number of shares based on the closing price at the previous day of the

board meeting resolution.

~28~

(22) Employee share-based payment

A. For the equity-settled share-based payment arrangements, the employee services received are

measured at the fair value of the equity instruments granted at the grant date, and are

recognised as compensation cost over the vesting period, with a corresponding adjustment to

equity. The fair value of the equity instruments granted shall reflect the impact of market

vesting conditions and non-market vesting conditions. Compensation cost is subject to

adjustment based on the service conditions that are expected to be satisfied and the estimates of

the number of equity instruments that are expected to vest under the non-market vesting

conditions at each balance sheet date. Ultimately, the amount of compensation cost recognised

is based on the number of equity instruments that eventually vest.

B. Restricted stocks:

(a) Restricted stocks issued to employees are measured at the fair value of the equity

instruments granted at the grant date, and are recognised as compensation cost over the

vesting period.

(b) For restricted stocks where those stocks do not restrict distribution of dividends to

employees and employees are not required to return the dividends received if they resign

during the vesting period, the Group recognises the fair value of the dividends received by

the employees who are expected to resign during the vesting period as compensation cost at

the date of dividends declared.

(c) For restricted stocks where employees have to pay to acquire those stocks, if employees

resign during the vesting period, they must return the stocks to the Group and the Group

must refund their payments on the stocks, the Group recognises the payments from the

employees who are expected to resign during the vesting period as liabilities at the grant

date, and recognises the payments from the employees who are expected to be eventually

vested with the stocks in ‘capital surplus’.

(23) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognised in profit

or loss, except to the extent that it relates to items recognised in other comprehensive income or

items recognised directly in equity, in which cases the tax is recognised in other comprehensive

income or equity.

B. The current income tax expense is calculated on the basis of the tax laws enacted or

substantively enacted at the balance sheet date in the countries where the Company and its

subsidiaries operate and generate taxable income. Management periodically evaluates positions

taken in tax returns with respect to situations in accordance with applicable tax regulations. It

establishes provisions where appropriate based on the amounts expected to be paid to the tax

authorities. An additional 10% tax is levied on the unappropriated retained earnings and is

recorded as income tax expense in the year the stockholders resolve to retain the earnings.

C. Deferred income tax is recognised, using the balance sheet liability method, on temporary

~29~

differences arising between the tax bases of assets and liabilities and their carrying amounts in

the consolidated balance sheet. However, the deferred income tax is not accounted for if it

arises from initial recognition of goodwill or of an asset or liability in a transaction other than a

business combination that at the time of the transaction affects neither accounting nor taxable

profit or loss. Deferred income tax is provided on temporary differences arising on investments

in subsidiaries and associates, except where the timing of the reversal of the temporary

difference is controlled by the Group and it is probable that the temporary difference will not

reverse in the foreseeable future. Deferred income tax is determined using tax rates (and laws)

that have been enacted or substantially enacted by the balance sheet date and are expected to

apply when the related deferred income tax asset is realised or the deferred income tax liability

is settled.

D. Deferred income tax assets are recognised only to the extent that it is probable that future

taxable profit will be available against which the temporary differences can be utilised. At each

balance sheet date, unrecognised and recognised deferred income tax assets are reassessed.

E. Current income tax assets and liabilities are offset and the net amount reported in the balance

sheet when there is a legally enforceable right to offset the recognised amounts and there is an

intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Deferred income tax assets and liabilities are offset on the balance sheet when the entity has the

legally enforceable right to offset current tax assets against current tax liabilities and they are

levied by the same taxation authority on either the same entity or different entities that intend to

settle on a net basis or realise the asset and settle the liability simultaneously.

F. A deferred tax asset shall be recognised for the carryforward of unused tax credits resulting

from acquisitions of equipment and research and development expenditures to the extent that it

is possible that future taxable profit will be available against which the unused tax credits can

be utilised.

(24) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new

shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

(25) Dividends

Dividends are recorded in the Company’s financial statements in the period in which they are

approved 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

on the effective date of new shares issuance.

(26) Revenue recognition

A. Sales of goods

(a) Group manufactures and sells contact probes products. Sales are recognised 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

~30~

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) Sales revenue of relevant products for contact probes is recognised after the quantities,

types and quotations of products purchased by customers were agreed. The transaction

terms are agreed based on normal commercial transaction mode.

(c) A receivable is recognised when the goods are delivered as this is the point in time that the

consideration is unconditional because only the passage of time is required before the

payment is due.

B. Incremental costs of obtaining a contract

Given that the contractual period lasts less than one year, the Group recognises the incremental

costs of obtaining a contract as an expense when incurred although the Group expects to

recover those costs.

(27) Government grants

Government grants are recognised 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 recognised in profit or loss on a systematic basis over the periods in which

the Group recognises expenses for the related costs for which the grants are intended to

compensate.

(28) Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the

Chief Operating Decision-Maker. The Chief Operating Decision-Maker, who is responsible for

allocating resources and assessing performance of the operating segments, has been identified as

the Board of Directors that makes strategic decisions.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these consolidated financial statements requires management to make critical

judgements in applying the Group’s accounting policies and make critical assumptions and estimates

concerning future events. Assumptions and estimates may differ from the actual results and are

continually evaluated and adjusted based on historical experience and other factors. The information is

addressed below:

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

None.

(2) Critical accounting estimates and assumptions

A. Assessment of notes and accounts receivable impairment

During the process of notes and accounts receivable impairment assessment, the Group evaluates

~31~

the possible credit loss based on historical experience and other known factors, as for the

estimation of expected credit loss relies on the Group’s subjective judgement and under the

provision matrix basis.

As of December 31, 2018, the carrying amount of accounts receivable was $587,888.

B. Evaluation of inventories

As inventories are stated at the lower of cost and net realisable value, the Group must determine

the net realisable 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 realisable 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 $225,695.

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

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’s bank deposits provided as collateral have been transferred as ‘Financial assets at

amortised cost’ with details in Note 6(3), recorded previously as ‘Other current assets’ under

IFRS 9 with details in Note 6(6).

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

Effective 2018

December 31, 2018 December 31, 2017

Cash on hand and revolving funds 2,898$ 2,383$ Checking accounts and demand deposits 584,267 679,120 Time deposits - - Cash equivalents- bonds sold under repurchase agreements - 14,941

587,165$ 696,444$

~32~

A. The Group recognised net gain of $5,822 on financial assets at fair value through profit or loss

for the year ended December 31, 2018.

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(4).

(3) Financial assets at amortised cost

Effective 2018

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

below:

B. For the year ended December 31, 2017, without taking into account any collateral held or other

credit enhancements, the maximum exposure to credit risk in respect of the amount that best

represents the financial assets at amortised cost held by the Group was $91,831.

C. Details of the Group’s financial assets at amortised cost pledged to others as collateral are

provided in Note 8.

D. Information relating to credit risk of financial assets at amortised cost is provided in Note 12(2).

December 31, 2018

Current items:

Financial assets at fair value through profit or loss

Open-end fund 5,990$

Listed (TSE and OTC) stocks 380

Valuation adjustment 26)(

Total 6,344$

Non-Current items:

Financial assets at fair value through profit or loss

Unlisted stocks 26,842$

Valuation adjustment 5,824

Total 32,666$

Items

December 31, 2018

Current items: Bank deposits provided as collateral 91,831$

Items

2018

Interest income 316$

~33~

(4) Notes and accounts receivable

A. For the ageing analysis of accounts receivable and notes receivable, please refer to Note 12(2).

B. For notes receivable that are pledged, please refer to Note 8.

C. The Group has no accounts receivable and notes receivable pledged to others.

D. Information relating to credit risk of accounts receivable and notes receivable is provided in

Note 12(2).

(5) Inventories

The cost of inventories recognised as expense for the year:


Notes receivable 31,386$ 40,285$

Less: Allowance for uncollectible accounts 1,575)( 733)(

29,811$ 39,552$

Accounts receivable 596,865$ 661,862$ Less: Allowance for uncollectible accounts 8,977)( 8,204)(

587,888$ 653,658$

Allowance for

Cost valuation loss Book value

Raw materials 29,850$ 6,335)($ 23,515$ Work in process 11,959 767)( 11,192 Semi-manufactured goods 99,958 28,357)( 71,601 Finished goods 156,554 38,052)( 118,502 Merchandise 3,536 2,651)( 885

301,857$ 76,162)($ 225,695$

December 31, 2018

Allowance for

Cost valuation loss Book value

Raw materials 33,519$ 9,169)($ 24,350$ Work in process 11,751 5,202)( 6,549 Semi-manufactured goods 87,490 32,008)( 55,482 Finished goods 131,312 44,420)( 86,892 Merchandise 5,724 1,514)( 4,210

269,796$ 92,313)($ 177,483$

December 31, 2017

~34~

(6) Other non-current assets

Please refer to Note 8 for information of restricted assets pledged to others.

