DELTA ELECTRONICS, INC. AND...

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DELTA ELECTRONICS, INC. AND

SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

SEPTEMBER 30, 2019 AND 2018

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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.

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REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

To the Board of Directors and Shareholders of Delta Electronics, Inc.

Introduction

We have reviewed the accompanying consolidated balance sheets of Delta Electronics, Inc. and its

subsidiaries (the “Group”) as at September 30, 2019 and 2018, and the related consolidated statements

of comprehensive income for the three-month and the nine-month periods then ended, as well as the

related consolidated statements of changes in equity and of cash flows for the nine-month periods then

ended, and notes to the consolidated financial statements, including a summary of significant accounting

policies. Management is responsible for the preparation and fair presentation of the consolidated

financial statements in accordance with the “Regulations Governing the Preparation of Financial Reports

by Securities Issuers” and International Accounting Standards (IAS) No. 34, “Interim Financial

Reporting” as endorsed by the Financial Supervisory Commission (FSC). Our responsibility is to express

a conclusion on these interim financial statements based on our reviews and the review reports of other

independent accountants.

Scope of Review

Except as explained in the Basis for Qualified Conclusion, we conducted our reviews in accordance

with the Generally Accepted Auditing Standards (GAAS) No. 65, “Review of Financial Statements”. A

review of interim financial information consists of making inquiries, primarily of persons responsible

for financial and accounting matters, and applying analytical and other review procedures. A review is

substantially less in scope than an audit and consequently does not enable us to obtain assurance that we

would become aware of all significant matters that might be identified in an audit. Accordingly, we do

not express an audit opinion.

Basis for Qualified Conclusion

As explained in Notes 4(3)B and 6(8), the financial statements of certain insignificant consolidated

subsidiaries and investments accounted for under equity method were not reviewed by independent

accountants. Those statements reflect total assets (including investments accounted for under equity

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method) of NT$21,502,713 thousand and NT$22,971,297 thousand, constituting 6.68% and 8.98% of

the consolidated total assets, and total liabilities of NT$9,371,423 thousand and NT$8,477,566 thousand,

constituting 6.50% and 6.91% of the consolidated total liabilities as at September 30, 2019 and 2018,

respectively, and total comprehensive income of NT$310,289 thousand and NT$224,402 thousand,

constituting 10.48% and 4.53% of the consolidated total comprehensive income for the three-month

periods then ended, respectively, and NT$518,336 thousand and NT$308,055 thousand, constituting

2.23% and 2.39% of the consolidated total comprehensive income for the nine-month periods then ended,

respectively.

Qualified Conclusion

Based on our reviews and the review reports of other independent accountants, except for the

possible effects of the matter described in the Basis for Qualified Conclusion section of our report,

nothing has come to our attention that causes us to believe that the accompanying interim financial

statements do not present fairly, in all material respects, the consolidated financial position of the Group

as at September 30, 2019 and 2018, and of its consolidated financial performance for the three-month

and the nine-month periods then ended and its consolidated cash flows for the nine-month periods then

ended in accordance with the “Rules Governing the Preparation of Financial Reports by Securities

Issuers” and IAS No. 34, “Interim Financial Reporting” as endorsed by the FSC.

Other Matter–Review Reports By Other Independent Accountants

We did not review the financial statements of certain consolidated subsidiaries and investment

accounted for under the equity method. Total assets of the subsidiaries amounted to NT$50,677,219

thousand and NT$4,143,755 thousand, constituting 15.75% and 1.62% of the consolidated total assets

as at September 30, 2019 and 2018, respectively, and total operating revenues amounted to

NT$9,743,225 thousand and NT$1,295,582 thousand, constituting 13.45% and 2.04% of consolidated

total operating revenues for the three-month periods then ended, respectively, and NT$25,279,440

thousand and NT$3,778,757 thousand, constituting 12.64% and 2.19% of consolidated total operating

revenues for the nine-month periods then ended, respectively. The investment accounted for under the

equity method amounted to NT$0 and NT$8,049,385 thousand, constituting 0% and 3.15% of the

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consolidated total assets as at September 30, 2019 and 2018, respectively, and the share of profit of

associates and joint ventures accounted for under equity method and share of other comprehensive

income of associates and joint ventures accounted for under equity method was NT$0 and NT$415,043

thousand, constituting 0% and 8.38% of the consolidated total comprehensive income for the three-

month periods then ended, respectively, and NT$429,060 thousand and NT$154,491 thousand,

constituting 1.84% and 1.20% of the consolidated total comprehensive income for the nine-month

periods then ended, respectively. Those financial statements and information disclosed in Note 13 were

reviewed by other independent accountants whose reports thereon have been furnished to us, and our

conclusion expressed herein, is based solely on the review reports of the other independent accountants.

The consolidated financial statements of Delta Electronics, Inc. and subsidiaries as of and for the

nine-month period ended September 30, 2019 expressed in US dollars are presented solely for the

convenience of the reader and were translated from the financial statements expressed in New Taiwan

dollars using the exchange rate of $31.02 to US$1.00 at September 30, 2019. This basis of translation is

not in accordance with International Financial Reporting Standards, International Accounting Standards,

and relevant interpretations and interpretative bulletins that are ratified by the FSC.

Lin, Yu-Kuan Chou, Chien-Hung

for and on behalf of PricewaterhouseCoopers, Taiwan

October 30, 2019

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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 review of such financial statements may differ from those

generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial

statements and review 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.

DELTA ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2019, DECEMBER 31, 2018 AND SEPTEMBER 30, 2018 (EXPRESSED IN THOUSANDS OF DOLLARS)

(THE SEPTEMBER 30, 2019 AND 2018 AMOUNTS ARE UNAUDITED)

(Continued)

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US Dollars New Taiwan Dollars

Assets Notes September 30, 2019 September 30, 2019 December 31, 2018 September 30, 2018

Current assets

Cash and cash equivalents 6(1) $ 1,461,611 $ 45,339,164 $ 59,618,697 $ 58,666,961

Financial assets at fair value through profit or loss - current 6(2) 36,590 1,135,016 1,000,116 734,469

Financial assets at fair value through other comprehensive income - current 6(3) 10,558 327,521 57,656 101,463

Contract assets - current 52,993 1,643,836 1,708,291 1,979,603

Notes receivable, net 6(5) 121,451 3,767,415 4,091,231 3,642,693

Accounts receivable, net 6(5) 1,886,314 58,513,473 52,053,496 49,823,686

Accounts receivable - related parties 7 12,840 398,299 1,722,114 1,407,533

Other receivables 51,486 1,597,095 757,008 1,012,316

Other receivables - related parties 7 158 4,891 99,389 71,416

Current income tax assets 13,599 421,854 293,394 416,238

Inventories 6(7) 1,279,096 39,677,545 34,301,866 31,922,350

Prepayments 68,216 2,116,067 1,151,065 1,423,648

Other current assets 8 12,994 403,060 451,583 465,322

Total current assets 5,007,906 155,345,236 157,305,906 151,667,698

Non-current assets

Financial assets at fair value through profit or loss - non-current 6(2) 72,387 2,245,444 2,392,799 2,764,942

Financial assets at fair value through other comprehensive income - non-current 6(3) 65,185 2,022,049 2,920,338 2,877,989

Contract assets - non-current 10,040 311,444 495,875 523,264

Investments accounted for under equity method 6(8) 38,251 1,186,542 9,393,716 9,272,472

Property, plant and equipment 6(9) and 8 2,014,322 62,484,270 46,428,874 45,439,322

Right-of-use assets 6(10) 106,555 3,305,325 - -

Investment property, net 6(11) 454 14,070 1,644,728 1,666,462

Intangible assets 6(12) 2,764,132 85,743,361 32,628,388 32,921,873

Deferred income tax assets 223,369 6,928,918 6,179,485 6,167,651

Other non-current assets 6(13) and 8 72,763 2,257,135 2,545,315 2,574,213

Total non-current assets 5,367,458 166,498,558 104,629,518 104,208,188

Total assets $ 10,375,364 $ 321,843,794 $ 261,935,424 $ 255,875,886

DELTA ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2019, DECEMBER 31, 2018 AND SEPTEMBER 30, 2018 (EXPRESSED IN THOUSANDS OF DOLLARS)

