Stock Code: 9933 Taiwan Stock Exchange Market Observation ... · Cooperation Council (GCC)...

Stock Code: 9933

Taiwan Stock Exchange Market

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2018 Annual Report

Printed on March 31, 2019

Notice to readers

This English version annual report is a summary translation of the Chinese version and is not an

official document of the shareholders’ meeting. If there is any discrepancy between the English

version and Chinese version, the Chinese version shall prevail. Spokesperson Name: Ming-Cheng Hsiao Title: Executive Vice President Tel: 886-2-2833-9999 ext. 10099 E-mail: [email protected] Deputy Spokesperson Name: Patrick Lin Title: Chief Financial Officer Tel: 886-2-2833-9999 ext. 16011 E-mail: [email protected] Headquarters and Branches Headquarters Address: 89, Sec. 6, Zhongshan North Rd., Taipei, Taiwan Tel: 886-2-2833-9999 Branch CTCI CORPORATION ABU DHABI BRANCH Address: Shaikh Sultan Bin Srour Al Dhaheri Building, Al Salam Street, Abu Dhabi Tel:971-2671-1572 CTCI CORPORATION QATAR BRANCH Address: Office No.6, 1st Floor, Al-Emadi Business Centre, C-Ring Road, Doha City, State of Qatar P.O. Box: 30261 Tel: 974-4451-7383 CTCI CORPORATION JAPAN BRANCH Address: NO.806, Ark Hills Front Tower RoP, 2-23-1 Akasaka, Minato-ku, Tokyo, Japan Stock Transfer Agent KGI Securities Co. Ltd. Address: 5th Fl., No.2, Sec. 1, Chung Ching South Rd., Taipei, Taiwan Website: http://www.kgieworld.com.tw Tel: 886-2-2389-2999 Auditors PriceWaterHouseCoopers Auditors: Yi-Fan Lin, Shu-Chiung Chang Address: 27th Fl., No.333, Sec. 1, Keelung Rd., Taipei, Taiwan Website: http://www.pwc.tw Tel.: 886-2-2729-6666 Overseas Trade Places for Listed Negotiable Securities None. Corporate Website http://www.ctci.com

Contents I. Letter from the Group Chairman ......................................................................................... 1

II. Company Profile 2.1 Date of Incorporation .................................................................................................................. 4 2.2 Company History .......................................................................................................................... 4

III. Corporate Governance Report 3.1 Organization ................................................................................................................................. 5 3.2 Directors and Management Team ............................................................................................... 9 3.3 Remuneration of Directors and Management Team ................................................................. 22 3.4 Implementation of Corporate Governance ............................................................................... 28 3.5 Information on CPA’s Fees ......................................................................................................... 88 3.6 Alternation of CPA ...................................................................................................................... 88 3.7 The Company's Chairman, President and any Managerial Officer in charge of Finance or

Accounting matters has held a position within CTCI’s CPA firm or its affiliated enterprise in the most recent year. ............................................................................................................. 88

3.8 Changes in Shareholding of Directors, Managers and Major Shareholders .............................. 89 3.9 Relationship among the Top Ten Shareholders ......................................................................... 91 3.10 Ownership of Shares in Affiliated Enterprises ........................................................................... 92 IV. Capital Overview 4.1 Capital and Shares ...................................................................................................................... 93 4.2 Corporate Bonds ........................................................................................................................ 97 4.3 Preferred Shares ........................................................................................................................ 97 4.4 Global Depository Receipts ........................................................................................................ 97 4.5 Employee Stock Options ............................................................................................................ 98 4.6 Employee Restricted Stock ...................................................................................................... 100 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions ....................... 100 4.8 Financing Plans and Implementation ....................................................................................... 100 V. Operational Highlights 5.1 Business Activities .................................................................................................................... 101 5.2 Market and Sales Overview ..................................................................................................... 108 5.3 Human Resources .................................................................................................................... 113 5.4 Environmental Protection Expenditure ................................................................................... 117 5.5 Labor Relations......................................................................................................................... 117 5.6 Important Contracts ................................................................................................................. 125 VI. Financial Information 6.1 Five-Year Financial Summary ................................................................................................... 128 6.2 Five-Year Financial Analysis ..................................................................................................... 132 6.3 Audit Committee’s Review Report in the Most Recent Year ................................................... 135 6.4 Annual Consolidated Financial Report in the Most Recent Year ............................................. 136 6.5 Annual Parent Company only Financial Report in the Most Recent Year ............................... 136 6.6 Impact of the Financial Distress Occurred to the Company and Affiliates in the Recent

Years until the Annual Report being published ....................................................................... 136

VII. Review of Financial Conditions, Financial Performance, and Risk Management 7.1 Analysis of Financial Status ...................................................................................................... 137 7.2 Analysis of Financial Performance ........................................................................................... 138 7.3 Analysis of Cash Flow ............................................................................................................... 138 7.4 Major Capital Expenditure Items ............................................................................................. 139 7.5 Investment Policy in the Most Recent Year, Main Causes for Profits or Losses,

Improvement Plans and the Investment Plans for the Coming Year ...................................... 139 7.6 Analysis of Risk Management .................................................................................................. 139 7.7 Other Important Information .................................................................................................. 147 VIII. Special Disclosure 8.1 Summary of Affiliated Companies ........................................................................................... 148 8.2 Private Placement Securities in the Most Recent Year ........................................................... 172 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year .... 172 8.4 Other Supplementary Information .......................................................................................... 176 Appendices 1. Annual Consolidated Financial Report in the Most Recent Year ............................................. 177 2. Annual Parent Company only Financial Report in the Most Recent Year ............................... 330

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I. Letter from the Group Chairman Dear Shareholders, CTCI is moving toward the 40th anniversary in 2019 and, firmly pursuing its long term prosperity for the time being. I would hereby like to report the 2018 business review, the business plan of 2019 and the blueprint for CTCI as follows:

A. 2018 Business Review

a) Operation performance The consolidated sales revenue for 2018 amounted to NTD64.1 billion, decreased by NTD7.54 billion, or a 10.53% slowdown compared to that of 2017. The consolidated operating expenses were NTD1.88 billion, while the consolidated non-operating income was NTD349.49 million. The consolidated net income was reported at NTD2.30 billion with earnings per share (EPS) of NTD2.40. The decreased consolidated sales revenue is mainly due to the comparatively less new contracts awarded in 2017; having new contract awarded over NTD100 billion in 2018, sales revenue is expected to rebound in 2019 accordingly.

b) Business Achievement

We have a record-high year both of new contract awarded and backlog in 2018, totaled NTD101.7 billion and NTD207.9 billion respectively. Major new contracts signed in 2018 consist of Taiwan CPC No. 3 LNG Receiving Terminal Tank, Taipei MCT Wanda Line System E&M Phase 1, Taichung Power Plant Coal Handling System Improvement, Taoyuan City Biomass Energy Center BOT Project, Taiwan KCG 33,000 CMD Linhai WWRU BTO Project, Taiwan CGTD Tank Farm, GSPC Gulei EVA BEPC Project, Thailand PTTLNG Nong Fab LNG Receiving Terminal, and India DLTPL Dhamra LNG Receiving Terminal.

c) Innovation and R&D

In 2018, Research and Innovation Center launched iEPC (intelligent EPC) digital initiatives with the goal of intelligent EPC; besides we continuously delivered smart solutions based on the requirements from all EPC departments to increase efficiency and quality. Currently, we are studying the applications of Cloud, VR/AR, Big Data, IoT, Robotic, and 5G related to our EPC operation. At the same time, we are reviewing the feasibility of EPC aided by AI and Machine Learning, by which we intend to differentiate ourselves from competitor with enhancement of competitiveness. Digitalization is the key factor in the development of iEPC. We studied how to transform design information into structured data via Machine Learning through industry-academia cooperation. Engineering Data Centers are set up across different departments in associated with their professional characteristics. Rules of design data exchange are established, along with Tag Platform as a multi-discipline design collaboration platform for data exchange. As for engineering design, software packages for automation of design analysis, calculation and plotting, have being developed, such as process analysis and calculation, steel connection design, structure design for cryogenic tank, static equipment skeleton drawing generator, 3D material take-off for Instrument & Electrical disciplines, automatic modeling of typical piping around unit equipment, plot plan layout optimization…etc. With improved design automation, we achieved better quality and accuracy. As for procurement, standardized information exchange mechanism and SOP with vendors are established to maintain transparency of information, speeding up the acquirement of design data and construction progress. In regard to construction, mobile devices have been continuously promoted at job site. New commercial software packages are implemented to increase job site efficiency as well. In order to counter the shortage of welding workers and reduce rework, and improve welding quality at the same time, automatic welding machines are surveyed. Through industry-academia cooperation, we studied the application of unmanned

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aerial vehicles and how GPS technologies could be applied to construction equipment control and storage management at job site. By combining commercial program and customized plug-in, tools for construction dynamic simulation are developed to solidify our capabilities of construction planning and management, making construction automation a possibility. In order to improve our professional techniques, the following researches were performed: design guidelines and evaluation templates for demineralized water treatment, dynamic simulation model of LNG terminal, behavior of track/bridge interaction and expansion joint arrangement, system design and configuration of pneumatic conveying package equipment, criteria for the selection of laboratory analyzer type, simulation and study of insulation coordination, advanced development for corrosion mechanism identification system…,etc. We also improved our design skills and design quality, and EPC project execution capabilities, by reinforcing our internal design guidelines and existing engineering software, updating and consolidating design specification of every kind, with the help of industry-academia cooperation as well as in-house development.

B. Highlights of Business Plan for 2019

Having successfully excavated shale gas, the United States is a key focus for our future development. CTCI is actively entering the US market and has successfully executed projects including Formosa Plastics USA production facility as well as the front-end engineering design of the petrochemical joint venture project of Exxon Mobil and Saudi Basic Industry Corporation. We foresee the booming US petrochemical market in the coming years. To differentiate CTCI from competitors and to successfully cultivate the market, we adopt a unique strategic team of "Taipei + USA" and solidify our blueprints in the US market. On the other hand, Middle East still remains a highly competitive market for international engineering companies. CTCI has built numerous track records in the Gulf Cooperation Council (GCC) countries including Saudi Arabia, Qatar, and Oman. Currently, we are also participating in bids for large-scale petroleum refinery plant projects in Kuwait and Abu Dhabi based on our strengths and reputation. CTCI will be continuously involved in all six nations of the GCC actively. Besides we plan to expand toward new potential territory e.g. North Africa by strategic alliance with partner. Given our qualification and globalization base, we are capable to bid project with amount up to USD 2 billion in the international EPC market. Constrained by the limited domestic market, we definitely intend to expand overseas business incessantly for our business growth in the future. We have devoted to optimize manpower allocations and accelerated global talent cultivation. Additionally, we have also fostered the interdisciplinary and multinational management competencies in our staff as well as expanding their global perspective through job rotations and expatriate experience.

C. Future Development Strategy Under our business expansion efforts, CTCI has grown to be an international engineering group that owns over 40 affiliated companies in 15 countries throughout the world. To integrate the resources of each subsidiary globally for a group-wide synergy against the competition, CTCI's group organization internally has placed the Executive Committee as the decision-making center unit since 2016. All domestic and foreign companies are re-positioned in three business groups, there are Group Engineering Business (GEB), Group Resource Cycling Business (GRCB), or Group Intelligent Solutions Business (GISB) based on the nature of their business; and the Group Shared Services (GSS) will provide overall back-end management and services. CTCI continues to further differentiate itself from competitors by focusing on professionalism, innovative mindsets, and new technologies. Currently, the three business groups have endeavored to performing successfully with profitable results and enlarging market shares. In particular, GEB division has polished the CTCI brand throughout the world through stellar performance, making CTCI equal to our international partners and becoming a global enterprise on par with world-class engineering companies from Europe, the

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US, Japan, and Korea. For GRCB, since we launched the "ECOVE" brand in 2017, it has become the second renowned CTCI brand in the global market. It is also the best brand in Taiwan for incineration (Energy-from-Waste), waste management and resource cycling with its earnings per share exceeding NTD10 for consecutive years. On the other hand, the GISB division pioneers the Taiwanese market in smart solutions. We have demonstrated fruitful results in fields such as smart manufacturing, smart transportation, smart buildings, and smart cities. This highly promising business continues to show endless possibilities and is likely to become the Group's third-largest brand. To encourage all CTCI colleagues to realize their influence and to be proud of how much their work has contributed to the planet and to their countries, we foster a Total Participation CSR Excellence Practice program in carrying out our major core professional engineering techniques: iEPC, smart plants, circular economy, and green engineering. Highly effective and economical measures are implemented from a project life cycle perspective throughout the site-building process, starting from engineering design, procurement, construction and commissioning, to selection of materials and equipment, and even operations and maintenance from clients upon project completion. At the same time, we collaborate with business partners to fulfill green and environmental-friendly measures in the hopes of realizing the greatest influence and exerting our corporate social responsibility in practice.

Owning over forty years of dedicated effort, CTCI has grown from a small-medium size local engineering company to the No. 1 in Taiwan, as well as taking its place among the top 100 international EPC contractors in the world. This achievement is contributed by our in-depth rooted corporate culture of "Professionalism, Integrity, Teamwork, and Innovation," and the implementation of our brand spirit of being "the Most Reliable." With such philosophies, CTCI can continuously be recognized by renowned clients and partners "the Most Reliable Global Engineering Services Provider".

Sincerely,

John T. Yu Group Chairman

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II. Company Profile 2.1 Date of Incorporation: April 6, 1979 2.2 Company History

Year Milestones

2018.03 CTCI Group won the REBRAND 100® “2018 Global Awards for Successful Brand Transformation”, the most authority in global brand reengineering.

2018.04 CTCI is one of the leading corporations certified to ISO 45001:2018 in Global Engineering Industry.

2018.05 CTCI Advanced Systems and ECOVE Environment Evaluated as Top 5% in the “2017 Corporate Governance Evaluation System”.

2018.05 In terms of the overall ranking in the Top 650 Service Enterprises by Common Wealth Magazine in 2018, CTCI ranked as 25th retained Top 1 spot in the contractor sector for years in a row. It also ranked as 22nd in Top 50 Most Profitable Companies (net profit after tax).

2018.07 CTCI and ECOVE Environment are both on the list of top 40 listed components in Taiwan Sustainability Index (TWSI). CTCI even ranks top 1/3 on this list.

2018.08 CTCI ranked the 24th in the large enterprise category, ECOVE Environment and CTCI Advanced Systems ranked the 3rd and 9th in the mid-size enterprise categories respectively in Corporate Social Responsibility” by Common Wealth Magazine in 2018.

2018.08 CTCI group ranked the 75th among “The International Design Firms”, the 76th among “The International Contractors”, the 146th among “The Global Design Firms”, and the 126th among “The Global Contractors” in the 2018 Engineering News-Record(ENR) Rankings.

2018.09 CTCI selected as a member of the Dow Jones Sustainability Index (DJSI) component for 4 years in a row, CTCI improves itself to the 4th place in the Engineering & Construction category, and retained the top place in the Economic Dimension, sustains its position as an industry leader in Taiwan.

2018.11 CTCI Group won the most prestigious award continuously, "The Most Prestigious Sustainability Awards - Top Ten Domestic Corporate" award in the 2018 Taiwan Corporate Sustainability Awards (TCSA).

2018.12 CTCI Resources Engineering received two special awards for excellent quality of project management and supervision execution performance in the Facilities category by the 18th annual Public Construction Golden Quality Award, issued by the Public Construction Commission.

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III. Corporate Governance Report 3.1 Organization 3.1.1 Organization Chart

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3.1.2 Operations and functions of the various departments

Department Operations & Functions

Immediate Board of Directors

Secretariat of The Board

Responsible for furnishing information required for business execution by directors, assisting directors with legal compliance, and handling matters relating to functional committees meetings, board meetings and shareholders meetings according to laws.

Audit Dept.

Responsible for inspecting and reviewing defects in the internal control systems for the Company and its subsidiaries’ business continuity, providing timely recommendations for improvements to reasonably ensure the sustained operating effectiveness of the systems.

Immediate President

HSE Management Dept.

Responsible for the effectiveness of establishing and maintaining the Company's HSE management system, handling HSE audit operations of various permanent departments and projects, researching and continuously improving the HSE management operation mechanism, and supervising the HSE management operations of the group.

Quality Management Dept.

Responsible for the effectiveness of establishing and maintaining the Company's Quality management system, handling Quality audit operations of various permanent departments and projects, researching and continuously improving the Quality management operation mechanism, and supervising the Quality management operations of the group.

Research and Innovation Center

Responsible for applying innovative technology, developing intelligent platform and researching new operating technology.

Executive Management Operations (EMO)

IT Division Responsible for defining the Company’s information policy, planning and promoting the information systems, supervising the information dept. affairs of various affiliates.

Legal Dept. Responsible for handling disputes, litigation, arbitration, non-litigation.

Contract Management Dept.

Responsible for contract reviewing.

Investment Relation Office

Responsible for liaising with shareholders, corporate investors and the media, and providing investors with timely and correct information about the Company’s operation.

Corporate Administration Dept.

Responsible for auditing the project cost, releasing commodity price information and helping the cost-related system development.

Finance Dept.

Responsible for supporting the project’s achievement of financial objectives, planning and executing important financial tasks and controlling the project risk to increase the Company’s earnings.

Accounting Dept. Responsible for verifying the Company’s income, providing the actual accounting information in a timely manner, and well-founding various financial management systems.

Human Resources Dept.

Responsible for human resource’s strategies and management, providing the talents corporate needs to meet corporate’s mission.

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Secretary Dept. Responsible for the optimization of the manpower of the secretary.

AGS & PR Dept.

Responsible for managing the general affairs, administration, and external public relations to ensure corporate administration running well and keep good relations with external customers and medias.

Project Site Administration Dept.

Responsible for the administrative general affairs of overseas and domestic construction project sites to ensure the operation of administrative management at the site.

Brand Management Dept.

Responsible for establishing brand structure of the group, promoting brand strategies and planning external brand marketing campaigns.

Hydrocarbon Business Operations (HBO)

Marketing & Sales Division

Responsible for developing the market, collecting business information, establishing cooperative relations, striving for bidding and winning opportunities, analyzing competitors’ status, planning strategic alliances, preparing qualification proposals and reviewing & suggesting tender documentation, participating in tender opening, negotiating for contracts and maintaining after-sales service.

Project Division I Responsible for executing various projects in Taiwan and Mainland China.

Project Division II Responsible for executing various projects in South East Asia and India.

Project Division III Responsible for executing various projects in the Middle East.

LNG Project Division

Responsible for executing LNG projects and proposal related business.

Project Service Division

Responsible for controlling the various information about refining and petro-chemical projects, and achieving the objectives together with the projects.

Proposal & Estimating Division

Responsible for defining the quotation strategies and work plans, organizing the quotation taskforce, drafting the project execution strategies and development execution plan, executing the project risk assessment, preparing technical and business tender documentation, clarifying and negotiating after tender submission, and preparing case closure report of the quotation.

Infrastructure, Environment & Power Business Operations (IEPBO)

Marketing & Sales Division

Responsible for developing the market, collecting business information, establishing cooperative relations, striving for bidding and winning opportunities, analyzing competitors’ status, planning strategic alliances, preparing qualification proposals and reviewing & suggesting tender documentation, participating in tender opening, negotiating for contracts and maintaining after-sale service.

Infrastructure Division

Responsible for executing the projects about MRT, HSR, light rail, steel plant, and air separation plant.

Power & Energy Division

Responsible for executing the projects about gas power plants, cogeneration plants, coal-fired power plants, incinerators, sewage and pure water treatment plants, water recycling and seawater desalination plants.

Environment Resources Division

Responsible for executing the projects about coal-fired power plants, desulfuration and De-NOx.

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EPC Operations

Engineering Management Division

Responsible for executing quality, HSE and cost control of project engineering management.

Engineering Division

Responsible for coordinating and integrating the human resources, quotation, execution of projects, and multi-departmental technology of various design departments and Hydrocarbon projects’ commissioning, also planning and executing the training programs for various projects.

Procurement Division

Responsible for the procurement, inspection and transportation business, and supervising and confirming the quality/SHE requirements about all of the procurement documents.

Construction Division

Responsible for supporting interaction of various business divisions and subsidiaries, and supervising the compliance of various quotations and project site operations with the Company’s requirement.

Plant Maintenance Business Operations

Responsible for power plants and hydrocarbon plants maintenance business.

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3.2 Directors and Management Team 3.2.1 Directors

March 31st, 2019

Title Nationality Name Gender Date

Elected Term

(Years)

Date First Elected (Rep. of juridical person)

Shareholding when Elected

Current Shareholding

(Rep. of juridical person)

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 R.O.C.

John T. Yu (Rep. of CTCI Development Corporation)

Male Jun. 28,

2017 3

Feb. 8, 2002

(Feb. 9, 1999)

912,170 0.12 912,170

(1,103,471) 0.12

(0.14) 2,020,000 0.26 0 0

-PMD 61, Harvard Business School, USA -B.S., Electrical Engineering, National Taiwan University -Senior Vice President / Executive Vice President / President, CTCI Corporation

Note 1 - - -

Vice Chairman

R.O.C.

Michael Yang (Rep. of CTCI Development Corporation)

Male Jun. 28,

2017 3

Feb. 8, 2002

(Mar. 7, 2016)

912,170 0.12 912,170

(0) 0.12

(0) 407,097 0.05 0 0

-EMBA, Business Administration, National Taiwan University of Science and Technology -M.S., Mechanical Engineering, National Taiwan University -B.S., Mechanical engineering, Tatung University - Senior Vice President/ Executive Vice President, CTCI Corporation

Note 2 - - -

Independent Director and Managing Director

R.O.C. Jack Huang Male Jun. 28,

2017 3

Jun. 26, 2014

0 0 0 0 0 0 0 0 S.J.D., Harvard University Note 3 - - -

Independent Director

R.O.C. Yen-Shiang

Shih Male

Jun. 28, 2017

3 Jun. 28,

2017 0 0 0 0 0 0 0 0 Note 4 Note 5 - - -


R.O.C. Frank Fan Male Jun. 28,

2017 3

Jun. 26, 2014

0 0 0 0 0 0 0 0

-M.S., Institute of traffic and Transportation, National Chiao Tung University -Minister without Portfolio & Chairperson of Public Construction Commission, Executive Yuan

None - - -

Director R.O.C.

Hsien-Cheng Yang

(Rep. of CTCI Foundation)

(Note 6)

Male Jun. 28,

2017 3

Apr. 6, 1979

(Mar. 1, 2019)

60,862,051 7.97 60,862,051

(0) 7.97

(0.00) 0 0 0 0

-Ph.D., Chemical Engineering, NTUST, Taiwan -Manager, Taiwan Green Productivity Foundation

-Director, CTCI Foundation

- - -

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Elected Term

(Years)

Date First Elected (Rep. of juridical person)

Shareholding when Elected

Current Shareholding

(Rep. of juridical person)

Spouse & Minor

Shareholding


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

Director R.O.C. Quintin Wu Male Jun. 28,

2017 3

Jun. 23, 2006

0 0 0 0 0 0 0 0 -Chairman, USI Corporation Note 7 - - -

Director R.O.C. Bing Shen Male Jun. 28,

2017 3

Mar. 26, 1999

(Note 8)

0 0 0 0 0 0 0 0

-MBA, Harvard Business School -Executive Director, Morgan Stanley Group -Executive Vice President, China Development Industrial Bank -President, CDIB & Partners Investment Holding Corp.

-Independent Director, Far Eastern International Bank -Independent Director, Far Eastern New Century Corporation -Independent Director, ELITE Material Co., Ltd.

- - -

Director R.O.C. Johnny Shih Male Jun. 28,

2017 3

Feb. 8, 2002

(Note 9)

0 0 0 0 0 0 0 0

-Master in Computer Science and Business Administration, Columbia University, USA -Vice Chairman, Far eastern International Bank

Note 10 - - -

Director R.O.C. Yancey Hai Male Jun. 28,

2017 3

Feb. 8, 2002

0 0 0 0 0 0 0 0

-MA, the University of Texas at Dallas -Country Manager, G.E. Capital -Vice President, J.P. Morgan -CEO, Delta Electronics Foundation

-Chairman, Delta Electronics Inc. - Independent Director, USI Corporation

- - -

Director R.O.C. An-Ping Chang

Male Jun. 28,

2017 3

Jun. 28, 2017

0 0 0 0 0 0 0 0

-MBA, New York University, U.S.A -Vice Chairman, Taiwan Cement Corporation -Chairman, Chia Hsin Cement Corporation

Note 11 - - -

Director R.O.C. Wenent Pan Male Jun. 28,

2017 3

Apr. 1, 2012

(Note 12) 0 0 0 0 0 0 0 0

-M.S. & Ph.D., Chemical Engineering, University of Wyoming, USA -President & Chairman, CPC Corporation -Chairman & CEO, Kuo Kuang Power Co.

Note 13 - - -

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Note 1: Chairman, CTCI Corporation / Chairman, CTCI Development Corporation /Director, CTCI Overseas Corporation Limited / Director, CTCI Education Foundation / Managing Director, CTCI Foundation / Supervisor, China Steel Chemical Corporation / Director, Taiwan Cement Co., Ltd. / Director, TSRC Corporation

Note 2: Vice Chairman & President, CTCI Corporation / Chairman, CTCI Overseas Corporation Limited / Chairman, Crown Asia 2 Investment Limited / Director, CTCI Education Foundation / Director, CTCI Americas, Inc. / Director, MIE Industrial Sdn. Bhd.

Note 3: Attorney-at-Law, Jones Day Taipei Office / Independent director, Taiwan Mobile Co., Ltd. / Independent director, WPG Holdings Limited / Independent director, Systex Corporation / Director, Yulon Motor Co., Ltd. / Director of the Board, Taiwania Capital Management Corporation / Director of the Board, Taiwania Capital Buffalo Fund Co., Ltd. / Director of the Board, Taiwania Capital Biotechnology Corporation

Note 4: Ph.D., Chemistry, Massachusetts Institute of Technology, U.S.A. / Professor and Chief of Chemical Engineering, National Taiwan University of Science and Technology / Director General, Small and Medium Enterprise Administration, Ministry of Economic Affairs (MOEA) / Director General, Industrial Development Bureau, MOEA / Minister & Vice Minister & Deputy Minister, MOEA / Director General, Taiwan Tobacco & Wine Bureau / Chairman, Sinotech Engineering Consultants, Inc.

Note 5: Chair Professor, Chung Yuan Christian University / Policy Advisor, Taiwan Electrical and Electronic Manufacturers’ Association / Council Minister and the Convener of the Group of Energy, Petroleum & Chemical, and Accouterments, Cross-Strait CEO Summit / Chairman, Sustainable Circulation Economy Development Association / Independent Director, AU Optronics Corp. / Director, Taiwan Institute of Economic Research / Independent Director, Formosa Plastics Corporation

Note 6: CTCI Foundation reassigned Mr. Leon Tzou to replace Mr. Teng-Yaw Yu as a director of the Company since Dec. 1, 2018, and reassigned Mr. Hsien-Cheng Yang to replace Mr. Leon Tzou as a director of the Company since Mar. 1, 2019.