2018 2017

Cost of inventories sold 1,144,541$ 1,165,372$ (Reversal of) Loss for market value decline and obsolete and slow-moving inventories 15,822)( 12,854 Loss on disposal of inventory 17,291 8,384 Loss on physical inventory 318 85

1,146,328$ 1,186,695$


Restricted assets -$ 66,932$

Other current assets 2,766 18,686

2,766$ 85,618$

~35~

(7) Property, plant and equipment

Machinery and Office Other Land Buildings equipment equipment equipment Total

At January 1, 2018Cost 26,236$ 37,146$ 394,070$ 24,144$ 194,066$ 675,662$ Accumulated depreciation and impairment - 14,385)( 242,233)( 19,075)( 122,853)( 398,546)(

26,236$ 22,761$ 151,837$ 5,069$ 71,213$ 277,116$

2018Opening net book amount 26,236$ 22,761$ 151,837$ 5,069$ 71,213$ 277,116$ Additions - 10,333 37,324 3,041 13,375 64,073 Disposal - - 610)( 5)( 593)( 1,208)( Reclassifications - 28,608 47,721 176 4,027 80,532 Cost of retirement - - 1,809)( 849)( 14,083)( 16,741)( Accumulated depreciation decrease due to retirement - - 1,809 849 14,083 16,741 Depreciation - 4,090)( 37,265)( 2,089)( 18,186)( 61,630)( Net exchange differences - 871)( 2,762)( 90)( 1,058)( 4,781)(

Closing net book amount 26,236$ 56,741$ 196,245$ 6,102$ 68,778$ 354,102$

At December 31, 2018Cost 26,236$ 75,192$ 468,073$ 26,203$ 186,189$ 781,893$ Accumulated depreciation and impairment - 18,451)( 271,828)( 20,101)( 117,411)( 427,791)(

26,236$ 56,741$ 196,245$ 6,102$ 68,778$ 354,102$

~36~

A. The Group’s buildings include building and expansion construction which are depreciated over 61 years and 3~12 years, respectively.

B. The Group has no property, plant and equipment pledged to others.

Machinery and Office Other Land Buildings equipment equipment equipment Total

At January 1, 2017Cost 26,236$ 37,227$ 361,154$ 23,768$ 197,014$ 645,399$ Accumulated depreciation and impairment - 10,833)( 209,789)( 19,119)( 118,692)( 358,433)(

26,236$ 26,394$ 151,365$ 4,649$ 78,322$ 286,966$

2017Opening net book amount 26,236$ 26,394$ 151,365$ 4,649$ 78,322$ 286,966$ Additions - 12,874 20,113 1,871 29,524 64,382 Disposal - - 68)( 88)( 269)( 425)( Reclassifications - - 3,126 - 1,904 5,030 Depreciation charge - 2,735)( 34,856)( 1,849)( 18,888)( 58,328)( Net exchange differences - 355)( 9,369)( 340)( 4,592)( 14,656)(

Closing net book amount 26,236$ 36,178$ 130,311$ 4,243$ 86,001$ 282,969$

At December 31, 2017Cost 26,236$ 37,146$ 394,070$ 24,144$ 194,066$ 675,662$ Accumulated depreciation and impairment - 14,385)( 242,233)( 19,075)( 122,853)( 398,546)(

26,236$ 22,761$ 151,837$ 5,069$ 71,213$ 277,116$

~37~

(8) Short-term borrowings

The Group did not provide any assets as collaterals.

(9) Other payables

(10) Pensions

A.(a) The Company and its domestic subsidiaries have a defined benefit pension plan in

accordance with the Labor Standards Law, covering all regular employees’ service years

prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years

thereafter of employees who chose to continue to be subject to the pension mechanism under

the Law. Under the defined benefit pension plan, two units are accrued for each year of

service for the first 15 years and one unit for each additional year thereafter, subject to a

maximum of 45 units. Pension benefits are based on the number of units accrued and the

average monthly salaries and wages of the last 6 months prior to retirement. The Company

and its domestic subsidiaries contribute monthly an amount equal to 2% of the employees’

monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the

trustee, under the name of the independent retirement fund committee. Also, the Company

and its 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 subsidiaries will make contributions to cover the

deficit by next March.

(b) The amounts recognised in the balance sheet are determined as follows:

Type of borrowings December 31, 2018 Interest rate range Collateral

Bank unsecured borrowing 10,000$ 1.67%~1.70% None


Payables on salary and bonus 78,702$ 84,769$ Other 69,146 55,266

147,848$ 140,035$


Present value of defined benefit obligations 19,870$ 20,003$ Fair value of plan assets 9,044)( 8,666)(

Net defined benefit liability (“shown as othernon-current liabilities”) 10,826$ 11,337$

~38~

(c) Movements in net defined benefit liabilities are as follows:

(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 utilisation plan and the “Regulations for Revenues, Expenditures, Safeguard

and Utilisation of the Labor Retirement Fund” (Article 6: The scope of utilisation 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 utilisation 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 is less than

aforementioned rates, government shall make payment for the deficit after being authorized

Present value of

defined benefit Fair value of Net defined obligations plan assets benefit liability

Year ended December 31, 2018Balance at January 1 20,003$ 8,666)($ 11,337$ Current service cost 35 - 35 Interest expense (income) 230 100)( 130

20,268 8,766)( 11,502

Remeasurements:Change in financial assumptions 176 251)( 75)( Experience adjustments 574)( - 574)(

398)( 251)( 649)(

Pension fund contribution - 27)( 27)(

Balance at December 31 19,870$ 9,044)($ 10,826$

Present value of

defined benefit Fair value of Net defined obligations plan assets benefit liability

Year ended December 31, 2017Balance at January 1 19,184$ 8,595)($ 10,589$ Current service cost 81 - 81 Interest expense (income) 259 116)( 143

19,524 8,711)( 10,813

Remeasurements:Change in financial assumptions 332 72 404 Experience adjustments 147 - 147

479 72 551

Pension fund contribution - 27)( 27)(

Balance at December 31 20,003$ 8,666)($ 11,337$

~39~

by the Regulator. The Company has no right to participate in managing and operating that

fund and hence the Company is unable to disclose the classification of plan asset 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 Utilisation

Report announced by the government.

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

Future mortality rate was estimated based on 90% of the 5th Taiwan Standard Ordinary

Experience Mortality Table.

Because the main actuarial assumption changed, the present value of defined benefit

obligation is affected. The analysis was as follows:

The sensitivity analysis above was arrived at 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 analysing 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 Company for the year

ending December 31, 2019 amounts to $27.

(g) As of December 31, 2018, the weighted average duration of that retirement plan is 5 years.

The analysis of timing of the future pension payment was as follows:

2018 2017

Discount rate 1.04% 1.15%

Future salary increases 3.00% 3.00%

Years ended December 31,

Increase 0.5% Decrease 0.5% Increase 0.5% Decrease 0.5%

December 31, 2018

Effect on present value of defined benefit obligation 706)($ 748$ 630$ 603$

December 31, 2017Effect on present value of defined benefit obligation 772)($ 821$ 701$ 668)($

Discount rate Future salary increases

Within 1 year $ 10,3281-5 years 6,442Over 5 years 4,708

$ 21,478

~40~

B.(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined

contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”),

covering all regular employees with R.O.C. nationality. Under the New Plan, the Company

and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’

monthly salaries and wages to the employees’ individual pension accounts at the Bureau of

Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of

employment. The pension costs under defined contribution pension plans of the Group for

the years ended December 31, 2018 and 2017 were $7,694 and $7,064, respectively.

(b) The Company’s mainland China subsidiaries, CCP-Dong Guan have a defined contribution

plan. Monthly contributions to an independent fund administered by the government in

accordance with the pension regulations in the People’s Republic of China (PRC) are based

on certain percentage of employees’ monthly salaries and wages. The contribution

percentage for the years ended December 31, 2018 and 2017, was both 13%. Other than the

monthly contributions, the Group has no further obligations.

(c) The Group’s foreign subsidiaries adopted a defined contribution plan in accordance with

local laws. The pension costs of the Group for the years ended December 31, 2018 and

2017 were $14,664 and $13,012, respectively.

(11) Share-based payment

A. As of December 31, 2018 and 2017, the Company’s share-based payment arrangements were

as follows:

(a) Employees can exercise their subscription rights each year according to 40%, 30% and 30%

rule after 1 to 3 years from the grant of employee stock options. The due date is December

11, 2019.

(b) The restricted stocks issued by the Company cannot be transferred during the vesting period,

but voting right and dividend right are not restricted on these stocks. Employees are

required to return the stocks but not required to return the dividends received if they resign

during the vesting period.