(THE SEPTEMBER 30, 2019 AND 2018 AMOUNTS ARE UNAUDITED)

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

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Liabilities and Equity Notes September 30, 2019 September 30, 2019 December 31, 2018 September 30, 2018

Current liabilities

Short-term borrowings 6(14) $ 279,670 $ 8,675,357 $ 6,259,062 $ 14,103,307

Financial liabilities at fair value through profit or loss - current 6(2) 1,780 55,205 8,544 21,855

Contract liabilities - current 6(20) 104,302 3,235,444 2,643,318 2,964,771

Notes payable 2,077 64,429 7,955 7,747

Accounts payable 1,271,048 39,427,911 39,016,773 37,606,414

Accounts payable - related parties 7 491 15,241 1,484,335 1,334,508

Other payables 6(19) 831,262 25,785,746 24,786,588 20,577,259

Current income tax liabilities 75,813 2,351,718 2,712,106 1,953,616

Other current liabilities 6(15) 142,866 4,431,711 3,710,299 4,598,493

Total current liabilities 2,709,309 84,042,762 80,628,980 83,167,970

Non-current liabilities

Long-term borrowings 6(15) 1,192,673 36,996,707 25,232,787 24,029,057

Deferred income tax liabilities 456,460 14,159,397 11,569,432 11,568,256

Lease liabilities - non-current 48,461 1,503,268 - -

Other non-current liabilities 243,253 7,545,703 5,043,317 3,927,424

Total non-current liabilities 1,940,847 60,205,075 41,845,536 39,524,737

Total Liabilities 4,650,156 144,247,837 122,474,516 122,692,707

Equity

Share capital

Share capital - common stock 6(17) 837,377 25,975,433 25,975,433 25,975,433

Capital surplus 6(18)

Capital surplus 1,560,787 48,415,598 48,397,067 48,408,297

Retained earnings 6(19)

Legal reserve 806,923 25,030,754 23,211,444 23,211,444

Special reserve 243,747 7,561,032 7,088,143 7,088,143

Unappropriated retained earnings 1,142,496 35,440,231 33,160,104 27,168,187

Other equity interest

Other equity interest ( 141,411 ) ( 4,386,576 ) ( 7,561,032 ) ( 8,367,649 )

Equity attributable to owners of the parent 4,449,919 138,036,472 130,271,159 123,483,855

Non-controlling interest 4(3) 1,275,289 39,559,485 9,189,749 9,699,324

Total equity 5,725,208 177,595,957 139,460,908 133,183,179

Significant contingent liabilities and unrecorded contract commitments 9

Significant subsequent events 11

Total liabilities and equity $ 10,375,364 $ 321,843,794 $ 261,935,424 $ 255,875,886

DELTA ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (EXPRESSED IN THOUSANDS OF DOLLARS, EXCEPT EARNING PER SHARE DATA)

(UNAUDITED)

(Continued)

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Nine months ended

September 30, 2019

Three months ended September 30, Nine months ended September 30,

Items Notes 2019 2018 2019 2018

Sales revenue 6(20) and 7 $ 6,445,459 $ 72,461,809 $ 63,616,800 $ 199,938,137 $ 172,383,931

Operating costs 6(7)(24)(25) and 7 ( 4,688,807 ) ( 52,023,978 ) ( 45,842,894 ) ( 145,446,789 ) ( 127,091,865 )

Gross Profit 1,756,652 20,437,831 17,773,906 54,491,348 45,292,066

Operating expenses 6(24)(25)

Selling expenses ( 476,237 ) ( 5,271,960 ) ( 4,061,099 ) ( 14,772,886 ) ( 12,034,191 )

General and administrative expenses ( 273,257 ) ( 3,173,670 ) ( 2,628,527 ) ( 8,476,417 ) ( 7,192,535 )

Research and development expenses ( 553,751 ) ( 6,369,559 ) ( 5,097,332 ) ( 17,177,356 ) ( 13,852,039 )

Expected credit impairment gain 12(2) ( 1,181 ) ( 102,258 ) ( 17,371 ) ( 36,625 ) 32,375

Total operating expenses ( 1,304,426 ) ( 14,917,447 ) ( 11,804,329 ) ( 40,463,284 ) ( 33,046,390 )

Operating profit 452,226 5,520,384 5,969,577 14,028,064 12,245,676

Non-operating income and expenses

Other income 6(21) 101,565 973,539 1,196,122 3,150,555 2,997,775

Other gain and loss 6(22) 196,951 243,520 6,268 6,109,409 ( 100,135 )

Finance costs 6(23) ( 18,542 ) ( 204,150 ) ( 150,389 ) ( 575,187 ) ( 390,450 )

Share of profit of associates and joint ventures

accounted for under equity method

6(8)

5,851

( 28,491 )

333,754

181,491

753,351

Total non-operating income and expenses 285,825 984,418 1,385,755 8,866,268 3,260,541

Profit before income tax 738,051 6,504,802 7,355,332 22,894,332 15,506,217

Income tax expense 6(26) ( 131,393 ) ( 1,161,947 ) ( 1,124,695 ) ( 4,075,786 ) ( 2,980,662 )

Profit for the period $ 606,658 $ 5,342,855 $ 6,230,637 $ 18,818,546 $ 12,525,555

DELTA ELECTRONICS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (EXPRESSED IN THOUSANDS OF DOLLARS, EXCEPT EARNING PER SHARE DATA)

(UNAUDITED)


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US Dollars New Taiwan Dollars Nine months ended

September 30, 2019 Three months ended September 30, Nine months ended September 30,

Items Notes 2019 2018 2019 2018 Other comprehensive income (loss) Components of other comprehensive income (loss) that will not be reclassified to profit or loss

Gain (loss) on remeasurements of defined benefit plans ( $ 8,746 ) ( $ 86,207 ) $ 5,772 ( $ 271,287 ) $ 40,511 Unrealised gain (loss) on valuation of equity investment at fair value through other comprehensive income

6(3) 8,771

( 191,009 )

5,228

272,087

( 668,019 )

Share of other comprehensive income (loss) of associates and joint ventures accounted for under equity method that will not be reclassified to profit or loss

270

5

496

8,381

( 2,480 ) Income tax related to components of other comprehensive income that will not be reclassified to profit or loss

6(26) 109

-

1,600

3,363

( 9,986 )

Other comprehensive income (loss) that will not be reclassified to profit or loss

404

( 277,211 )

13,096

12,544

( 639,974 )

Components of other comprehensive income (loss) that will be reclassified to profit or loss

Financial statements translation differences of foreign operations

52,233

( 2,276,704 )

( 1,335,903 )

1,620,223

1,535,343

Gain on hedging instrument 155 ( 5,679 ) 128 4,810 60,702 Share of other comprehensive income (loss) of associates and joint ventures accounted for under equity method that will be reclassified to profit or loss

114,985

( 5,009 )

91,587

3,566,844

( 626,275 ) Income tax relating to the components of other comprehensive income that will be reclassified to profit or loss

6(26)

( 23,848 )

183,286

( 47,992 )

( 739,759 )

48,201 Other comprehensive income that will be reclassified to profit or loss

143,525

( 2,104,106 )

( 1,292,180 )

4,452,118

1,017,971

Other comprehensive income for the period $ 143,929 ( $ 2,381,317 ) ( $ 1,279,084 ) $ 4,464,662 $ 377,997 Total comprehensive income for the period $ 750,587 $ 2,961,538 $ 4,951,553 $ 23,283,208 $ 12,903,552

Profit attributable to: Owners of the parent $ 581,292 $ 5,129,602 $ 6,090,310 $ 18,031,687 $ 12,148,576

Non-controlling interest $ 25,366 $ 213,253 $ 140,327 $ 786,859 $ 376,979

Comprehensive income attributable to: Owners of the parent $ 668,361 $ 3,022,002 $ 5,356,159 $ 20,732,556 $ 12,015,304

Non-controlling interest $ 82,226 ( $ 60,464 ) ( $ 404,606 ) $ 2,550,652 $ 888,248

Earnings per share 6(27)

Basic earnings per share $ 0.22 $ 1.97 $ 2.35 $ 6.94 $ 4.68

Diluted earnings per share $ 0.22 $ 1.96 $ 2.34 $ 6.91 $ 4.65

DELTA ELECTRONICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(EXPRESSED IN THOUSANDS OF DOLLARS)