Note 7: Chairman, USI Corporation / Chairman, China General Plastics Corporation / Chairman, Asia Polymer Corporation / Chairman, Taita Chemical Company, Limited / Chairman, Acme Electronics Corporation

Note 8: Mr. Bing Shen is not the director or supervisor of the Company during these periods: Nov. 28, 2001 ~ Jun. 13, 2005 / May 16, 2006 ~ Jun. 22, 2006 / May 11, 2011 ~ Jun. 21, 2011.

Note 9: Mr. Johnny Shih is not the director or supervisor of the Company during the period from Jun. 15, 2005 to Jun. 25, 2014.

Note 10: Vice Chairman, Far Eastern New Century Corporation / Vice Chairman, Oriental Union Chemical Corporation / Chairman, Everest Textile Company Limited / Director, Asia Cement Corporation

Note 11: Chairman, Taiwan Cement Corporation(TCC) /Chairman, TCC International Holdings Ltd. / Chairman, Hong Kong Cement Manufacturing Co., Ltd. / Independent Director, Synnex Technology International Corporation / Managing Director, O-Bank Co., Ltd. / Director, Taiwan Stock Exchange Corporation

Note 12: Mr. Wenent Pan is not the director or supervisor of the Company during the period from Aug. 1, 2012 to Jun. 25, 2014.

Note 13: Chairman, CTCI Foundation / Independent Director, UPC Technology Corporation / Independent Director, China Petrochemical Development Corporation

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Major shareholders of the institutional shareholders March 31st, 2019

Name of institutional shareholders Major shareholders of the institutional shareholders

CTCI Development Corporation CTCI Corporation (100%)

CTCI Foundation None

Major shareholders of the major shareholders that are juridical persons

March 31st, 2019

Name of juridical persons Major shareholders of the juridical persons

CTCI Corporation

CTCI Foundation (7.97%), CTBC Bank Co., Ltd. (CTCI Corporation Employee Stock Ownership Trust)(7.28%), Fubon Life Insurance Co., Ltd.(6.06%), Blackrock Global Funds-Asian Growth Leaders(4.35%), CTBC Bank Co., Ltd. (Sustainability Employee Stock Ownership Trust)(3.86%), Chunghwa Post Co., Ltd.(3.00%), American Funds Developing World Growth and Income Fund(2.77%), KGI Bank(2.07%), USI Corporation(1.99%), Asia Polymer Corporation(1.90%).

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Professional qualifications and independence analysis of directors

Criteria Name

Meet 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 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

John T. Yu - - V V V V V V 0 Michael Yang - - V V V V V V V 0

Jack Huang V V V V V V V V V V V V V 3

Yen-Shiang Shih V - V V V V V V V V V V V 2

Frank Fan - - V V V V V V V V V V V 0

Hsien-Cheng Yang - - V V V V V V V V V 0

Quintin Wu - - V V V V V V V V V V V 0

Bing Shen - - V V V V V V V V V V V 3

Johnny Shih - - V V V V V V V V V V V 0

Yancey Hai - - V V V V V V V V V V V 1

An-Ping Chang - - V V V V V V V V V V V 1

Wenent Pan - - V V V V V V V V V 2

1. Not an employee of the Company or any of its affiliates. 2. Not a director or supervisor of the Company’s affiliates. The same does not apply, however, 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 that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking

in the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company. 7. Not a professional individual who, or 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, provided that this restriction does 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 GTSM.

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.

14

3.2.2 Management Team March 31st, 2019


Effective

Shareholding Spouse & Minor

Shareholding


Arrangement Experience(Education) Other Position

Managers who are spouses or within two

degrees of kinship

Shares % Shares % Shares % Title Name Relation

Vice Chairperson

of Management

Strategy Committee

R.O.C. Andy Sheu Male Jun. 23,

2009 1,031,281 0.14 1,966 0.00 0 0

-MBA, EMBA Program in International Business Management, National Taiwan University -B.S., Power Mechanical Engineering, National Tsing-Hua University -Managing Director, CTCI (Thailand) Co., Ltd. - Senior Vice President / Executive Vice President / President, CTCI Corporation

-Chairman, CTCI Overseas (BVI) Corporation -Director, CTCI Overseas Corporation Limited -Chairman, CTCI Americas, Inc.

- - -

President R.O.C. Michael

Yang Male

Jun. 28, 2017

0 0 407,097 0.05 0 0

-EMBA, Business Administration, National Taiwan University of Science and Technology -M.S., Mechanical Engineering, National Taiwan University -B.S., Mechanical engineering, Tatung University -Vice President/ Senior Vice President/ Executive Vice President, CTCI Corporation

-Chairman, CTCI Overseas Corporation Limited -Chairman, Crown Asia 2 Investment Limited -Director, CTCI Education Foundation -Director, CTCI Americas, Inc. -Director, MIE Industrial Sdn. Bhd.

- - -

Executive Vice

President R.O.C.

M. H. Wang

Male Jan. 1, 2013

0 0 283,212 0.04 0 0

-MBA, Chulalongkorn University, Thailand -B.S., Civil Engineering, Feng-Chia University -Vice President/ Senior Vice President, CTCI Corporation -Deputy Managing Director/ Managing Director, CTCI (Thailand) Co., Ltd.

-Chairman, CTCI Arabia Ltd. -Director, CTCI Chemicals Corporation -Director, CTCI Machinery Corporation -Director, CTCI Americas, Inc. -Director, CCJV P1 Engineering & Construction Sdn. Bhd.

- - -

15


Effective


Shareholding




degrees of kinship


Executive Vice

President R.O.C.

Pao-Yao Pan

(Note 1) Male

Jan. 1, 2016

12,628 0.00 326,000 0.04 0 0

-M.S., Management, National Sun Yat-sen University -B.S., Mechanical Engineering, Tatung University -Vice President/ Senior Vice President, CTCI Corporation

None - - -

Executive Vice

President R.O.C.

Ming-Cheng Hsiao

Male Jan. 1, 2016

2,000 0.00 130,000 0.02 0 0

-Ph.D., Chemical Engineering, National Tsin Hua University -MBA, EMBA Program in Accounting, National Taiwan University -M.S., Chemical Engineering, National Tsin Hua University -B.S., Chemical Engineering Tamkang University -Postdoctoral position, University of California, Davis -President, Unisurpass Technology Co., Ltd. -President, Uniplus Electronics Co., Ltd. -Senior Vice President, CTCI Corporation

-Chairman, CTCI Engineering & Construction Sdn. Bhd. -Director, CTCI Americas, Inc. -Chairman, Universal Engineering (BVI) Corporation -Chairman, CIPEC Construction Inc. -Chairman, Accuracy International Inc. -Director, ECOVE Solar Energy Corporation -Director, Powertec Energy Corporation -Director, Unisurpass Technology Co., Ltd. -Director, Unimighty Co., Ltd. -Director, Crown Asia 2 Investment Limited

- - -

Executive Vice

President R.O.C. Todd Chen Male

Jan. 1, 2018

0 0 137,099 0.02 0 0

-M.S., Mechanical Engineering, National Chiao Tung University -B.S., Mechanical Engineering, National Chiao Tung University -Senior General Manager/ Vice President/ Senior Vice President, CTCI Corporation

-Chairman, CTCI Investment Corporation -Director, CTCI Beijing Co., Ltd. -Director, CTCI Americas, Inc. -Chairman, CINDA Engineering & Construction Private Limited

- - -

http://www.uniplus.com.tw/

http://www.uniplus.com.tw/

16


Effective


Shareholding




degrees of kinship


Senior Vice

President R.O.C.

Jung-Yu Han

(Note 2) Male

Jan. 1, 2016

11,604 0.00 240,000 0.03 0 0

-B.S., National Taipei University of Technology -Senior General Manager/ Vice President, CTCI Corporation

None - - -

Senior Vice

President & CFO

R.O.C. Patrick Lin Male Jan. 1, 2017

53,280 0.01 248,000 0.03 0 0

-MBA, EMBA Program in Finance, National Taiwan University -MBA, University of Massachusetts-Boston, USA -B.S., Business Administration, Tamkang University -Director, Financial Division, Coretronic Corporation -Manager, Financial Division, Powerchip Technology Corporation -Director, Societe Generale Corporate & Investment Banking -Vice President, CTCI Corporation

-Director and President, CTCI Investment Corporation -Director, SINOGAL - Waste Services Co., Ltd. -Supervisor, ECOVE Environment Consulting Corporation -Supervisor, Yuan Ding Resources Corp. -President, CTCI Development Corporation -Director, CTCI Overseas (BVI) Corporation -Supervisor, EVER ECOVE Corporation -Chairman, CTCI Singapore Pte. Ltd.

- - -

Senior Vice

President R.O.C. T. C. Huang Male

Mar. 17, 2017

270,273 0.04 0 0 0 0

-Executive Master of Business Administration, National Sun Yat-Sen University -B.S., Mechanical engineering, Chinese Culture University -President/Chairman, CTCI Machinery Corporation

None - - -

17


Effective


Shareholding




degrees of kinship


Senior Vice

President R.O.C. Casey Yeh Male

Nov. 2, 2017

16,000 0.00 0 0 0 0

-M.S., Industrial Engineering and Management, University of Iowa, U.S.A. -B.S., Aeronautical Engineering, National Cheng Kung University, Taiwan -Senior Program Manager, Autodesk -Senior Program Manager, Kaspick & Company -Senior Engineering Manager, Intuit, Mountain View -Director , VISA

None - - -

Vice President

R.O.C. Ting-Kuo Li Male Jan. 1, 2017

116,751 0.02 0 0 0 0

-B.S., Mechanical engineering, Tatung University -Senior General Manager, CTCI Corporation

-Chairman, CTCI (Thailand) Co., Ltd. -Chairman, CIMAS Engineering Company Limited -Director, CTCI Americas, Inc. -Director, Superiority (Thailand) Co., Ltd. -Chairman, CTCI&HEC Water Business Corporation -Director, Metro Consulting Service Corporation -Director, CTCI Machinery Corporation -Director, EVER ECOVE Corporation -Director, HDEC-CTCI (Linhai) Corporation

- - -

18


Effective


Shareholding




degrees of kinship


Vice President

R.O.C. Teh-Ming

Tao (Note 3)

Male Jan. 1, 2006

316,064 0.04 0 0 0 0

-Ph.D., Chemical Engineering, TAMU, USA -M.S., Chemical Engineering, TAMU, USA -B.S., Chemistry, National Tsing-Hua University, Taiwan -Senior Research Engineer, Dowell Schlumberger (USA) SR-RE -CEO, CTCI Foundation -Project Manager, CTCI Foundation -Director, Industrial Safety and Health, CPC Corporation

None - - -

Vice President

R.O.C. Steve Jean Male Jan. 1, 2011

1,668 0.00 196,000 0.03 0 0

-EMBA, Executive Master of Business Administration of National Cheng Chi University -M.S., Mechanical Engineering, National Central University -B.S., Civil Engineering, National Taipei Institute of Technology -General Director, CIMAS Engineering Company Limited

None - - -

Vice President

R.O.C. M. G. Lee Male Jan. 1, 2013

0 0 153,029 0.02 0 0

-M.S., Management, National Taiwan University of Science and Technology -B.S., Ming Chi University of Technology -Senior General Manager, CTCI Corporation

None - - -

Vice President

R.O.C. Po-Chien

Wang (Note 4)

Male Jan. 1, 2013

155,144 0.02 0 0 0 0

-LL.M., Legal Studies, University of Illinois Springfield -LL.B., Department of Law, Soochow University -Senior General Manager, CTCI Corporation

None - - -

19


Effective


Shareholding




degrees of kinship


Vice President

R.O.C. Tsai-Ming

Wang Male

Apr. 1, 2014

0 0 316,767 0.04 0 0

-B.S., Mechanical Engineering, Tamkang University -Chemical Engineering, National Taipei Institute of Technology -Senior General Manager, CTCI Corporation

-Director, CINDA Engineering & Construction Private Limited

- - -

Vice President

R.O.C. Min-Li Lee Male Apr. 1, 2014

95,156 0.01 33,000 0.00 0 0

-M.S., Chemical Engineering, National Central University -B.S., Chemical Engineering, Chung-Yuan Christian University -Senior General Manager, CTCI Corporation

-Director, CTCI Chemicals Corporation

- - -

Vice President

R.O.C. Jing-Shing

Wu Male

Apr. 1, 2014

260,000 0.03 0 0 0 0

-Executive Master of Business Administration, National Sun Yat-Sen University -Chemical Engineering, National Taipei University of Technology -Senior General Manager, CTCI Corporation

None - - -

Vice President

R.O.C. Y. S. Liao Male Mar. 12,

2015 0 0 98,000 0.01 0 0

-B.S. in Nuclear Engineering, National Tsing-Hua University -President, CTCI Smart Engineering Corporation

-Director, CTCI Beijing Co., Ltd. -Director, CTCI&HEC Water Business Corporation

- - -

Vice President

R.O.C. S.H. Lin Male Jan. 1, 2017

9,000 0.00 190,649 0.02 0 0

-EMBA, National Chengchi University -B.S., Accounting, Soochow University -Senior General Manager, CTCI Corporation

- Director, Pan Asia Corporation -Supervisor, CDIB Partners Investment Holding Corp. -Supervisor, ECOVE Solar Energy Corporation -Director, CTCI Overseas (BVI) Corporation

- - -

20


Effective


Shareholding




degrees of kinship


Vice President

R.O.C. Connie Lin Female May 12,

2017 26,000 0.00 0 0 0 0

-MBA, EMBA of National Central University, Taiwan -B.S., International Business and Trade, Chinese Culture University, Taiwan -HR Consultant, Delta Research Institute Delta Electronics, Inc. -Senior HR Manager, Corp. HR, Delta Electronics, Inc.

-Supervisor, CTCI Smart Engineering Corporation

- - -

Vice President

R.O.C. Vincent Liu

(Note 5) Male

Jun. 28, 2017

23,575 0.00 0 0 0 0

-M.S., Chemical Engineering, National Taiwan University, Taiwan -B.S., Chemical Engineering, National Central University, Taiwan -Executive Vice President/ President, CTCI Advanced Systems Inc.

None - - -

Vice President

R.O.C. Ho-Chuang

Lee Male

Jan. 1, 2018

0 0 219,076 0.03 0 0

-MBA, EMBA Program in Industrial Management, National Taiwan University of Science and Technology, Taiwan -B.S., Marine Engineering, National Taiwan Ocean University, Taiwan -Senior Manager, CTCI Corporation

-Director and President, CTCI Beijing Co., Ltd. -Director and President, CTCI Shanghai Co., Ltd. -Director and President, CTCI Trading Shanghai Co., Ltd.

- - -

Vice President

R.O.C. Shih-Wei

Chung Male

Jan. 1, 2018

36,033 0.00 38,000 0.00 0 0

-Mechanical Engineering, National Kaohsiung Industrial of Institute -Senior General Manager, CTCI Corporation

-Director, CTCI Development Corporation

- - -

Accounting Officer

R.O.C. Ai-Cheng

Ho Male

Mar. 18, 2017

58,225 0.01 11,000 0.00 0 0

-MBA, EMBA Program in Finance, National Taiwan University -MBA in Finance, West Coast University, California, USA -General Manager, CTCI Corporation

-Supervisor, CTCI Beijing Co., Ltd. -Director, Century Ahead Ltd. -Supervisor, CTCI Advanced Systems Shanghai Inc. -Supervisor, CTCI Trading Shanghai Co., Ltd.

- - -

21

Note 1: EVP Pao-Yao Pan is dismissed on Jun. 26, 2018, and disclose the information during his tenure of office only. Note 2: SVP Jung-Yu Han is dismissed on Sep. 15, 2018, and disclose the information during his tenure of office only. Note 3: VP Teh-Ming Tao is dismissed on Jan. 24, 2019, and disclose the information during his tenure of office only. Note 4: VP Po-Chien Wang is dismissed on Mar. 4, 2019, and disclose the information during his tenure of office only. Note 5: VP Vincent Liu is dismissed on Sep. 1, 2018, and disclose the information during his tenure of office only.

22

3.3 Remuneration of Directors and Management Team 3.3.1 Remuneration of Directors

December 31st, 2018; Unit: NT$ thousands; thousand shares

Title Name

Compensation Ratio of total remuneration

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

Relevant remuneration received by directors who are also employees Ratio of total compensation

(A+B+C+D+E+F+G) to net income(%)

Compensation paid to directors from an invested company other than

the Company’s subsidiary

Base Remuneration (A) Pension Fund(B) Directors’

Remuneration (C) Allowances(D) Salary, Bonuses, and Allowances (E)

Pension Fund(F) (Note 3)

Employees’ Compensation (G)

CTCI All

Consolidated Entities

CTCI All


CTCI All


CTCI All


CTCI All


CTCI All


CTCI All


CTCI All

Consolidated Entities CTCI

All Consolidated

Entities Cash Stock Cash Stock

Chairman John T. Yu (Note1) 700 988 0 0 0 0 15,133 16,716 0.87 0.97 0 0 0 0 0 0 0 0 0.87 0.97 0

Juristic- person

Director

CTCI Development Corporation

11,881 11,881 0 0 13,250 13,250 2,740 3,100 1.53 1.54 13,109 14,549 257 257 114 0 114 0 2.26 2.36 0

CTCI Foundation

Vice Chairman

Michael Yang (Note1)

Director

Quintin Wu

Bing Shen

Wenent Pan

Yancey Hai

Teng-Yaw Yu (Note 2)

Leon Tzou (Note 2)

Johnny Shih

An-Ping Chang


Jack Huang

Frank Fan

Yen-Shiang Shih

* Other than disclosure in above table, Directors remunerations earned by providing services (e.g. providing consulting services as a non-employee) to CTCI and all consolidated entities in the 2018 financial statements: None.

Note 1: Mr. John T. Yu and Mr. Michael Yang are representative of CTCI Development Corporation. Note 2: Mr. Teng-Yaw Yu and Mr. Leon Tzou are representative of CTCI Foundation. Mr. Teng-Yaw Yu be dismissed on November 30th 2018; Mr. Leon Tzou be newly appointed on December 1st 2018. The above-mentioned directors disclose

the Remuneration during their tenure of office only. Note 3: NT$ 257 thousand are allocated to the pension plan in 2018.

23

Bracket

Name of Directors

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

CTCI All Consolidated

Entities CTCI

All Consolidated Entities

Under NT$ 2,000,000 CTCI Foundation /

Michael Yang /Teng-Yaw Yu / Leon Tzou

CTCI Foundation / Michael Yang /Teng-Yaw Yu

/ Leon Tzou

CTCI Foundation / Teng-Yaw Yu/ Leon Tzou

CTCI Foundation / Teng-Yaw Yu/ Leon Tzou

NT$2,000,000 ~ NT$5,000,000

CTCI Development Corporation / Quintin Wu / Bing Shen / Wenent Pan/

Yancey Hai / Johnny Shih / An-Ping Chang / Jack Huang / Frank Fan / Yen-Shiang Shih







NT$5,000,000 ~ NT$10,000,000 - - - -

NT$10,000,000 ~ NT$15,000,000 - - Michael Yang -

NT$15,000,000 ~ NT$30,000,000 John T. Yu John T. Yu John T. Yu John T. Yu / Michael Yang

NT$30,000,000 ~ NT$50,000,000 - - - -

NT$50,000,000 ~ NT$100,000,000 - - - -

Over NT$100,000,000 - - - -

Total - - - -

24

3.3.2 Compensation of President and Executive Vice President December 31st, 2018; Unit: NT$ thousands; thousand shares

Title Name

Salary(A) Pension Fund (B)

(Note1) Bonuses and Allowances

(C) Employees’ Compensation (D)

Ratio of total compensation (A+B+C+D)

to net income (%)

Compensation paid to the

president and executive vice

president from an invested company

other than the Company’s subsidiary


Entities CTCI

All Consolidated Entities


Entities


Entities CTCI All Consolidated

Entities Cash Stock Cash Stock

Vice Chairperson of Management

Strategy Committee

Andy Sheu

19,531 24,915 749 749 43,018 43,018 453 0 453 0 3.49 3.78 0

President Michael Yang

Executive Vice President

M. H. Wang

Pao-Yao Pan (Note2)

Ming-Cheng Hsiao

Todd Chen

Note1: Pension contributed according to actuaries’ report and resolution of board of directors’ meeting. Note2: Mr. Pao-Yao Pan is retired on Jun. 26, 2018.

Bracket Name of President and Executive Vice President

CTCI All Consolidated Entities

Under NT$ 2,000,000 - -

NT$2,000,000 ~ NT$5,000,000 - -

NT$5,000,000 ~ NT$10,000,000 Pao-Yao Pan / Todd Chen Pao-Yao Pan / Todd Chen

NT$10,000,000 ~ NT$15,000,000 Andy Sheu / Michael Yang / M. H. Wang / Ming-Cheng Hsiao Andy Sheu / M. H. Wang / Ming-Cheng Hsiao

NT$15,000,000 ~ NT$30,000,000 - Michael Yang

NT$30,000,000 ~ NT$50,000,000 - -

NT$50,000,000 ~ NT$100,000,000 - -

Over NT$100,000,000 - -

Total - -

25

Employees’ Compensation Granted to Management Team Unit: NT$ thousands

Title Name

Employee Bonus - in Stock

(Fair Market Value)

Employee Bonus - in Cash

Total Ratio of Total

Amount to Net Income (%)

Executive Officers

Vice Chairperson of Management Strategy Committee

Andy Sheu

0 1,252 1,252 0.07


Executive Vice President M. H. Wang

Executive Vice President Ming-Cheng Hsiao

Executive Vice President Todd Chen

Senior Vice President & CFO Patrick Lin

Senior Vice President T. C. Huang

Senior Vice President Casey Yeh

Vice President Steve Jean

Vice President M. G. Lee

Vice President Tsai-Ming Wang

Vice President Min-Li Lee

Vice President Jing-Shing Wu

Vice President Y. S. Liao

Vice President S.H. Lin

Vice President Ting-Kuo Li

Vice President Connie Lin

Vice President Vincent Liu

Vice President Ho-Chuang Lee

Vice President Shih-Wei Chung

Accounting Officer Ai-Cheng Ho

Note: The distributed amount is based on the total amount (NT$54,826 thousand) approved by Board of Directors in 2019 and calculated accordingly to each executive officers’ on-job days in the previous year.

26

3.3.3 Comparison of Remuneration for Directors, Presidents and Executive Vice Presidents in the Most Recent Two Fiscal Years and Remuneration Policy, for Directors, Presidents and Executive Vice Presidents

a. Analysis of total remuneration of ratio to net income in accordance with CTCI’s Directors, President and Executive Vice President by CTCI and all

consolidated entities’ financial statements in the most recent two fiscal years Unit: NT$ thousands

Year

Title

2017 2018

CTCI All Consolidated Entities CTCI All Consolidated Entities

Total remuneration

Ratio to net income (%)

Total remuneration


Total remuneration


Total remuneration


Directors 106,750 3.81 115,194 4.11 106,578 5.83 113,833 6.23 Presidents and Executive

Vice President

b. The remuneration’s policies, standards, combinations, the procedures for determining the remuneration, and the relation to business performance and

future risks (a)CTCI’s Directors’ Compensation is categorized into Base Remuneration, Remuneration and Allowance:

Directors’ Base Remuneration: Pursuant to Article 35 of Articles of Incorporation, the remuneration of directors, chairman and vice chairman shall be determined by the Board of Directors in reference to the industry standard and their respective contribution. The base remuneration of Chairman and Independent Directors is stipulated with the Company’s performance (Consolidated Revenue, EPS, ROE)

Directors’ Remuneration: It is paid according to Article 37 of Articles of Incorporation, “when net profit occurs in the annual accounts, the Company may, after reserving a sufficient amount of the income before tax to cover the accumulated losses, with the resolution of the board of directors, distribute no more than 1.5% of the income before tax to pay to the board of directors as remuneration” and Company’s performance (Consolidated Revenue, EPS, ROE). The Directors’ remuneration will not be paid to Independent Directors.

Allowance: It includes traveling allowance and attendance fee which are stipulated with reference to the typical pay levels adopted by other public listed companies or companies within the similar industry field. The remuneration of Directors/Supervisors who hold concurrent positions in the affiliates is stipulated under the same standard.

27

(b)The structure of remuneration of the President and Executive Vice Presidents is categorized into fixed and variable ones. The fixed remuneration is salary paid monthly, while the variable one includes employee remuneration, year-end bonus and Employee Stock Options, with the standards based on individual’s annual key performance index (KPI) assessment. The aforementioned assessment includes qualitative indicators (e.g. core competencies, potential development, etc.) and quantitative indicators (e.g. the achievement of the individual's goals, the rate of achievement or the degree of achievement of the expected target value, etc.) Employee remuneration is paid based on the Company’s Articles of Incorporation. The year-end bonus is determined based on the annual operating performance of the Company, and shall be decided after suggestion of Company's personnel development committee / Remuneration Committee and approval by Board of Directors. The grant of Employee Stock Option is categorized into regular and reward. The regular number of options will be determined by corporate title, seniority and job performance. The employees who have directly contribution to the Company or outstanding performance are eligible for the grant of reward stock options which is decided after suggestion of Chairman / Remuneration Committee and approval by Board of Directors.

(c) The procedure for setting remuneration is in accordance with “Procedure for Performance Assessment and Remuneration Standard of the directors

and Management Officers “. It refers to the typical pay levels adopted by other public listed companies and companies within the similar industry field, and considered about Company’s business performance, individual performance and their respective contribution to Company in order to prescribe reasonable remuneration. Remuneration committee and Board will periodically review the reasonableness of the remuneration and make timely adjustment of the remuneration system based on the Company’s business and relevant laws. It also shall not produce an incentive for the Directors, President and Executive Vice Presidents to engage in activity to pursue remuneration exceeding the risks that the Company may tolerate in order to avoid the Company loss suffering even after the compensation payment.

28

3.4 Implementation of Corporate Governance 3.4.1 Board of Directors A total of 8 meetings of the board of directors were held in the previous period,

Directors’ attendance was as follow: (As of March 31st , 2019)

Title Name Attendance

in Person By Proxy

Attendance rate (%)

Remarks

Chairman John T. Yu

(Rep. of CTCI Development Corporation)

8 0 100

Vice Chairman

Michael Yang (Rep. of CTCI Development

Corporation) 7 1 88

Independent Director and

Managing Director

Jack Huang 8 0 100


Yen-Shiang Shih 8 0 100


Frank Fan 8 0 100

Director Teng-Yaw Yu

(Rep. of CTCI Foundation) 5 1 83

Be dismissed on Dec. 1, 2018 and

should present 6 times.