(c) Employees can exercise their subscription rights each year according to 50%, 25% and 25%

rule after 2 to 4 years from the grant of employee stock options. The due date is May 14,

2022.

Type of arrangement Grant date Quantitygranted

Contractperiod

Vestingconditions

Restricted stocks to employees 2016.12.12 1,390 3 yearsDescription (a)and (b)

Employee stock options 2017.5.15 2,400 5 years Description (c)Employee stock options 2017.12.7 1,600 5 years Description (d)

~41~

(d) Employees can exercise their subscription rights each year according to 50%, 25% and 25%

rule after 2 to 4 years from the grant of employee stock options. The due date is December

6, 2022.

(e) The abovementioned share-based payment arrangements are equity-settled.

B. The redemptions of employee restricted stock as resignation of employees for the years ended

December 31, 2018 and 2017 were 24 thousand shares and 18 thousand shares, respectively.

C. As of December 31, 2018 and 2017, the unexercised employee restricted stocks were 417

thousand shares and 834 thousand shares, respectively.

D. The information of abovementioned employees’ option plan are as follows:

E. The fair value of stock options granted on grant date is measured using the Black-Scholes

option-pricing model. Relevant information is as follows:

Weighted-average exercise price

No. of options (in dollars)

Employees’ stock option outstanding at January 1 4,000 33.4$ Employees stock option granted - -

Employees’ stock option outstanding at December 31 4,000 33.4

Employees’ stock option exercisable at December 31 - -

Year ended December 31, 2018

Weighted-average exercise price

No. of options (in dollars)

Employees’ stock option outstanding at January 1 4,000 33.4$ Employees stock option granted - -

Employees’ stock option outstanding at December 31 4,000 33.4

Employees’ stock option exercisable at December 31 - -


~42~

F. Expenses generated from share-based payment transactions:

(12) Share capital

A. As of December 31, 2018, the Company’s authorised capital was $750,000, consisting of 75

million shares of ordinary stock (including 4 million shares reserved for employee stock

options), and the paid-in capital was $638,452 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:

B. Treasury stock

(a) The reason and the number of redemption stock:

(b) For the years ended December 31, 2018 and 2017, the Company redeemed restricted stocks

Stock Exercise Expected Fair valueType of

arrangement Grant date

price

(in dollars)

price

(in dollars)

price

volatility

Expected

option life

Expected

dividends

Risk-free

interest rate

per unit

(in dollars)Restrictedstocks toemployees

2016.12.12 36.7 10 - 3 - - 36.11

Employeestock options

2017.5.15 33.8 33.8 37.92% 3.5 - 0.74% 9.69


2017.5.15 33.8 33.8 37.47% 4 - 0.77% 10.24


2017.5.15 33.8 33.8 36.88% 4.5 - 0.81% 10.72


2017.12.7 32.9 32.9 34.11% 3.5 - 0.57% 8.48


2017.12.7 32.9 32.9 35.89% 4 - 0.61% 9.51


2017.12.7 32.9 32.9 36.04% 4.5 - 0.65% 10.14

2018 2017

Equity-settled $ 22,668 $ 28,189


2018 2017

At January 1 63,845 63,213 Issuance of restricted stocks to employees 42)( - Stock dividends - 632

At December 31 63,803 63,845

Company name Reason of redemption No. of shares Book value

The Company Redemption of restrictedstocks to employees notmeeting the vestingcondition

$ 18,000 $ 180

December 31, 2017

~43~

to employees not meeting the vesting condition in the amount of 24 thousand and 18

thousand shares, respectively. The Company had completed the registration on August 30,

2018 and April 12, 2017, respectively.

(13) 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 Law requires

that the amount of capital surplus to be capitalised 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.

(14) Retained earnings

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

Gain on Change to the

disposal Employee Restricted owner’s equity Share premium of assets stock warrants stocks of subsidiaries Total

January 1, 2018 378,660$ 317$ 5,922$ 20,614$ 11$ 405,524$

Compensation cost ofshare-based payment

- - 14,128 - - 14,128

Vesting of restrictedstock to employees

8,390 - - 8,390)( - -

Redemption ofrestricted stocks toemployees - - - 240 - 240

December 31, 2018 $ 387,050 $ 317 $ 20,050 $ 12,464 $ 11 $ 419,892

Gain on Change to the

disposal Employee Restricted owner’s equity Share premium of assets stock warrants stocks of subsidiaries Total

January 1, 2017 364,143$ 317$ $ - 31,776$ $ - 396,236$

Non-controllingequity transaction

- - - - 11 11

Compensation cost ofshare-based payment

- - 5,922 - - 5,922

Vesting of restrictedstock to employees

14,517 - - 14,517)( - -

Redemption ofrestricted stocks toemployees

- - - 180 - 180

Adjustment tochanges in restrictedstocks to employees - - - 3,175 - 3,175

December 31, 2017 $ 378,660 $ 317 $ 5,922 $ 20,614 $ 11 $ 405,524

~44~

amount shall be set aside as legal reserve, until the legal reserve equals the total capital stock

balance. After appropriating or reversing special reserve in accordance with related regulations,

the remaining earnings along with beginning balance of unappropriated earnings are

distributable net profit for stockholders, the appropriation is proposed by the Board of Directors

and to be approved at the stockholders’ meeting.

B. The Company’s dividend policy is summarised below:

After considering the industry environment and the Company’s long-term financial plans, in

order to continue operations, sustain development and maximize shareholders’ interests, the

dividend is distributed using the remaining retained earnings along with prior years’

unappropriated earnings and based on the consideration of future capital expenditure budget

and capital needs. Dividend may not be distributed when the above distributable earnings are

fewer than 5% of the paid-in capital. Distribution of cash or stock dividend may not be lower

than 15% of the remaining distributable earnings. The distribution of stock dividend shall not

be more than 50% of the total dividends. The Company’s dividend policy determined by the

Board of Directors should take into consideration the actual operating conditions, along with

plans for capital forecasts in the coming year.

C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in

proportion to their share ownership, the legal reserve shall not be used for any other purpose.

The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their

share ownership is permitted, provided that the distribution of the reserve is limited to the

portion in excess of 25% of the Company’s paid-in capital.

D.(a)In accordance with the regulations, the Company shall set aside special reserve from the

debit balance on other equity items at the balance sheet date before distributing earnings.

When debit balance on other equity items is reversed subsequently, the reversed amount

could be included in the distributable earnings.

(b)The amounts previously set aside by the Company as special reserve on initial application of

IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6,

2012, shall be reversed proportionately when the relevant assets are used, disposed of or

reclassified subsequently. Such amounts are reversed upon disposal or reclassified if the

assets are investment property of land, and reversed over the use period if the assets are

investment property other than land.

The components of the Company’s special reserve mentioned as of January 1, 2013 in the

above order letter:

Unrealised revaluation increment 11,299$ Cumulative translation adjustment 16,133

27,432$

~45~

E.(a)The appropriations of 2017 and 2016 earnings had been resolved at the stockholders’ meeting

on June 15, 2018 and June 21, 2017, respectively. Details are summarised below:

(b)The appropriation of 2018 earnings had been resolved at the Board of Directors’ meeting on

March 20, 2019. Details are summarised below:

(c)Above information about the appropriation as proposed by the Board of Directors and

resolved by the stockholders will be posted in the “Market Observation Post System” at the

website of the Taiwan Stock Exchange.

F. For the information relating to employees’ compensation and directors’ remuneration, please

refer to Note 6(20).