(UNAUDITED)

(Continued) ~9~

Equity attributable to owners of the parent

Retained earnings Other equity interest

Items Notes Share capital - common stock

Capital surplus Legal reserve

Special reserve

Unappropriated retained earnings

Financial statements translation

differences of foreign

operations

Unrealized gain (loss) on

financial assets

measured at fair value

through other comprehensive

income


available-for-sale financial assets

Hedging instrument gain

(loss) on effective hedge

of cash flow hedges

Gain (loss) on hedging

instruments Total Non-controlling

interest Total equity

2018 New Taiwan Dollars

Balance at January 1, 2018 $ 25,975,433 $ 48,446,318 $ 21,373,388 $ 2,767,749 $ 35,320,056 ( $ 5,911,839 ) ( $ 4,751,514 ) ( $ 1,256,841 ) $ 80,537 $ - $ 122,043,287 $ 9,216,505 $ 131,259,792

Effects of retrospective application and retrospective restatement

- -

- - ( 1,118,916 ) - 2,375,757 1,256,841 ( 80,537 ) 80,537 2,513,682 - 2,513,682

Balance after retrospective restatement at January 1, 2018

25,975,433 48,446,318

21,373,388 2,767,749 34,201,140 ( 5,911,839 ) ( 2,375,757 ) - - 80,537 124,556,969 9,216,505 133,773,474

Profit for the period - - - - 12,148,576 - - - - - 12,148,576 376,979 12,525,555

Other comprehensive income (loss) for the period

- -

- - 27,557 461,690 ( 683,966 ) - - 61,447 ( 133,272 ) 511,269 377,997

Comprehensive income (loss) for the period - - - - 12,176,133 461,690 ( 683,966 ) - - 61,447 12,015,304 888,248 12,903,552

Distribution of 2017 earnings 6(19)

Legal reserve appropriated - - 1,838,056 - ( 1,838,056 ) - - - - - - - -

Special reserve appropriated - - - 4,320,394 ( 4,320,394 ) - - - - - - - -

Cash dividends - - - - ( 12,987,717 ) - - - - - ( 12,987,717 ) - ( 12,987,717 )

Changes in ownership interests in subsidiaries - ( 38,021 ) - - ( 62,680 ) - - - - - ( 100,701 ) - ( 100,701 )

Changes in non-controlling interests - - - - - - - - - - - ( 405,429 ) ( 405,429 )

Disposal of equity investments at fair value through other comprehensive income

6(3) - -

- - ( 239 ) - 239 - - - - - -

Balance at September 30, 2018 $ 25,975,433 $ 48,408,297 $ 23,211,444 $ 7,088,143 $ 27,168,187 ( $ 5,450,149 ) ( $ 3,059,484 ) $ - $ - $ 141,984 $ 123,483,855 $ 9,699,324 $ 133,183,179


Balance at January 1, 2019 $ 25,975,433 $ 48,397,067 $ 23,211,444 $ 7,088,143 $ 33,160,104 ( $ 4,422,025 ) ( $ 3,270,159 ) $ - $ - $ 131,152 $ 130,271,159 $ 9,189,749 $ 139,460,908


3(1) - -

- - 1,943 - - - - - 1,943 - 1,943


25,975,433 48,397,067

23,211,444 7,088,143 33,162,047 ( 4,422,025 ) ( 3,270,159 ) - - 131,152 130,273,102 9,189,749 139,462,851

Profit for the period - - - - 18,031,687 - - - - - 18,031,687 786,859 18,818,546


- -

- - ( 134,341 ) 2,555,912 275,450 - - 3,848 2,700,869 1,763,793 4,464,662

Comprehensive income for the period - - - - 17,897,346 2,555,912 275,450 - - 3,848 20,732,556 2,550,652 23,283,208


Legal reserve appropriated - - 1,819,310 - ( 1,819,310 ) - - - - - - - -

Special reserve appropriated - - - 472,889 ( 472,889 ) - - - - - - - -

Cash dividends - - - - ( 12,987,717 ) - - - - - ( 12,987,717 ) - ( 12,987,717 )

Changes in ownership interests in subsidiaries - 11,474 - - - - - - - - 11,474 - 11,474

Difference between consideration and carrying amount of subsidiaries acquired or disposed

- 7,057

- - - - - - - - 7,057 ( 379,614 ) ( 372,557 )

Changes in non-controlling interests - - - - - - - - - - - 28,198,698 28,198,698


6(3) - -

- - ( 339,246 ) - 339,246 - - - - - -

Balance at September 30, 2019 $ 25,975,433 $ 48,415,598 $ 25,030,754 $ 7,561,032 $ 35,440,231 ( $ 1,866,113 ) ( $ 2,655,463 ) $ - $ - $ 135,000 $ 138,036,472 $ 39,559,485 $ 177,595,957


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



(UNAUDITED)


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Equity attributable to owners of the parent

Retained earnings Other equity interest

Items Notes Share capital - common stock

Capital surplus Legal reserve

Special reserve

Unappropriated retained earnings

Financial statements translation

differences of foreign

operations


financial assets

measured at fair value

through other comprehensive

income


available-for-sale financial assets

Hedging instrument gain

(loss) on effective hedge

of cash flow hedges

Gain (loss) on hedging

instruments Total Non-controlling

interest Total equity


Balance at January 1, 2019 $ 837,377 $ 1,560,189 $ 748,274 $ 228,502 $ 1,068,991 ( $ 142,554 ) ( $ 105,421 ) $ - $ - $ 4,228 $ 4,199,586 $ 296,252 $ 4,495,838


3(1) - -

- - 63 - - 63 63


837,377 1,560,189

748,274 228,502 1,069,054 ( 142,554 ) ( 105,421 ) - - 4,228 4,199,649 296,252 4,495,901

Profit for the period - - - - 581,292 - - 581,292 25,366 606,658


- -

- - ( 4,331 ) 82,396 8,880 - - 124 87,069 56,860 143,928

Comprehensive income for the period - - - - 576,962 82,396 8,880 - - 124 668,361 82,226 750,587


Legal reserve appropriated - - 58,650 - ( 58,650 ) - - - - - - -

Special reserve appropriated - - - 15,245 ( 15,245 ) - - - - - - -

Cash dividends - - - - ( 418,688 ) - - - - ( 418,688 ) - ( 418,688 )

Changes in ownership interests in subsidiaries - 370 - - - - - - - - 370 - 370

Difference between consideration and carrying amount of subsidiaries acquired or disposed

- 227

- - - - - - - - 227 ( 12,238 ) ( 12,011 )

Changes in non-controlling interests - - - - - - - - - - - 909,049 909,049


6(3) - -

- - ( 10,936 ) - 10,936 - - - - - -

Balance at September 30, 2019 $ 837,377 $ 1,560,787 $ 806,923 $ 243,747 $ 1,142,496 ( $ 60,158 ) ( $ 85,605 ) $ - $ - $ 4,352 $ 4,449,919 $ 1,275,290 $ 5,725,208


CONSOLIDATED STATEMENTS OF CASH FLOWS



(UNAUDITED)

(Continued)

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US Dollars

New Taiwan Dollars

Notes 2019 2019 2018 CASH FLOWS FROM OPERATING ACTIVITIES Consolidated profit before tax for the period $ 738,051 $ 22,894,332 $ 15,506,217 Adjustments Income and expenses having no effect on cash flows Depreciation 6(9)(10)(11) 258,619 8,022,373 6,803,599 Amortization 6(12) 71,239 2,209,819 1,669,624 Expected credit impairment gain 12(2) 1,180 36,625 ( 32,375 ) Net loss (gain) on financial assets or liabilities at fair

value through profit or loss 6(22)

(

5,591 ) ( 173,417 ) 180,138

Interest expense 6(23) 18,345 569,063 391,162 Interest income 6(21) ( 22,101 ) ( 685,584 ) ( 576,583 ) Dividend income 6(21) ( 8,534 ) ( 264,732 ) ( 171,272 ) Share-based payments 6(28) 1,087 33,707 1,215 Share of profit of associates accounted for under equity

method 6(8)

(

5,851 ) ( 181,491 ) ( 753,351 )