Director Leon Tzou


Be newly appointed on Dec. 1, 2018, be dismissed

on Mar. 1, 2019 and

should present 1 times.

Director Hsien-Cheng Yang


Be newly appointed on Mar. 1, 2019 and should present 1

times.

Director Quintin Wu 5 3 63

Director Bing Shen 7 1 88

Director Johnny Shih 5 3 63

Director Yancey Hai 8 0 100

Director An-Ping Chang 5 3 63

Director Wenent Pan 6 2 75

29

Independent Directors’ attendance of each meeting of board of directors was as follows: (As of March 31st, 2019)

◎:Attendance in Person; ☆:By Proxy; ●:Not present

Name

the 6th Meeting of the 14th Term

Board of Directors (2018.03.09)

the 7st Meeting of the 14th Term






Jack Huang ◎ ◎ ◎ ◎

Yen-Shiang Shih ◎ ◎ ◎ ◎

Frank Fan ◎ ◎ ◎ ◎

Name









Jack Huang ◎ ◎ ◎ ◎

Yen-Shiang Shih ◎ ◎ ◎ ◎

Frank Fan ◎ ◎ ◎ ◎

Other mentionable items: 1. If there are the matter referred to as below in the directors’ meetings, the dates of meetings,

sessions, contents of motions, all independents’ opinion and the Company’s response to independent directors’ opinion should be specified. (1) the matters referred to in Article 14-3 of Securities and Exchange Act. (2) resolutions of the directors’ meetings objected to by Independent Directors or subject to

qualified opinion and recorded or declared in writing. The Company has already established the Audit Committee, please refer to the section 3.4.2 “The State of operations of the Audit Committee” for the matters referred to in Article 14-5 of Securities and Exchange Act. Until the annual report on printed, the resolutions of the directors’ meetings were unanimously approved by all present Board members.

2. If there is Directors’ avoidance of motions in conflict of interest, the Directors’ names, contents of

motions, causes for avoidance and voting should be specified: (1) Directors’ Names: Michael Yang

Contents of motion: The 6th meeting of the 14th term Board of Directors (2018.03.09): Approval of the subscribers and the exercisable units of the 2018 Employee Stock Options. Causes for avoidance and voting should be specified: Vice Chairman Michael Yang recused himself during discussion of and voting on this item because of the interested party relationship.

(2) Directors’ Names: John T. Yu and Wenent Pan Contents of motion: The 7th meeting of the 14th term Board of Directors (2018.05.04): Approval of selling shares of Utech Solar Corporation. Causes for avoidance and voting should be specified: Chairman John T. Yu and Director Wenent Pan recused themselves during discussion of and voting on this item because of the interested party relationship.

(3) Directors’ Names: Quintin Wu Contents of motion: The 12th meeting of the 14th term Board of Directors (2018.12.12): Approval of Increase investment in Ever Victory Global Limited (BVI), which will then invest in Dynamic Ever Investment Limited (HK), which will then invest in Fujian Gulei Petrochemical Complex. Causes for avoidance and voting should be specified: Director Quintin Wu recused themselves during discussion of and voting on this item because of the interested party relationship.

30

(4) Directors’ Names: Michael Yang Contents of motion: The 12th meeting of the 14th term Board of Directors (2018.12.12): Approval of the issuance of the 2019 employee stock options plan. Causes for avoidance and voting should be specified: Vice Chairman Michael Yang recused himself during discussion of and voting on this item because of the interested party relationship.

(5) Directors’ Names: Michael Yang Contents of motion: The 12th meeting of the 14th term Board of Directors (2018.12.12): Approval of the average salary increase rate of 2019. Causes for avoidance and voting should be specified: Vice Chairman Michael Yang recused himself during discussion of and voting on this item because of the interested party relationship.

(6) Directors’ Names: Michael Yang Contents of motion: The 12th meeting of the 14th term Board of Directors (2018.12.12): Approval of the remuneration of the management officers. Causes for avoidance and voting should be specified: Vice Chairman Michael Yang recused himself during discussion of and voting on this item because of the interested party relationship.

(7) Directors’ Names: John T. Yu Contents of motion: The 12th meeting of the 14th term Board of Directors (2018.12.12): Approval of the amendment to the Chairman’s remuneration. Causes for avoidance and voting should be specified: Chairman John T. Yu recused himself during discussion of and voting on this item because of the interested party relationship.

(8) Directors’ Names: Michael Yang Contents of motion: The 13th meeting of the 14th term Board of Directors (2019.03.08): Approval of the subscribers and the exercisable units of the 2019 Employee Stock Options. Causes for avoidance and voting should be specified: Vice Chairman Michael Yang recused himself during discussion of and voting on this item because of the interested party relationship.

3. Measures taken to strengthen the functionality of the Board:

(1) CTCI has elected three independent directors and established the Audit Committee which is composed of all independent directors on Jun. 26, 2014. Please refer to the section 3.4.2 “The State of Operations of the Audit Committee”.

(2) CTCI has established the Nomination Committee under the resolution of the directors’ meeting on Dec. 13, 2016. The 2nd term Nomination Committee is composed by 3 Independent Directors and Chairman.

(3) From 2011, CTCI has disclosed the major resolutions of the Board meeting voluntarily on the Company website.

(4) In accordance with the Articles of Association, CTCI has purchased D&O insurance for directors and supervisors in order to reduce and diversify major damage risks of CTCI and the shareholders.

31

3.4.2 The State of operations of the Audit Committee 1. A total of 8 meetings of the Audit Committee were held in the previous period,

Independent Directors’ attendance was as follows: (As of March 31st, 2019)

Title Name Attendance

in Person By Proxy

Attendance rate (%)

Remarks


Jack Huang 8 0 100


Yen-Shiang Shih

8 0 100


Frank Fan 8 0 100

2. The Audit Committee is responsible to review the following major matters: A. Review financial report. B. Adopt or amend the internal control system. C. Assessment of the effectiveness of the internal control system. D. Adopt or amend regulations for financial or operational actions of material significance, such as

acquisition or disposal of assets, derivatives trading, extension of monetary loans to others, or endorsements or guarantees for others.

E. Review a matter bearing on the personal interest of a director. F. Review a material asset or derivatives transaction. G. Review a material monetary loan, endorsement, or provision of guarantee. H. Review the offering, issuance, or private placement of any equity-type securities. I. Review the hiring or dismissal of an attesting CPA, or the compensation given thereto. Review Annual Financial Report

The Board of Directors has prepared the Company’s 2018 Business Report, Financial Statements and proposal for allocation of profits. The CPA firm of PriceWaterhouseCoopers was retained to audit CTCI’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 CTCI Corporation.

Assess the effectiveness of the internal control system The Audit Committee assessed the effectiveness of the Company's internal control system policies and procedures (including finance, operation, risk management, information security, compliance, etc.) and reviewed periodic reports from the Company's Internal Audit Department, independent accountants and management. The Audit Committee believes that the Company's internal control system is effective and that the Company has adopted the necessary control mechanisms to monitor and correct violations.

Hire or evaluate an attesting CPA Due to the internal job adjustment within PricewaterhouseCoopers, it changes the independent auditors of the Company to Yi-Fan Lin and Shu-Chiung Chang, that being effective from the 1st quarter of 2018. This issue has been approved by the 4th meeting of the 2nd term Audit Committee and the 6th meeting of the 14th term Board of Directors on Mar. 9, 2018. In order to ensure the independence of the accounting firm, the Audit Committee has established an independent evaluation form to Assess the independence, professionalism and competence of accountants with reference to Article 47 of the Accountant law and Accountant's Code of Ethics Code No. 10.

Other mentionable items: 1. If there are the matter referred to as below in the Audit Committee, the dates of directors’

meetings, sessions, contents of motions, the Audit Committee’ resolutions and the Company’s response to the Audit Committee’s opinion should be specified.

32

(1) the matters referred to in Article 14-5 of Securities and Exchange Act. (2) resolution that was not approved by the Audit Committee but be undertaken upon the

consent of two-thirds or more of all directors.

BOD Meetings Contents of Motions and the Response

In Article 14-5 of Securities

and Exchange Act

Not approved by the Audit Committee but be

undertaken upon the consent of two-thirds or more of all

directors

The 6th meeting of the 14th term Board of Directors (2018.03.09)

Approval of the distribution plan of the 2017 directors’ and employees’ remuneration.

V None

Approval of the Fiscal 2017 business report, financial reports and consolidated reports.

V None

Approval of change of independent auditors of the Company.

V None

Approval of the distribution plan of Fiscal 2017 earnings.

V None

Approval of “Statement of Internal Control System for the Year 2017”.

V None

Approval on funds lending the subsidiaries for working capital requirement by the Company.

V None

Approval of CTCI Corporation to close its Italian branch.

V None

Resolutions of the Audit Committee(2018.03.09): unanimously approved by all present Audit Committee members.

The Company’s response to the Audit Committee’s opinion: unanimously approved by all present Board members.


Approval of selling shares of Utech Solar Corporation.

V None




Approval of the ex-dividend record date of 2018. V None

Approval of the amendment to the Company’s “Internal Control Systems”.

V None




Report on consolidated financial reports as of June 30, 2018.

V None

Approval of investing Ever Ecove Corporation. V None


V None


V None




Approval of investing HDEC-CTCI(Linhai) Corporation. V None





V None


V None



33

BOD Meetings Contents of Motions and the Response

In Article 14-5 of Securities

and Exchange Act

Not approved by the Audit Committee but be

undertaken upon the consent of two-thirds or more of all

directors


Approval of the budget of 2019. V None

Approval of the Year 2019 Audit Plan. V None

Approval of the issuance of unsecured ordinary corporate bonds.

V None

Approval of the cash injection of CTCI Development Corporation.

V None


V None

Approval of registration of a branch in Singapore for project execution.

V None

Approval of registration of a branch in Korea for project execution.

V None

Approval of Increase investment in Ever Victory Global Limited (BVI).

V None

Approval of donation to CTCI Education Foundation. V None

Approval of the issuance of 2019 Employee Stock Options plan.

V None

Approval of the amendment to the remuneration of the Chairman of the Company.

V None




Approval of the distribution plan of the 2018 directors’ and employees’ remuneration.

V None

Approval of the Fiscal 2018 business report, financial reports and consolidated reports.

V None

Approval of the distribution plan of Fiscal 2018 earnings.

V None

Approval of “Statement of Internal Control System for the Year 2018”.

V None


V None


V None



2. If there is Independent Directors’ avoidance of motions in conflict of interest, the Independent

Directors’ names, contents of motions, causes for avoidance and voting should be specified: None.

3. Communications between Independent Directors and the Company's Internal Audit officer and CPA A. After having presented the audit and follow-up reports to the Chairman, the Internal Audit

officer submitted the same reports via e-mail for review by the Independent Directors on a monthly basis. The Internal Audit officer communicated with the Independent Directors in person at least quarterly in 2018. There were no objections raised by independent directors in 2018.

B. The Internal Audit officer presents the findings of audit reports in the meetings of the Audit Committee and Board of Directors. All the Independent Directors have adequate access to how audit performs. During 2018, the communication channel between Independent Directors and the Internal Audit officer functioned well.

C. The CPAs present audit reports and findings to the Independent Directors. CFO, Finance manager, Accounting manager and Internal Audit officer attend the Audit Committee meetings and reply to Independent Directors immediately if they have any questions. During 2018, the communication channel between Independent Directors and CPAs functioned well.

34

3.4.3 Corporate Governance and Operation, Differences from the Corporate Governance Best Practice Principles for the TWSE/ GTSM Listed Companies and Reasons

Evaluation Item

Operation Status Deviations from “Corporate Governance Best-Practice

Principles for TWSE/GTSM Listed Companies” and reasons

Yes No Summary Statement

1. Does the Company establish and disclose the Corporate Governance Practice Principals in accordance with the Corporate Governance Best Practice Principles for the TWSE/ GTSM Listed Companies?

V In the 10th meeting of the 10th term board of directors, the establishment of the Corporate Governance Practice Principals was decided on Jul. 24, 2006, which had been modified in accordance with the regulations and real practice in these years. The latest revision was made in the 15th meeting of the 13th term board of directors on Aug. 5, 2016 and was published in the Market Observatory Post System (MOPS) and CTCI’s website.

None.

2. Ownership structure and shareholder’s equity (1) Does the Company set up the internal

standard operation procedure to handle issues such as shareholder’s advices, questions, disputes and accusations for implementation accordingly?

(2) Does the Company have control over the major shareholders, who control the Company and have the name list of the major shareholders who have the ultimate control over the Company?

(3) Does the Company set up and implement the risk control and firewall mechanism with the subsidiaries and affiliates?

V

(1)The Company has set up spokesman and investor relation

office as the liaison channel to handle issues like the shareholders’ advices or disputes.

(2) The Company has been submitting monthly report to the

Market Observatory Post System, assigned by the Securities and Futures Bureau about the change of the shareholding of the insiders (directors, managers and shareholders who have more than 10% of the total shares) in accordance with the 25th article of the Securities and Exchange Act.

(3) In addition to establishing the “Supervision and

Management of Subsidiaries” based on the “Regulations Governing Establishment of Internal Control System by Public Companies” set by the Financial Supervisory

None.

35

Evaluation Item




(4) Does the Company stipulate internal regulation, prohibiting the insiders of the Company to make use of the unpublished information for the trading of securities?

Committee, the Company also stipulated the internal basic principles for cooperation between the parent company and the subsidiaries like ”the Basic Principles for Joint- Venture contract and Cooperation between the Parent Company and Subsidiaries of the CTCI Group”, “the Common Operation Procedure to maintain the rights and interest of the CTCI Group”, etc., which are inspected by departments like the Auditing Department and QHSE Division to ensure the thorough implementation of the system and good mechanism of the risk- control for the subsidiaries and affiliates.

(4) The Company has set up the “Measures to Prevent Insider

Trading” and “CTCI Code of Ethics and Conduct”, prohibiting use of the unpublished information for the trading of securities.

3. Composition and Responsibilities of Board of Directors (1) Is there establishment of the

diversification and thorough implementation about the composition of board of directors?

V

(1)

A. The Company has established the diversification of board of directors in its “Corporate Governance Principles “. In consideration of diversity and fairness, the 14th term Board of Directors has 12 directors: Mr. John T. Yu(Chairman), Mr. Michael Yang (Vice Chairman), Mr. Quintin Wu(Director), Johnny Shih(Director), Mr. Yancey Hai(Director), Mr. An-Ping Chang(Director) and Mr. Wenent Pan(Director) are managements of various industries including Engineering Consultant, Plastics, textiles, electronics, optoelectronics and cement and so on. They are good

None.

36

Evaluation Item




(2) In addition to the establishment of the Remuneration Committee and Audit Committee, does the Company have other functional committees?

V

at leadership, management and have different industrial knowledge, decision-making ability and international market view. Mr. Jack Huang (Independent Director) is an attorney at law. Mr. Yen-Shiang Shih (Independent Director) had been Minister of Ministry of Economic Affairs (MOEA); Mr. Frank Fan (Independent Director) had been Chairperson of Public Construction Commission, Executive Yuan. Mr. Bing Shen(Director) has Financial background. Mr. Hsien-Cheng Yang(Director) has worked in the foundation which implement environmental protection and energy saving for many years. The implementation about diversity policy of each Director, please refer to【Note 1】.

B. There is 1 Director (8%) of the Company who is also employee. There are 3 Independent Directors (25%): 1 Independent Director’s seniority is within 3 years and the other 2 Independent Directors’ seniority is between 4 to 6 years. 1 Director’s age is under 50; 1 Director’s age is between 50 to 60; 7 Directors’ age are between 60 to 70 years old; 3 Directors’ age are over 70 years old.

C. The implementation about diversity policy of Board members has disclosed on the Company website (www.ctci.com) and the Market Observation Post System.

(2) In addition to the establishment of the Remuneration Committee and Audit Committee regulated by law, the Company also established the Corporate Governance Committee whose major jobs include planning,

None.

37

Evaluation Item




(3) Is there performance appraisal of the board of directors, which is carried out annually?

V

promoting and improving the program of Corporate Social Responsibility (involved Corporate Governance, Environment Protection, Occupational Health and Safety and Social participation); revising the performance regarding the implementation of the Company governance system, etc. The committee is composed of 12 directors and has held 4 meetings during the most recent fiscal year and current fiscal year up to the date of publication of the annual report. It works strictly and plays a decisive role in the major company policy decisions. Moreover, the Company established the Nominating Committee on Dec. 13, 2016. The 2nd term Nominating Committee is composed of 3 independent directors and Chairman, whose major jobs include the programming of the composition of board of directors/ functional committees, the qualification assessment of the directors, the programming of the succession of the managing echelon, conducting performance evaluation of the board of directors, etc. The meeting was held twice during the most recent fiscal year and current fiscal year up to the date of publication of the annual report.

(3) The Company has set up the “Regulations Governing the

board Performance Evaluation“ by the resolution of the Boards on Dec. 13, 2016 and revised by law or actual situations. According to the revised version by the resolution of 11th meeting of the 14th term of the Boards on Nov. 2, 2018, CTCI adds the execution about the board performance evaluation through an external

None.

38

Evaluation Item




professional independent organization or a team of external experts and scholars for every three years. The lately version is revised by the resolution of the 13th meeting of the 14th term of the Boards on Mar. 8, 2019. According to the latest regulation, the board of directors of the Company shall perform the performance evaluation of the internal board of directors each year according to the evaluation procedures and the evaluation indexes of the regulations. The performance evaluation of the board of directors of the Company shall be carried out at least once every three years by an external professional independent organization or a team of external experts and scholars. The results of the internal and external performance evaluation of the board of directors should be completed before the end of the first quarter of the following year. The Company considers the Company's situation and needs to determine the performance evaluation of the board of directors, including the following aspects: a. Participation in the operation of the Company; b. Improvement of the quality of the board of directors'

decision making; c. Composition and structure of the board of directors; d. Election and continuing education of the directors; e. Internal control; and f. Others. The criteria for performance evaluation of Board members include the following aspects: a. Alignment of the goals and missions of the Company; b. Awareness of the duties of a director;

39

Evaluation Item




(4) Is there regular assessment of the independence of the certified public accountant every year?

V

c. Participation in the operation of the Company; d. Management of internal relationship and

communication; e. The director's professionalism and continuing

education; f. Internal control; and g. Others. The 2018 board performance evaluation is in charge of execution by the Secretariat of the Board (STB) in early 2019. STB collect related information about activities of the Board of Directors and distribute “the Questionnaire of Self-Evaluation of Performance of the Board” to Board members for self-evaluation. The result has been reported to the 13th meeting of the 14th term Board of Directors on Mar. 8, 2019. The operation of CTCI’s Board of Directors is evaluated well base on the result of the 2018 board performance evaluation.

(4) To fulfill Corporate Governance, the Company has established “Evaluation of engaged Certified Public Accountant Regulation” in the 11th meeting of the 12th

term board of director on Dec. 20, 2012. According to this regulation, the Company exams and evaluates CPA’s independence and capability annually, and submit a report to the Audit Committee and Board meeting. The report was approved by the 11th meeting of the 2rd term Audit Committee on Mar. 7, 2019 and the 13th meeting of the 14th term Board of Directors on Mar. 8, 2019, the evaluation items please refer to the【Note 2】. After

assessed, CPAs Yi-Fan Lin and Shu-Chiung Chang from PricewaterhouseCoopers were qualified. Both CPAs do

None.

40

Evaluation Item




not have any direct or indirect interest relationship with either Board of Directors or CTCI, and believed to have more than sufficient capabilities on auditing, taxation and time cost efficiency.

4. Does the Company set up the corporate governance units or personnel responsible for matters related corporate governance?(including but not limited to providing the business-required information to the directors and supervisor, handling the matters related to the meetings of the Board and the shareholders' meeting, the registration of the Company and the minutes of the Board and the shareholders' meeting)

V The Executive Vice President of Executive Management Operations (EMO) and head of Secretariat of the Board (STB), Mr. Ming-Cheng Hsiao, has been appointed as the chief corporate governance officer who is the most senior executive for corporate governance matters. Mr. Ming-Cheng Hsiao has been in a managerial position for at least three years in a public company in handling stock affairs (STB) and corporate governance affairs. The major job of chief corporate governance officer includes as following: Handling matters relating to board meetings and shareholders’ meetings according to laws; Producing minutes of board meetings and shareholders’ meetings; Assisting in onboarding and continuous development of directors and supervisors; Furnishing information required for business execution by directors and supervisors; Assisting directors and supervisors with legal compliance The business developments in 2018 are as following: A. Handling matters relating to board meetings and

shareholders’ meetings according to laws, producing minutes of board meetings and shareholders’ meetings and assisting directors with legal compliance. a. Draw up the meeting schedule for functional

committees meetings and Board meetings; consolidate proposals from related divisions and

None.

41

Evaluation Item




provide the notice, agenda and related information to each director no later than 7 days prior to the scheduled meeting date; convene the said meetings and provide meeting materials; remind directors who have conflicts of interest of recusing themselves; and complete meeting minutes within 20 days after the functional committees meetings and board meetings.

b. Draw up and have prior booking for the date of Shareholders’ meeting; process the stock affairs; prepare meeting notice, handbook, annual report and minutes within statutory period; and report to MOPS and apply the certificate from Ministry of Economic Affairs after shareholders’ meeting.

c. Ensuring directors’ affair and the process of board resolution are in compliance with regulations.

B. Assist directors to carry out their duties, provide related information in need and arrange training program for them. a. Plan the 3 hours of on-site course for directors of CTCI

group’s listed company in May and August respectively and plan the training course for the directors, supervisors and management officers of the non-public company on an irregular basis.

b. In response to the substantial revision of Company Act, the Company arranged two seminars for group Directors, Supervisors and managers in August and December, 2018. The specialized lawyers explain effects about shareholders’ meetings and Board of directors in accordance with revised Company Act.

42

Evaluation Item




c. Inform the related information of laws or announcements to insiders on irregular basis.

C. Renew the Directors’ and Officers’ Liability Insurance in September, and report the insured amount, coverage, premium rate, and other major contents of the liability insurance at the board meeting in November.

D. Prepare the Self-evaluation of Corporate Governance Evaluation and assist related divisions to follow up Corporate Governance Evaluation Indicators and related regulations by the Competent Authority published.

5. Does the Company establish communication channel for stakeholders which including but not limited to shareholders, employees, customers and suppliers, set up a dedicated section in its corporate website for stakeholders, and properly respond to CSR-related issues concerned by stakeholders?

V The Company establishes "CSR" and "Investor Relations" sections in its corporate website to explain to stakeholders the conducts for fulfilling CSR and may be contacted via its corporate website when needed. The Company will give proper feedback to any reasonable concerns raised by the stakeholders.

None.

6. Does the Company entrust the professional stock affair agency for the shareholder affairs?

V The Company has entrusted the department of the stock affair agency of the KGI Securities Co. Ltd. to assist us in the stock affairs.

None.

7. Information Disclosure (1) Does the Company set up a website to

disclose information regarding the Company’s finance, business and corporate governance status?

V (1)

a) The Company has set up a Chinese/English website (www.ctci.com) to disclose information regarding the Company’s finance and business status and update information regularly.

b) The Company has disclosed information regarding the organization and function of Internal Auditing Dept., “Rules Governing Procedure for Making of Endorsements or Guarantees”, “Rules Governing

None.

43

Evaluation Item




(2) Is there any other information disclosure

channels (e.g., maintaining an English-language website, appointing responsible people to handle information collection and disclosure, appointing spokespersons, webcasting investors conference)?

Acquisition and Disposal of Assets” and “Rules Governing Procedure for Loaning of Funds” on the Company website.

(2)

a) The Company has set up a Chinese/English website and has appointed Brand Management Dept. to handle information collection and disclosure.

b) The Company has appointed the Head of Executive Management Office as the spokesperson, CFO as deputy spokesperson and they are responsible for speaking to the public. The Company will hold investors conference presentation according to practical needs.

c) The audio-visual record of investor conference has been posted on the Company website. The Company has disclosed finance and business information revealed in inventor conference on the Company website and the Market Observation Post System pursuant to regulations of Taiwan Stock Exchange.

8. Is there other important information, which helps to understand the governance and operation of the Company, which includes but not limited to the rights and interest of the staff, cares for the employees, investor relations, relation with the suppliers, rights of the stakeholders, trainings received by the directors and supervisors, the implementation of the risk management policy and risk assessment criteria, the

V Please refer to the【Note 3】. None.

44

Evaluation Item




liability insurance policies taken out for the directors and supervisors, etc.?

9. According to the last Corporate Governance Evaluation by TWSE, please indicate the situation has been improved and the priority and measures for the non-improved ones.

V The result of the 5th Corporate Governance Evaluation System was announced. Please refer to the 【Note 4】for

the specific improvements.

None.

45

【Note 1】The implementation about diversity policy of each Director

Diversity Name

Gender Operation

Management Industry

knowledge Law

Financial Accounting Economics

international market

perspective

Ability to lead

Ability to make policy

decisions

John T. Yu Male V V V V V

Michael Yang Male V V V V V

Jack Huang Male V V V V V

Yen-Shiang Shih Male V V V V V V

Frank Fan Male V V V V

Hsien-Cheng Yang Male V V V V

Quintin Wu Male V V V V V

Bing Shen Male V V V V V V

Johnny Shih Male V V V V V V

Yancey Hai Male V V V V V V

An-Ping Chang Male V V V V V V

Wenent Pan Male V V V V V

【Note 2】Assessment of the CPA’s independence

No. Evaluation Item Result Qualify for

Independence

1 The engaged auditors should not accept the engagement when they may have involved in any direct or material indirect interests which may impair their impartiality and independence.

Yes Yes

2

An audit or review of financial statements delivers high or medium (but not absolute) assurance to potential users of financial statements. In addition to the maintenance of independence in appearance, the maintenance of independence in mind is more important for an independent auditor. Therefore, the members of audit engagement team, the partners of the accounting firm, and accounting firm and its affiliates must be independent to us.

Yes Yes

3

If the engaged auditor fulfills any of the below requirements:

Yes Yes

(1) Integrity: an independent auditor shall be straightforward and honest during his/her provision of professional services.

(2) Objectivity: During his/her provision of professional services, an independent auditor shall be objective and avoid any conflict of interests to override his/her independence.

(3) Independence: an independent auditor shall have independence in mind and in appearance on an audit or review of financial statements.

4 Independence is related to the integrity and objectivity. During the engagement, if an independent auditor isn’t in the lack/impairment of independence and thus affects his/her integrity and objectivity.

Yes Yes

5 If the independence of an auditor isn’t impaired by self-interest, self-review advocacy, familiarity, and intimidation.