(15) Other equity items

Dividends per Dividends perAmount share (in dollars) Amount share (in dollars)

Legal reserve 14,240$ 15,938$

(Reversal of )Specialreserve

26,111)( 27,046 $ 0.10

Stock dividends - $ - 6,321 1.70

Cash dividends 102,123 1.60 107,463

90,252$ 156,768$

Year ended December 31, 2017 Year ended December 31, 2016

Dividends perAmount share (in dollars)

Legal reserve 5,971$

Reversal of special reserve 10,663

Cash dividends 44,662 $ 0.7061,296$


Currency Unearned translation compensation Total

January 1, 2018 28,367)($ 11,879)($ 40,246)($ Currency translation differences –Group 14,610)( - 14,610)( Tax on currency translationdifferences - Group 3,947 - 3,947 Compensation cost of share-basedpayment - 8,540 8,540

December 31, 2018 39,030)($ 3,339)($ 42,369)($

~46~

(16) Operating revenue

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and at a point in time in the following

major product lines:

B. Contract assets and liabilities

The Group has recognised the following revenue-related contract assets and liabilities:

Revenue recognised that was included in the contract liability balance at the beginning of the

period:

Currency Unearned translation compensation Total

January 1, 2017 22,628)($ 31,850)($ 54,478)($ Currency translation differences –Group 6,914)( - 6,914)( Tax on currency translationdifferences - Group 1,175 - 1,175 Compensation cost of share-basedpayment - 22,267 22,267 Issuance of restricted stocks toemployees - 2,296)( 2,296)(

December 31, 2017 28,367)($ 11,879)($ 40,246)($

Year ended December31, 2018

At a point in time：

Pogo Pin Connectors 1,204,444$ IC Test Pin 150,995 EV Charging Plug & Socket 85,470 Other 332,847

1,773,756$

December 31, 2018

Contract liabilities:Contract liabilities –advance sales receipts 3,987$

Year ended December31, 2018

Revenue recognised that was included in the contractliability balance at the beginning of the period 8,425$

~47~

(17) Other income

(18) Other gains and losses

(19) Expenses by nature

(20) Employee benefit expense

A. According to the Articles of Incorporation of the Company, a ratio of distributable profit of the

current year, after covering accumulated losses, shall be distributed as employees’

compensation and directors’ and supervisors’ remuneration. The ratio shall be 8% to 20% for

employees’ compensation and shall not be higher than 4% for directors’ and supervisors’

remuneration.

B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at

$7,961 and $15,257, respectively; directors’ and supervisors’ remuneration was accrued at

$1,990 and $3,814, respectively. The aforementioned amounts were recognised in salary

expenses.

2018 2017

Interest income: Interest income from bank deposits 3,200$ 2,328$ Financial products 680 1,483

Other income - other 11,458 6,950

15,338$ 10,761$


2018 2017

Net currency exchange loss 13,704$ 32,289)($ Others 884 1,874)(

14,588$ 34,163)($


2018 2017

Employee benefit expense 543,755$ 483,230$ Depreciation 61,630 61,732 Amortisation 10,583 6,902

615,968$ 551,864$


2018 2017

Wages and salaries 462,177$ 411,962$ Labor and health insurance fees 21,207 19,237 Pension costs 22,523 20,300 Other personnel expenses 37,848 31,731

543,755$ 483,230$


~48~

The employees’ compensation and directors’ remuneration were estimated and accrued based

on 8.4% and 2% of distributable profit of current year as of the end of reporting period. The

employees’ compensation and directors’ remuneration resolved by the Board of Directors were

$8,359 and $1,990, respectively. The difference of $398 between the amounts resolved at the

Board meeting and the amounts recognised in the 2017 financial statements, had been adjusted

in the profit or loss of 2018, and the employees’ compensation will be distributed in the form of

cash.

For 2017, the employees’ compensation and directors’ and supervisors’ remuneration resolved

at the meeting of Board of Directors amounted to $15,257 and $3,814, respectively. Those

amounts were recognised in the 2017 financial statements.

Information about employees’ compensation and directors’ 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.

(21) Income tax

A. Income tax expense

(a)Components of income tax expense:

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

follows:

2018 2017

Current tax:Current tax on profits for the year 17,723$ 23,107$ Tax on undistributed surplus earnings 5,170 257 Prior year income tax overestimation 2,883 988)( Deferred tax:Origination and reversal of temporary differences

6,290 16,439

Impact of change in tax rate 7,741 -

Income tax expense 39,807$ 38,815$


2018 2017

Currency translation differences 2,922)($ 1,175)($

Remeasurement of defined benefit obligations

129 94)(

Impact of change in tax rate

-Currency translation differences 1,025)(

-Remeasurement of defined benefit obligations 159 -

3,659)($ 1,269)($


~49~

~50~

B. Reconciliation between income tax expense and accounting profit

C. Amounts of deferred tax assets or liabilities as a result of temporary differences and investment

tax credits are as follows:

2018 2017

Tax calculated based on profit before tax and statutory tax rate (Note) 24,546$ 47,208$ Effects from items disallowed by tax regulation 533)( 7,662)(

Tax on undistributed earnings 5,170 257 Prior year income tax overestimation 2,883 988)( Impact of change in tax rate 7,741 -

Income tax expense 39,807$ 38,815$


Recognised

Recognised in other

in profit comprehensive

January 1 or loss income December 31

Temporary differences:－Deferred tax assets:

Allowance for bad debts 1,040$ 268$ -$ 1,308$ Unused compensated absences 510 155 - 665

Allowance for inventory obsolescence and market value 16,320 103)( - 16,217 Accrued pension obligations 1,927 526 288)( 2,165 Currency translation differences 1,379 - 3,947 5,326 Unrealised exchange loss 1,220 1,220)( - -

Others 1,757 46)( - 1,711

Subtotal 24,153 420)( 3,659 27,392

2018

~51~

Recognised

Recognised in other



2018

－Deferred tax liabilities: Investment income accounted for under the equity method 61,586)( 15,096)( - 76,682)( Unrealised exchange gain - 492)( - 492)(

Others 9,667)( 1,977 - 7,690)(

Subtotal 71,253)( 13,611)( - 84,864)(

Total 47,100)($ 14,031)($ 3,659$ 57,472)($

Recognised

Recognised in other



Temporary differences:－Deferred tax assets:

Allowance for bad debts 807$ 233$ -$ 1,040$ Unused compensated absences 413 97 - 510

Allowance for inventory obsolescence and market value 14,071 2,249 - 16,320 Accrued pension obligations 1,800 33 94 1,927 Currency translation differences 204 - 1,175 1,379 Unrealised exchange loss - 1,220 - 1,220

Others 2,136 379)( - 1,757

Subtotal 19,431 3,453 1,269 24,153

2017

~52~

D. The Company’s income tax returns through 2015 have been assessed and approved by the Tax

Authority.

E. 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 assessed the impact of the

change in income tax rate.

(22) Earnings per share

Recognised

Recognised in other



2017

－Deferred tax liabilities: Investment income accounted for under the equity method 42,197)( 19,389)( - 61,586)( Unrealised exchange gain 218)( 218 - -

Others 8,946)( 721)( - 9,667)(

Subtotal 51,361)( 19,892)( - 71,253)(

Total 31,930)($ 16,439)($ 1,269$ 47,100)($

Weighted averagenumber of ordinary Earnings shares outstanding per share

Amount after tax (shares in thousands) (in dollars)

Basic earnings per share Profit attributable to ordinary shareholders of the parent 59,708$ 63,015 0.95$

Diluted earnings per share Profit attributable to ordinary shareholders of the parent 59,708 63,015 Assumed conversion of all dilutive potential ordinary shares -Employee compensation - 532 -Resticted stocks - 291

Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 59,708$ 63,838 0.94$


~53~

(23) Transactions with non-controlling interests

The Group did not participate in the capital increase raised by a subsidiary proportionally to its

interest to the subsidiary.

The Group established Apex Probes Technology Co., Ltd. on May 11, 2017, and held 100%

interest equity. On June 25, 2017, Apex Probes Technology Co., Ltd. increased its capital through

cash. The Company did not acquire new shares according to its original shareholding ratio and lost

40% shareholding ratio. The transaction increased non-controlling interest and equity attributable

to owners of the parent by $19,989 and $11, respectively. For the year ended December 31, 2017,

the changes in equity of Apex Probes Technology Co., Ltd. affected equity attributable to owners

of the parent as follows:

Weighted averagenumber of ordinary Earnings shares outstanding per share

Amount after tax (shares in thousands) (in dollars)

Basic earnings per share Profit attributable to ordinary shareholders of the parent 142,407$ 62,483 2.28$

Diluted earnings per share Profit attributable to ordinary shareholders of the parent 142,407 62,483 Assumed conversion of all dilutive potential ordinary shares -Employee compensation - 548 -Resticted stocks - 504

Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 142,407$ 63,535 2.24$



Cash $ 20,000Increase in book value of non-controlling interest ( 19,989)

Capital surplus- changes in interest equity to the subsidiary $ 11

~54~

(24) Supplemental cash flow information

Investing activities with partial cash payments:

7. RELATED PARTY TRANSACTIONS

Key management compensation

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

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

follows:

2018 2017

Purchase of property, plant and equipment 64,073$ 46,054$ Add: opening balance of payable on equipment - 2,211

Less: ending balance of payable on equipment 2,906)( -

Cash paid during the year 61,167$ 48,265$


2018 2017

Salaries and other short-term employee benefits 24,806$ 19,823$ Post-employment benefits 45 30 Share-based payments 3,134 4,519

27,985$ 24,372$


Pledged asset December 31, 2018 December 31, 2017 Purpose

Cash in banks (shown asother current assets)

91,831$ 66,932$ Guarantee of acceptance bill,customs duties andgovernments grants

Notes receivable 17,369 13,177 Guarantee of acceptance bill

109,200$ 80,109$

Book value


Property, plant and equipment 3,047$ 1,085$ Intangible assets - 329

3,047$ 1,414$

~55~

B. Operating leases agreements

The future aggregate minimum lease payments receivable under non-cancellable operating

leases are as follows:

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE

Details of the appropriation of 2018 earnings as proposed by the Board of Directors on March 20,

2019 are provided in Note 6(14).