Loss (gain) on disposal of property, plant and equipment 6(22) 1,464 45,423 ( 233,287 ) Loss (gain) on disposal of investments 6(22) ( 187,402 ) ( 5,813,219 ) 81 Reversal of impairment loss on non-financial assets 6(22) ( 2,815 ) ( 87,323 ) - Changes in assets/liabilities relating to operating activities Net changes in assets relating to operating activities Financial assets mandatorily measured at fair value

through profit or loss

5,564

172,605 98,182 Contract assets 8,023 248,886 ( 832,678 ) Notes receivable 10,439 323,816 367,752 Accounts receivable 85,602 2,655,364 ( 1,378,255 ) Accounts receivable - related parties 87,001 2,698,776 ( 88,064 ) Other receivables ( 9,341 ) ( 289,754 ) ( 297,760 ) Other receivables - related parties 3,370 104,535 ( 1,235 ) Inventories 170,237 5,280,755 ( 1,096,948 ) Prepayments ( 1,203 ) ( 37,309 ) 307,758 Other current assets 2,535 78,635 226,873 Other non-current assets 4,245 131,709 ( 109,954 ) Net changes in liabilities relating to operating activities Contract liabilities 19,089 592,126 1,270,998 Notes payable 1,821 56,474 ( 2,045 ) Accounts payable ( 218,365 ) ( 6,773,683 ) 897,590 Accounts payable - related parties ( 77,308 ) ( 2,398,099 ) 128,311 Other payables ( 102,325 ) ( 3,174,134 ) ( 4,632,224 ) Other current liabilities ( 20,354 ) ( 631,388 ) ( 815,226 ) Other non-current liabilities 14,522 450,470 ( 294,179 )

Cash inflow generated from operations 841,243 26,095,360 16,534,064 Interest received 23,191 719,393 530,297 Dividends received 8,534 264,732 703,361 Interest paid ( 18,338 ) ( 568,859 ) ( 387,929 ) Income taxes paid ( 95,850 ) ( 2,973,281 ) ( 4,073,212 )

Net cash flows from operating activities 758,780 23,537,345 13,306,581


CONSOLIDATED STATEMENTS OF CASH FLOWS



(UNAUDITED)


~12~

US Dollars

New Taiwan Dollars

Notes 2019 2019 2018 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of financial assets at fair value through other

comprehensive income

( $ 361 )

( $ 11,190 ) ( $ 289,199 ) Proceeds from disposal of financial assets at fair value

through other comprehensive income 6(3)

32,091

995,455 90 Acquisition of investments accounted for using equity

method

-

- ( 209,287 ) Net cash flow from acquisition of subsidiaries (net of cash

acquired) 6(29)

( 774,275 )

( 24,018,015 ) - Acquisition of property, plant and equipment 6(9) ( 398,425 ) ( 12,359,134 ) ( 8,735,986 ) Proceeds from disposal of property, plant and equipment 9,182 284,831 550,004 Acquisition of intangible assets 6(12) ( 17,330 ) ( 537,581 ) ( 158,074 ) (Increase) decrease in other financial assets ( 671 ) ( 20,803 ) 4,839 (Increase) decrease in other non-current assets ( 19,828 ) ( 615,079 ) 282,891

Net cash flows used in investing activities ( 1,169,617 ) ( 36,281,516 ) ( 8,554,722 )

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in short-term borrowings 6(30) 77,895 2,416,295 ( 3,360,202 ) Proceeds from long-term debt 383,680 11,901,754 12,810,004

Repayment of long-term debt ( 4,334 ) ( 134,436 ) -

Lease principal repayment ( 14,107 ) ( 437,591 ) -

Cash dividends paid 6(18) ( 418,688 ) ( 12,987,717 ) ( 12,987,717 ) Cash dividends paid to minority share interests ( 74,482 ) ( 2,310,444 ) ( 369,183 )

Acquisition of ownership interests in subsidiaries ( 12,004 ) ( 372,338 ) -

Net cash flows from (used in) financing activities ( 62,040 ) ( 1,924,477 ) ( 3,907,098 )

Effects due to changes in exchange rate 12,544 389,115 455,583

Net (decrease) increase in cash and cash equivalents ( 460,333 ) ( 14,279,533 ) 1,300,344 Cash and cash equivalents at beginning of period 1,921,944 59,618,697 57,366,617

Cash and cash equivalents at end of period $ 1,461,611 $ 45,339,164 $ 58,666,961

~13~


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

(UNAUDITED)

1. HISTORY AND ORGANISATION

Delta Electronics, Inc. (the Company) was incorporated as a company limited by shares under the

provisions of the Company Law of the Republic of China (R.O.C.). The Company and its subsidiaries

(collectively referred herein as the Group) are global leaders in power and thermal management solutions

and are primarily engaged in the research and development, design, manufacturing and sale of electronic

control systems, DC brushless fans, thermal system, and miniaturization key component, industrial

automation products, digital display products, communication products, consumer electronics products,

energy-saving lighting application, renewable energy applications, EV charging, energy technology

services and consulting services of building management and control solutions, etc. The Group’s

mission statement, to provide innovative, clean and energy-efficient solutions for a better tomorrow,

focuses on addressing key environmental issues such as global climate change. With the concern for the

environment, the Group continues to develop innovative energy-efficient products and solutions. In

recent years, the Group has transformed from a product provider towards a solution provider and the

Group’s business is segregated into power electronics business, automation business, and infrastructure

business.

2. THE DATE OF AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were reported to the Board of Directors on October 30, 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 the FSC effective from 2019 are as

follows:

~14~

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’

A. 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.

B. The Group has elected to apply IFRS 16 by not restating the comparative information (referred

herein as the ‘modified retrospective approach’) when applying “IFRSs” effective in 2019 as

endorsed by the FSC. Accordingly, the Group increased ‘right-of-use asset’, ‘lease liability’ and

‘retained earnings’ by $2,749,997, $1,695,257 and $1,943, respectively, and decreased other non-

current assets by $1,052,797 with respect to the lease contracts of lessees on January 1, 2019.

C. The Group has used the following practical expedients permitted by the standard at the date of

initial application of IFRS 16:

(a) Reassessment as to whether a contract is, or contains, a lease is not required, instead, the

application of IFRS 16 depends on whether or not the contracts were previously identified as

leases applying IAS 17 and IFRIC 4.

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

(c) The use of hindsight in determining the lease term where the contract contains options to

extend the lease.

D. The Group calculated the present value of lease liabilities by using the weighted average

incremental borrowing interest rate of 1.19%.

E. The Group recognised lease liabilities which had previously been classified as ‘operating leases’

under the principles of IAS 17, ‘Leases’. The reconciliation between operating lease commitments

New Standards, Interpretations and Amendments

Effective date by

International Accounting

Standards Board

Amendments to IFRS 9, ‘Prepayment features with negative

compensation’

January 1, 2019

IFRS 16, ‘Leases’ January 1, 2019

Amendments to IAS 19, ‘Plan amendment, curtailment or settlement’ January 1, 2019

Amendments to IAS 28, ‘Long-term interests in associates and joint

ventures’

January 1, 2019

IFRIC 23, ‘Uncertainty over income tax treatments’ January 1, 2019

Annual improvements to IFRSs 2015-2017 cycle January 1, 2019

~15~

under IAS 17 measured at the present value of the remaining lease payments, discounted using

the lessee’s incremental borrowing rate and lease liabilities recognised as of January 1, 2019 is as

follows:

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

the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2020 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.

(3) Effect of 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.

Operating lease commitments disclosed by applying IAS 17 as at

December 31, 2018 1,858,381$

Less: Short-term leases 189,770)(

Add: Adjustments as a result of a different treatment of extension

options 232,621

Total lease contracts amount recognised as lease liabilities by applying

IFRS 16 on January 1, 2019 1,901,232

Incremental borrowing interest rate at the date of initial application 1.19%

Lease liabilities recognised as at January 1, 2019 by applying IFRS 16 1,695,257$


Effective date by

International

Accounting

Standards Board

Amendments to IAS 1 and IAS 8, ‘Disclosure Initiative-Definition of

Material’

January 1, 2020

Amendments to IFRS 3, ‘Definition of a business’ January 1, 2020


Effective date by

International

Accounting

Standards Board

Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets

between an investor and its associate or joint venture’

To be determined by

International

Accounting Standards

Board

IFRS 17, ‘Insurance contracts’ January 1, 2021

~16~

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the compliance statement, basis of preparation, basis of consolidation and increased sections

as below, the significant accounting policies are identical to those disclosed in the consolidated financial

statements for the year ended December 31, 2018. These policies have been consistently applied to all

the periods presented, unless otherwise stated.