Yes Yes

6

Self-interest could impair an auditor’s independence. Self-interest means acquiring a financial interest in an audit client (i.e. CTCI Corporation) or having another conflict of interests created by other interests or relationships with us. If our engaged independent auditor isn’t in any of the below situations:

Yes Yes

(1) Having a direct or material indirect financial interest from us.

46

No. Evaluation Item Result Qualify for

Independence

(2) Having financing or guarantee relationship with us or our directors.

(3) Concerned about the possibility of losing CTCI Corporation as a client.

(4) Having a significant and close business relationship with us.

(5) Entering into a potential employment negotiations with us.

(6) Entering into a contingent fee arrangement relating to our audit engagement.

7

Independence influenced by self-review means an independent auditor uses a report or judgment resulting from a non-audit service as an important factor to conclude the result in an audit or review of financial information, or a member of the audit engagement team is our former director, or is in our key position with significant influence over the subject matter of the audit engagement. If the engaged auditor isn’t in any of the below situations:

Yes Yes (1) A member of the audit engagement team is/was our director,

supervisor, manager, or employed by us in a position with significant influence over the subject matter of the audit engagement within last two years.

(2) The accounting firm of the audit engagement team provides us non-audit services which would directly affect a material item of the audit engagement.

8

Independence influenced by advocacy means that a member of the audit team acting as an advocate of our position so the objectivity of the independent auditor could be challenged. If the engaged auditor isn’t in any of the below situations: Yes Yes

(1) Promoting or brokering shares or other securities issued by us.

(2) Acting as an advocate on behalf of us in litigation or disputes with third parties.

9

The effects of familiarity to independence means a close relationship with our directors, supervisors, and/or managers will cause an independent auditor to excessively concern or sympathize about our interest. If the engaged auditor isn’t in any of the below situations:

Yes Yes

(1) Having a family relationship with our directors, supervisors, managers, or employees in a position with significant influence over the subject matter of the audit engagement.

(2) A former partner, who was disassociated with the engaged accounting firm within a year, joins us as a director, supervisor, manager, or employee in a key position with significant influence over the subject matter of the audit engagement.

(3) Accepting gifts or preferential treatment from our directors, managers, or us.

10

Independence influenced by intimidation means an independent auditor is deterred from being objective due to actual or perceived pressures, including the attempts to exercise undue influences. if engaged auditor isn’t in any of the below situations:

Yes Yes (1) Requesting an independent auditor to agree with our inappropriate

accounting treatments and disclosures.

(2) Compelling an independent auditor to reduce the extent of work performed in order to lower the audit fee.

47

【Note 3】

1. The system about employee rights and interests and the care for the employees adopted by the Company is implemented in accordance with the related regulations and specified clearly in the working regulations of the employee manual, which include the gender equality at work, sexual harassment prevention and treatment, the compensation and pension for the disaster, injury and disease, subsidy principals the for weddings /funerals, etc. The labor management meeting is held as well to communicate with each other for issues concerned by the labor regularly each quarter. There are other measurements like the mail box for the employee opinion and special line against the sexual harassment to give trust to the employees thoroughly and to carry out the self- governance of the employee.

2. The first principle for the sound corporate administration is to protect the shareholder rights and interests and to treat all shareholders fairly. To encourage the investors to participate in the corporate governance and to implement the shareholder activism, the Company has uploaded the minute of the shareholder meeting on the website and released the major information in English and Chinese simultaneously to protect the rights and interests of the domestic and international investors. Moreover, the Company holds the corporate conference regularly and uploads the video of the conference to the website to increase the understanding of the corporation about the Company to maintain the shareholder rights and interests accordingly.

3. The Company offers the relevant laws and regulations requiring attention and seminar information for further study to directors and make presentation about the business regularly in the meeting of board of directors. (For detailed information, please refer to the important information concerning the corporate governance and operation.)

4. All directors will attend the meeting of board of directors except for special situation and their attendance of the meeting will be reported in the Market Observatory Post System.

5. The Directors of the Company will recuse themselves to avoid conflicts of interests in the Board Meeting.

6. The Company purchased D&O insurance for its directors and supervisors. 7. We strictly conduct supplier management. Only those qualified and registered in the CTCI Group

PSSCM (Project Service Supply Chain Management) System have the chance for quote and to be contracted for plant construction. Issues regarding the scope of the integration work, the work regulation, the project schedule, the quality inspection, QHSE Management are well- explained to the contractors during the inquiry and quote for them to understand completely the content of work, responsibilities and obligations in the contract. The total amount of the contract, the payment term, the responsibilities, obligations and penalties for the mutual parties are specified in the contract as base for the implementation of the contract of the corporative contractor. Upon the delivered equipment, materials or services, project team will evaluate vendor performance, including quality, HSE and schedule. The performance evaluation will be referred to future vendor selection for inquiry. In case of any inappropriate-issue caused by vendor during on-going contraction, project team also could propose the request to negotiate with the vendor by official hierarchy. With the sound finance of the Company, all contractors get paid in due course and according to the payment term. Besides, the function to check the payment is established for the contractors to know the review procedure of the invoice. The Company treats all contracted contractors fairly and honestly and negotiates with them for cooperation, mutual harmony and prosperity.

8. “Implementation of risk management policies and risk measuring criteria” Risk management policies: Declarations: All kinds of risks will affect the achievement of objective of the Company. The understanding and management of risk can assist the Company to prepare countermeasure and improve performance, so as to achieve stable growth and pursue the sustainable operation. Descriptions: Through constructing proper risk management procedure, the risk management of the Company will integrate into the daily operating activities to manage the operating risks effectively. For this purpose, the Company will:

48

Establish enterprise risk management system consistent with company strategy; Define the roles and responsibilities of all employees in enterprise risk management, and

communicate with all employees; Prepare systematized enterprise risk assessment method to ensure that risks significantly

affecting the Company can be identified effectively; Ensure that information related to enterprise risk can be passed through explicit and effective

channel; Integrate enterprise risk management mechanism into daily operating activities. Enterprise risk management is a continuous activity; all employees of the Company are responsible for understanding and carrying out risk management system of the Company. All colleagues shall properly perform the duty of risk management; each management level shall also comply with relevant requirements of this risk management system. CTCI follows the “Risk Management Regulations” which defines the risk management process and risk measuring criteria to perform the risk management tasks. Each risk management unit regularly performs risk identification and risk evaluation and proposes the improvement plan. The report is submitted to the Risk Management Executive Committee to control and to reduce the risks.

9. “To Satisfy Our Customers with Optimized Engineering Services” is CTCI’s corporate mission, and we stress customers’ feedback highly. For years, we have been collecting customers’ feedback based on “Customer Service Enhancement Regulations” in a timely fashion and proactively conducting customer satisfaction survey twice a year. Besides, a cross-departmental “Customers Services Feedback Group” coordinated by the President was established. The Group would review the customer feedback raised in the questionnaire survey, proposed correction actions, and instructed the departments concerned to fulfill their tasks accordingly to make sure our customers’ trust and expectations are met.

【Note 4】

No. Evaluation Item Specific Improvements

1.6 Was the Annual General Meeting convened before the end of May?

CTCI’s 2018 Annual General Meeting has been convened on May 29, 2018.

2.23

Has the Company’s “Regulations Governing the board Performance Evaluation” approved by the Board of the Directors according to external appraisal has determined at least once every three years and executive deadline, statues and results are disclosed on the Company’s website and annual report by the regulation?

CTCI’s “Regulations Governing the board Performance Evaluation” has been amended by the Board of Directors on November 2018. The amended regulations prescribe the performance evaluation of the board of directors of the Company shall be carried out once every three years by an external professional independent organization or a team of external experts and scholars.

49

3.4.4 The Remunerate committee’s composition, responsibilities and operation: A. Remuneration Committee members’ information

Identity (Note1)

Criteria Name

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

Independence Criteria(Note 2) Number of

Other Public Companies in

Which the Individual is

Concurrently Serving as a member of

Remuneration Committee

Remark

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


Frank Fan — — V V V V V V V V V 0


Yen-Shiang Shih

V — V V V V V V V V V 1


Jack Huang V V V V V V V V V V V 3

Note 1: Please fill out director, independent director, or other. Note 2: 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. The same does not apply, however, 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 that directly holds 5% or more of the total number of outstanding shares of the Company or that holds shares ranking in

the top five in holdings. 6. Not a director, supervisor, officer, or shareholder holding 5% or more of the share, of a specified company or institution that has a financial or business relationship with the Company. 7. Not a professional individual who, or 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 been a person of any conditions defined in Article 30 of the Company Law.

50

B. The state of operations of the Remuneration Committee a. This committee is comprised of 3 members. b. The term of current committee members is from Jun. 28, 2017 to Jun. 27, 2020.

A total of 3 meetings of the Remuneration Committee were held during the most recent fiscal year: (As of March 31st, 2019)

Title Name Attendance in

Person By Proxy

Attendance rate (%)

Remarks

Convener Frank Fan 3 0 100

Member Yen-Shiang Shih 3 0 100

Member Jack Huang 3 0 100

Other mentionable items:

1. If board of directors declined to adopt, or modified, a recommendation of the remuneration committee, the dates of meetings, sessions, contents of motions, resolutions of the Board Meeting and the Company’s response to remuneration committee’ opinion should be specified (If the remuneration passed by board of directors exceeds the recommendation of the remuneration committee, the circumstances and cause for the difference shall be specified): None.

2. If there are objections or reservations to any discussion matters or extraordinary motions expressed by any member of the Committee, recorded or provided in written forms, the dates of meetings, sessions, contents of motions, all members’ opinion and the Company’s response to members’ opinion should be specified: None.

3. The State of operations of the Remuneration Committee in the recent fiscal year:


Contents of Motions and the Response

Resolution The Company’s response

to the Remuneration Committee’s opinion

the 4th Meeting of the 3rd Term


(2018.03.09)

1. The distribution plan of the 2017 directors’ and employees’ remuneration.

2. The subscribers and the exercisable units of the 2018 Employee Stock Options.

Unanimously approved by all present Remuneration Committee members.

Unanimously approved by all present Board Directors.



(2018.12.12)

1. The average salary increase rate of 2019.

2. The remuneration of the management officers.

3. The amendment to the Chairman’s remuneration.

4. The issuance of the 2019 employee stock options plan.





(2019.03.07)

1. The distribution plan of the 2018 directors’ and employees’ remuneration.

2. The amendment to the management officers’ remuneration.

3. The subscribers and the exercisable units of the 2019 Employee Stock Options.



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3.4.5 Corporate Social Responsibility (CSR)

Evaluation Item

Implementation Status Deviations from

“Corporate Governance Best-Practice

Principles for

TWSE/GTSM Listed

Companies” and reasons


1. Corporate Management Practices (1) Does the Company formulate

CSR policy or systems and review the implementation status?

(2) Does the Company arrange CSR

trainings regularly? (3) Does the Company establish

exclusively (or concurrently) dedicated units with senior management authorized by the Board to be in charge of CSR Promotion and report to the Board?

V (1) CTCI established the CSR Promotion and CSR Report Publication Procedure in November 2009

to define the organizational framework, responsibility and authority of the CSR Committee, and to specify the cautions and rules for promoting CSR within CTCI. When setting issues to be promoted within CTCI, these issues are considered in accordance with the Global Reporting Initiatives (GRI) Standard in terms of corporate governance, environmental protection and social participation as well as AA1000 International Standards, including the concern for stakeholders and impacts on CTCI; and systematic procedures for determining such have been established.

(2) The Company promotes the concept of corporate social responsibilities through various approaches, such as lectures, public announcement and activities held.

(3) To continuously strengthen corporate sustainability, the functional committee of the board—Corporate Governance Committee is established to administer CSR related activities and policies and the promotion of them. Meanwhile, to carry out every policy, a CSR Task Force was set up under the Corporate Governance Committee which shall report to the Board on a yearly basis. The President and the GSS CEO act as the Chief Officer and the Coordinator of the CSR Task Force, respectively. Alongside them are the Social Participation Group, the Environmental Protection Group and the Operation & Governance Group. Their members are, the heads of EPC Operations (EPCO), Hydrocarbon Business Operations (HBO), and Infrastructure, Environment & Power Business Operations (IEPBO), leaders of the three group, head of Brand Management Department, and other personnel designated by the President. CTCI CSR Task Force holds meetings either routinely or occasionally, and it reports to the

None.

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Evaluation Item



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(4)Does the Company make a reasonable remuneration policy; combine performance assessment of employees with CSR policy; and regulate an explicit and effective system of reward and punishment?

Corporate Governance Committee, a functional committee under the Board of Directors at the end of every year. The scheduled meeting is held every October, and the Coordinator is responsible for organizing the meeting. The annual budget of the subsequent year is proposed, and agendas are set and discussed. Other meetings are held as the Chief Officer sees fit. The members of the Committee and department supervisors that are relevant to the topics for discussion should either be present or appoint representatives to attend the meetings. The primary roles of the CSR Task Force are as follows:

Establish CSR Policy.

Review operations of the CSR Management System.

Review CSR targets, strategies, and action plans of the Company, and guide and track the developments, performances, and improvements of each action plan.

Supervise communication plans with each stakeholder (e.g. the writing of the CSR Report), and invite stakeholders to join in discussions with committee members or host stakeholder meetings as the need arises.

Supervise that the writing and compilation of the CSR Report is accomplished within the set timeframe.

(4) CTCI values employee welfare and care. Apart from offering a base salary higher than the minimum local wage, CTCI also appeals in internal and external fairness as well as individual fairness. In terms of external fairness, we have external professionals surveying the salary and benefit survey with fully understanding of the market rate while analyzing the employment environment as the foundation of our salary design. For internal fairness, the salary structure is designed based on the evaluation of skills and duties of employees so as to insure that the salary standard is appropriate and irrespective of gender difference. To encourage better performance of colleagues, CTCI also combines one's payment with his/her performance, especially for variable bonus, to realize individual fairness in salary with one's organizational

53

Evaluation Item



Principles for

TWSE/GTSM Listed



performance, departmental performance, and personal performance. Additionally, salary review is performed according to the market salary survey and personal performance ever year. Aside from specifying in Topic 1, Performance, Rewards and Discipline of Chapter 6 Work Rule in the Employees Manual, we also speculated CTCI Employees Reward and Punishment Regulations accordingly, so as to boost morale and strengthen disciplines with fairness, justice, openness, and rationality.

2. Sustainable Environment Development (1) Does the Company dedicate

itself to improve the efficiency of all kinds of resources and use the renewable materials that impact on the environment less?

(2) Does the Company set up an

environmental management system that suits the nature of industry?

(3) Does the Company pay

attention to the impact of

V (1) As a member of the society, CTCI shall spare no pain to save energy and reduce carbon

emissions. In terms of engineering expertise, CTCI has been making continuous innovation of engineering technologies to reduce energy consumption and reduce pollution. For routine affairs, CTCI urges employees to save energy and resources and emphasize the importance of saving paper, electricity, water and petroleum consumption.

(2) CTCI has long been dedicating to the R&D of green engineering technologies. The aims are to

provide owners with economical, feasible environmental and energy-saving solutions, to reduce pollution, to lower impacts to human health and environment risk, and to bring innovation and enhance the industry’s green competitiveness based on the core technology of CTCI, with a full life cycle perspective starting from engineering design, procurement, construction, commissioning, operation and decommissioning. Hence, we can attain a multi-win scenario among CTCI, cooperative partners, stakeholders and social environment.

(3) CTCI dedicates to working on the greenhouse gas (GHG) inventory, controlling GHG emissions,

submitting solutions to GHG reductions and implementing projects of GHG reductions in respect

None.

54

Evaluation Item



Principles for

TWSE/GTSM Listed



climate change on its operations; carry out the investigation of greenhouse gas inventory; and make strategies of energy efficiency, carbon and greenhouse gas reduction for the Company?

of GHG emissions management policies. To show the world its resolution to mitigate climate change, CTCI absorb the issues regarding greenhouse gases and climate change into the primary missions of CSR and the environmental protection group subordinate to the Board of Directors. Not only yearly routineness of GHG inventory but also promotion of energy conservation and carbon reduction projects, assessment of climate change risks and proposals of emergent strategies are the main accountability and responsibility of environmental protection task group. The environmental protection task group reports the management benefits of GHG and the results of climate change solutions to the general manager via routine work conferences. Due to the fact that supervision is exerted by the Corporate Governance Committee, an affiliation to the Board of Directors, strategic suggestions regarding climate change shall be reported to the Board of Directors regularly as the basis of long-term strategies. The Global Risks Reports published by World Economic Forum from 2017 to 2019 indicate that extreme weather events, natural disasters and failures of climate change mitigation are the top three risks for three consecutive years. With serious global climate change and the increase in energy consumption, enterprise transformation and low carbon business models became the key elements to improve competitiveness of all activities. In order to cope proactively with market needs, CTCI adopted the risk analysis of TCFD (Task Force on Climate related Financial Disclosure) to discover the risks and opportunities of business potentials in the future. In this way, we can evaluate the potential impact on finances and propose relevant methods of management. It has been more than five years that the headquarters building of CTCI conducted the ISO 14064-1 GHG Emissions Inventories and Verification each year. In 2018, the headquarters building's emissions of CO2e in the Scope 1 and Scope 2 are 126.2 and 2,909.7 tons respectively. After it has been introduced and implemented by the headquarters building since 2012 until 2015, Tunghsiao Power Plant was changed into a demonstration site in 2016, which was later

55

Evaluation Item



Principles for

TWSE/GTSM Listed



absorbed into external audit. In 2017, CTCI absorbed all domestic sites into the scope of inventory, which became an important milestone on the road towards the green engineering and management. According to the inventory results in 2018, all the domestic sites' emissions of CO2e in the Scope 1 and Scope 2 are 1437.9 and 2188.8 tons respectively. All the overseas sites' emissions of CO2e in the Scope 1 and Scope 2 are 5588.2 and 2926.3 tons respectively. Our main objective of GHG reductions each year is: the average emissions of greenhouse gases shall not surpass those of former two years. Greenhouse gas management policy: Commitment to greenhouse gas emission inventory Tracking actual greenhouse gas emissions by the Company Proposing viable plans for greenhouse gas reduction Implementing greenhouse gas reduction plans Sustainable development Energy saving measures and benefits: The headquarters building of CTCI started the green building project in mid-2017. In March 2018, the LED lamp replacement in the whole building was completed, and 12,371 T5 lamps were replaced. In July 2018, the Energy Management System was put into operation and 199 smart meters were installed to intelligently control the electricity consumption data related to air conditioning, lighting, sockets, and elevators on all floors of the building. After a year of hard work, in August 2018, the Company obtained the EEWH bronze label for improvement to the existing building, and continued to obtain the gold label from certification by the most widely used and most sustainable LEED (Leadership in Energy and Environmental Design) evaluation system developed by the U.S. Green Building Council (USGBC) in November of the same year. In our headquarters building, we regularly remind our employees to make energy saving a habit, to establish a corporate culture of energy conservation. Energy saving and carbon reduction are

56

Evaluation Item



Principles for

TWSE/GTSM Listed



a focus in our routine operations at the headquarters building. Nightly patrols are carried out to ensure no energy waste takes place, and energy consumption is well-documented. In terms of professional engineering, CTCI will continue to invest more new technologies for energy-saving and carbon reduction technology in engineering, and constantly pursue the research and development and application of new technologies to reduce energy consumption and prevent pollution during construction, so that new technologies can exert an influence on the construction sites of the engineering projects. It is recommended that construction contractors prioritize the use of energy-saving and low-pollution construction equipment and minimize the idle time of relevant equipment.

3. Social Welfare Protection (1) Does the Company formulate

management policies and procedures in accordance with relevant regulations as well as International Covenant on Human Rights?

(2) Does the Company create a

mechanism and channel for employees’ complaint and settle it properly?

V (1) In compliance with the United Nations Global Compact regarding regulations over human

rights, labor standards, environment and anti-corruption, in addition to ensuring all daily operations conforming to corporate ethics, CTCI develops basic conduct standards of compliance for all board directors, managers, employees and procurement staff. This set of standards Corporate Governance Norms, Business Ethical Behavior Norms for Board Members and Managers, Code of Employee Ethics and Behavior, and Work Ethical Behavior Rules for Procurement Staff.

(2) The Company has stipulated “Guidelines for Ethical Conduct“ and specifically defined the

guidelines and penalties in “Prohibition of Bribes Offering and Acceptance, and Blackmailing”, “Preventing Conflicts of Interest”, and “Protection of Business Confidentiality and Intellectual Property Rights”. The Company established an investigation team and complaint hotline for corruption and briberies, which accept reporting from persons inside and outside of the organization at all time. The reporting and consulting hotline is (02-2835-5936) or the email address: [email protected]. The department in charge of the complaints is the Human

None.

57

Evaluation Item



Principles for

TWSE/GTSM Listed



(3) Does the Company provide

employees with a safe and healthy working environment as well as the regular tutorials regarding the knowledge of safety and health?

(4) Does the Company create a

mechanism of regular communication for employees and notify them of any significant operational changes that might impact on them?

Resource Department. We encourage employees to notify any infringement of law, regulation or staff regulations through named reporting. The Company should by any means hold confidentiality of the identity of the person submitting this report to avoid threats. In cases that one is suspicious of corrupt practices but could not be verified of the action violating the law, the consulting hotline is available for immediate report. Colleagues can even write e-mails to the feedback box, which will be directly responded by the manager of Human Resource Department or related departments for further handling.

(3) CTCI’s HSE Policy Statement stresses “Safety First” and works on aspects including “Promote

Personal Health and Wellbeing”, “Protect the Environment and Pursue Sustainability”, “Implement Effective Risk Management”, “Comply with Legal and Contractual Requirements”, “Encourage Training and Engagement”, and “Continuously Improve Our HSE Management System” to provide employees with a safe work environment. CTCI established a health center in 2013. We advocate health promotion through inviting physicians or nutritionists as well as other experts to hold health promotion seminars and provide physician on-site services every month. The topics of health promotion seminars feature mental, physical and spiritual wellbeing. Moreover, to create a friendly workplace, we set up a breastfeeding room for female colleagues who become new moms.

(4) CTCI values the opportunities to carry out bidirectional communication with our employees.

That’s why we have been working to provide open and transparent channels for communication because only unimpeded communication between employees and the Company will create a workplace that encourage active employee participation. Our employees are provided with multiple mechanisms to make their workplace perfect, including labor-management meetings, internal service satisfaction survey, new employee lunch talks,

58

Evaluation Item



Principles for

TWSE/GTSM Listed



(5) Does the Company draw up

workable plans of vocational skills development for employees?

(6) Does the Company formulate

policies and a complaint procedure regarding consumer

talks with senior executives, and the organization climate survey. Through these channels, employees are invited to report all kinds of issues in workplace and have these issues resolved. In 2018, in order to gain a deeper understanding of the voices inside the hearts of our colleagues and promote two-way communication and interaction, a special meeting with the President was held, with more than 50 senior engineers participated in this event. After the meeting, the recommendations of the colleagues were comprehensively planned. The short-term and long-term plans would be formulated for effective communication. In the short term, different communication resources and assistance would be provided for each stage. The long-term plan would be to establish regular meetings for effective communication within the business units and implementation of the Company's policies and various institutions.

(5) To provoke the passion for work in every employee and in consideration of the need for the

organization to satisfy employees with self-realization, CTCI started promoting Individual Development Plant (IDP) for all employees since 2014. Each employee may develop different learning development plans according to the corporate development, competency required for the function and individual development intent, which urges the employees to increase their own KSA (knowledge, skill and attitude) while employees can develop training, experience, disciplines, and refinement based on their own strength and weakness through communication with the coach. Consequently the overall competitiveness in employees is enhanced to reach win-win situation between the employees and the Company, which forms an unconstrained work environment with infinite development opportunities.

(6) The Company conducts customer satisfaction survey on the projects in progress and the

projects during its closing to warrantee period annually. The Brand Management Department will send out the questionnaire to customers. Then, the “Customers Services Feedback Group”

59

Evaluation Item



Principles for

TWSE/GTSM Listed



rights protection based on the workflow of R&D, procurement, production, operation and service?

(7) Does the Company abide by

relevant regulations and international standards in the marketing and labeling of their products and services?

(8) Does the Company check if the

suppliers had any record of affecting environment and society in the past before doing business with them?

(9) Do the contracts signed

between the Company and suppliers contain the terms that the contract can be terminated or canceled at any time if the supplier violate

will make analysis on the survey results and seek effective solutions for further improvement by respective departments following acquiring approval by the President. This has ensured CTCI's quality standard can win customers' trust and meet their expectations.

(7) A commitment to quality is the key that enables CTCI to operate sustainably, it is also a promise that CTCI has kept to its clients. To do so, we established Quality Management System based on ISO 9001:2015 to make sure all vital stages of project management, engineering, procurement, construction, fabrication, commissioning and maintenance are in compliance with engineering and regulation requirements. We had been certified since 1996.

(8) All vendors have to sign "Contractor’s Commitments on Corporate Sustainable Management",

promising to be in compliance with the sustainable operation practice. For new vendors requested by the management to undergo plant visiting survey, "Self-Assessment Sheet of Contractor's Corporate Sustainable Management" will be distributed and filled in beforehand for evaluations of their social and environmental performances. As of 2016, vendors listed in Tier 1 will have to fill in "Self-Assessment Sheet of Contractor's Corporate Sustainable Management" to evaluate the possible environmental and social impacts.

(9) Since 2011, we began to incorporate "Corporate Social Responsibilities" with vendor

evaluations; while beginning with 2014, we add more items including "Environmental Management", "Labor Conditions", "Human Rights" and "Social Impact" to the list to ensure the vendor is qualified with ISO14001/OHSAS 18001certification, and comply with requirements for quality, price, delivery period, safety, health, environmental management, labor conditions, health management, and employee welfare. Disqualified vendors will be

60

Evaluation Item



Principles for

TWSE/GTSM Listed



against its policy of CSR and has significant impact on environment and society?

suspended for cooperation following such stringent review process.

4. Information Disclosure Enhancement (1) Does the Company disclose any

relevant and reliable information regarding CSR on its official website and Market Observatory Post System?

V (1) (a) Being one of the leading transparent companies, we participated in the “Information Disclosure

and Transparency Ranking System” launched by TWSE and Taipei Exchange since 2004, and were ranked as a listed company with rather transparent information disclosure. From 2009, CTCI has been ranked as an A++ company for 6 consecutive years, the top ranking a company can ever receive. Since the year 2014, TWSE and Taipei Exchange (formerly Gre Tai Securities Market) has been holding “Corporate Governance Evaluation”, and CTCI has been upholding the highly transparent principle for corporate governance and been listed as Top 5% for 3 consecutive years. The fact proved our rigor in corporate governance and effort to maintain information transparency.