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 2018, the Company’s strategy, which was unchanged from 2017, was to maintain the

gearing ratio below 60%.


Not later than one year 17,382$ 16,341$ Later than one year but not later than five years

3,466 22,052

20,848$ 38,393$

~56~

(2) Financial instruments

A. Financial instruments by category

Note：Financial assets at amortised cost including cash and cash equivalents, notes receivable,

accounts receivable, other receivables, other current assets. Financial liabilities at amortised

cost including notes payable, accounts payable, other payables and other current liabilities.

B. Financial risk management policies

(a)The Group’s activities expose it to a variety of financial risks: market risk (including foreign

exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s

overall risk management programme focuses on the unpredictability of financial markets and

seeks to minimise 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 cooperation with the Group’s operating units. The Board provides

written principles for overall risk management, as well as written policies covering specific

areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of

derivative financial instruments and non-derivative financial instruments, and investment of

excess liquidity.

C. Significant financial risks and degrees of financial risks

(a)Market risk

Foreign exchange risk

i. The Group operates internationally and is exposed to foreign exchange risk arising from

the transactions of the Company and its subsidiaries used in various functional

currency, primarily with respect to the USD Foreign exchange risk arises from future


Financial assets

Current financial assets at fair value through profit or loss

6,344$ 30,526$

Non-current financial assets at fair value through profit or loss 32,666 - Financial assets at amortised cost/Loans and receivables 1,304,657 1,460,787

1,343,667$ 1,491,313$


Financial liabilities Financial liabilities at amortised cost 485,715$ 465,541$

485,715$ 465,541$

~57~

commercial transactions and recognised assets and liabilities.

ii. The Group’s businesses involve some non-functional currency operations. The

information on assets and liabilities denominated in foreign currencies whose values

would be materially affected by the exchange rate fluctuations is as follows:

iii.Total exchange loss, including realised and unrealised 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 $13,704 and $32,289, respectively.

Price risk

i. The Group is exposed to equity securities price risk because of investments held by the

Group and classified on the consolidated balance sheet as financial assets at fair value

through profit or loss. The Group is not exposed to commodity price risk. To manage its

price risk arising from investments in equity securities, the Group diversifies its portfolio.

Diversification of the portfolio is done in accordance with the limits set by the Group.

ii. The Group’s investments in equity securities comprise domestic listed stocks. The prices

of equity securities would change due to the change of the future value of investee

companies.

Cash flow and fair value interest rate risk

The Group’s investments in equity securities comprise domestic listed stocks. The prices of

Foreign Book

currency amount Exchange value Degree of Effect on

(In thousands) rate (NTD) variation profit or loss

(Foreign currency:functional currency)Financial assets Monetary items USD:NTD 12,498$ 30.72 383,939$ 1% 3,071$

December 31, 2018

Sensitivity analysis

Foreign

currency amount Exchange Book Degree of Effect on (In thousands) rate value (NTD) variation profit or loss

(Foreign currency:functional currency)Financial assets Monetary items USD:NTD 14,890$ 29.76 443,126$ 1% 3,678$

Sensitivity analysis

December 31, 2017

~58~

equity securities would change due to the change of the future value of investee companies.

The Group expects the price risk is remote as the investment amount is not significant.

(b)Credit risk

Effective 2018

i. For fixed interest rate bond investments held by the Group classified as financial assets at

fair value through profit or loss, changes in market interest rates would affect their fair

values. The Group expects the interest risk is remote as the investment amount is not

significant.

ii. The Group manages their credit risk taking into consideration the entire group’s concern.

For banks and financial institutions, only independently rated parties with a minimum

rating of 'A' are accepted. According to the Group’s credit policy, each local entity in the

Group is responsible for managing and analysing the credit risk for each of their new

clients before standard payment and delivery terms and conditions are offered. Internal

risk control assesses the credit quality of the customers, taking into account their financial

position, past experience and other factors. Individual risk limits are set based on internal

or external ratings in accordance with limits set by the Board of Directors. The utilisation

of credit limits is regularly monitored.

iii. The Group adopts following assumptions under IFRS 9 to assess whether there has been a

significant increase in credit risk on that instrument since initial recognition:

(i) If the contract payments were past due over 60 days based on the terms, there has been a

significant increase in credit risk on that instrument since initial recognition.

(ii) For investments in bonds that are traded over the counter, if any external credit rating

agency rates these bonds as investment grade, the credit risk of these financial assets is

low.

iv. If the credit rating grade of an investment target degrades two scales, there has been a

significant increase in credit risk on that instrument since initial recognition.

v. The default occurs when the contract payments are past due over 120 days.

vi. The Group classifies customers’ notes receivable and accounts receivable, contract assets

and rents receivable in accordance with credit risk on trade. The Group applies the

modified approach using provision matrix, loss rate methodology to estimate expected

credit loss under the provision matrix basis.

vii. The following indicators are used to determine whether the credit impairment of debt

instruments has occurred:

(i) It becomes probable that the issuer will enter bankruptcy or other financial

reorganization due to their financial difficulties;

~59~

(ii) The disappearance of an active market for that financial asset because of financial

difficulties;

(iii) Default or delinquency in interest or principal repayments;

(iv) Adverse changes in national or regional economic conditions that are expected to

cause a default.

viii. 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 notes and accounts receivable based on

the agreed terms, and the contract cash flows of debt instruments stated at amortised cost.

The Group used forecastability to adjust historical and timely information to assess the

default possibility of notes and accounts receivable. On December 31, 2018, the provision

matrix is as follows:

ix. The ageing analysis of accounts receivable and notes receivable are as follows:

The above ageing analysis was based on past due date.

Not pastdue

Up to 90days past

due

91~180days

past due

181~270days

past due

271~360days

past due

Over360 dayspast due Total

At December 31, 2018Expected loss rate 0.37%

~8.06%

2.83%~

26.24%

19.15%~

65.50%

57.86%~

78.20%

46.99%~

100%

100%

Total book value 460,957$ 52,096$ 3,561$ 796$ 67$ 987$ 518,464$

Loss allowance 3,547$ 2,094$ 845$ 469$ 58$ 987$ 8,000$


Not past due 542,588$ 526,428$ Up to 90 days 77,611 131,670 91~180 days 5,724 25,770 181~270 days 832 4,220 271~360 days 142 5,239 Over 360 days 1,354$ 8,770$

628,251$ 702,097$

~60~

x. Movements in relation to the Group applying the modified approach to provide loss

allowance for notes receivable and accounts receivable are as follows:

xi. In addition, the Group individually assessed the impairment loss of notes receivable

amounting to $109,787 and recognised impairment loss amounting to $2,552 as of

December 31, 2018.

xii. Credit risk information of 2017 is provided in Note 12(4).

(c)Liquidity risk

i. Cash flow forecasting is performed in and aggregated by the Group treasury. Group

treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has

sufficient cash to meet operational needs while maintaining sufficient headroom on its

undrawn committed borrowing facilities at all times so that the Group does not breach

borrowing limits or covenants on any of its borrowing facilities. Such forecasting takes

into consideration the Group’s debt financing plans, covenant compliance, compliance

with internal balance sheet ratio targets and, if applicable external regulatory or legal

requirements.

ii. The Group invests surplus cash in interest bearing current accounts, time deposits, money

market deposits and marketable securities, choosing instruments with appropriate

maturities or sufficient liquidity to provide sufficient headroom as determined by the

above mentioned forecasts, and that are expected to readily generate cash inflows for

managing liquidity risk.

iii. The Group’s non-derivative financial liabilities are all due within one year. The Group

does not expect the timing of occurrence of the cash flows estimated through the maturity

date analysis will be significantly earlier, nor expect the actual cash flow amount will be

significantly different.

(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of

Accounts receivable Notes receivable

At January 1_IAS 39 8,204$ 733$ Adjustments under new standards 5,890 -

At January 1_IFRS 9 14,094 733 Provision for impairment - 842 Reversal of impairment loss 5,025)( - Effect of foreign exchange 92)( -

At December 31 8,977$ 1,575$

2018

~61~

financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date. A market is regarded as active where a

market in which transactions for the asset or liability take place with sufficient

frequency and volume to provide pricing information on an ongoing basis. The fair

value of the Group’s investment in listed stocks is included in Level 1.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the

asset or liability, either directly or indirectly. The fair value of the Group’s investment

in off-the-run convertible bonds and most derivative instruments is included in Level

2.