(1) Compliance statement

A. The consolidated financial statements of the Group have been prepared in accordance with the

“Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the

International Accounting Standard 34, “Interim financial reporting” as endorsed by the FSC.

B. These consolidated financial statements should be read along with the consolidated financial

statements for the year ended December 31, 2018.

(2) Basis of preparation

A. Except for the following items, the consolidated financial statements have been prepared under

the historical cost convention:

(a) Financial assets and financial liabilities (including derivative instruments) at fair value through

profit or loss.

(b) Financial assets at fair value through other comprehensive income.

(c) Defined benefit liabilities recognised based on the net amount of pension fund assets less

present value of defined benefit obligation.

B. The preparation of financial statements in conformity with International Financial Reporting

Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as

endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain

critical accounting estimates. It also requires management to exercise its judgment in the process

of applying the Group’s accounting policies. The areas involving a higher degree of judgment or

complexity, or areas where assumptions and estimates are significant to the consolidated financial

statements are disclosed in Note 5.

(3) Basis of consolidation

A. Basis for preparation of consolidated financial statements:

(a) All subsidiaries are included in the Group’s consolidated financial statements. Subsidiaries are

all entities (including structured entities) controlled by the Group. The Group controls an entity

when the Group is exposed, or has rights, to variable returns from its involvement with the

entity and has the ability to affect those returns through its power over the entity. Consolidation

of subsidiaries begins from the date the Group obtains control of the subsidiaries and ceases

when the Group loses control of the subsidiaries.

(b) Inter-company transactions, balances and unrealised gains or losses on transactions between

companies within the Group are eliminated. Accounting policies of subsidiaries are consistent

with the policies adopted by the Group.

~17~

(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 recognised 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 recognised in profit or loss. All

amounts previously recognised in other comprehensive income in relation to the subsidiary

are reclassified to profit or loss, on the same basis as if the related assets or liabilities were

disposed of. That is, when the Group loses control of a subsidiary, all gains or losses previously

recognised 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.

~18~

B. Subsidiaries included in the consolidated financial statements:

Name of Main Business Name of September December 31, September

No. Subsidiary Activities Investor 2019 2018 2018 Description

1 Delta International

Holding Limited

(DIH)

Equity investments Delta Electronics,

Inc.

94 94 94

2 Delta Networks

Holding Limited

(DNH)

〃〃 100 100 100

3 Delta Electronics

(Netherlands) B.V.

(DEN)

Sales of power

products, display

solution products,

electronic

components,

industrial

automation

products and

materials

Delta Electronics,

Inc. and DIH

100 100 100

4 PreOptix (Hong

Kong) Co., Ltd.

(PHK)

Equity investments 〃 100 100 100 Note 1

Note 2

5 NeoEnergy

Microelectronics,

Inc. (NEM)

Designing and

experimenting on

integrated circuits

and information

software services

Delta Electronics,

Inc.

98.17 98.17 98.17 Note 1

Note 2

Note 3

6 Cyntec Co., Ltd.

(Cyntec)

Research,

development,

manufacturing and

sales of film optic-

electronics devices

〃 100 100 100

7 DelBio Inc. (DelBio) Manufacturing,

wholesale and

retail of medical

equipment

〃 100 100 100 Note 1

Note 2

8 Delta Electronics

Capital Company

(DECC)

Equity investments 〃 100 100 100

9 Delta Electronics

Int'l (Singapore) Pte.

Ltd.

(DEIL-SG)

Sales of electronic

products

〃 100 100 100 Note 4

10 Allied Material

Technology Corp.

(AMT)

Lease services, etc. 〃 99.97 99.97 99.97

11 Delta America Ltd.

(DAL)

Equity investments Delta Electronics,

Inc., DEN, Castle

Horizon Limited

and Energy

Dragon Global

Limited

100 100 100

Ownership (%)

~19~



12 Delta Electronics

(H.K.) Ltd. (DHK)

Equity

investments,

operations

management and

engineering

services

DIH 100 100 100

13 DEI Logistics (USA)

Corp. (ALI)

Warehousing and

logistics services

〃 100 100 100


(Japan), Inc. (DEJ)

Sales of power

products, display

solution products,

electronic

components,

industrial

automation

products and

materials

〃 100 100 100 Note 1

Note 2

15 DAC Holding

(Cayman) Ltd.

(DAC)


Note 2

16 Ace Pillar

Holding Co., Ltd.

(Ace)

〃〃 100 100 100

17 Drake Investment

(HK) Limited

(Drake-HK)

〃〃 100 100 100

18 Delta Greentech

(China) Co., Ltd.

(DGC)

Sales of

uninterruptible

power systems

DIH, Ace, Drake-

HK, DGSG and

Boom

95.91 95.91 95.91 Note 5

19 Vivitek Corporation

(Vivitek)

Sales of projector

products and their

materials

DIH 100 100 100 Note 1

Note 2

20 Delta Greentech

SGP Pte. Ltd.

(DGSG)



Europe Ltd. (DEU)

Repair centre and

providing support

services

〃 100 100 100 Note 1

Note 2

22 Boom Treasure

Limited (Boom)


23 Apex Investment

(HK) Limited

(Apex-HK)

〃〃 100 100 100

24 Galaxy Star

Investment (HK)

Limited

(Galaxy Star-HK)

〃〃 100 100 100

25 Jade Investment

(HK) Limited

(Jade-HK)

〃〃 100 100 100

Ownership (%)

~20~




(Dongguan) Co.,

Ltd. (DDG)

Manufacturing and

sales of transformer

and thermal

products

DHK 100 100 100


Power (Dongguan)

Co., Ltd. (DEP)

Manufacturing and

sales of power

supplies

〃 100 100 100


(Shanghai) Co., Ltd.

(DPEC)

Product design,

management

consulting service

and distribution of

electronic products

〃 100 100 100


(Jiangsu) Ltd.

(DWJ)

Manufacturing and

sales of power

supplies and

transformers

DHK, Apex-HK,

Galaxy Star-HK

and Jade-HK

100 100 100 Note 6


Components

(Wujiang) Ltd.

(DWC)

Manufacturing and

sales of new-type

electronic

components,

variable-frequency

drive and others

〃 100 100 100 Note 6

31 Delta Video Display

System (Wujiang)

Ltd. (DWV)

Manufacturing and

sales of various

projectors

〃 100 100 100 Note 6


(Wuhu) Co., Ltd.

(DWH)

Manufacturing and

sales of LED light

source, power

supplies and others

DHK 100 100 100


(Chenzhou) Co., Ltd.

(DCZ)

Manufacturing and

sales of

transformers

〃 100 100 100


International Mexico

S.A. DE C.V.

(DEIL-MX)

Sales of power

management system

of industrial

automation product

and

telecommunications

equipment

〃 100 100 100 Note 1

Note 2


(Wujiang) Trading

Co., Ltd. (DWT)

Installation,

consulting and

trading of electronic

products

〃 - 100 100 Note 2

Note 7

36 Delta Green

(Tianjin) Industries

Co., Ltd. (DGT)

Manufacturing and

sales of

transformers

〃 100 100 100 Note 1

Note 2


(Pingtan) Co., Ltd.

(Delta Pingtan)

Wholesale and

retail of electronic

products and

energy-saving

equipment

〃 100 100 100 Note 1

Note 2

Ownership (%)

~21~



38 PreOptix (Jiang Su)

Co., Ltd. (PJS)

Manufacturing and

sales of lenses and

optical engines for

projectors

PHK 100 100 100 Note 1

Note 2

39 Addtron Technology

(Japan), Inc.

(AT Japan)

Trading of

networking system

and peripherals

DEJ 100 100 100 Note 1

Note 2


(Korea), Inc.

(Delta Korea)

Sales of power

products, display

solution products

electronic

components,

industrial

automation

products and their

materials

〃 100 100 100 Note 1

Note 2


Mexico S.A. DE

C.V. (DEM)

Manufacturing and

sales of electronic

products

DAC - 100 100 Note 2

Note 8

42 Delta Video

Technology Limited

(DVT)

Sales of electronic

products

〃 - 100 100 Note 2

Note 9

43 Wuhu Delta

Technology Co., Ltd.