(b) CTCI has been providing correct, open and transparent important operational information for

investors to make the correct choice. We also assign a spokesperson, organize conference calls, publish periodic reports, and make important announcements over the CTCI website to make active communication with investors. In addition to the corporate website, we also disclose relevant information over the Market Information Post System of the Taiwan Stock Exchange. Since March 2010, the English version of important announcements has been made available. We also organize overseas investor conferences for foreign investors or participate in the investor conferences organized by securities companies, in order to improve and increase communication and exchange with overseas corporate investors.

None.

61

Evaluation Item



Principles for

TWSE/GTSM Listed



(c) In order to communicate with stakeholders and allow them to better understand our way of operation, we began publishing on an annual basis the CTCI CSR Report in 2008 to disclose the information concerning our materiality issues according to the GRI Standard. We also regularly submit the report to a neutral third party for verification. In fact, we are the first private business in Taiwan to have our CSR report verified by a neutral third party. For more details, Please refer to the item 7 “If the corporate social responsibility reports have received assurance from external institutions, they should state so below“ of this table.

5. If the Company has established corporate social responsibility principles based on “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies,” please describe any discrepancy between the principles and their implementation: verified by a third party, CTCI CSR Report is in compliance with the three major principles of AA1000 Assurance Standard, which are Inclusivity, Materiality and Responsiveness.

6. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices: (1) CSR Policy Statement:

To fulfill corporate social responsibilities with due faith has been a target of operation for our company; aside from pursuing the largest profits for our shareholders, we aim to attend at the same time the rights of the stakeholders, conform to the ethical codes considered the social norms, and promote energy saving and carbon reduction to slow the pace of climate change. It is hoped that with such actions we can construct a society of justice and fairness jointly with the stakeholders while creating a sustainable living environment. Thereby, the implementation directives of CSR promoted by CTCI Corporation include the three aspects, "Operation and Governance," "Environmental Protection," and "Social Participation," committing to developing a robust organizational structure, realizing the vision of green engineering with due diligence, and performing CSR with due faith.

Developing a Robust Organizational Structure Steady growth and sustainable development are the basic requirements for performing CSR. Without them, no enterprise is capable of promoting social welfare and environmental protection. For this reason, besides legal compliance, we will continue to develop an effective internal control system, maintain information security, carry out risk management, ensure accessibility and transparency in disclosure, uphold business self-discipline, and optimize organizational structure, while at the same time provide employees with steady career development, shareholders with stable long-term profits, and clients with satisfactory project service quality.

62

Evaluation Item



Principles for

TWSE/GTSM Listed



Performing CSR with Due Faith "Cultivating engineering talent for the enhancement of engineering service quality" has been the corporate mission of CTCI since its inception, and it is the most straightforward method to requite society. The Company has been in full compliance with the labor laws, dedicated to protecting and respecting the principles of globally recognized basic labor rights, ensured such rights applied for all without discrimination, and provide diversified communication channels as well as a healthy and safe workplace for employees. Also, we maintain good neighbor relationship with citizens in local communities and promote social welfare in the best way possible.

Realizing the Vision of Green Engineering with Due Diligence CTCI has long been emphasizing the technological development for green engineering, and dedicating efforts to minimize pollution, and lower the impacts made to human health and the environment during the whole life cycle of project executions, including engineering (E), procurement (P), construction (C), commissioning (K), operation and maintenance after plant turnover to the owners. All the procedures are taken with approaches that are economical and viable with an aim to bring innovation and enhance the green competitiveness of the industry to create a multi-win scenario among CTCI, cooperative partners, stakeholders, and the social environments, and to contribute its share to the creation of a sustainable eco environment.

(2) Methods of communication, frequency, and key responses:

Stakeholders Communication method

and frequency Major issues Reply of CTCI Communication effectiveness

Employees Labor-management meeting, senior supervisors' seminar, Occupational Safety and Health Committee/quarterly;

Safe and healthy work environment

Recruitment and retention

Career development and educational training

Set target values for various work safety indicators, and make continuous improvement

Utilize the mentoring system/OJT and the annual training program,

4 labor-management meetings were held in 2018

6 senior executives symposiums

4 meetings of the Occupational Safety and Health Committee

63

Evaluation Item



Principles for

TWSE/GTSM Listed



Employees' suggestion platform, hotline, e-mail box, Employee Welfare Committee/any time

Labor rights and human rights

so that the professional ability

attainment rate can reach ≧

92% and the completion rate the annual training program can

reach ≧ 95%

Formulate and promulgate the human rights policy

Provide Employee Assistance Programs (EAPs) to achieve balance of body and mind and facilitate a positive cycle of health at the workplace

Shareholders/investors Shareholders' meeting/annually;Investor conference/semi-annually; Overseas investor conference, investor roadshow/occasionally Investor visit/occasionally

Profitability

Business outlook

Horizontal competition

Operational risk

Sustainable development

EPS is NT$2.40 in 2018

Governments continues to promote infrastructure, bringing an optimistic business outlook to CTCI

CTCI is the largest turnkey engineering company in Taiwan and ranks among Engineering News-Record's (ENR) top 100 engineering companies in the world, and therefore the Company has considerable competitive advantages

1 shareholder meeting was held in 2018

2 investor conference of the Group were held in 2018

CTCI participated in 7 overseas investor conference in 2018

In 2010, a total of 99 foreign judicial persons and 40 domestic judicial persons visited the CTCI

64

Evaluation Item



Principles for

TWSE/GTSM Listed



Operational risks are diversified through diversification of business and globalization of operational landscape

CTCI have been included in the DJSI for four consecutive years

Community Hosting a large cultural event/annually Charity sale event/every other week Public welfare activities/occasionally

Social involvement The road surface repair work of the parking lot of the headquarters building was completed to reduce noise and maintain community peace

Connect with the international community and head towards sustainable development

Improve education standards

Provide care and assistance for the vulnerable and promote social harmony

Promote industrial exchanges

Improve the level of the engineering industry chain

In 2018, the CTCI Education Foundation handled 17 projects and 92 events with 8,087 participants and 102 participating units

CTCI offered 2,813 hours of volunteer service in 2018

CTCI and its employees have participated in a total of 49 academic/professional associations as a group and individual members

65

Evaluation Item



Principles for

TWSE/GTSM Listed



Suppliers/downstream contractors

Visit vendors or factories/occasionally

Supply chain sustainability management

Safe and healthy working environment

Pollution prevention

In the future, before an order is placed, we will request a vendor to sign “Vendor’s Commitments on Corporate Sustainable Management”

After convening its supplier meeting, CTCI takes advices for improvement from vendors in terms of topics covered and the way the meeting is conducted, and make adjustments for meeting held the next year accordingly

As of 2018, 2,291 suppliers have signed Vendor's Commitment on Corporate Sustainable Management with CTCI

In 2018, CTCI developed six domestic suppliers to become selected suppliers for overseas projects

CTCI organized suppliers' conventions, where we shared CSR execution results with our vendors, and at the same time requested our suppliers to comply with CTCI's sustainable supply chain policy

Customers Conduct the customer satisfaction survey/annually

Set the annual quality objectives of the project, conduct measurement, and hold a review meeting/quarterly

Customer service and management

Safe and healthy working environment

Supply chain sustainability management

Implement CRM systems, build customer relationships, and provide good services.

Develop corrective actions and track improvements in implementation outcomes for projects that are not up to standard and deviate from the target.

Score of 2018 Customer Satisfaction Survey: 8.2 (out of 10)

3 reports on project quality measurement results and 1 annual company-level quality management review meeting were held to review the quality objectives of 25 projects as implemented

66

Evaluation Item



Principles for

TWSE/GTSM Listed



Media Important information press release/any time

Information disclosure

Brand image

CTCI will issue reports on CTCI and sustainability issues through various media platforms

On the social media, CTCI will publicize the activities of CTCI and sustainability issues in various languages to increase the browsing rate of its official websites

CTCI appropriately responds to the media's questions and concerns about CTCI to establish the most reliable brand image. In 2018, there were 150 media reports (exposure)

CTCI Education Foundation has totally 351 media reports (exposure) published.

(3)Corporate social responsibility implementation planning and effectiveness

CTCI will continue to invest in social charity. To review the benefits from the investment, we adopt the London Benchmark Group (LBG) as our evaluation mechanism. Each category of investment is divided by activity goals and cost. We evaluate the positive benefits generated from the investment, measure the impact of social participation to assist with the corporation in reasonable resource distribution, and review the benefits of the resource input, so as to effectively integrate financial and non-financial information, while at the same time meet the expectation of multiple stakeholders and create shared values.

Item Cost (TWD) Proportion (%) Item Amount (TWD) Proportion (%)

Charity activity 5,279,842 19% Cash donation 24,337,873 89.01%

Community investment 12,524,617 46% Goods donation 20,500 0.07%

Commercial activities 9,539,408 35% Volunteering 2,953,650 10.08%

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Participation in Nonprofit Organizations Since its establishment, CTCI has hoped to become the leader of the industry. It hopes to contribute its engineering knowledge and serve the public construction projects through its world-class professional core competence, and actively communicate with other players in the industry by participating in the academic/professional associations. CTCI has served as the important role of director and supervisor in various major associations. CTCI is committed to promoting the development of conferences and improving the level of the industry chain. CTCI is playing a leading role in the engineering community, and encouraging employees to improve their skills by participating in professional groups. In 2018, CTCI and its employees participated in a total of 49 academic/professional associations as a group and individual members. In order to encourage colleagues to participate in industry exchanges, there is also a mechanism to subsidize their participation. In 2018, the group subsidized 568 people to participate in such events as individuals, and the total amount of subsidies was NT$400,186. The total cost of its devotion to the academic/professional associations for the whole year is NT$2,480,686.

Identity of participant

Non-profit organizations in which CTCI participated in 2018

Director

Chinese Institute of Engineers (Main Chapter), Chinese Institute of Engineers (Kaohsiung Chapter), Chinese Petroleum Institute, Taiwan Institute of Chemical Engineers, Sino-Arabian Cultural& Economic Association, Middle East Business Association, Chinese Arbitration Association, Chung-Hwa Railway Industry Development Association, Intelligent Transportation Society of Taiwan, Taiwan Safety Council, Cross-Strait CEO Summit, Taiwan Carbon Capture Storage and Utilization Association, Board of Directors, Taiwan Institute for Sustainable Energy, Taiwan Welding Society, The Chinese Association of Engineering Consultants, The Taipei Federation of Engineering Consultants, Taiwan Electric Power Association, Sino-Indonesia Cultural and Economic Association, Chinese Society of Mechanical Engineers, Chinese Society of Structural Engineering, Pressure Vessel Association, Nuclear Science & Technology Association, Taiwan Energy Service Association, Taiwan Road Association, Chinese Environmental, Safety and Health Association

Supervisor The Chinese Association of Engineering Consultants, The Taipei Federation of Engineering Consultants, Taiwan Association of Energy Companies, Taiwan Institute of Steel Construction, Taiwan Offshore Wind Turbine Foundation and Marine Engineering Association

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Evaluation Item



Principles for

TWSE/GTSM Listed



Talent fostering an industry-academia cooperation CTCI not only provides its employees with a variety of educational training resources to enhance their professional competency, but also capitalizes the knowledge power of its senior engineers and senior managers, who deliver lectures in engineering departments of universities, sharing practical experience with the academia. Moreover, it offers students of engineering-associated departments and those interested in engineering opportunities with internship, so as to minimize the gap between the industry and the academia. Since 2011, CTCI has organized scholarship programs for outstanding university students. In 2016, it established the CTCI Education Foundation to lay the groundwork for education to nurture and reward the excellent youth. In addition to traditional methods of evaluation on academic performance and teachers' endorsement, we have also formulated the "project research related to CTCI engineering practices". In this program, with industry-academia interaction through academic engineering project research or school-based R&D project commissioned by CTCI, the students will learn the industry practices at an early stage. Through the corporate power, we hope we can play a role in nurturing domestic engineering talents, supporting excellent students to fulfill their potential in their respective field, and make contributions to the society and the country. In 2018, we also ran six industry-academia cooperation projects with ten universities, spending NTD59.86 million. Through these projects, with research and innovation, we offer students opportunities to study and conduct research.

(4) Education Foundation: CTCI Education Foundation was established in the end of 2016. The vision of the Foundation is "to cooperate with 2030 Sustainable Development Goals (SDGs) of United Nations by promoting construction of sustainable engineering and helping the country walk toward sustainable development" and to dedicate itself to three core values. Currently, five main committees subordinate to the Foundation (including University Cooperation Committee, Sustainable Engineering Committee, Cross-Strait Exchange Committee, International Exchange Committee and Social Care Committee) cooperate with Taiwan Sustainable Engineering Union in collaboration with the operational directions of the Foundation. In addition, the Secretariat Office was founded with the missions to implement relevant projects and integrate all resources; in this way, the level of Taiwanese engineering industry and engineering industry chains can be elevated, heading toward the new world of sustainable development. The objectives of CTCI Education Foundation are to improve the engineering education and technologies, cultivate outstanding engineering talents, reward and encourage academic research, build up a lifelong learning environment and improve national competitiveness. Since its establishment, it has handled 12 projects and 92 activities, 24 sponsored events with in total 8,087 participants and 102 participating units from the industry, government agencies and academies. Relevant results and impacts include:

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Evaluation Item



Principles for

TWSE/GTSM Listed



(1) Cultivate sustainable talents and expand their global horizons: Held the "Youth Sustainability Leadership Camp", involving 36 participants from 20 schools (including 1 overseas university). Hosted 4 sessions of the "Corporate Social Responsibility Pilot Project" twice, involving 24 teams and 96 participants from 14 schools in 26 countries

(including the 15 undergraduate and graduate students that did not enter the final selection stage in the 2nd "Corporate Social Responsibility Pilot Project" but participate in the workshop activities; the total number of participants is 111 students), 237 people, 11 units and enterprises. Held 10 sessions of the "Enterprise Elite Perseverance and Training Course" across 5 counties/cities in 5 universities, with approximately 641

participants, hoping that they could practice the sustainable development goals and learn to judge a company’s ability to maintain its performance.

(2) Deepen sustainable competence and promote international exchange: Promoted the "120h - Taiwan in My Eyes" project twice in 11 sessions. There were 24 teams and 96 participants from 17 schools and 31 countries,

involving 902 people, 8 units and enterprises in total. Co-organized the "CSR University Lecture Hall" with the CCS, where a total of 23 seminars on sustainable development issues were held, with 1,657

undergraduate and graduate students as participants, to help integration of industry and education, and spread the concept of sustainability. Held the "International Seminar on the Circular Economy Integration and Innovation Program" in 1 session and invited international scholars to

publish relevant research papers. Domestic and foreign experts and scholars from various fields attended the conference to discuss the international trend of circular economy application. About 140 participants joined the seminar.

The Global Corporate Sustainability Forum(GCSF) was held in 1 session with approximately 2,100 participants. (3) Support sustainable development of universities and industry-university cooperation and exchanges:

The "2018 University Professors Corporate Sustainability Visiting Group" held in 2 sessions. 23 professors from 19 departments of 14 universities participated in this visit tour. CTCI has continued to construct a sustainable education platform and engaged in industry-university-institute cooperation and exchange.

"University Sustainable Development Goals and Industry Exchange Seminar - National Taiwan Normal University" was held in 1 session, with about 54 participants, bringing together university professors from 18 schools and 10 supervisors from companies and research institutes to analyze the business model of cooperation between the academic community and the business community and work together to promote sustainable development in Taiwan.

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Evaluation Item



Principles for

TWSE/GTSM Listed



The "2018 Workshop of Communication on Creating a Sustainable Future Together - National University of Kaohsiung" was held with about 67 participants to encourage university teachers to combine their professions with SDGs and university organizations to integrate SDGs into their school operations development goals. The workshop brought together 28 faculty members, as well as supervisors from 18 companies, 6 government units, and 6 NGOs, so that they could conduct research and development and create a sustainable future together.

Initiated the scholarship programs to provide four scholarships, including the CTCI International Exchange Scholarship, the CTCI Youth Sustainable Leadership Scholarship, the CTCI CSR Scholarship, and the CTCI CSR Academic Scholarship. This year, 140 scholars will be awarded scholarships in an amount of NT$3,486,000. CTCI has abundant resources to take root in long-term education for the society, cultivate and reward outstanding professional talents, promote enterprises to fulfill their corporate social responsibilities, and exert social influence by implementing deep-rooted and sustainable education to shape the most reliable brand image.

Sponsored the activities of 18 academic/professional associations to link the influence of engineering companies, scholars and experts, to demonstrate the value chain thinking and sustainable engineering concepts, and to further expand the core value of industrial symbiosis network for environment protection in the international market, where CTCI has handled a total of 21 such cases.

(4) Promote sustainable development and implement local practice: Sponsored activities in a total of 12 sessions to promote social integration, including donations of environmental education books for care of

students in rural areas to benefit 14 primary school students and 1,792 people; for 3 consecutive years, CTCI have co-organized the "Banquet 30 Year-End Party" campaign with the Zenan Homeless Social Welfare Foundation, the Genesis Social Welfare Foundation and the Huashan Social Welfare Foundation and continued to encourage colleagues to actually engage in volunteer services. This year, about 80 people responded to such activities in 1 session.

Sponsored its employees as volunteers in beach cleaning activities. This year, one such event was held. A total of 50 colleagues participated in this event to jointly respond to the UN's marine sustainable goals.

Sponsored the CTCI concert for Shilin Cultural Festival in Zhishan Cultural and Ecological Garden, with more than 200 people and 8 enterprises as the participants.

Conducted an activity on the project of "Taiwan Electricity Use and Energy Transformation Poll" for 1 time, where an effective sample of 1,077 public opinion surveys on Taiwan's electricity use were obtained to study on the use of electricity and awareness of energy transition, providing the industry, government and academy with a complete and neutral analysis so that they can develop relevant policies and strategies.

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Evaluation Item



Principles for

TWSE/GTSM Listed



Invited 18 top experts and scholars in the field of sustainable development to write and publish a book on sustainable development goals. CTCI published Volume 2: "The United Nations’ Sustainable Development Goals - Sustainable Industry Concept and Practice".

7. If the corporate social responsibility reports have received assurance from external institutions, they should state so below: In order to communicate with stakeholders and allow them to better understand our way of operation, we began publishing on an annual basis the CTCI Corporate Sustainability Report in 2008 to disclose the information concerning our materiality issues and according to the GRI standards. We also regularly submit the report to a neutral third party for verification. In fact, we are the first private business in Taiwan to have our CSR report pass verification by an external neutral third party. In the G4.0 Guidelines proclaimed in 2014, the GRI advised organizations that they should disclose information more comprehensively and more transparently. Upholding the attitude of being responsible and the spirit of information accessibility and transparency, we disclosed corporate information using the G4.0 Guidelines. Also, we passed the AA1000:2008 High Level accreditation from external verification unit and the GRI G4.0 Guidelines. All these point to one thing: We were a pioneer reporter using the GRI G4.0 Guidelines. In addition, to ensure that stakeholders at home and abroad can better understand the actual CSR activities at CTCI and to connect with the world, contents of this report also correspond to the Ten Principles of the UN Global Compact, the Seven Core Subjects in ISO2600:2010, and the Determination Items of the Corporate Social Responsibility Best Practice Principles for TWSE/GTSM-Listed Companies domestically. All these show that the CSR activities and information disclosed in this report are complete and transparent. With the concerted effort of Company’s managers and all employees, we won numerous awards and credits in 2018 to prove our achievements in promoting CSR.

Awards Description

Emerging Markets Index Membership for Dow Jones Sustainability Indices (DJSI)

CTCI has been continuously selected for Emerging Markets Index Membership for DJSI with excellent performance and is a pioneer enterprise in the field of Engineering & Construction Industry in Taiwan.

Recognized by the Taiwan Institute for Sustainable Energy (TAISE) with the Honor of Taiwan Corporate Sustainability Awards (TCSA)

CTCI is recognized by TAISE and honored with “The Most Prestigious Sustainability Awards - Top Ten Domestic Corporate”, ”Sustainable Corporate Award”, Top 50 Platinum Report Award, "English Reportage Award" , "Supply Chain Management Award", “Growth through Innovation Awards,” “Transparency and Integrity Awards” as well as “Social Inclusion Award”.

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Evaluation Item



Principles for

TWSE/GTSM Listed



Excellence in Corporate Social Responsibility Award by CommonWealth Magazine

CTCI’s accomplishment of CSR activities was recognized by the CommonWealth Magazine, listed 24th among Excellence in Corporate Social Responsibility Award this year for the category of large enterprises (with annual turnover exceeding NT$10 billion). With good performance in the aspects of corporate governance, corporate commitment, social participation, and environmental protection, CTCI was able to stand out from various large enterprises and well-recognized with its achievement in corporate sustainability.

Listed among the Top 2000 Enterprises by CommonWealth Magazine and retains Top 1 in the contractor sector

The ranking of Taiwan's Top 2000 Enterprises was based on the consolidated revenues and profits of the companies for the previous year, a result of the survey conducted by CommonWealth Magazine. In terms of the overall ranking in the Top 650 Service Enterprises, CTCI Corporation ranked as the 22nd this year, retained Top 1 in the contractor sector for years in a row.

ISO Plus Award for Social Responsibility and Sustainable Business Performance

CTCI is honored with ISO Plus Award for Social Responsibility and Sustainable Business Performance by SGS.

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3.4.6 The Ethical Corporate Management

Evaluation Item

Implementation Status Deviations from “Ethical

Corporate Management Best Practice Principles for TWSE/GTSM-

Listed Companies” and reasons


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 The Company established “Corporate Governance Principles”, “Ethical Corporate Management Principles “, “Codes of Ethical Conduct”, and “Procurement Personnel Code of Conduct”. Directors, and managers should obey the “Codes of Ethical Conduct”, when they execute their function. Meanwhile, all employees are requested to follow the laws and ethics standard and behavior principles clearly defined in “Codes of Ethical Conduct”.

None.

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?

V a. The Company concluded the commerce contracts based on mutual trust and good faith management principles.

b. The Company assigned Human Resources Department to be in charge of corporate integrity related matter and report to the board meeting at least once a year.

c. It is forbidden to have preferential affairs between employee and party. All employees can’t pay or ask for present, entertainment, commission or bribe

None.

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Evaluation Item





(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?

(5) Does the Company regularly hold internal and external educational trainings on operational integrity?

for the advantage of themselves or third party, when they conduct their work.

d. The Company set up effective and faultless accounting system and internal control program to manage out of ordinary affairs. The Company also set up a specialized independent audit unit to execute yearly auditing plans and report the audit results to supervisors every month. The audit unit also has to attend the Audit Committee and Board of Directors to report the faults and extraordinary affairs in their internal control inspection, and push related units to take modified measures and trace the results quarterly until they are fully- modified.

e. The principles of the Company are professionalism, integrity, teamwork and innovation. We delivered the related training coursed to train our employees and posted the poster at office and site to remind our employees as well.

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 a. The Company has the Accusation management regulation with a special telephone line and an investigation team to deal with the graft and bribe events.

b. The Company has the regulation of Reward and Punishment to deal with the above cases.

None.

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Evaluation Item





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 The Company has disclosed the “Ethical Corporate Management Best Practice Principles” on its website and MOPS.

None.

5. If the Company has established its own ethical corporate principles based on “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies”, please describe the difference between operation practice and the ethical corporate principles: According to the “Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies”, the Company has obtained the approval of the “Ethical Corporate Management Best Practice Principles” (the “Principle”) in the 5th meeting of the 13th Term Board of Directors in Dec. 17, 2014. The all employees, officers and board members should comply with the Principle. Furthermore, the Principle was amended and renamed to the “Ethical Corporate Management Principles” for the expansion of applicable scope to whole CTCI Group.

6. Other important information to facilitate understanding of the Company’s good faith management implementation.(e.g. To announce the Company’s determination to implement good faith management to business vendors, to invite vendors to participate in related education, and to review and revise the Company’s ethical corporate management best practice principles) The Company strictly observed “Company Act”,” Securities and Exchange Act”, related rules for TWSE/GTSM-Listed Companies and other commerce ordinances to implement the good faith management. Review and revise the Company’s internal management principles including “Corporate Governance Principles”,

“Ethical Corporate Management Principles “, “Codes of Ethical Conduct”, and “Procurement Personnel Code of Conduct” based on the development of ethical corporate management principles.

3.4.7 Corporate Governance Guidelines and Regulations

Please refer to the Company’s website at www.ctci.com.

http://www.ctci.com/

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3.4.8 Other Important Information Regarding Corporate Governance A. Training program for directors

Title Name Study period

Sponsoring Organization Course Training

hours From To

Chairman John T. Yu

2018/08/03 2018/08/03 Taiwan Corporate Governance Association

Talking about enterprise's anti-corruption and information security promotion from the evolution of bitcoin

3.0

2018/07/26 2018/07/26 Center for Corporate Sustainability

The thirteenth CEO lecture and special speech 2.0


Sustainable development and strategy of engineering service industry

3.0

Vice Chairman

Michael Yang 2018/08/03 2018/08/03

Taiwan Corporate Governance Association


3.0


Sustainable development and strategy of engineering service industry.

3.0


Managing Director

Jack Huang


AI, Internet of Things Development Trends and Operational Strategies and Risks

6.0


Exploring the trend of international information exchange from Foreign Account Tax Compliance Act(FATCA) and CRS

3.0


Board Performance Evaluation 3.0


Yen-Shiang Shih



3.0



3.0


Frank Fan



3.0



3.0

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hours From To

Director Teng-Yaw Yu



3.0



3.0

Director Leon Tzou

2018/12/13 2018/12/13 Securities and Futures Institute

Enterprise Financial Crisis Early Warning and Type Analysis

3.0


How do Directors and Supervisors supervise managements of company's risk and crisis for strengthening corporate governance?

3.0

Director Quintin Wu


Enterprise Environmental Protection and Sustainable Development

3.0


Corporate Social Responsibility keeps pace with time

3.0

Director Bing Shen



3.0



3.0

Director Johnny Shih

2018/12/24 2018/12/24 Taiwan Academy of Banking and Finance

Trade war and its impact between China and USA

3.0



3.0

Director Yancey Hai



3.0


The impact of tax reform on Delta 3.0

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hours From To

Director Wenent Pan


Money laundering, combatting information security attack and legal compliance

3.0



3.0

Director An-Ping Chang


How to detect and prevent corporate fraud and big data analysis application

6.0


Analysis and practice about money laundering control and combatting information security attack

3.0


Artificial intelligence came and the generation of anti-business(C2B)

3.0

2018/01/25 2018/01/25 Taiwan Institute for Sustainable Energy

International Economic Trends and Financial System in 2018

2.0

B. Internal Material Information Disclosure Procedure

According to the letter of Financial Supervisory Commission dated Mar. 16, 2009 and consulting with “Internal Material Information Disclosure Procedure” which is announced by Taiwan Stock Exchange Corporation (TWSE), the Company has obtained the approval of the “Regulations Governing Prevention of Insider Trading” (the “Regulation”) in the 9th meeting of the 11th Term Board of Directors on Aug. 28, 2009. The Regulation is the code of conduct for Directors, Supervisors, Managerial personnel, and the persons regulated under the Regulation and it includes the scope of Internal Material Information, and the laws, regulations, orders that people forenamed should comply with. The Company has provided the Regulation to all Directors and Supervisors, and also disseminates all employees.