Level 3: Unobservable inputs for the asset or liability. The Group does not hold any financial

and non-financial instrument in Level 3.

B. Financial instruments not measured at fair value

Except for those listed in the table below, the carrying amounts of cash and cash equivalents,

notes receivable, accounts receivable, other receivables, short-term borrowings, notes payable,

accounts payable and other payables are approximate to their fair values.

C. The related information of financial and non-financial instruments measured at fair value by

level on the basis of the nature, characteristics and risks of the assets and liabilities is as

follows:

(a) The debt instruments at amortised cost held by the Group were all low credit risk

investments on December 31, 2018, therefore, their book value would be measured based

on expected credit loss amount in twelve months after the balance sheet date.

(b) The methods and assumptions the Group used to measure fair value are as follows:

i. The instruments the Group used market quoted prices as their fair values (that is, Level 1)

are listed below by characteristics:

ii. 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 consolidated balance sheet

date.

iii.When assessing non-standard and low-complexity financial instruments, for example, debt

instruments without active market and options, the Group adopts valuation technique that

Listed shares Open-end fund

Market quoted price Closing price Net asset value

~62~

is widely used by market participants. The inputs used in the valuation method to measure

these financial instruments are normally observable in the market.

iv. 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, etc. In

accordance with the Group’s management policies and relevant control procedures

relating to the valuation models used for fair value measurement, management believes

adjustment to valuation is necessary in order to reasonably represent the fair value of

financial and non-financial instruments at the consolidated balance sheet. The inputs and

pricing information used during valuation are carefully assessed and adjusted based on

current market conditions.

v. The Group takes into account adjustments for credit risks to measure the fair value of

financial and non-financial instruments to reflect credit risk of the counterparty and the

Group’s credit quality.

D. For the years ended December 31, 2018 and 2017, there was no transfer between Level 1 and

Level 2.

E. The following chart is the movement of Level 3 for the years ended December 31, 2018 and

2017:

Movement of unrealised gain or loss in profit or loss of assets and liabilities held as at

December 31, 2018, recorded as non-operating income and expense.

F. For the years ended December 31, 2018 and 2017, there was no transfer into or out from Level

3.

G. The valuation procedures for fair value measurements categorised within Level 3 were

performed by external valuers, which is to verify independent fair value of financial

instruments. Such assessment is to ensure the valuation results are reasonable by applying

independent information to make results close to current market conditions, confirming the

resource of information is independent, reliable and in line with other resources and

2018 2017

At January 1 -$ -$ Gains and losses recognised in profit or loss Recorded as non-operating income and expenses

5,824 -

Acquired in the period 26,842 -

At December 31 32,666$ -$

Equity instrument

~63~

represented as the exercisable price, and frequently calibrating valuation model, performing

back-testing, updating inputs used to the valuation model and making any other necessary

adjustments to the fair value.

Investment management segment set up valuation policies, valuation processes and rules for

measuring fair value of financial instruments and ensure compliance with the related

requirements in IFRS.

H. The following is the qualitative information of significant unobservable inputs and sensitivity

analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair

value measurement:

I. The Group has carefully assessed the valuation models and assumptions used to measure fair

value. However, use of different valuation models or assumptions may result in different

measurement. The following is the effect of profit or loss or of other comprehensive income

from financial assets and liabilities categorised within Level 3 if the inputs used to valuation

models have changed:

Fair value atDecember 31,

2018 Valuationtechnique

Significantunobservable

input

Range(weightedaverage)

Relationshipof inputs tofair value

Non-derivativeequityinstrument:

Unlisted shares 32,666$ Marketcomparablecompanies

Closing priceto book ratiomultiple,discount forlack ofmarketability

7.64%-27.04%(17.34%)

The higher themultiple andcontrolpremium, thehigher the fairvalue

12.74%-17.38%(15.06%)

The higher thediscount forlack ofmarketability,the lower the

~64~

(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 at fair value through profit or loss are financial assets held for trading or

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. Financial assets that meet one of the

following criteria are designated as at fair value through profit or loss on initial

recognition:

(i) Hybrid (combined) contracts; or

(ii) They eliminate or significantly reduce a measurement or recognition inconsistency; or

(iii) They are managed and their performance is evaluated on a fair value basis, in

accordance with a documented risk management or investment strategy.

ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss

are recognised and derecognised using trade date accounting.

iii.Financial assets at fair value through profit or loss are initially recognised at fair value.

Related transaction costs are expensed in profit or loss. These financial assets are

subsequently remeasured and stated at fair value, and any changes in the fair value of these

financial assets are recognised in profit or loss.

(b)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. Accounts receivable are initially recognised at fair value and subsequently

measured at amortised 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 effect of discounting is immaterial.

Input Change Favourable

changeUnfavourable

change

Financial assets

Equity instrumentClosing price to book ratio multiple

±5% $ 1,693 $ 1,655

" discount for lack of marketability ±5% $ 200 $ 362

December 31, 2018

Recognised in profit orloss

~65~

(c)Impairment of financial assets

i. The Group assesses at each balance sheet date whether there is objective evidence that a

financial asset or a group of financial assets is impaired as a result of one or more events

that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or

events) has an impact on the estimated future cash flows of the financial asset or group of

financial assets that can be reliably estimated.

ii. The criteria that the Group uses to determine whether there is objective evidence of an

impairment loss is as follows:

(i) Significant financial difficulty of the issuer or debtor;

(ii) A breach of contract, such as a default or delinquency in interest or principal payments;

(iii) The Group, for economic or legal reasons relating to the borrower’s financial difficulty,

granted the borrower a concession that a lender would not otherwise consider;

(iv) It becomes probable that the borrower will enter bankruptcy or other financial

reorganisation;

(v) The disappearance of an active market for that financial asset because of financial

difficulties;

(vi) Observable data indicating that there is a measurable decrease in the estimated future

cash flows from a group of financial assets since the initial recognition of those assets,

although the decrease cannot yet be identified with the individual financial asset in the

group, including adverse changes in the payment status of borrowers in the group or

national or local economic conditions that correlate with defaults on the assets in the

group;

(vii) Information about significant changes with an adverse effect that have taken place in

the technology, market, economic or legal environment in which the issuer operates,

and indicates that the cost of the investment in the equity instrument may not be

recovered;

(viii) A significant or prolonged decline in the fair value of an investment in an equity

instrument below its cost.

iii.When the Group assesses that there has been objective evidence of impairment and an

impairment loss has occurred, accounting for impairment is made as follows according to

the category of financial assets:

Loans and receivables (including notes receivable, accounts receivable and other

receivables)

The amount of the impairment loss is measured as the difference between the asset’s

carrying amount and the present value of estimated future cash flows discounted at the

financial asset’s original effective interest rate, and is recognised in profit or loss. If, in a

subsequent period, the amount of the impairment loss decreases and the decrease can be

~66~

related objectively to an event occurring after the impairment loss was recognised, the

previously recognised impairment loss is reversed through profit or loss to the extent that

the carrying amount of the asset does not exceed its amortised cost that would have been

at the date of reversal had the impairment loss not been recognised previously.

Impairment loss is recognised and reversed by adjusting the carrying amount of the asset

through the use of an impairment allowance account.

B. The reconciliations of carrying amount of financial assets transfered from December 31, 2017,

IAS 39, to January 1, IFRS 9, were as follows:

The Group has no conversion difference for the financial assets at fair value through profit or

loss.

C. The reconcilation of allowance for impairment and provision from December 31, 2017 , as

these are impaired under IAS 39, to January 1, 2018, as these are expected to be impaired under

IFRS 9, are as follows:

The Group decreased both accounts receivable and retained earnings both in the amount of

$5,890 under the provision impairment loss rule of IFRS 9.

D. Details of significant accounts for the year ended December 31, 2017 were as follows:

(a) Financial assets at fair value through profit or loss-current

i. The Group recognised net gain of $326 on financial assets held for trading for the year

ended December 31, 2017.

ii. The Group has no financial assets at fair value through profit or loss pledged to others.

E. Details of credit risk for the year ended December 31, 2017 were as follows:

(a) Credit risk refers to the risk of financial loss to the Group arising from default by the clients

or counterparties of financial instruments on the contract obligations. According to the

Group’s credit policy, each local entity in the Group is responsible for managing and

analysing the credit risk for each of their new clients before standard payment and 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

December 31, 2017

Current itemsFinancial assets held for trading Listed (TSE and OTC) stock

380$

Convertible corporate bonds - Open-end fund 30,000

30,380 Financial assets held for trading Valuation adjustment

146

30,526$

Items

~67~

set by the Board of Directors. The utilisation of credit limits is regularly monitored. Credit

risk arises from cash and cash equivalents, derivative financial instruments and deposits

with banks and financial institutions, as well as credit exposures to customers, including

outstanding receivables and committed transactions. For the counterparty of the financial

instruments, the Group transacts with a variety of financial institutions all with high credit

quality to disperse credit risk.