(WDT)

Manufacturing and

sales of

transformers

DWH 100 100 100

44 Chenzhou Delta


(CDT)

〃 DCZ 100 100 100

45 Delta Energy

Technology

(Dongguan) Co.,

Ltd. (DET-DG)

Research and

development of

energy-saving

technology, energy-

saving equipment

and energy

management

system as well as

technology

consulting service

DDG and DPEC 100 100 100 Note 1

Note 2

Note 25

46 Delta Energy

Technology


(DET-SH)

Energy

performance

contracting,

development of

energy-saving

technology, energy-

saving equipment

and energy

management

system as well as

consulting service,

installation, sales,

etc.

DPEC and DGC 100 100 100 Note 1

Note 2

Ownership (%)

~22~



47 Delta Networks, Inc.

(DNI Cayman)

Equity investments DNH 100 100 100

48 Delta Networks, Inc.

(Taiwan) (DNIT)

Research,

development,

design,

manufacturing and

sales of networking

system and

peripherals

Delta Electronics,

Inc.

- 99.98 99.98 Note 10

49 DNI Logistics (USA)

Corporation (ALN)

Trading of

networking system

and peripherals

DNI Cayman - 100 100 Note 2

Note 11

50 Delta Networks

(HK) Ltd. (DNHK)

Equity investments DNI Cayman 100 100 100

51 Delta Networks

(Dongguan) Ltd.

(DII)

Manufacturing and

sales of other

radio-broadcast

receivers and the

equipment in

relation to

broadband access

networking system

DNHK 100 100 100

52 Delta Networks

(Shanghai) Ltd.

(DNS)

Design of computer

software

〃 - - 100 Note 2

Note 12

53 Fairview Assets

Ltd. (Fairview)

Equity investments Cyntec 100 100 100

54 Grandview Holding

Ltd. (Grandview)

〃 Fairview 100 100 100

55 Cyntec Holding

(H.K.) Ltd. (CHK)

〃 Grandview 100 100 100

56 Cyntec International

Ltd. -Labuan

(CIL-Labuan)

Trading 〃 100 100 100

57 Cyntec Electronics

(Suzhou) Co., Ltd.

(CES)

Research,

development,

manufacturing and

sales of new-type

electronic

components (chip

components,

sensing elements,

hybrid integrated

circuits) and

wholesale of

similar products

CHK 100 100 100

Ownership (%)

~23~



58 DelBio (Wujiang)

Co., Ltd.

Manufacturing,

wholesale and

retail of medical

equipment

DelBio 100 100 100 Note 1

Note 2

59 ELTEK AS Research,

development and

sales of power

supplies and others

DEN 100 100 100

60 Castle Horizon

Limited

Equity investments ″ 100 100 100

61 Energy Dragon

Global Limited

″ ″ 100 100 100

62 Delta Controls Inc.

(DCI)

Provide resolution

of building

management and

control

″ 100 100 100

63 DELTA

ELECTRONICS

HOLDING (USA)

INC.

Equity investments ″ 100 100 100 Note 1

Note 2

64 ELTEK PAKISTAN

(PRIVATE)

LIMITED

Sales of power

supplies and others

ELTEK AS 100 100 100 Note 1

Note 2

65 Eltek Deutschland

GmbH

Sales of power

supplies and others

and system

installation

″ 100 100 100 Note 1

Note 2

66 ELTEK

AUSTRALIA PTY

LIMITED

〃〃 100 100 100 Note 1

Note 2

67 Eltek Egypt for

Power Supply S.A.E.

Sales of power

supplies and others

〃 95 95 95 Note 1

Note 2

68 Eltek SGS Pvt Ltd. Sales of power

supplies and others

and system

installation

″ 100 100 100 Note 1

Note 2

69 Eltek SGS

Mechanics Pvt Ltd.

Sales of power

supplies and others

ELTEK AS and

Eltek SGS Pvt

Ltd.

51 51 51 Note 1

Note 2

70 ELTEK POWER

PTE. LTD.

Sales of power

supplies and others

and system

installation

DELI-SG - 100 100 Note 1

Note 2

Note 4

Ownership (%)

~24~



71 Eltek Polska Sp.

z o. o.

Sales of power

supplies and others

and system

installation

ELTEK AS 51.04 51.04 51.04 Note 1

Note 2

72 ELTEK POWER

FRANCE SAS

〃〃 100 100 100 Note 1

Note 2

73 ELTEK LIMITED Equity investments

and trading

〃 100 100 100 Note 1

Note 2

74 ELTEK MEA

DMCC

Sales of power

supplies and others

〃 100 100 100 Note 1

Note 2

75 ELTEK KENYA

LIMITED

Sales of power

supplies

ELTEK MEA

DMCC and

ELTEK AS

100 100 100 Note 1

Note 2

76 ELTEK WEST

AFRICA LIMITED

〃〃 100 100 100 Note 1

Note 2

77 Eltek Italia S.r.l. Sales of power

supplies and others

ELTEK AS 100 100 100 Note 1

Note 2

78 Eltek Power Sweden

AB

Sales of power

supplies and equity

investments

〃 100 100 100 Note 1

Note 2

79 Eltek Power (UK)

Ltd.

Sales of power

supplies

〃 100 100 100 Note 1

Note 2

80 Eltek Power Oy Sales of power

supplies and others

〃 100 100 100 Note 1

Note 2

81 OOO Eltek Sales of power

supplies and others

and system

installation

〃 100 100 100 Note 1

Note 2

82 ELTEK ENERJI

SISTEMLERI

LIMITED SIRKETI

Sales of power

supplies and others

〃 100 100 100 Note 1

Note 2

83 Eltek Montage

GmbH

Installation and

maintenance of

power supplies

Eltek

Deutschland

GmbH

100 100 100 Note 1

Note 2

84 E.V.I Electronics Sp.

z o. o.

Trading and

construction of

power supply

model

〃 - 100 100 Note 2

Note 13

Ownership (%)

~25~



85 ELTEK POWER

INCORPORATED

Sales of power

supplies and others

DEIL-SG/ELTEK

POWER PTE.

LTD.

100 100 100 Note 1

Note 2

Note 14

86 ELTEK POWER

CO., LTD.

〃〃 100 100 100 Note 1

Note 2

Note 14

Note 15

87 ELTEK POWER

(CAMBODIA) LTD.

〃〃 100 100 100 Note 1

Note 2

Note 14

88 ELTEK POWER

(MALAYSIA) SDN.

BHD.

〃〃 100 100 100 Note 1

Note 2

Note 14

Note 16

89 ELTEK CVI

LIMITED

Equity investments ELTEK

LIMITED

100 100 100 Note 1

Note 2

90 Eltek Energy

Technology

(Dongguan)

Ltd.

Development,

manufacturing and

sales of intelligent

power equipment

and system for

supporting access

networking system,

and manufacturing

and sales of

intelligent power

equipment for

supporting

renewable energy

DHK/ELTEK

CVI LIMITED

100 100 100 Note 1

Note 2

Note 24

91 DELTA

ELECTRONICS

(USA) INC.

Manufacturing and

sales of power

supplies

DELTA

ELECTRONICS

HOLDING

(USA) INC.

100 100 100

92 DELTA

ELECTRONICS

(ARGENTINA)

S.R.L.

Sales of power

supplies and others

DELTA

ELECTRONICS

(USA) INC.

100 100 100 Note 1

Note 2

93 Eltek Sistemas de

Energia Industria e

Commercio S.A.

Manufacturing and

sales of power

supplies

〃 100 100 100 Note 1

Note 2

94 DELTA

ELECTRONICS

(PERU) INC. S.R.L.

Sales of power

supplies and others

〃 100 100 100 Note 1

Note 2

95 DELTA

ELECTRONICS

(COLDMBIA)

S.A.S.

〃〃 100 100 100 Note 1

Note 2

96 Eltek Energy

International I,

LLC

Equity investments 〃 - - 100 Note 2

Note 17

Ownership (%)

~26~



97 Eltekenergy

Services, S.A. de

C.V.