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C. Code of Business Conduct and Ethics for Board of Directors and Managers

CTCI CORPORATION

Code of Business Conduct and Ethics for Board of Directors and Managers Amended on December 19th, 2007

Amended on August 8th, 2014 Amended on June 22nd, 2016

Article 1 (Purpose of and basis for adoption) Pursuant to Article 6 of CTCI’s Corporate Governance Principles, CTCI’s Codes of Ethical Conduct are established to pursue the greatest interest of CTCI and devote in continuous business development. And for stakeholders to understand the content of ethical standards and code of conduct that have been complied by directors, managers and all employees in the execution of their duties. CTCI’s Codes of Ethical Conduct shall be approved by a resolution of Board of Directors.

Article 2 (Scope) The Codes of Ethical Conduct are applicable to CTCI’s subsidiaries, and other institutions or juridical persons which are substantially controlled by CTCI ("business group"). The term “CTCI employees” in this Codes of Ethical Conduct refers to directors, supervisors, and managerial officers (including deputy assistant general managers or their equivalents, chief financial and chief accounting officers), and employees.

Article 3 (Compliance of ethical conduct) CTCI directors and managers shall comply with all regulations and the Codes of Ethical Conduct. They shall set as examples to CTCI employees, promoting the practice of this Codes of Ethical Conduct, pursuing high-level compliance of this Codes. CTCI directors and managers shall fulfill the duty of care of a good custodian, and as their objective the pursuit of CTCI’s overall benefit. Moreover, CTCI employees may not damage CTCI’s rights and interests for the benefit of a specific individual or specific group, and shall treat all shareholders fairly. In the execution of their duties, CTCI employees shall focus on teamwork, abandon sectionalism, diligently comply with the principle of honesty and credibility, be proactive, responsible and prudent.

Article 4 (Fair hiring and anti-discrimination policy) No form of preferential treatment or discrimination should take place in any form based on race, sex, religious beliefs, political party affiliation, sexual orientation, position, nationality, or age.

Article 5 (Safe and healthy working environment) CTCI employees should work to maintain a safe and healthy environment, and there should be no instances of harassment, or violent and threatening behavior.

Article 6 (Prevention of conflicts of interest) When a proposal at a given board of directors meeting concerns the interest of CTCI, the concerned person shall not participate in discussion of or voting on the proposal and shall recuse himself or herself from the discussion or the voting, and may not exercise voting rights as proxy for another director. Where a director or manager, for himself/herself or on behalf of others, enters into a sale/purchase or loan transaction, or conducts any legal act with CTCI, he/she shall disclose detail information of the above situation to the audit committee.

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Article 7 (Prevention of conflicts of interest) If a director engages in conduct involving competition with CTCI, pursuant to the Company Law, he or she shall report the matter in advance to a general meeting of shareholders and obtain approval. If a manager engages in conduct involving competition with CTCI, in accordance with the Company Law, he or she shall report the matter in advance to board of directors and obtain approval.

Article 8 (Minimizing incentives to pursue personal gain) CTCI employees shall faithfully execute their duties in the interests of all shareholders. As regards procurement and supply arrangements related to CTCI’s operations, cooperation arrangements, strategic alliances or other commercial opportunities or opportunities from which profit may be gained with which CTCI employees become familiar as the result of executing their functional duties, CTCI employees shall give priority to providing such opportunities to CTCI or to preserving the interests of the Company, and must not take advantage of such opportunities to seek personal gains for themselves or third parties. CTCI employees shall prevent the following activities: 1.Seeking an opportunity to pursue personal gain by using company property or information or taking

advantage of their positions. 2.Competing with CTCI or damage CTCI’s interest through any methods.

Article 9 (Fair trade) CTCI employees shall treat all suppliers and customers, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure, or misuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.

Article 10 (Insider trading) Work-related knowledge and any information that could affect the share price of CTCI stock, before it has been disclosed as public information, all information shall be kept confidential pursuant to The Securities and Exchange Act regulations, and shall not to be used to engage in insider trading.

Article 11 (Confidentiality) Company employees’ work-related knowledge, confidential information or customer data is to be carefully managed, and except for that required for company disclosure or publicized as required by law, data should not be leaked to other persons, or used for any non-work related matter. This Article also to employees who have left the Company. CTCI employees are obliged to keep the Company and its clients’ information confidential. Information shall not be disclosed prior to Company’s authorization or as required by law, and leaked to other persons or used for any non-work related matter. The confidential information includes, but is not limited to, any undisclosed information that may be utilized or divulged by competitors and consequently cause damage or loss to the Company or its clients, as well as information regarding the investments, inventions, business secrets, technical data, product design, professional manufacturing knowledge, finance, accounting and intellectual property rights of CTCI.

Article 12 (Safeguarding and proper use of company assets) CTCI employees have the responsibility to safeguard company assets and to ensure that they can be effectively and lawfully used for official business purposes; any theft, negligence in care, or waste of the assets will all directly impact CTCI's profitability.

Article 13(Legal compliance) CTCI employees shall comply all regulations and company’s policies and procedures.

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Article 14 (Encouraging reporting on illegal or unethical activities) CTCI shall raise awareness of ethics internally and encourage employees to report with defined identity or anonymously upon suspicion or discovery of any activity in violation of a law or regulation or the Codes of Ethical Conduct. The Company shall use its best efforts to ensure the safety of informants and protect them from reprisals.

Article 15 (Procedures for penalizing) CTCI employees in violation of the Codes of Ethical Conduct shall be penalized according to the Company’s Rewards and Punishment related policy. Employees who are in significant violation of this Conduct shall be reported to Board of Directors.

Article 16 (Procedures for exemption) In the event that a director or supervisor wishes to be exempted from the applicability of the Codes of Ethical Conduct, he or she should explain said opportunity, information or the specific details of the competition with CTCI to Board of Directors, and the reasons why there is no conflict with CTCI’s interests; this shall then be approved by a resolution of Board of Directors. Upon approval by a resolution of Board of Directors of an exemption of applicability as provided in the preceding paragraph, CTCI shall immediately disclose information including the titles and names of the personnel exempted, the date of board approval of the exemption, the period of the exemption, the reasons for exemption, and the standard(s) has been exempted on the Market Observation Post System (MOPS).

Article 17 (Enforcement and method of disclosure) CTCI's Codes of Ethical Conduct, and any amendments to it, shall enter into force after it has been adopted by board of directors, and shall disclose in CTCI annual reports on its website.

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D. Accusation Management Regulations

CTCI CORPORATION

Accusation Management Regulations

1.0 Purpose This regulation is specially formulated in order to effectively control the accusation case of the Company and establish smooth accusation channel and fair investigation procedure, so as to prevent blackmail and correct possible undue behavior.

2.0 Scope

2.1 Accuser Including official, contracted and dispatched in-service employee of the Company, however, if external personnel of the Company finds any significant malpractice, such personnel can be included as accuser.

2.2 Scope of accusation Accusation may be proposed if the accused object violates laws and decrees, rules and regulations of the Company, or has other undue behaviors affecting the rights and interests of the Company.

3.0 Definition

3.1 Individual accusation A employee proposes real-name accusation independently in his/her own name.

3.2 Joint accusation Two (inclusive) or more employees propose real-name accusation jointly.

3.3 Blackmail The accusation letter proposed anonymously.

4.0 Responsibility

4.1 Human Resources Department Responsible for accepting accusation case and proposing suggestion on preliminary examination, sending the case for Rewards and Punishment Committee for hearing, and handing subsequent matters thereof according to hearing result.

4.2 Investigation group The trans-department group formed by the members as approved by Rewards and Punishment Committee, which will be responsible for investigating whether the accusation contents are true and proposing investigation report.

4.3 Rewards and Punishment Committee Responsible for hearing the accusation case preliminary examination proposal and accusation case investigation report, and proposing suggestions on punishment.

4.4 Each Department Relevant personnel of each department shall coordinate to assist investigation group to execute relevant investigation works.

5.0 Activity

5.1 Operation procedure Subject to Attachment 1 - Flow Chart of this Regulation.

5.2 Accusation The accuser shall fill in "Accusation Letter" (Attachment 2), the accusation matter must conform to the scope as prescribed in Article 2.2 hereof, besides, accuser shall provide specific descriptions and relevant evidences on the concerned person, matter, time, place and object etc., and submit the such letter to the special accusation e-mail box of Human Resources Department or send it in confidential paper copy. Employee may use accusation special line to report the

83

accusation case, provided such employee shall still provide relevant accusation documents and evidences as mentioned above. When accepting joint accusation, it will be handled as single case, and representative shall be elected upon accusation for the convenience of contact. When the accusation case comes from outside the Company, the unit or employee that receiving the accusation materials shall submit the complete accusation materials to Human Resources Department at first time for subsequent handling, if the affiliated department of accused object has any concealment or delay that causing impact on the handling time and affecting the rights and interests of the Company, it shall be punished according to relevant regulations of the Company.

5.3 Case acceptance After Human Resources Department has accepted the accusation case, if necessary, it may ask the accuser to supplement relevant descriptions or evidences, conduct preliminary examination according to relevant contents of accusation materials, propose suggestions on whether or not to establish trans-department investigation group for investigation, fill in "Accusation Preliminary Examination Proposal" (Attachment 3) ans submit it to CTCI Rewards and Punishment Committee together with other case materials for review and approve whether or not to open a case for investigation. If it is not belong to the scope of accusation or the evidences proposed by accuser are not detailed and true, Human Resources Department shall ask the accuser for supplement. If the accusation case is blackmail, Human Resources Department may not handle it.

5.4 Investigation If the CTCI Rewards and Punishment Committee decides to open a case for investigation, it shall designate relevant unit representatives to form investigation group and assign group convenor to start investigation according to the situation of accusation case. In the course of investigation, Human Resources Department shall inform relevant units that shall cooperate to assist in investigation according to the investigation plan of the investigation group. When necessary, investigation group may interview relevant personnel or ask relevant personnel to provide relevant materials to assist in investigation. After the completion of investigation, investigation group shall submit investigation report to Human Resources Department.

5.5 Punishment After Human Resources Department has received the investigation report, it shall convene the meeting of Rewards and Punishment Committee pursuant to "CTCI Employees Reward and Punishment Regulations" to hear the accusation case, and propose punishment suggestions according to the preceding Regulation. Then Human Resources Department will submit the complete report contents to the Chairman for review and decision.

5.6 Response For any accusation case, Human Resources Department shall respond to the accuser in writing on the handling result thereof. For false accusation or fling abuses, the responding content shall include the reminder on relevant legal responsibility.

5.7 Confidentiality obligation Responsible employee of Human Resources Department and all members of Rewards and Punishment Committee and investigation group shall bear confidentiality obligation for the materials of accuser.

6.0 Reference document

CP-319-B CTCI Employees Reward and Punishment Regulations 7.0 Attachment

Attachment 1 Work Flow Chart Attachment 2 Accusation Letter Attachment 3 Accusation Preliminary Examination Proposal

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3.4.9 Internal Control System A. Statement of Internal Control System

85

B. Where a CPA has been hired to carry out a special audit of the internal control system, furnish the

CPA audit report: None. 3.4.10 In Recent Years until the Annual Report being Published, Violation of Internal Control Policies

by Employees：None.

3.4.11 Major Resolutions of Shareholders’ Meeting and Board Meetings A. Major resolutions of Shareholders’ Meeting of Year 2018(2018.05.29):

Date Resolutions of Shareholders’ Meeting Action Arisen

2018.05.29

1. Adoption of the Company’s 2017 Business Report, Financial Statements and Consolidated Financial Statements.

The resolution has been made and implemented.

2. Adoption of the Company’s distribution plan of 2017 earnings.(Each common share holder will be entitled to receive a cash dividend of TWD 3.23 per share, unappropriated retained earnings is TWD 315,072,874.)

The ex-dividend record date was on Aug. 1, 2018, and cash dividend was paid on Aug. 24, 2018.

B. Major resolutions of the Board Meeting in recent years until the annual report being published: 2018.03.09 2017 Review Report of Functional Committees.

Evaluation Report for the Independence and Capability of Independent Auditor. Assessment Report for Adoption of International Financial Reporting Standards IFRS 16 Leases. Report for Board of Directors Performance Assessments.

Approval of the distribution plan of the 2017 directors’ and employees’ remuneration. Approval of the Fiscal 2017 business report, financial reports and consolidated reports. Approval of the distribution plan of Fiscal 2017 earnings. Approval of “Statement of Internal Control System for the Year 2017”. Approval of the convening of the 2018 Annual General Meeting. Approval of the place and the period of time for shareholders to submit proposals of the 2018 Annual General Meeting. Approval of change of independent auditors of the Company. Approval on funds lending the subsidiaries for working capital requirement granted by the Company. Approval of CTCI Corporation to close its Italian branch.

Approval of appointment of additional assistant of the “Corporate Governance Committee”. Approval of list of subscribers and the number of shares they are allowed to subscribe for of 2018 Employee Stock Options Program.

2018.05.04 Report on Consolidated financial reports as of Mar. 31, 2018. Approval of selling shares of Utech Solar Corporation.

2018.05.29 Approval of the ex-dividend record date of 2018. Approval of the amendment to the Company’s “Internal Control Systems”.

2018.08.03 Report on Consolidated financial reports as of Jun. 30, 2018. Approval of investing Ever ECOVE Corporation. Approval on funds lending the subsidiaries for working capital requirement granted by the Company.

Approval of the amendment to the Company’s “Internal Control Systems”. Approval of the amendment to the Company’s “Constitution of Corporate Governance

86

Committee”. Approval of the adjustment of the Corporate Governance Committee’s assistant.

2018.09.12 Approval of investing HDEC-CTCI(Linhai) Corporation. 2018.11.02 Report on Consolidated financial reports as of Sep. 30, 2018.

Status Report of Directors’ and Officers’ Liability Insurance. Approval on funds lending the subsidiaries for working capital requirement granted by the Company. Approval of the amendment to the Company’s “Internal Control Systems”. Approval of the amendment to the Company’s “Organizational Charter of Nominating Committee”. Approval of the amendment to the Company’s “Regulations Governing the board Performance Evaluation”.

2018.12.12 Report on the implementation of ethical corporate management in 2018. Approval of the budget of 2019.

Approval of the Year 2019 Audit Plan. Approval of the issuance of unsecured ordinary corporate bonds. Approval of the cash injection of CTCI Development Corporation. Approval on funds lending the subsidiaries for working capital requirement granted by the Company. Approval of registration of a branch in Singapore for project execution. Approval of registration of a branch in Korea for project execution. Approval of Increase investment in Ever Victory Global Limited (BVI), which will then invest in Dynamic Ever Investment Limited (HK), which will then invest in Fujian Gulei Petrochemical Complex. Approval of donation to CTCI Education Foundation. Approval of the appointment of the Corporate Governance Committee’s member.

Approval of the issuance of the 2019 employee stock options plan. Approval of the average salary increase rate of 2019. Approval of the remuneration of the management officers of the Company. Approval of the amendment to the remuneration of the Chairman of the Company.

2019.03.08 2018 Review Report of Functional Committees. Evaluation Report for the Independence and Capability of Independent Auditor. Report for Board of Directors Performance Assessments. Acknowledgment of amendment to “Regulations Governing Issuance and Subscription of Employee Stock Option”. Approval of the distribution plan of the 2018 directors’ and employees’ remuneration. Approval of the Fiscal 2018 business report, financial reports and consolidated reports.

Approval of the distribution plan of Fiscal 2018 earnings. Approval of “Statement of Internal Control System for the Year 2018”. Approval of the amendment to the Company’s “Regulations Governing the Acquisition and Disposal of Assets”, “Regulations Governing Making of Endorsements/ Guarantees” and “Regulations Governing Loaning of Funds”. Approval of the amendment to the Company’s “Shareholder Services Management Regulations”. Approval of the amendment to the Company’s “Internal Audit Systems”. Approval of the convening of the 2019 Annual General Meeting. Approval of the place and the period of time for shareholders to submit proposals of the 2019 Annual General Meeting. Approval on funds lending the subsidiaries for working capital requirement granted by

the Company. Approval of the amendment to the Company’s “Regulations Governing the board

87

Performance Evaluation”. Approval of appointment of additional members of the “Corporate Governance

Committee”. Approval of the adjustment of managerial officers of the Company. Approval of the removing the non-competition restrictions on new managerial officers. Approval of the amendment to the remuneration of the management officers of the Company. Approval of list of subscribers and the number of shares they are allowed to subscribe for of 2019 Employee Stock Options Program.

3.4.12 Major Issues of Record or Written Statements Made by Any Director or Supervisor Dissenting to Important Resolutions Passed by Board of Directors None.

3.4.13 Resignation or Dismissal of the Company’s Key Individuals, Including the Chairman, President,

and Heads of Accounting, Finance, Internal Audit and R&D None.

88

3.5 Information on CPA’s Fees 3.5.1 Information of CPA

Accounting Firm Name of CPA Audit Period Note

PriceWaterHouseCoopers Yi-Fan Lin Shu-Chiung Chang 2018.01.01-2018.12.31 -

3.5.2 Scale of information on CPA’s Fees Unit: NT$ thousands

Item Amount (NTD)

Audit Fee Non-audit Fee Total

1 Less than 2,000

2 2,000 ~ 4,000 (inclusive of 2,000) 3,508 3,508

3 4,000 ~ 6,000 (inclusive of 4,000)

4 6,000 ~ 8,000 (inclusive of 6,000) 6,350

6,350 5 8,000 ~ 10,000 (inclusive of 8,000)

6 More than 10,000 (inclusive of 10,000)

Unit: NT$ thousands

Accounting Firm Name of CPA Audit Fee

Non-audit Fee

Audit Period Note System Design

Registration Human

Resource Other

(Note1) Total

PriceWaterHouseCoopers Yi-Fan Lin

6,350 2,652 26 0 830 3,508 2018.01.01~2018.12.31

Note 1 Shu-Chiung Chang 2018.01.01~2018.12.31

Note 1: The (other) professional fees except audit fee include: transfer-pricing report NT$680 thousand, opinion of review employee stock options NT$150 thousand.

Note 2: In the event that the CPA firm is changed and the audit fees paid by the Company in the concurrent year are lower than the preceding year: None. Note 3: In the event that the audit fees paid by the Company are reduced by 15% compared to the preceding year: None. 3.6 Alternation of CPA: None. 3.7 The Company's Chairman, President and Managerial Officer in charge of Finance or Accounting matters has held a position within CTCI’s CPA firm

or its affiliated enterprise in the most recent year: None.

89

3.8 Changes in Shareholding of Directors, Managers and Major Shareholders Unit: Share

Title Name

2018 As of March 31st, 2019

Holding Increase

(Decrease)

Pledged Holding Increase

(Decrease)

Holding Increase

(Decrease)


(Decrease)

Chairman


0 0 0 0

Representative: John T. Yu

0 0 0 0

Vice Chairman


0 0 0 0

Representative: Michael Yang

0 0 0 0


Managing Director Jack Huang 0 0 0 0


Yen-Shiang Shih 0 0 0 0


Frank Fan 0 0 0 0

Director

CTCI Foundation 0 0 0 0

Representative: Teng-Yaw Yu

(Note 1) 0 0 0 0

Representative: Leon Tzou (Note 1)

0 0 0 0

Representative: Hsien-Cheng Yang

(Note 1) 0 0 0 0

Director Quintin Wu 0 0 0 0

Director Bing Shen 0 0 0 0

Director Johnny Shih 0 0 0 0

Director Yancey Hai 0 0 0 0

Director An-Ping Chang 0 0 0 0

Director Wenent Pan 0 0 0 0

Managerial Officers John T. Yu 0 0 0 0

Managerial Officers Andy Sheu 0 0 0 0

Managerial Officers Michael Yang 0 0 0 0

Managerial Officers M. H. Wang 0 0 0 0

Managerial Officers Pao-Yao Pan

(Note 2) 0 0 0 0

Managerial Officers Ming-Cheng Hsiao 0 0 0 0

Managerial Officers Todd Chen 0 0 0 0

Managerial Officers T. C. Huang 12,000 0 0 0

Managerial Officers Jung-Yu Han

(Note 3) 9,000 0 0 0

Managerial Officers Patrick Lin 10,000 0 0 0

90

Title Name

2018 As of March 31st, 2019

Holding Increase

(Decrease)


(Decrease)

Holding Increase

(Decrease)


(Decrease)

& CFO

Managerial Officers Casey Yeh 16,000 0 0 0

Managerial Officers Teh-Ming Tao

(Note 4) 0 0 0 0

Managerial Officers Steve Jean 0 0 0 0

Managerial Officers M. G. Lee 0 0 0 0

Managerial Officers Po-Chien Wang

(Note 5) 6,000 0 0 0

Managerial Officers Tsai-Ming Wang 0 0 0 0

Managerial Officers Min-Li Lee 0 0 0 0

Managerial Officers Jing-Shing Wu 10,000 0 0 0

Managerial Officers Y. S. Liao 0 0 0 0

Managerial Officers S. H. Lin 4,000 0 0 0

Managerial Officers Ting-Kuo Li 15,000 0 0 0

Managerial Officers Connie Lin 26,000 0 0 0

Managerial Officers Vincent Liu

(Note6) 16,000 0 0 0

Managerial Officers Ho-Chuang Lee 0 0 0 0

Managerial Officers Shih-Wei Chung 29,033 0 0 0

Accounting Officer Ai-Cheng Ho 0 0 0 0

Note1: Mr. Teng-Yaw Yu be dismissed on Dec. 1, 2018; Mr. Leon Tzou be newly appointed on Dec. 1, 2018 and be dismissed on Mar. 1, 2019; Mr. Hsien-Cheng Yang be newly appointed on Mar. 1, 2019. The above-mentioned directors disclose the changes in Shareholding during their tenure of office only.

Note2: Be Dismissed on Jun. 26, 2018. Note3: Be Dismissed on Sep. 15, 2018. Note4: Be Dismissed on Jan. 24, 2019. Note5: Be Dismissed on Mar. 4, 2019. Note6: Be Dismissed on Sep. 1, 2018. 3.8.1 Shares Trading with Related Parties

Unit: Share

3.8.2 Shares Pledge with Related Parties

None.

Name Reason

for Transfer

Date of Transaction

Transferee

Relationship between Transferee and

Directors, Supervisors,

Managers and Major Shareholders

Shares Transaction Price (NT$)

Ho-Chuang Lee Donation 2018.07.11 Su-Fang Chen Spouse 199,076 NA

91

3.9 Relationship among the Top Ten Shareholders As of March 31st, 2019

Name Shareholding

Spouse & Minor


Arrangement

The relationship between any of the Company’s Top Ten Shareholders

Remarks

Shares % Shares % Shares % Name Relation

CTCI Foundation 60,862,051 7.97 0 0 0 0 None None

CTBC BANK CO., LTD.(CTCI Corporation Employee Stock Ownership Trust)

55,586,731 7.28 0 0 0 0 None None

Fubon Life Insurance Co., Ltd.

46,292,000 6.06 0 0 0 0 None None

Representative: Richard M. Tsai

0 0 0 0 0 0 None None

Blackrock Global Funds-Asian Growth Leaders

33,220,000 4.35 0 0 0 0 None None

CTBC BANK CO., LTD. (Sustainability Employee Stock Ownership Trust)

29,467,937 3.86 0 0 0 0 None None

Chunghwa Post Co., Ltd.

22,879,000 3.00 0 0 0 0 None None

Representative: Chien-Hung, Wei

0 0 0 0 0 0 None None

American Funds Developing World Growth and Income Fund

21,127,000 2.77 0 0 0 0 None None

KGI Bank 15,812,000 2.07 0 0 0 0 None None

Representative: Mark Wei

0 0 0 0 0 0 None None

USI Corporation 15,180,656 1.99 0 0 0 0 Asia

Polymer Corporation

Subordinate company of

USI Corporation’s

subsidiary

Representative: Quintin Wu

0 0 0 0 0 0 Asia

Polymer Corporation

Chairman of Asia Polymer Corporation

Asia Polymer Corporation

14,496,107 1.90 0 0 0 0 USI

Corporation

Parent company of

Asia Polymer Corporation’s shareholder

Representative: Quintin Wu

0 0 0 0 0 0 USI

Corporation

Chairman of USI

Corporation

92

3.10 Ownership of Shares in Affiliated Enterprises As of March 31st, 2019

Affiliated Company

Investment of the Company

Directors, Supervisors,

Managements Direct and Indirect

Investment of the Company

Total Investment

Share % Share % Share %

CTCI Smart Engineering Corporation

59,098,624 97.09 27,288 0.04 59,125,912 97.13

CTCI Resources Engineering Inc. 24,762,252 99.05 1,388 0.01 24,763,640 99.05

CTCI Advanced Systems Inc. 11,444,842 48.72 331,766 1.41 11,776,608 50.13

CTCI Development Corporation 187,000,000 100.00 0 0.00 187,000,000 100.00

CTCI Investment Corporation 207,200,000 100.00 0 0.00 207,200,000 100.00

ECOVE Environment Corporation 38,457,105 57.31 290,034 0.43 38,747,139 57.74

CTCI (Thailand) Co., Ltd. 1,249,500 49.00 1,300,500 51.00 2,550,000 100.00

CTCI Overseas (BVI) Corporation 6,740,000 100.00 0 0.00 6,740,000 100.00

CTCI Engineering & Construction Sdn. Bhd.

450,000 60.00 300,000 40.00 750,000 100.00

CTCI Arabia Ltd. 500 50.00 500 50.00 1,000 100.00

CTCI Machinery Corporation 20,000,000 100.00 0 0.00 20,000,000 100.00

SINOGAL - Waste Services Co., Ltd. *0 30.00 *0 30.00 0 60.00

CTCI Americas, Inc. 100,000 100.00 0 0.00 100,000 100.00

CTCI Singapore Pte. Ltd. 5,100,000 100.00 0 0.00 5,100,000 100.00

CCJV P1 Engineering & Construction Sdn. Bhd.

247,500 99.00 0 0 247,500 99.00

CTCI CMCE JV SDN. BHD. 382,500 51.00 0 0 382,500 51.00

CTCI&HEC Water Business Corporation

25,500,000 51.00 0 0 25,500,000 51.00

*SINOGAL - Waste Services Co., Ltd. doesn’t issue any stock related certificates.