(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 due nor impaired is

provided as follows:

Group 1: The Group’s major customers with optimal credit and good credit standing had

Group 1: no bad debts arising from accounts receivable based on historical experience.

Group 2: The Group’s customers are small scale companies that are normally managed.

(d) The ageing analysis of financial assets that were past due but not impaired is provided as

follows:

The above ageing analysis was based on invoice date.

(e) The individual analysis of financial assets that had been impaired is provided as follows:

i. As of December 31, 2017, there were no such accounts of the individually impaired

accounts receivable.

ii. Movements on the Group’s provision for impairment of notes receivable are as follows:

December 31, 2017

Group 1 260,953$ Group 2 225,240

486,193$

December 31, 2017

Up to 30 days 81,379$ 31 to 90 days 50,291 91 to 180 days 25,770 181 to 365 days 9,425

Over 366 days 8,804

175,669$

~68~

iii. Movements on the Group’s provision for impairment of accounts receivable are as

follows:

(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 for the year ended December 31, 2017 are provided in Note

4 of consolidated financial statements.

B. In line with IFRS 15 requirements, the Group changed the presentation of certain accounts in

the balance sheet as follows:

Under IFRS 15, liabilities in relation to unearned sales revenue are recognised as contract

liabilities, but were previously presented as advance sales receipts in the balance sheet. As of

January 1, 2018, the balance amounted to $8,425.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: None.

B. Provision of endorsements and guarantees to others: Please refer to table 1.

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 $300 million or

20% of the Company’s paid-in capital: None.

E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in

Individualprovision

Groupprovision Total

At January 1 -$ 221$ 221$ Reclassification - 512 512

At December 31 -$ 733$ 733$

2017

Individualprovision

Groupprovision Total

At January 1 1,512$ 5,992$ 7,504$ (Reversal of)provision for imppairment

1,459)( 2,227 768

Write-offs during the year 53)( - 53)( Effect off exchange rate - 15)( 15)(

At December 31 -$ 8,204$ 8,204$

2017

~69~

capital or more: Please refer to table 3.

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

Please refer to table 4.

I. Trading in derivative instruments undertaken during the reporting periods:None.

J. Significant inter-company transactions during the reporting periods: Please refer to table 5.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in

Mainland China)：Please refer to table 6.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 7.

B. Significant transactions, either directly or indirectly through a third area, with investee

companies in the Mainland Area: Please refer to table 13(1) B, G ,H, J.

14. SEGMENT INFORMATION

(1) General information

The Group operates business only in a single industry. The Board of Directors allocates resources

and assesses performance of the Group as a whole, has identified that the Group has only one

reportable operating segment.

(2) Measurement of segment information

A. The Group’s segment profit (loss) is measured using the operating profit (loss) before tax,

which is used as a basis for assessing the performance of the operating segments. The

accounting policies and accounting assumptions of the operating segments are in agreement

with the significant accounting policies summarised and accounting estimates and assumptions

in Notes 4 and 5.

B. The financial information reported to the chief operating decision-maker is measured in a

manner consistent with that in the statement of comprehensive income.

(3) Information on products and services

The Group is primarily engaged in research and development, manufacturing and selling of current

terminal solution of pogo pin connectors and other contact probes. As the Group has only single

type of product, the disclosure of other products information is not applicable.

(4) Geographical information

(5) Major customer information

Information on major customers whose sales are 10% or above of the net sales revenue for the

Revenue Non-current assets Revenue Non-current assets

China 1,007,488$ 252,401$ 1,225,332$ 162,038$ Taiwan 328,654 157,656 277,736 157,086 Others 437,614 623 389,246 727

1,773,756$ 410,680$ 1,892,314$ 319,851$


~70~

years ended December 31, 2018 and 2017:

Revenue Proportion (%) assets Revenue Proportion (%) assets

A $ 169,744 10 $ 308,032 16


Company name

Relationship

with the

endorser/

guarantor

（Note 2）

0 The Company CCP-DG 3 291,836$ 276,480$ 199,680$ -$ -$ 13.68% 729,591$ Y N Y

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

(1)The Company is ‘0’.

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

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

(1)Having business relationship.

(2)The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(3)The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company.

(4)The endorsed/guaranteed parent company directly or indirectly owns more than 50% voting shares of the endorser/guarantor subsidiary.

(5)Mutual guarantee of the trade as required by the construction contract.

(6)Due to joint venture, each shareholder provides endorsements/guarantees to the endorsed/guaranteed company in proportion to its ownership.

(7)Joint guarantee of the performance guarantee for pre-sold home sales contract as required under the Consumer Protection Act.

Note 3: Fill in limit on endorsements/guarantees provided for a single party and ceiling on total amount of endorsements/guarantees provided as prescribed in the endorser/guarantor company’s “Procedures for Provision of Endorsements and

Guarantees”, and state each individual party to which the endorsements/guarantees have been provided and the calculation for ceiling on total amount of endorsements/guarantees provided in the footnote.

Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period. The Company’s Board of Directors approved before every guarantees on due, the accumulated maximum amount as

of the end of the year was $276,480 thousand, including the balance of effective guarantees of $76,800 thousand, the guarantee amount did not exceed the limit.

Note 5:Fill in the amount approved by the Board of Directors or the chairman if the chairman has been authorised by the Board of Directors based on subparagraph 8, Article 12 of the Regulations Governing Loaning of Funds and Making of

Endorsements / Guarantees by Public Companies.

Note 6: Fill in the actual amount of endorsements/guarantees used by the endorsed/guaranteed company.

Note 7: Fill in ‘Y’ for those cases of provision of endorsements/guarantees by listed parent company to subsidiary and provision by subsidiary to listed parent company, and provision to the party in Mainland China.

Outstanding

endorsement/

guarantee

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Limit on

endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Party being

endorsed/guaranteedProvision of

endorsements/

guarantees to

the party in

Mainland

China

（Note 7） Footnote

Actual amount

drawn down

（Note 6）

Amount of

endorsements/

guarantees

secured with

collateral

Ratio of

accumulated

endorsement/

guarantee

amount to net

asset value of

the endorser/

guarantor

company

Ceiling on

total amount of

endorsements/

guarantees

provided

（Note 3）

Provision of

endorsements/

guarantees by

parent

company to

subsidiary

（Note 7）

Provision of

endorsements/

guarantees by

subsidiary to

parent

company

（Note 7）

Expressed in thousands of NTD

(Except as otherwise indicated)

Table 1


Provision of endorsements and guarantees to others

During the year ended December 31, 2018

Table 1, Page 1

Table 2

Number of shares

Book value

（Note 3） Ownership Fair value

The Company Stock - Answer Technology

Co., Ltd.

- Financial asset at fair value


13,760 445$ 0.02% 445$

The Company Fund -Schroder 2022 Maturity

Emerging Market

Opportunities Sovereign Bond



20,000 5,890 - 5,899


Ltd.

Stock -Capso Vision, Inc. - Financial asset at fair value

through profit or loss - non-

current

296,297 13,760 0.34% 13,760


Ltd.

Stock -TAIWAN

INNOVATIVE SPACE, INC.


through profit or loss - non-

current

112,500 18,906 0.22% 18,906

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Leave the column blank if the issuer of marketable securities is non-related party.

Note 3: Fill in the amount after adjusted at fair value and deducted by accumulated impairment for the marketable securities measured at fair value; fill in the acquisition cost or amortised cost deducted by accumulated impairment for the

marketable securities not measured at fair value.

Footnote

（Note 4）Securities held by

Marketable securities

（Note 1）

Relationship with the

securities issuer （Note 2）

General

ledger account



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




Table 2, Page 1

Table 3

Purchases

(sales) Amount

Percentage of

total

purchases

(sales) Credit term Unit price Credit term Balance

Percentage of

total

notes/accounts

receivable

(payable)

The Company C.C.P. INTERNATIONAL(H.K.) LIMITED The Company is the

ultimate parent

company

Purchases 555,637$ 90% 60 days - Similar with

general

transactions

98,660)($ 78%


(H.K.) LIMITED

The Company The Company is the

ultimate parent

company

Sales 555,627)( 95% 60 days - Similar with

general

transactions

98,660 95%


(H.K.) LIMITED

CCP-DG Same Parent

Company

Purchases 545,749 99% 60 days - Similar with

general

transactions

110,559)( 100%

CCP-DG C.C.P. INTERNATIONAL(H.K.) LIMITED Same Parent

Company

Sales 545,749)( 42% 60 days - Similar with

general

transactions

110,559 29%

Note 1: If terms of related party transactions are different from third-party transactions, explain the differences and reasons in the ‘Unit price’ and ‘Credit term’ columns.