Sales of power

supplies and others

DELTA

ELECTRONICS

(USA) INC. and

DELTA

ELECTRONICS

HOLDING

(USA) INC.

100 100 100 Note 1

Note 2

98 Eltekenergy

International de

México, S. de R.L.

de C.V.

〃〃 100 100 100 Note 1

Note 2


(Americas) Ltd.

Sales of electronic

components

DAL 100 100 100 Note 1

Note 2

100 Delta Solar

Solutions LLC


Note 2

101 2009 PPA LLC Sales of power

supplies

Delta Electronics

(Americas) Ltd.

100 100 100 Note 1

Note 2

102 DSS-CI LLC Rental of solar

power systems

Delta Solar

Solution LLC

100 100 100 Note 1

Note 2

103 DSS-USF LLC 〃〃 100 100 100 Note 1

Note 2

104 Power Forest

Technology

Corporation

IC design of power

management

Cyntec 59.03 59.03 59.03 Note 1

Note 2

105 Delta Energy

Technology Puhuan


Energy technology,

development and

consulting of

environmental

technical skills,

and design and

sales of energy

saving equipment

DET-SH 100 100 100 Note 1

Note 2

106 Loy Tec electronics

GmbH (Loy Tec)

Consulting service

of building

management and

control solutions

DEIL-SG 100 85 85 Note 1

Note 2

Note 19

107 LOYTEC Americas,

Inc.

〃 Loy Tec 100 100 100 Note 1

Note 2


(Beijing) Co., Ltd.

Installation of

mechanic,

electronic,

telecommunication

and circuit

equipment

DHK 100 100 100 Note 1

Note 2


(Xi'an) Co., Ltd.

Sales of computer,

peripheral and

software

″ 100 100 100 Note 1

Note 2

Ownership (%)

~27~



110 Beijing Industrial

Foresight


Computer system

services and data

process

Delta Electronics

(Beijing) Co.,

Ltd.

- 80 80 Note 1

Note 2

Note 20

111 UNICOM SYSTEM

ENG. CORP.

(UNICOM)

Design and sales of

computer,

peripheral and

information system

(software and

hardware)

Delta Electronics,

Inc.

100 100 100 Note 1

Note 2

112 Unicom (Nanjing)

System Eng. Corp

″ UNICOM 100 100 100 Note 1

Note 2


(Switzerland) AG

(DES)

Equity

investments,

research,

development and

sales of electronic

products

DEN, Delta

Greentech

(Netherlands)

B.V.

100 51 51 Note 21

114 Delta Greentech

Electronics Industry

LLC

Marketing and

sales of electronic

products

″ 100 51 51 Note 1

Note 2

Note 21

115 Delta Greentech

(Brasil) S.A. (DGB)

Manufacturing and

sales of electronic

products

DEN 100 100 100 Note 1

Note 2


(Czech Republic),

spol. s.r.o.

″ DES 100 100 100


(Italy) S.r.l.

″ ″ 100 100 100


(Poland) Sp. z o. o.

Sales of electronic

products

″ 100 100 100

119 Delta Solutions

(Finland) Oy

Manufacturing and

sales of electronic

products

″ 100 100 100


Solutions (Spain) SL

Sales of electronic

products

″ 100 100 100


(France) SA

″ ″ 100 100 100

122 Delta Energy

Systems (Sweden)

AB

″ ″ 100 100 100

Ownership (%)

~28~



123 Vivotek Inc.

(Vivotek)

Manufacturing and

sales of video

compression

software and

encoding, network

video server,

webcam and its

related components

Delta Electronics,

Inc.

49.87 50.13 49.36 Note 18

124 Vatics Inc. Designing and

sales of multimedia

integrated circuits

Vivotek and

Realwin

54.41 54.41 54.41

125 Vivotek Holdings,

Inc.

Holding company Vivotek 100 100 100

126 Realwin Investment

Inc.

(Realwin)

Investment in the

network

communications

industry

″ 100 100 100

127 Vivotek Netherlands

B.V.

Sales service ″ 100 100 100

128 Vivotek (Japan)

Inc.

″ ″ 100 100 - Note 22

129 Vivotek USA, Inc. Sales of webcams

and related

components

Vivotek

Holdings, Inc.

100 100 100

130 Wellstates

Investment, LLC

Investment and

commercial lease

of real estate

Realwin 100 100 100

131 Otus Imaging, Inc. Sales of webcams

and related

components

Vivotek 100 100 100

132 Aetek Inc. ″ Realwin 56.21 56.21 56.21

133 Vivotek Middle East

FZCO

″ ″ 89.99 89.99 89.99

134 Lidlight Inc. Sale of lighting

equipment

″ 51 51 51

135 DELTA

ELECTRONICS

BRASIL LTDA.

Manufacturing and

sales of electronic

products

DEN 100 100 100 Note 1

Note 2


(Thailand) Public

Company Limited

(DET)

Manufacturing and

exporting power

supplies, other

electronic parts and

components

Delta Electronics,

Inc., DEIL-SG

and DIH

63.78 - - Note 23

Ownership (%)

~29~



137 DET International

Holding Limited

Equity investments DET 100 - - Note 23

138 Delta Energy

Systems (Singapore)

PTE. LTD.

Equity

investments,

trading,

management and

consultancy

〃 100 - - Note 23

139 Delta Green

Industrial (Thailand)

Co., Ltd.

Integration, sales,

trading, installation

and providing

services of

uninterruptible

power supply,

photovoltaic

inverter, electric

cars changer and

data center

〃 100 - - Note 23

140 DET Logistics

(USA) Corporation

Providing logistics

services in USA

DET International

Holding Limited

100 - - Note 23

141 Delta Energy

Systems (Germany)

GmbH

Development,

marketing and

sales of electronic

products

〃 100 - - Note 23

142 Delta Energy

Systems (India)

Private Ltd.

Marketing and

sales of electronic

products

〃 100 - - Note 23


(Slovakia) s.r.o.

Manufacturing and

sales of power

supplies, power

system and OEM

power system

DET International

Holding Limited

and Delta

Energy Systems

(Singapore) PTE.

LTD.

100 - - Note 23

144 Delta Energy

Systems (Romania)

S.R.L.

Research and

development

DET International

Holding Limited

100 - - Note 23

145 Delta Energy

Systems Property

(Germany) GmbH

Property rights

business

Delta Energy

Systems

(Germany) GmbH

100 - - Note 23


(Australia) Pty. Ltd.

Marketing and

sales of renewable

energy products

Delta Energy

Systems

(Singapore) PTE.

LTD.

100 - - Note 23


India Pvt. Ltd.

Manufacturing and

marketing of non-

telecom power

system and

uninterruptible

power supply, and

sales of

uninterruptible

power supply

〃 100 - - Note 23

Ownership (%)

~30~

Note 1: As the subsidiaries do not meet the definition of significant subsidiaries, their financial

statements as at September 30, 2019 were not reviewed by independent accountants.

Note 2: As the subsidiaries do not meet the definition of significant subsidiaries, their financial

statements as at September 30, 2018 were not reviewed by independent accountants.




(Myanmar) Co., Ltd.

Manufacturing of

electronic products

used in CMP

manufacturing

process and

machinery

Delta Energy

Systems

(Singapore) PTE.

LTD.

100 - - Note 23

149 Delta Energy

Systems (UK) Ltd.

Research and

development of

electronic products

〃 100 - - Note 23

150 Delta PBA

Engineering

Solutions Co., Ltd.

Providing solution

for industrial

automation

〃 51 - - Note 23

151 Delta Greentech

(Netherlands)

Cooperatie U.A.

Equity investments 〃 100 - - Note 23

152 Delta Greentech

(Netherlands) B.V.

Equity investments Delta Greentech

(Netherlands)

Cooperatie U.A.

100 - - Note 23

153 Delta Energy

Systems LLC

Marketing and

sales of power

systems

Delta Greentech

(Netherlands)

B.V.

100 - - Note 23

154 Eltek s.r.o. Manufacturing of

telecom power

system

〃 100 - - Note 23


(Automotive)

Americas Inc.