93

IV. Capital Overview 4.1 Capital and Shares 4.1.1 Source of Capital A. Issued Shares

As of March 31st, 2019

Year /Month

Par Value (NT$)

Authorized Capital Paid-in Capital Remark

Shares Amount

(NT$) Shares

Amount (NT$)

Sources of Capital

Capital Increased

by Assets Other

than Cash

Other

1997.07 10 300,000,000 3,000,000,000 288,417,000 2,884,170,000 Retained Earnings

None

1998.07~

2000.06 10 520,000,000 5,200,000,000 476,000,000 4,760,000,000

Retained Earnings

None

2001.06 10 720,000,000 7,200,000,000 547,600,000 5,476,000,000 Retained Earnings

None

2003.12~

2004.03 23.38 720,000,000 7,200,000,000 571,620,484 5,716,204,840 ECB None

2004.08~

2006.08 10 720,000,000 7,200,000,000 598,000,000 5,980,000,000

Retained Earnings

None

2007.09~

2008.08 10 900,000,000 9,000,000,000 631,438,000 6,314,380,000

Retained Earnings

None

2010.01~

2011.04 10 900,000,000 9,000,000,000 698,666,648 6,986,666,480 CB & ESOP None

2011.07~

2015.12 10 900,000,000 9,000,000,000 760,508,848 7,605,088,480 ESOP None

2016.04 10 900,000,000 9,000,000,000 761,107,598 7,611,075,980 ESOP None Note 1

2016.05 10 900,000,000 9,000,000,000 762,514,598 7,611,075,980 ESOP None Note 2

2016.07 10 900,000,000 9,000,000,000 763,273,848 7,632,738,480 ESOP None Note 3

Note 1: 2016.04.13 MOEA Ruling Ref.No. 10501068390. Note 2: 2016.05.24 MOEA Ruling Ref.No. 10501109180. Note 3: 2016.07.19 MOEA Ruling Ref.No. 10501164430.

B. Type of Stock

Share Type Authorized Capital

Remarks Issued Shares Un-issued Shares Total Shares

Common Share 763,273,848 136,726,152 900,000,000 Listed stock

94

4.1.2 Status of Shareholders As of March 31st, 2019

Item Government

Agencies Financial

Institutions

Other Juridical Person

Domestic Natural Persons

Foreign Institutions & Natural Persons

Total

Number of Shareholders

1 55 91 22,485 282 22,914

Shareholding (shares)

757 203,627,001 171,802,555 124,669,032 263,174,503 763,273,848

Percentage (%) 0.00 26.68 22.51 16.33 34.48 100 4.1.3 Shareholding Distribution Status

Common Shares (The par value for each share is NT$10) As of March 31st, 2019

Class of Shareholding (Unit : Share)

Number of Shareholders

Shareholding (Shares) Percentage (%)

1 ~ 999 8,250 1,865,936 0.24

1,000 ~ 5,000 10,463 22,410,659 2.94

5,001 ~ 10,000 1,920 14,501,762 1.90

10,001 ~ 15,000 609 7,570,015 0.99

15,001 ~ 20,000 375 6,746,556 0.88

20,001 ~ 30,000 379 9,446,818 1.24

30,001 ~ 40,000 177 6,263,417 0.82

40,001 ~ 50,000 126 5,682,787 0.74

50,001 ~ 100,000 255 18,124,543 2.37

100,001 ~ 200,000 140 19,369,502 2.54

200,001 ~ 400,000 79 21,950,517 2.88

400,001 ~ 600,000 30 14,122,344 1.85

600,001 ~ 800,000 18 12,172,800 1.59

800,001 ~ 1,000,000 11 9,772,447 1.28

1,000,001 or over 82 593,273,745 77.74

Total 22,914 763,273,848 100.00 4.1.4 List of Major Shareholders


Shareholder's Name Shareholding

Shares Percentage (%)

CTCI Foundation 60,862,051 7.97

CTBC BANK CO., LTD. (CTCI Corporation Employee Stock Ownership Trust)

55,586,731 7.28

Fubon Life Insurance Co., Ltd. 46,292,000 6.06

Blackrock Global Funds-Asian Growth Leaders 33,220,000 4.35

CTBC BANK CO., LTD. (Sustainability Employee Stock Ownership Trust)

29,467,937 3.86

Chunghwa Post Co., Ltd. 22,879,000 3.00

American Funds Developing World Growth and Income Fund 21,127,000 2.77

KGI Bank 15,812,000 2.07

USI Corporation 15,180,656 1.99

Asia Polymer Corporation 14,496,107 1.90

95

4.1.5 Market Price, Net Worth, Earnings, and Dividends per Share

Item 2017 2018 As of March 31st, 2019

Market Price per Share

Highest Market Price 54.50 54.90 49.00

Lowest Market Price 43.00 42.60 44.00

Average Market Price 49.07 46.92 48.40

Net Worth per Share

Before Distribution 23.52 22.91 N/A

After Distribution 20.29 20.65 N/A

Earnings per Share

Weighted Average Shares 763,274 762,016 N/A

Diluted Earnings Per Share 3.68 2.40 N/A

Dividends per Share

Cash Dividends 3.23 2.25 N/A

Stock Dividends

Dividends from Retained Earnings 0 0 N/A

Dividends from Capital Surplus 0 0 N/A

Accumulated Undistributed Dividends 0 0 N/A

Return on Investment

Price / Earnings Ratio 13.33 19.55 N/A

Price / Dividend Ratio 15.19 20.85 N/A

Cash Dividend Yield Rate 0.07 0.05 N/A

Note: Board of Directors has approved the 2018 earnings distribution and has not been resolved by the Annual General Meeting of Shareholders in 2019.

4.1.6 Dividend Policy and Implementation Status A. Dividend Policies under Articles of Incorporation

When net profit occurs in the annual accounts, the Company shall first pay the profit-seeking enterprise income taxes and offset its losses in previous years and set aside a legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve has equaled the total capital of the Company; then set aside a special capital reserve in the amount equivalent to the balance of shareholders’ equity deficit of the current fiscal year. After having paid the corporate taxes and off-set past losses, 10% of the profit earned by the Company of each fiscal year shall be set aside as statutory reserve, except where such reserve has reached the total authorized capital of the Company. Furthermore, a special reserve shall be set aside. If there is recovery of the balance of shareholders’ equity deficit, the recovered amount shall be included in the distribution of the profit for the current year. The allocable profit for the current year, which is the balance after the profit distribution and covering losses aforementioned, together with the cumulative undistributed profit of the previous year shall be referred to as cumulative allocable profit, which shall be distributed according to shareholders’ resolutions. In order to meet the requirements in business expansion and industry growth, fulfilling future operating needs and stabilizing financial structure is the priority of the Company's dividend policy. Thus, the distribution of the cumulative allocable profit according to the shareholders’ resolutions Besides, the amount of shareholders’ bonus shall not be less than 50% of cumulative allocable profit of the Company, in particular cash dividend shall not be less than 20%.

96

B. Proposed Distribution of Dividend: Cash dividend: NT$2.255 per share. C. The Company adopts a dividend policy of high earnings appropriation rate, and stipulates that at

least 80% of total attributable earnings should be appropriated as dividends. In recent years, the Company distributes all of its dividends in the form of cash. Historical information about dividends distribution is available on the Company’s website.

4.1.7 Impact of Stock Dividend Distribution on Business Performance, EPS and Return on

Investment: Not Applicable. 4.1.8 Employee and Directors' Remuneration A. Information Relating to Employee and Directors’ Remuneration in the Articles of Incorporation

When net profit occurs in the annual accounts, the Company may, after reserving a sufficient amount of the income before tax to cover the accumulated losses, with the resolution of board of directors, distribute 1.5% ~ 5% of the income before tax to pay to the employees as remuneration, and distribute no more than 1.5% of the income before tax to pay to board of directors as remuneration. The remuneration could be stock or cash, and the employee remuneration could be distributed to the employees of subsidiaries of the Company under certain conditions. A report of the distribution of employee remuneration or board of directors’ remuneration shall be submitted to the shareholders’ meeting.

B. The estimation basis on remuneration to Employees and Directors, the calculating basis on the

number of shares for share bonus and accounting treatment for the differences between the actual distributing amounts and estimations: Estimation of employee and Directors’ remuneration is based on prior experience and is recognized as current expenses. In case of a significant change (per Article 6 of Securities and Exchange Act Enforcement Rules, the amount is over NT$10,000 thousand while reaching 1% of audited net operating revenue or 5% of paid-in capital), the expense shall be adjusted accordingly in the year where the employee bonus was recorded. When the change is not significant, it shall be recorded in the following year as change in accounting estimation. If the amount remains variable at the date of Shareholders’ meeting in the following year, it shall be recorded in the following year as change in accounting estimation.

C. Profit Distribution of Year 2018 Approved in Board of Directors Meeting for Employee and Directors’

Remuneration a. Recommended Distribution of Directors’ Remuneration is NT$ 13.250 million, and Employees’

Remuneration in cash is NT$54.826 million. b. Ratio of Recommended Employee Stock Bonus to Capitalization of Earnings: None.

97

D. Information of 2017 Earnings Set Aside to Employee Bonus and Directors’ and Supervisors’ Remuneration:

Unit: NT$

Actual Distribution A

Recognized Estimated Amount B

Variance C=A-B

Bonuses for Employees (Cash) 84,160,434 84,160,434 0

Remuneration for Directors (Cash)

16,536,989 16,536,989 0

The Estimation for 2017 Employee Bonus and Directors’ Remuneration is based on the percentage of earnings after tax and legal reserve consideration in the Articles of Incorporation. There is no difference between the actual 2017 Employee Bonus and Directors’ Remuneration distributed according to the resolution of the stockholders’ meeting and the Estimated Amount.

E. The Information of Top Ten Recipients of Employee Bonuses in 2017:

Name Title Amount(NT$)

Andy Sheu Vice Chairperson of

Management Strategy Committee

1,206,909

Michael Yang President

M. H. Wang Executive Vice President

Ming-Cheng Hsiao Executive Vice President

Patrick Lin Senior Vice President and CFO

Jung-Yu Han Senior Vice President

Teh-Ming Tao Vice President

Tsai-Ming Wang Vice President

S.H. Lin Vice President

Y. S. Liao Vice President

4.1.9 Buyback of Treasury Stock None. 4.2 Corporate Bonds None. 4.3 Preferred Shares None. 4.4 Global Depository Receipts None.

98

4.5 Employee Stock Options 4.5.1 Issuance of Employee Stock Options


Type of Stock Option 2017 ESOP 2018 ESOP 2019 ESOP

Effective Date by Regulatory Agency

2017/04/05 2018/01/09 2019/01/09

Issue date 2017/04/11 2018/03/09 2019/03/08

Units issued 20,000 units 20,000 units 20,000 units

Option shares to be issued as a percentage of

outstanding shares (%) 2.62 2.62 2.62

Duration

The duration for options is 6 years, during which employees may not transfer, pledge, or gift their options except to heirs. Upon the expiration of the grant period, unexercised options are deemed forfeited and the subscribers may no longer claim right to exercise the option and purchase those shares.

Conversion measures Issue new common share.

Conditional conversion periods and percentages

Subscribers may exercise their options by the following schedule and proportion: The availability period The ceiling of option exercisable

(accumulate)

Regular Reward Less than 2 years 0% 0% In 2 years after the grant 50% 25% In 3 years after the grant 75% 50% In 4 years after the grant 100% 100%

Converted shares 0 Shares 0 Shares 0 Shares

Exercised amount NT$0 NT$0 NT$0

Number of shares yet to be converted

20,000,000 Shares 20,000,000 Shares 20,000,000 Shares

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

NT$46.4 NT$42.9 NT$48.9

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

2.62 2.62 2.62

Impact on possible dilution of shareholdings

Dilution to Shareholders’ Equity is limited.

99

4.5.2 List of Executives Receiving Employee Stock Options and the Top 10 Employees As of March 31st, 2019

Title Name

No. of Option Shares

(thousand shares)

Option Shares as a Percentage of Shares issued (%)

Exercised Unexercised Note1 No. of Shares

Converted (thousand

shares)

Strike Price (NT$)

Amount (NT$

thousands)

Converted Shares as a Percentage of Shares issued (%)

No. of Shares

Converted (thousand

shares)

Strike Price (NT$)

Amount (NT$

thousands)


Man

agerial officers

Vice Chairperson of Management Strategy

Committee Andy Sheu

8,543 1.12 0 N/A 0 0 8,543

2017 ESOP:

NT$46.4; 2018 ESOP:

NT$42.9;2019 ESOP:

NT$48.9.

393,697 1.12


Executive Vice President M. H. Wang

Executive Vice President Ming-Cheng Hsiao

Executive Vice President Todd Chen

Senior Vice President Patrick Lin

Senior Vice President T. C. Huang

Senior Vice President Casey Yeh


Vice President M. G. Lee

Vice President Tsai-Ming Wang

Vice President Min-Li Lee

Vice President Jing-Shing Wu

Vice President Y. S. Liao

Vice President S. H. Lin

Vice President Ting-Kuo Li

Vice President Connie Lin

Vice President Ho-Chuang Lee

Vice President Shih-Wei Chung

Accounting Officer Ai-Cheng Ho

100

Title Name

No. of Option Shares

(thousand shares)

Option Shares as a Percentage of Shares issued (%)

Exercised Unexercised Note1 No. of Shares

Converted (thousand

shares)

Strike Price (NT$)

Amount (NT$

thousands)


No. of Shares

Converted (thousand

shares)

Strike Price (NT$)

Amount (NT$

thousands)


Emp

loyees

Chief Engineer Wen-Pin Lo

1,650 0.22 0 N/A 0 0 1,650

2017 ESOP:

NT$46.4; 2018 ESOP:

NT$42.9;2019 ESOP:

NT$48.9.

76,057 0.22

Chief Engineer Hope Sun

Chief Engineer Cheng-Shen Wang

Chief Information Officer Gino Tsai

Senior General Manager Chun-Jung Hung

Senior General Manager Jin-Wen Chang

Senior General Manager Michael Shih

Senior General Manager Jenq-Shyong Chung

Senior General Manager Michael C. Chang

Senior General Manager C.L. Yen

Note1: The Effective Date and Issue date of the 2017 ESOP is Apr. 5 and Apr. 11 2017, and the subscribers may not request for exercising the stock option within 2 years after the date of issued; the Effective Date and Issue date of the 2018 ESOP is Jan. 9 and Mar. 9 2018, and the subscribers may not request for exercising the stock option within 2 years after the date of issued; the Effective Date and Issue date of the 2019 ESOP is Jan. 9 and Mar. 8 2019, and the subscribers may not request for exercising the stock option within 2 years after the date of issued.

4.6 Employee Restricted Stock

None. 4.7 Status of New Shares Issuance in Connection with Mergers and Acquisitions

None. 4.8 Financing Plans and Implementation

None.

101

V. Operational Highlights 5.1 Business Activities 5.1.1 Business Scope A. Main areas of business operations

a. Markets: Hydrocarbon, Power, Environmental, Transportation and Industrial.

b. Services: Project Management, FS/FEED, Engineering, Procurement, Fabrication, Construction, Commissioning, Intelligent Solutions, Automation & Control, Clean Room & MEP, Structure Jacking & Movement, Ground Freezing and Operation & Maintenance.

c. Products: Stationary Equipment, Chemical Additives and Energy Management Software.

B. Revenue distribution

Unit；NT$ thousands

Major Divisions Total Sales in Year 2018 (%) of total sales

Engineering 57,122,560 89.16

Environment 4,819,569 7.52

General Trade 1,276,827 1.99

Others 850,586 1.33

Total 64,069,542 100.00

C. Main Services

The main services of the Company include feasibility study & planning, project management, engineering, procurement, fabrication, construction, plant commissioning, QA & HSE, operation & maintenance, and information technology.

D. New products development: Not Applicable. 5.1.2 Industry Overview A. Outlook of Macro Economy:

According to the latest International Monetary Fund (IMF) report, the global economy continues to expand, but the expansion has weakened since the second half of 2018, mainly resulting from some Idiosyncratic factors (new fuel emission standards in Germany, natural disasters in Japan) which weighed on activity in large economies. Overall, the global growth for 2018 is estimated at 3.7 percent. Looking forward, the global growth is projected to decline to 3.5 percent in 2019, not only because of the negative effects of tariff increases enacted in the United States and China earlier last year, but also weakening financial market sentiment and a contraction in Turkey now projected to be deeper than anticipated. Specifically, growth in advanced economies is projected to slow from an estimated 2.3 percent in 2018 to 2.0 percent in 2019, and the growth in emerging market and developing economy group is also projected to reduce from 4.6 percent in 2018 to 4.5 percent in 2019. The revision downward for the advanced economies mostly come from the revision of euro area, notably Germany (due to weak industrial production following the introduction of revised auto emission standards); Italy (due to weak domestic demand); France (due to the negative impact of street protests and industrial action); and United Kingdom (due to the substantial uncertainty about the Brexit outcome). And the revision downward for the emerging market and developing economy group majorly reflects that the weaker near-term oil price outlook may drag on the oil output countries.

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Forecast of Economic Growth Rate

Country 2018 2019

Global 3.7% 3.5%

Taiwan 2.7% 2.4%

China 6.6% 6.2%

Singapore 2.9% 2.5%

Indonesia 5.1% 5.1%

Malaysia 4.7% 4.6%

Thailand 4.6% 3.9%

Vietnam 6.6% 6.5%

India 7.3% 7.4%

Philippines 6.5% 6.6%

United States 2.9% 2.5%

Saudi Arabia 2.2% 2.4%

United Arab Emirates 2.9% 3.7%

Qatar 2.7% 2.8%

Kuwait 2.3% 4.1%

Oman 1.9% 5.0%

Russia 1.7% 1.8% Sources: International Monetary Fund (IMF) - Data and Statistics.

B. Market Overview: The Company is mainly engaged in the field of engineering design, procurement and construction (“EPC”). As a professional EPC lump sum turn-key provider, enjoying a leading position out of more than 530 companies registered with the Chinese Association of Engineering Consultants. Basically, most of local EPC companies target domestic market which is limited and competitive. In addition, those large-projects are under the tendency of lump sum turn-key for international bidding. Therefore, there is few local EPC companies are capable to team up with international bidders. Having a solid track record in the international EPC market for years, the Company has become a designated partner of many well-known international companies for various large projects globally. Currently, the Company is capable to bid project with single contract amount over US$ 1 billion.

C. The EPC Industry: Major clients of the Company cover in areas of refinery, petrochemical, general chemical, LNG, power, transportation, steel manufacturing, environmental protection, and etc. The main service of the Company is to provide the EPC works in accordance to clients’ requirements. The EPC project is a professional-based integration, which requires an intensive engineers’ capability in completion timely and efficiently as required by the clients. For this reason, the entry barrier to enter this industry is high. More specifically, the Company’s services include feasibility study, engineering, procurement services, equipment supply, construction management, and commissioning services. The upstream of this industry is the clients with plant construction demands. The midstream is the EPC turnkey companies. (The Company is at this section) The downstream is the third-party vendors, such as materials, equipment suppliers and construction firms.

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D. Market Trend and Competition:

a. The Trend (1) Large EPC Projects

Given a trend of incessant businesses expansion overtime, requirements from client are getting more complicated. In order to minimize the risks associated with large projects and reduce the costs, clients turn to be reluctant to award specific sub-projects to different contractors and prefer single EPC contractors instead.

(2) Turnkey Solution Clients’ requirements today request not only engineering design, procurement and construction, but advance planning, project financing, operation management, etc. To complete the project with low cost, high quality and timely are preferred by the clients. It’s undoubtedly a challenge to EPC contractors.

(3) Potential BOT projects in public sector In the public sector, the governments tend to boost economic growth by investing infrastructure projects. In order to reduce the government fiscal burden and encourage private sector to get involve with government’s projects, it’s becoming popular to announce BOT (Build-Operate-Transfer) projects for public sector projects. In the future, we will also introduce BOT model to emerging markets’ clients. After Taiwan joined the World Trade Organization and signed government purchase agreements with other countries, the domestic market in is now available to foreign construction companies on an equal basis. Taiwanese engineering companies aim business potentials in global markets via collaboration with other engineering firms worldwide, and strengthening the capability in finance and legal resources to cope with the ever-changing environment.

(4) Technical Innovation Technical innovation becomes increasingly important to viability of EPC contractors. Generating value-added solutions to satisfy clients’ demands is a key challenge to engineering firms worldwide for maintaining competiveness on the market.

b. Competition The Company doesn’t have its own technology, but the key to be awarded a project usually comes from the Company’s track records on the product and the ability to control executing cost. The Company has around 40 affiliates spanning across more than 15 countries worldwide, and has accumulated abundant experiences in local markets, which becomes its competitive advantage. There are about 16 EPC competitors globally, who are mainly from South Korea, Japan and Europe. Take the major petrochemical market in Middle East for example, rigid competition from South Korea companies remains unchanged; besides several European companies turn to be aggressive in recent years. In domestic market, there are only few local competitors in terms of operation scale, so the Company still has the geographically advantages in Taiwan.

Suppliers(Materials、

Equipments and

Construction)

Downstream

CTCI

Midstream

Client

(Owner)

Upstream

Engineering

diagrams,

Construction

procedures and

standards,

Construction

management

Requirement and

Specification

Completion of

construction or

installation

Completion

Certificate

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5.1.3 Research and Development Overview A. Research and Development Expenses in Past Three Years

Unit；NT$ thousands

Item/Year 2016 2017 2018

Operating Revenue 42,764,443 48,591,380 35,684,680

R&D Expense 101,816 113,993 120,849

R&D Expense as percentage of Operating Revenue (%)

0.24 0.23 0.34

Note: Independent Financial Statements were under IFRS.

B. Research and Development Projects Completed in Recent Years and Successful Technology or

Products Developed in Past Two Years

a. RD Projects Completed in Recent Years:

Item 2017 Projects 2018 Projects

1 The front operation, system setting and report online of implementing existing Innovation RD product to new project

Research on Engineering Object-oriented Information Integration Platform

2 The research and development of intelligent application platform (Tag Platform)

Application and Research of Intelligent Technology in EPC Project

3 The research of virtual and physical plant hand over

Construction Site Mobile App

4 The research of intelligent sensing technology applied to site management

Research and Development for Smart Device Application in Construction Site Management

5 The integrated research of Intergraph SPE and Tag Platform

Develop program for intelligence plot plan of tank area

6 Material management system’s maintenance, mobilization application and group affiliates implementation

Research and Development for Application of Image Recognition Technology in Engineering Design

7 AP Service Development of Intelligent Solution Platform(iSP)

8 The development and application of Engineering information integration by using SmartPlant Suite

Implement, Maintain and Update

9 The development of Auto-Identification and Inspection Planning System for Corrosion and Deterioration Mechanisms

iEPC Intelligent Design System Development of Process Department

10 The development of HAZOP Review Comment Control System

Water Treatment System Research and Development

11 The development and research of process design information automation

Dynamic Simulation of LNG Terminal

12 The P&ID template establishment of raw water, pure water treatment system

iEPC Intelligent Design System Development of Civil & Building Department

13 The basic design creation of systemic reclaimed water treatment technology

Research of Civil & Building New Technology

14 The dynamic simulation research of flare / steam network

Analysis of Track-Bridge Interaction and Study of Rail Expansion Joints Layout Assessment

15 The development of iEPC common information operation systems in Civil & Building Engineering

iEPC Intelligent Design System Development of Equipment Department

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Item 2017 Projects 2018 Projects

16 Research & development on innovation of science and technology for Civil and Building Engineering

Project Equipment Design Apps Development/ Maintenance and Information Exchange

17 The research and development of technology for railway track engineering

Packaged Equipment- Pneumatic Conveying System Research

18 The improvement of equipment operation workflow

iEPC intelligent design system development of Instrument Department

19 Project equipment database system Instrument operating system upgrade and maintenance, and customized develop for project

20 The development and maintenance of equipment application system

Research for Laboratory Equipment

21 CFD analysis for evaluating hot-air recirculation affection in air-cooled heat exchanger

A case study for Value Engineering to improve the performance

22 The automatic integrated research of instrumentation inter-discipline data

iEPC Intelligent Design System Development of Piping Department

23 The research and development of instrumentation 3D/2D design operation

Research and develop new technology and techniques of piping engineering

24 The development of intelligent program for plot plan design

iEPC Intelligent Design System Development of Electrical Engineering

25 The technology development of VR applied to 3D model review

Update and Develop the Professional Software of Electrical Engineering

26 The integrated development of piping digital information

Simulation and Study of Insulation Coordination

27 The extending application of power information integrated data

Vendor Information Exchange

28 Applying electrical information to 3D/2D with automatic generation

The optimizations of mobile system applied to construction job site

29 Analysis of Fast-Bus Transfer (FBT) scheme for its impact on power system and protective relay co-ordination

The study of application requirements of construction R&D works

30 Vendor information exchange Piping field auto-welding robot

31 The establishment of Implementing SPC system to optimize construction management platform

Customization program development and system maintenance of Material Management System

32 The research of scaffolding operation optimization and establishing modular skill

SPF related modules development, maintenance and promotion system

33 The application and development of robot installation at construction site

Integration and application and handover of engineering data for SmartPlant Enterprise

34 Mobile system optimization at construction site

AP Service

35 Developing system mark-up 3D model in S3D Advanced Development ,Maintenance and Application for Corrosion Mechanism Identification System

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b. Successful Technology or Products Developed in Past Two Years Only the most important technology or products are listed below due to approximate 30 projects in a year.