Note 2: In case related party transaction terms involve advance receipts (prepayments) transactions, explain in the footnote the reasons, contractual provisions, related amounts, and differences in types of transactions compared to third-party

transactions.

Note 3: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity

attributable to owners of the parent in the calculation.

Footnote

（Note 2）Purchaser/seller Counterparty

Relationship with the

counterparty

Transaction

Differences in transaction terms

compared to third party

transactions（Note 1）

Notes/accounts receivable

(payable)


Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more




Table 3, Page 1

Table 4

Amount Action taken

CCP-DG C.C.P. INTERNATIONAL(H.K.)

LIMITED

The Company is the

ultimate parent

company

110,559$ 4.8% -$ - 23,636$ -$

Note 1: Fill in separately the balances of accounts receivable–related parties, notes receivable–related parties, other receivables–related parties….

Note 2: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity

attributable to owners of the parent in the calculation.

Amount collected

subsequent to the

balance sheet date

Allowance for

doubtful accounts Creditor Counterparty

Relationship

with the counterparty

Balance as at December 31,

2018（Note 1） Turnover rate

Overdue receivables


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

December 31, 2018



Table 4,Page 1

Table 5

General ledger account Amount

Transaction terms

(Note 4)

Percentage of consolidated total operating

revenues or total assets (Note 3)

0 The Company E-PLAN INTERNATIONS

LIMITED

1 Sales 59,845$ - 3.37%

0 The Company C.C.P. INTERNATIONAL

(H.K.) LIMITED

1 Purchases 555,637 - 31.33%

0 The Company C.C.P. INTERNATIONAL

(H.K.) LIMITED

1 Accounts payable - related

parties

98,660 - 4.72%

1 C.C.P. INTERNATIONAL (H.K.)

LIMITED

CCP-DG 3 Purchases 545,749 - 30.77%

1 C.C.P. INTERNATIONAL (H.K.)

LIMITED

CCP-DG 3 Accounts payable - related

parties

110,559 - 5.29%

2 E-PLAN INTERNATIONS LIMITED CCP-DG 3 Sales 67,913 - 3.83%

3 CCP CONNECTION PLATFORM,INC. The Company 2 Service revenue 24,891 - 1.19%

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

(1)Parent company is ‘0’.

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

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

subsidiaries refer to the same transaction, it is not required to disclose twice. For example, if the parent company has already disclosed its transaction with a subsidiary, then the subsidiary is not required to disclose the transaction;

for transactions between two subsidiaries, if one of the subsidiaries has disclosed the transaction, then the other is not required to disclose the transaction.):

(1)Parent company to subsidiary.

(2)Subsidiary to parent company.

(3)Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on

accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4:The Company may decide to disclose or not to disclose transaction details in this table based on the Materiality Principle.

Number

(Note 1) Company name Counterparty

Relationship

(Note 2)

Transaction


Significant inter-company transactions during the reporting periods




Table 5, Page 1

Table 6

Balance

as at December 31,

2018

Balance

as at December 31,

2017 Number of shares Ownership (%) Book value

The Company Green Esteem Services Limited Samoa Investment 388,128$ 388,128$ 12,762,342 100% 742,545$ 28,171$ 25,554$

The Company CCP CON-NECTION

PLATFORM, INC.

USA Trading 15,486 15,486 500,000 100% 12,588 353)( 353)(

The Company Shang Chuan Investment Co.,

Ltd.

Taiwan Investment 100,000 100,000 10,000,000 100% 89,631 5,135)( 5,135)(

The Company MEGA CRYSTAL LTD. Seychelles Investment 15,341 - 500,000 100% 11,312 4,059)( 4,059)(

Green Esteem Services Limited World Success Group Limited Samoa Investment 384,229 384,229 12,634,136 100% 736,411 26,747 26,747

Green Esteem Services Limited E-Plan International Limited Samoa Trading - - 1 100% 6,252 1,383 1,383

Green Esteem Services Limited Forefront International Limited Samoa Investment - - 1 100% 3 - -

Green Esteem Services Limited C.C.P. Intertional (H.K.)Limited Hong Kong Trading 3,899 3,899 1,000,000 100% 11,159 40 40


Ltd.

Apex prohes Technology Co.

Ltd.

Taiwan Manufacture of

Electronic Parts

and Components

30,000 30,000 3,000,000 60% 18,161 15,471)( 9,283)(


Ltd.

One Test Systems Co., Ltd. Cayman Investment 24,171 - 660,525 73.39% 19,884 2,033)( 1,492)(

One Test Systems Co., Ltd. OTS Co., Ltd. Taiwan Trading 15,000 - 1,500,000 100% 14,355 645)( 645)(

One Test Systems Co., Ltd. One Test Systems USA Trading 7,713 - 250,000 100% 7,061 606)( 606)(

Note 1: If a public company is equipped with an overseas holding company and takes consolidated financial report as the main financial report according to the local law rules, it can only disclose the information of the overseas holding

company about the disclosure of related overseas investee information.

Note 2: If situation does not belong to Note 1, fill in the columns according to the following regulations:

(1)The columns of ‘Investee’, ‘Location’, ‘Main business activities’, Initial investment amount’ and ‘Shares held as at December 31, 2018’ should fill orderly in the Company’s (public company’s) information on investees and every

directly or indirectly controlled investee’s investment information, and note the relationship between the Company (public company) and its investee each (ex. direct subsidiary or indirect subsidiary) in the ‘footnote’ column..

(2)The ‘Net profit (loss) of the investee for the year ended December 31, 2018, column should fill in amount of net profit (loss) of the investee for this period.

(3)The ‘Investment income (loss) recognised by the Company for the year ended December 31,2018’ column should fill in the Company (public company) recognised investment income (loss) of its direct subsidiary and

recognised investment income (loss) of its investee accounted for under the equity method for this period. When filling in recognised investment income (loss) of its direct subsidiary, the Company (public company) should

confirm that direct subsidiary’s net profit (loss) for this period has included its investment income (loss) which shall be recognised by regulations.

Initial investment amount Shares held as at December 31, 2018

Net profit (loss)

of the investee for the year

ended December 31, 2018

（Note 2(2)）

Investment income(loss)

recognised by the Company

for the year ended

December 31, 2018

（Note 2(3)）


Information on investees




Footnote Investor Investee（Notes 1 and 2） Location

Main business

activities

Table 6 Page 1

Table 7

Remitted to

Mainland China

Remitted back to

Taiwan

CCP-DG Manufacturing

PCB and testing

components for

jigs and fixture

device

400,152$ (2) 400,152$ -$ -$ 400,152$ 26,748$ 100% 26,748$ 736,411$ -$

DONGGUAN

TONGXING

PRECISION

LTD.

Manufacturing

PCB and testing

components for

jigs and fixture

device

15,431 (2) - 15,431 - 15,431 3,993)( 100% 3,993)( 11,378 -

Company name

Accumulated

amount of

remittance from

Taiwan to

Mainland China

as of December 31,

2018

Investment amount

approved by the

Investment

Commission of the

Ministry of

Economic Affairs

(MOEA)

Ceiling on

investments in

Mainland China

imposed by the

Investment

Commission of

MOEA

CCP-DG 400,152$ 400,152$ 887,099$

DONGGUAN

TONGXING

PRECISION

LTD.

15,431 15,431 887,099

Note 1: Investment methods are classified into the following three categories:

(1)Directly invest in a company in Mainland China..

(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China.

(3) Others

Note 2: The gain on investment was calculated based on the financial statements reviewed by the Taiwan parent’s appointed accountants.

Note 3: The numbers in this table are expressed in New Taiwan Dollars.

Note 4: Calculated based on 60% of the net assets of the Company’s consolidated financial statements.

Accumulated

amount

of investment

income

remitted back to

Taiwan as of

December 31,

2018 Footnote

Amount remitted from Taiwan to

Mainland China/

Amount remitted back

to Taiwan for the year ended December

31, 2018

Accumulated

amount

of remittance

from Taiwan to

Mainland China

as of December

31, 2018

Net income of

investee as for the

year ended

December 31,

2018

Ownership

held by

the Company

(direct or

indirect)

Investment income

(loss) recognised

by the Company

for the year ended

December 31, 2018

（Note 2）

Book value of

investments in

Mainland China as

of December 31,

2018


Information on investments in Mainland China




Paid-in capital

Investment method

（Note 1）

Accumulated

amount of

remittance from

Taiwan to

Mainland China

as of January 1,

2018

Investee in

Mainland China

Main business

activities

Table 7, Page 1

Documents

C.C.P. Contact Probes Co., Ltd. Annual Report 2018