Research and

development of

automotive power

and traction

inverter

〃 100 - - Note 23

156 Amerlux, LLC Design and

producing of

dedicated lighting

system and

facilities

DEN 100 - - Note 1

Note 23

157 Amerlux Lighting

Asia, LLC

Equity investments Amerlux, LLC 100 - - Note 1

Note 23

158 Amerlux Lighting

Hong Kong Limited

〃 Amerlux Lighting

Asia LLC

100 - - Note 1

Note 23

159 Guangzhou Amerlux

Lighting Co., Ltd.

Wholesale of

lighting fixture and

decorative objects

Amerlux Lighting

Hong Kong

Limited

100 - - Note 1

Note 23

Ownership (%)

~31~

Note 3: In the fourth quarter of 2015, the subsidiary company began liquidation process and was

dissolved, but has not yet been completed as at September 30, 2019.

Note 4: In March 2019, ELTEK AS sold ELTEK POWER PTE. LTD. to DEIL-SG, and ELTEK

POWER PTE. LTD. merged into DEIL-SG in May 2019. Under the merger, DEIL-SG

was the surviving company while ELTEK POWER PTE. LTD. was the dissolved

company.

Note 5: In July 2019, Drake-HK acquired 10.38% and 3.81% equity interest of DGC held by

DIH and Ace, respectively.

Note 6: In July 2019, DHK acquired 15% equity interest of DWV, DWC and DWJ held by Apex-

HK, Galaxy Star-HK and Jade-HK, respectively.

Note 7: This company had been liquidated in April 2019.

Note 8: This company had been liquidated in March 2019.

Note 9: This company had been liquidated in August 2019.

Note 10: Merged with the Company on April 1, 2019.

Note 11: In August 2019, DNI Cayman sold this company to DIH, and this company merged into

its subsidiary-ALI. Under the merger, ALI was the surviving company while ALN was

the dissolved company.

Note 12: This company had been liquidated in November, 2018.

Note 13: This company had been liquidated in September 2019.

Note 14: Relative to the merger described in Note 4, the investee was changed from ELTEK

POWER PTE. LTD. to DEIL-SG.

Note 15: 55% of shares are held through others due to local regulations.

Note 16: 71% of shares are held through others due to local regulations.

Note 17: This company had been liquidated in October, 2018.

Note 18: Because most of the shares were held by the company and other shareholdings are

disaggregated, it was included in the consolidated financial statements.

Note 19: In May 2019, DEIL-SG acquired a 15% equity interest in Loy Tec electronics GmbH,

and the total shareholding ratio is 100%.

Note 20: This company had been liquidated in July 2019.

Note 21: The Group obtained control over Delta Electronics (Thailand) Public Company Limited

through merger. The Group holds a 100% equity interest in Delta Electronics

(Switzerland) AG and Delta Greentech Electronics Industry LLC through the Delta

Electronics (Thailand) Public Company Limited 100% held subsidiary, Delta Greentech

(Netherlands) B.V.

~32~

Note 22: Companies were established or acquired through merger during 2018.

Note 23: Companies were established or acquired through merger during 2019.

Note 24: In July 2019, this company was sold to DHK by ELTEK CVI LIMITED.

Note 25: In September 2019, the subsidiary company began liquidation process and was dissolved,

but has not yet been completed as at September 30, 2019.

The financial statements of certain consolidated subsidiaries for the nine months ended September

30, 2019 and 2018 were not reviewed by independent accountants. The total assets of these

unreviewed subsidiaries as at September 30, 2019 and 2018 were $20,316,171 and $21,748,210,

constituting 6.31% and 8.50% of consolidated total assets, respectively, and the total liabilities

were $9,371,423 and $8,477,566, constituting 6.50% and 6.91% of the consolidated total liabilities,

respectively. The total comprehensive income was $340,997, $213,609, $582,208 and $337,951,

constituting 11.51%, 4.31%, 2.50% and 2.62% of the consolidated total comprehensive income

for the three months and nine months ended September 30, 2019 and 2018, respectively.

C. Subsidiaries not included in the consolidated financial statements: None.

D. Adjustments for subsidiaries with different balance sheet dates: None.

E. Significant restrictions: None.

F. Subsidiaries that have non-controlling interests that are material to the Group:

As at September 30, 2019, December 31, 2018 and September 30, 2018, the non-controlling

interest amounted to $39,559,485, $9,189,749 and $9,699,324, respectively. The information on

non-controlling interest and respective subsidiary is as follows:

Principal place Ownership Ownership

Name of subsidiary of business Amount (%) Amount (%)

Delta International

Holding Ltd. (DIH)

Cayman Islands $ 4,830,570 6.00% $ 4,216,092 6.00%

Vivotek Inc.

(Vivotek)

Taiwan 3,957,259 50.13% 3,975,977 49.87%

Delta Electronics

(Thailand) Public

Co., Ltd. (DET)

Thailand 30,565,092 36.22% - -

Non-controlling interest

September 30, 2019 December 31, 2018

~33~

Summarised financial information of the subsidiary:

Balance sheet

Principal place Ownership

Name of subsidiary of business Amount (%)

Delta International

Holding Ltd. (DIH)

Cayman Islands $ 4,491,931 6.00%

Vivotek Inc.

(Vivotek)

Taiwan 4,023,884 50.64%

Non-controlling interest

September 30, 2018

September 30, 2019 December 31, 2018 September 30, 2018

Current assets 90,747,314$ 87,627,784$ 84,739,776$

Non-current assets 39,458,332 34,384,761 33,867,760

Current liabilities 44,756,726)( 46,922,159)( 46,418,448)(

Non-current liabilities 2,839,192)( 2,693,084)( 1,918,188)(

Total net assets 82,609,728$ 72,397,302$ 70,270,900$

DIH

September 30, 2019 December 31, 2018 September 30, 2018

Current assets 3,313,415$ 3,003,380$ 3,008,471$

Non-current assets 6,504,149 6,575,800 6,304,581

Current liabilities 1,506,274)( 1,207,012)( 1,168,511)(

Non-current liabilities 417,296)( 399,485)( 198,482)(

Total net assets 7,893,994$ 7,972,683$ 7,946,059$

DET

September 30, 2019

Current assets 34,392,008$

Non-current assets 63,761,791

Current liabilities 11,709,858)(

Non-current liabilities 2,056,608)(

Total net assets 84,387,333$

Vivotek

~34~

Statement of comprehensive income

2019 2018

Revenue 44,307,418$ 43,580,113$

Profit before income tax 1,866,348 2,562,157

Income tax expense 548,931)( 1,067,517)(

Profit for the period from continuing operations 1,317,417 1,494,640

Other comprehensive loss, net of tax 747,115)( 1,228,208)(

Total comprehensive income for the period 570,302$ 266,432$

Comprehensive income attributable to

non-controlling interest 29,787$ 15,409$

Dividends paid to non-controlling interest 20,969$ 21,618$

DIH

Three months ended September 30,

2019 2018

Revenue 127,803,908$ 119,449,075$

Profit before income tax 9,384,789 10,735,345

Income tax expense 1,450,092)( 2,137,180)(

Profit for the period from continuing operations 7,934,697 8,598,165

Other comprehensive loss, net of tax 1,226,029)( 1,821,210)(

Total comprehensive income for the period 6,708,668$ 6,776,955$



Dividends paid to non-controlling interest 20,969$ 21,618$

DIH

Nine months ended September 30,

2019 2018

Revenue 1,578,512$ 1,295,582$

Profit before income tax 37,056 20,652

Income tax expense 23,563)( 15,477)(

Profit for the period from continuing operations 13,493 5,175

Other comprehensive (loss) income, net of tax 749)( 704


Comprehensive (loss) income attributable to

non-controlling interest 38)($ 10,221$

Dividends paid to non-controlling interest 104,890$ -$

Vivotek

Three months ended September 30,

~35~

Statements of cash flows

2019 2018

Revenue 5,224,340$ 3,778,757$

Profit before income tax 152,903 109,756

Income tax expense 58,165)( 52,969)(

Profit for the period from continuing operations 94,738 56,787

Other comprehensive income, net of tax 3,542 8,184




Dividends paid to non-controlling interest 104,890$ -$

Vivotek

Nine months ended September 30,

Three months ended Nine months ended

September 30, 2019 September 30, 2019

Revenue 12,698,933$ 39,233,267$

Profit before income tax 194,204 1,736,057

Income tax benefit 40,864 3,077

Profit for the period from continuing operations 235,068 1,739,134

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