Year RD Achievements

2017 1. The research and development of intelligent application platform (Tag Platform)

2. The research of virtual and physical plant hand over 3. The research of intelligent sensing technology applied to site management 4. The development of Auto-Identification and Inspection Planning System for

Corrosion and Deterioration Mechanisms 5. The development of HAZOP Review Comment Control System 6. The research and development of technology for railway track engineering 7. CFD analysis for evaluating hot-air recirculation affection in air-cooled heat

exchanger 8. The research and development of instrumentation 3D/2D design operation 9. The development of intelligent program for plot plan design 10. The technology development of VR applied to 3D model review 11. Analysis of Fast-Bus Transfer (FBT) scheme for its impact on power system and

protective relay co-ordination 12. Vendor information exchange 13. The research of scaffolding operation optimization and establishing modular skill 14. The application and development of robot installation at construction site 15. Developing system mark-up 3D model in S3D

2018 1. Research on Engineering Object-oriented Information Integration Platform 2. Application and Research of Intelligent Technology in EPC Project 3. Construction Site Mobile App 4. Research and Development for Smart Device Application in Construction Site

Management 5. Develop program for intelligence plot plan of tank area 6. Research and Development for Application of Image Recognition Technology in

Engineering Design 7. Development of Intelligent Solution Platform(iSP) 8. Water Treatment System Research and Development 9. Dynamic Simulation of LNG Terminal 10. Analysis of Track-Bridge Interaction and Study of Rail Expansion Joints Layout

Assessment 11. Packaged Equipment- Pneumatic Conveying System Research 12. Research for Laboratory Equipment 13. Simulation and Study of Insulation Coordination 14. Vendor Information Exchange 15. Piping field auto-welding robot

C. 2019 RD Direction and Major Technology Development

a. 2019 RD Direction is to (1) Develop iEPC digital initiatives to enhance the intelligentized of EPC project operation (2) Develop the application of expertise technology to strengthen engineering core competence (3) Establish a cloud-based intelligent platform to provide the service for smart building and

smart factory

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b. Major Technology developments are as follows: (1) Develop iEPC digital initiatives

- Research and Development for Unified Project Information applied to the plant entire life cycle

- Develop iEPC Intelligent Design System for all Engineering departments - Design Data Transferring Rule Research - Development of Engineering Digital Information Acquisition Technology - Development of intelligent program for plot plan - i-Procurement Applications - Research and Development of Intelligent Technology Applied to the Construction Site

Management - Welding Robot Applied to Piping Erection Work

(2) Develop expertise technology - Wastewater Treatment System Research and Development - Dynamic Simulation of LNG Tank - Research of Cryogenic Tank - Development of Design Tool for Floating Slab Track - Research of Packaged Equipment-Pneumatic Conveying Systems - Analysis of Influence from Creep on High Temperature Pipelines - Main Steam System of

Power Plant - Material management system (Smart Materials) maintenance and customization - Document management system (Smart plant Foundation) maintenance and customization

(3) Establish a cloud intelligent platform - Development of iSP cloud platform

D. Current Project or New Product Being in process

Refer to Section 7.6.3 for current RD project list. 5.1.4 Short & Long Term Development Plans A. Short Term Goals:

a. Cultivating Global Landscape with Enhancement of Cross-Border Management Capability The Company has been well-positioned in the international EPC markets such as Middle East, Southeast Asia and the US, and will explore further to those new territories including East Europe, North Africa and South America. Having such active global development in the future, the Company will endeavor to facilitate comprehensive cross-border management synergy by means of a barrier-free platform in language, culture, talents and internal operations. Importantly, a global mindset has to be implanted in-depth to all of employees around the world.

b. Participating in Global Power Plant and LNG receiving terminal Projects Aggressively According to the nuclear-free government policy in Taiwan, Taipower has planned several gas-fired power plant projects in next couple years. And the demand for LNG also lead to several LNG receiving terminal projects. In addition, contributed by a promising economy in Southeast Asian region, strong power demand has been predicted, which draws attention for new power plant projects in the coming few years as well. The Company will be involved actively in Taiwan and overseas market consistently.

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B. Long Term Goals a. Targeting New Business

In addition to existing business lines, the Company has developed new fields recently such as liquid natural gas, green energy, recycling resources, etc. These new businesses are expected to contribute a good and stable profit in the long run, particularly in emerging markets.

b. Innovating Service Patterns to differentiate competitiveness against rivals By integrating of EPC service vertically and horizontally for an incessant expansion, the Company consistently devotes to an improvement in various aspects such as engineering technology, procurement, research and development, quality/HSE, etc. Through an active introduction of intelligent technology, the Company aims to create an intelligent technology platform - “iEPC” for its turnkey service and build big data bank for an intelligent turnkey service to a variety of customers. Through iEPC, the Company will be able to optimize the efficiency of project execution and originate a synergy for future business development aggressively. In all, the Company aims to become one of the top 30 engineering companies in the world, and to create an esteemed brand name for the Taiwanese engineering consulting service industry.

5.2 Market and Sales Overview 5.2.1 Market Analysis The Company signed contracts amounted NT$ 65 billion, while CTCI Group signed of NT$101.7 billion totally in 2018. The sales revenues of the Company amounted NT$ 35.7 billion, while the CTCI Group consolidated sales revenues amounted NT$ 64.1 billion totally in 2018. A. Sales Analysis by Major Services:

a. By Area

Area Group New Contracts Consolidated Sales Revenues

Taiwan 55% 33%

South East Asia 12% 30%

United States 12% 4%

India 6% 1%

China 13% 7%

Middle East 2% 25%

Total 100% 100%

b. By Industry

Industry Group New Contracts Consolidated Sales Revenues

Refinery/Petrochemical 54% 52%

Industrial 20% 8%

Transportation 7% 5%

Environmental 15% 10%

Power 2% 21%

Others 2% 4%

Total 100.00% 100%

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B. Market Share The Company has ranked No.1 in the domestic EPC market in Taiwan for years. The Common Wealth Magazine has placed the Company as No.1 in the top 650 service company survey within the engineering service provider category since 2005. On the global scene, the Company is well recognized by the U.S. Magazine Engineering News-Record in its annual rankings. For the year 2018, the Company is ranked No.75 in The Top 225 International Design Firms Rankings, No.76 in The Top 250 International Contractors Rankings, No.146 in The Top 150 Global Design Firms Rankings, and No.126 in The Top 250 Global Contractors Rankings.

C. Industry Trend Overview a. Short Term Market Trend

Based on the latest International Monetary Fund (IMF) report, the global economic will keep growing, but the expansion is expected to slow down in 2019. Most of the Company’s target markets have still maintained the GDP growth rate higher than the global average (e.g. China, Asian 5, United Arab Emirates, Oman), so the Company expected the investment momentum would extend to 2019. Our views on the global market are briefed as following: (1) Taiwan

The Company expects the government to maintain its policy on expanding domestic consumption, from which the Company targets local projects as one of priorities in the coming years. The demand for electricity has been increasing given the expanding economic. Moreover, based on the government policy, all of the domestic nuclear power plants will be decommissioned and some of the mega thermal power plants will be expired in recent years. In order to provide sufficient electricity, Taiwan Power Company begins to execute renewal and expansion plans for many gas-fired power plants, along with the LNG receiving terminals, which are the Company’s major potential opportunities. In addition, the projects for mass rapid transportation (MRT) system, General Industry, solid waste burning, air pollution control, and sewerage projects are also the bidding targets for The Company.

(2) South East Asia and India With the benefit of demographic dividend area in Southeast Asia and India, the demand for petrochemical products and LNG remains strong, bringing in more investments in LNG receiving terminals, refinery plants, and petrochemical plants. For example, CPC Corporation plans to build petrochemical complex in India or Indonesia; Indonesia state-owned company, Pertamina, plans to build several refinery plants; Thailand will increase the capacity for values-added products while the hydrocarbon industry is well developed; In Malaysia, we still focus on Petronas petrochemical projects; India, to respond to the government’s policy ”made in India”, the private and state-owned companies will keep increasing the investments on refinery and petrochemical plants to replace the import. Besides, under the increasing environmental awareness and decreasing demand for carbon, gas-fired power plants have become the major energy policy in Southeast Asia and India, pushing more opportunities from gas-fired power and LNG receiving terminals. In addition, the plans of MRT projects still continues in Southeast Asia.

(3) China Under the circumstance of US-China Trade War, huge domestic demand and the release of FDI constraint, major international players such as ExxonMobil, BASF, SABIC, and Taiwanese investors are planning for huge refinery and petrochemical complex in China. It is expected the wave of ethylene and downstream investment will be completed by 2030. The other environmental protection opportunities include waste water treatment, waste to energy projects and steel mill plant flue gas denitration(De-NOx).

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(4) Middle East and North Africa Since OPEC production targets were reduced and the economic sanctions against Iran were imposed by the United States, the oil price is expected to be more stable in 2019, making the owners in the Middle East restart the investments on new capacities of downstream sector and value-added products. Besides, to meet the International Maritime Organization’s new regulation of Low-Sulphur Fuel Oil (LSFO) in 2020, owners in the Middle East shall upgrade their refinery facilities to produce LSFO for marine usage, which is also the source of bidding opportunities for the Company. Major bidding projects majorly come from the national tactical plan. Saudi Aramco plans to invest US$334 billion across the oil and gas value chain by 2025, and to triple its chemical production to 34 million metric tons per year by 2030. The Qatar government announced to expand gas production 30%; Kuwait will focus on new and revamping refinery plants and gas investments; Oman Government concentrates on the development of Duqm area and expect the Refinery would stimulate overall development; In North Africa area, Egypt plans to introduce US$10 billion FDI by 2019 to inject more domestic oil and gas facilities, and Algeria plans to build refinery plants in five years and invest US$70 billion on shale gas projects by 2030.

(5) USA Driven by low cost of feedstock in past years, the first wave of ethylene plants were already completed. Major international players such as ExxonMobil, LyondellBasell, Dow DuPont, and Formosa Group are proceeding on second wave investment of ethylene and downstream projects. The Company will actively strive for the bidding opportunities.

(6) Commonwealth of Independent States There are abundant gas and petroleum resources in Russia, Kazakhstan and Uzbekistan, but the hydrocarbon business usually need financing support. CTCI Beijing will cooperate with China Export & Credit Insurance Corporation (SINOSURE) to follow up the projects in “One Belt One Road” Initiative.

b. Long Term Market Trend Looking into the future, although the economy uncertainty still exists because of the fluctuated oil price and new policy leaded by U.S. government, the emerging market such as China, Indonesia, Vietnam, India will still remain the economy growth which is stronger than global average; the advanced countries, take USA for example, is expected to benefit from the cheap shale gas, downstream petrochemical market shall remain booming. As the notion of conserving energy is gaining momentum around the world, industries related to alternative energy and environmental protection are set to become mainstream in the years to come. Accordingly, the Company is trying to be more involved into new techniques and new areas such as LNG, alternative energy and other energy conservation items.

D. Competitive Advantage

The Company has been engaged in the industry for 40 years and recognized as tier one international EPC company with solid track records worldwide. To overcome competition around the world, the Company tries to leverage resources on a global basis. By setting up 56 subsidiaries and branches in 20 countries, the Company develops engineering talents at competitive costs. Besides, the Company seeks strategic partners, on project basis, not only with other EPC companies but also critical vendors (e.g. producer of generator) to jointly bid project for enhancement of competitiveness. The Company is constantly trying to reinforce capability of project execution by soliciting a global logistics for cost down, and strengthening project risk management as well.

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E. Advantages and Disadvantages for Long-Term Development & Corresponding Strategies

a. Advantages (1) Domestic market is recovering

Taiwan government continues to push ahead for a new national development plan. CPC Corporation and Taiwan Power Company continue to execute their plans for renewal and expansion plans. Besides, the contraction relation between Taiwan and China stimulates Taiwanese companies to invest in Taiwan and Southeast Asia as well. Given the better control ability of resources and good track records in domestic market, the Company stands in a better position to bid the potential opportunities. Moreover, Taiwanese petrochemical companies keep investing in new capacity expansion in China, India, Southeast Asia and USA, which is also the potential business for the Company.

(2) Bidding for mega projects with professional capabilities The Company is now the tier one engineering Company in Taiwan to be able to carry out projects with amount over US$ 1 billion alone. The Company has valuable experience in teamed up with foreign partners for project both in domestic and overseas markets. Also, by collaborating with these international firms, the Company has established itself in the global market place for future opportunities overseas.

(3) Entering into Overseas Markets with Strategic Partners With the successful strategic alliances, the Company now has world-class patented processes and techniques at its disposal. These advantages will not only serve existing projects, but can also be utilized globally such as China, Thailand, Vietnam, Malaysia, India, Singapore and the Middle East. The Company will integrate all the available resources to expand globally.

(4) Strengthening Competiveness through Global Resources Management The Company’s subsidiaries in China, Thailand, India, and Vietnam, Malaysia and Singapore have contributed significantly to the projects carried out in domestic and overseas markets. The ability of theses engineers in these subsidiaries have raised significantly throughout the execution process. These subsidiaries will continue to serve the Company favorably in the years to come with low cost and work efficiency advantages.

b. Disadvantages & Corresponding Strategies

Item Corresponding Strategies

Severe competition from other EPC companies

The Company plans to do the following to increase its chances of winning projects: Strengthen cost control and project management capabilities. Technical Improvement: Continuous process re-engineering and

innovation through the R&D center. Human Resources Development: Global expansion by integrating

local talents.

Fluctuations in commodity prices

The Company has adopted the following internal control mechanisms to deal with risk of commodity price: Shortening design timeframe, better control of procurement supply

quantities and shipment schedule. Multiple hedging mechanisms to reduce the associated risks to the

minimum. Purchasing commodity swaps to lock-in the prices of basic materials required such as copper and nickel.

Arranging long-term supply contracts with suppliers. Enhancing relationships with major equipment manufacturers.

To reduce the procurement costs of the projects, actively seeking for low cost regional suppliers with stable quality.

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Item Corresponding Strategies

Difficulties in executing overseas projects

The Company has established a risk management committee to monitor and control all the relevant risks at both the project and the corporate levels.

Better integration of local resources and cost control for higher efficiency.

5.2.2 The Company’s Main Services Purposes and Service Sequences

The Company’s main services are EPC and consulting-oriented, including all sorts of professional services such as feasibility study, design, equipment supply, equipment fabrication, construction services, construction management, commissioning, and maintenance. A. Main Services and Purposes

a. Refinery/Petrochemical: For the manufacturing of oil-related and petrochemical products. b. Utilities: Nuclear power plant, natural-gas power plant, coal-fired power plant, and combined-

cycle power plant. c. Infrastructure: MRT system, high speed railway, etc. d. Environmental: Incinerators operation and maintenance, waste management, water

treatment, air pollution processing, etc. e. General Industry: Steel manufacturing plant, storage and docking facilities. f. High tech and bio-related: electronic plant, pharmaceutical plant, etc.

B. Service Sequences: Feasibility study and initial design → Engineering → Procurement → Construction →

Construction Management → Commissioning → Service and Maintenance 5.2.3 Major Materials Used and Supply Status:

A. Commodities: specially-formed steel, steel plates, steel rods, cement, various pipes and accessories, electricity cables, and special paints. These materials are sourced by qualified suppliers in the region close to the project job sites.

B. Equipments: reactor, storage tank, heat exchanger, heat boiler…etc. These major equipments are supplied by specialized companies throughout the world.

5.2.4 Major Suppliers and Clients A. Major Clients (each commanding 10%-plus share of annual order volume) Information for the Last Two

Calendar Years Unit：NT$ thousands

Item

2017 2018

Company Name

Amount % Relation with

Issuer Company

Name Amount %

Relation with Issuer

1 TPC 11,893,499 17 None Orpic 13,847,797 22 None

2 Orpic 15,413,235 22 None Prpc 8,592,370 13 None

3 Others 44,299,870 61 None Others 41,629,475 65 None

Total 71,606,604 100 Total 64,069,642 100

B. Major Suppliers Information for the Last Two Calendar Years N/A.

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5.2.5 Production over the Last Two Years Unit: NT$ thousands

2017 2018

Engineering 62,906,736 54,198,529

Environment 3,220,331 3,511,930

General Trade 136,152 1,116,335

Others 231,885 642,995

Total 66,495,104 59,469,789 5.2.6 Shipments and Sales over the Last Two Years

Unit: NT$ thousands

2017 2018

Local Export Local Export

Engineering 54,965,443 11,645,549 41,053,978 16,068,582

Environment 3,538,665 940,922 3,889,678 929,891

General Trade 184,704 0 1,276,827 0

Others 331,321 0 850,586 0

Total 59,020,133 12,586,471 47,071,069 16,998,473

5.3 Human Resources 5.3.1 The information about employees employed for the most recent two fiscal years and up to

the date of printing of the annual report

Year 2017 2018 As of March 31st, 2019

Number of Employees

Permanent employee 2,571 2,547 2,531

Contract employee 127 94 92

Total 2,698 2,641 2,623

Average Age 41.9 41.9 41.9

Average service seniority 12.9 13.5 13.5

Number of employees at each level of

educational degree

Doctor 15 18 17

Master 1,255 1,268 1,261

Bachelor 1,322 1,284 1,275

Senior High School 72 53 52

Senior High School below

34 18 18

Certification details of employees whose Jobs are related to the Release of the Company’s Financial Information:

Certification Number of Employees

Certified Internal Auditor(CIA) 4

Test of the Enterprise Internal Control Basic Ability 4

Test of the Bank Internal Control Basic Ability 1

Certified Securities Investment Analyst(CSIA) 2

Certified Public Accountant (ROC) 3

Certified Public Accountant (USA) 1

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5.3.2 Work Environment and Occupational Safety and Health

A. HSE Policy Statement Our approach is captured by the following values, principles and mission statements, which drive the way our staff and subcontractors act and operate. This policy statement is also communicated to our suppliers and JV partners. ‧ Insist on Safety as the First Priority ‧ Promote Personal Health and Wellbeing ‧ Protect the Environment and Pursue Sustainability ‧ Implement Effective Risk Management ‧ Comply with Legal and Contractual Requirements ‧ Encourage Training and Engagement ‧ Continuously Improve Our HSE Management System Creating a safe, comfortable and environmentally friendly workplace has always been the CTCI's philosophy. All activities are given priority in providing a safe and secure workplace, and actively promote self-management of workplace health, create a healthy working environment, and promote physical and mental activity. Moreover, we provide professional services that meet environmental protection requirements, promote energy conservation, carbon reduction, and pollution prevention. Implement risk management mechanisms to prevent occupational injuries and environmental protection, and continuously improve the performance and goals of safety, health and environmental protection. We are committed to the design, procurement, construction and commissioning of CTCI in line with the government's regulations and customer requirements for occupational safety, health and environmental protection. In order to enhance the safety, health and environmental awareness of all employees and vendors, CTCI regularly organizes and sponsors various HSE training activities or seminars to encourage colleagues and vendors to participate actively. In addition, CTCI continues to review and optimize the activities of safety, health and environmental protection, ensuring that the safety, health and environmental protection management system is sound and feasible, thereby enhancing the effectiveness of the HSE management system.

B. HSE Organization setting CTCI set up the department of HSE as a first-class unit to provide a safe workplace for our colleagues and achieve the goal of zero incidents. Therefore, the HSE Management Department is responsible for drafting, planning, promoting and supervising the safety, health and environmental management matters of CTCI and guides the implementation of various departments, projects and related group alliances, and regularly measures the performance of various HSE management, and supervises and ensures the effectiveness of the implementation of the HSE management of each project unit, so as to prevent the reduction of occupational injuries and ensure the goals of safety and health of workers and maintaining environmental resources.

C. HSE Management System Driven by the mission of providing quality engineering services forever and adhering to the needs of customers in the era, CTCI adheres to the well-established HSE management mechanism in response to the development trend of international HSE management. CTCI obtained certificates of the ISO 14001 Environmental Management System and OHSAS 18001 Occupational Health and Safety Management System Certificate in 2006. In order to continue to improve, CTCI obtained the OHSAS 18001:2007 certification. At the same time, CTCI also voluntarily undertook the Taiwan Occupational Safety and Health Management System (TOSHMS) certification. Moreover, CTCI transferred to and obtained the CNS 15506 certification in 2012, we also continued to contribute to the TOSHMS promotion meeting, and the experience are shared to the domestic industry, and spared no effort to improve domestic safety and health management capabilities. In addition, CTCI obtained ISO 14001: 2015 certification in 2017. CTCI's long-term development of the HSE management system

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demonstrated its value in April 2018. CTCI takes the lead in being certified to ISO Occupational Health and Safety Standard in global engineering industry. This is not only the result of team efforts, but also show CTCI's determination of taking the initiative and surpass ourselves on the improvement of HSE management.

D. HSE Management Operation CTCI HSE management system is a management method and strategy. It solves the problems related to safety, health and environmental protection with order, objectives and methods. It adopts the logic of Deming management mode: planning, do, check and action (PDCA) which covers design, procurement, construction, commissioning, emergency response and headquarters office buildings. In addition, CTCI has formed the “Occupational Safety and Health Committee”, and the Committee has 15 members, with the EMO president serving as the chairman of the committee. 6 are representatives from the labor side. Routine meetings are held every three months. Prior to each meeting, we would distribute the BBS (Behavior Based Safety) survey to understand the levels of employee awareness in HSE-related information. In the survey, the employees can make suggestions to the Company on HSE matters. Furthermore, to the spirit of continuous improvement of the HSE management system, the president take charge of the “HSE Top Management Review Meeting” which not only reviews the annual achievement of the HSE target and performance indicators, but also proposes the specific and feasible improvement plans to various defects and problems as well as requires to be implemented by relevant units to reduce potential safety, health and environmental risks, and provides the best working environment for all workers.

E. HSE Training To decrease the occurrence of occupational hazards, all relevant personnel need to receive educational training for work-related hazard prevention and regulations from local government. The training courses must be completed prior to being stationed at a project site. In addition, Employees in CTCI HQ Building also need to receive routine safety, health, and environmental protection training courses according to the law, including those in fire drill, new employee training, general on-the-job safety and health training, first-aid training and high-risk emergency training for special topics.

F. HSE Risk Assessment CTCI 's HSE risk assessment procedure was established according to ISO 45001, ISO 14001 management systems and as per the principles of ISO 31000. The Administration & PR Division and HSE contact personnel of respective departments would participate in the HSE risk assessment at the Company HQ building on an annual basis. Improvements or regulatory measures are proposed for risks and opportunities. Risk evaluation during project execution is carried out at the start of the project and re-evaluated on an annual basis till its end. When there are changes in construction methods, equipment, or procedures, major worker-safety related incidents or abnormal improvements to HSE, then the corrective measures would be proposed and hazard and risk need to be identified and assessed again. The HSE assessment and improvement results of HSE were included in the enterprise risk management issues, and the president presided over the review of the “Organization Risk Management Meeting”.

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G. Statistical analysis of occupational injury CTCI is an international engineering company. According to the requirements of customers of international engineering projects, the statistics of occupational injury mainly adopts the recordable accident frequency (TRCR)1, Days Away, Restricted or Transferred incidents (DARTR)2 which published by the Occupational Safety and Health Administration (OHSA) of the US Department of Labor is the statistical basis. The causes of occupational injuries are analyzed and the implementation improvement plan is proposed, including cross-unit or systemic issues which are the focus of management.

H. HSE Specific Effectiveness In 2018, CTCI continued to work hard in safety, health and environmental protection. The outstanding results are summarized as follows: a. Domestic and foreign projects that more than one million hours without any work-related injury in

2018 rebuilding project, as detailed in the following table:

b. The CTCI HQ building has received a certificate of record on August 10, 2018 for operating for 43,212,706 hours without any work-related injury from the Occupational Safety and Health Administration, Ministry of Labor.

c. P1 Project achieved 23 million safe man-hours without any work-related injury and commended by PETRONAS in November 2018.

d. Dahej LNG Project awarded 10th CIDC Vishwakarma Awards 2018 by Construction Industry Development Council, India.

e. Dahej LNG Project awarded 1M safe work hour without Lost Time Accident by ENGINEERS INDIA LIMITED.

f. Talin Power Plant Project received an Appreciation of Zone Defense from Labor Standards Inspection Office Labor, Affairs Bureau, Kaohsiung City.

g. Tung Hsiao Power Plant Project awarded the first prize of TPC green environment site evaluation by Taipower in the year of 2018.

Note 1: Total recordable case rate, TRCR =Total recordable cases

Total hours worked× 200,000

Note 2: Days away from work, days of restricted work activity or job transfer

incidence rate, DARTR =Days away,Restricted or Transfer incidents

Total hours worked× 200,000

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h. Singapore Thomson Line Project awarded Annual Safety Award Convention 2018 Accident Free Recognition Award-Category 3.

i. Singapore Thomson Line Project awarded Annual Safety Award Convention 2018 Category C-Excellent Award.

5.4 Environmental Protection Expenditure

As the Company belongs construction and engineering technology service industry, CTCI’s workplace divides into a headquarters building and a project site, as detailed below: 1. Headquarters building: mainly for office operations, no pollution has occurred. In response to

environmental protection and energy conservation, the green building project was launched in 2015. In March of 2018, the Company completed the replacement of the LED lamp in the headquarters building and the online work of the energy management system in July. From July to December, through the analysis of the energy management system, the total energy efficiency of the headquarters building has reached 332,172 degrees (compared to the energy baseline), with an average energy saving of 10.13%.

2. Project site: Most of the operations are carried out in the industrial zone. During the construction process, all the cooperating vendors are required to implement the relevant environmental protection measures such as air, water, waste and soil to comply with environmental protection regulations. The most important goal is not to affect the residents and the environment around, and there is no unreasonable situation at present.

5.5 Labor Relations 5.5.1 Employee benefit plans, continuing education, training, retirement systems, and the status of

their implementation, and the status of labor-management agreements and measures for preserving employees' rights and interests

A. Employees’ benefits

a. Labor insurance (1) The Company’s employees are enrolled in the labor insurance program pursuant to laws. (2) The labor insurance premium includes the premium of the insurance against ordinary incident

and occupational disaster. 70% of the insurance premium for ordinary incident will be borne by the Company, 20% thereof borne by the insured, 10% thereof borne by the government. The insurance premium for occupational disaster will be borne by the Company in full.

b. National health insurance (1) The Company’s employees and their dependents are enrolled in the national health insurance

program pursuant to laws. (2) The payable national health insurance premium shall be subject to the government’s relevant

requirements.

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c. Group insurance (1) The Company’s employees are entitled to the additional group insurance purchased by the

Company from the life insurance company externally. (2) The Company’s employees will be enrolled in the group insurance program immediately on the

hiring date. The group insurance covers life insurance and accidental injury insurance, which will be borne by the Company in full.

(3) The Company’s employees and their dependents may select the medical care insurance programs at their sole discretion, and 60% of the insurance premium will be borne by the Company.

d. Annual bonus The Company will allocate the incentive bonus subject to the annual operation overview, and will grant the bonus with respect to individual performance, attendance record and seniority in accordance with the relevant operating procedure.

e. Workers’ Welfare Commission The Company establishes the Workers’ Welfare Commission pursuant to laws, and allocates the welfare fund periodically. The colleagues may elect the commission members openly, and organize tours and club activities and give birthday coupons and festival gifts, subsidies and consolation money periodically.

f. Incentive payment for shareholding trust To support the employees’ shareholding committee incorporated by employees and encourage employees to save funds and hold the Company’s shares permanently, the Company specially agrees that the colleagues who have served more than one year and been enrolled in the employees’ shareholding committee may be granted the incentive payment on a pro rata basis subject to the fund allocated on a monthly basis.

g. Employee health care and promotion In order to create a healthy workplace environment, the Company has a health center and deploys full-time medical staff (nurse and psychologist), provided Employee Assistance Program system and doctors' clinic services, health training course, and has an electronic platform to assist associates in linking health resources to implement employee health care and promotion.

B. Top Management advanced studies:

a. EMBA:

Title Name Course Name Status

President Michael Yang EMBA, National Taiwan University of Science and Technology, Taiwan

Graduated in 2008


M. H. Wang EMBA, Chulalongkorn University, Thailand Graduated

in 2009

Senior Vice President & CFO

Patrick Lin EMBA, National Taiwan University, Taiwan Graduated

in 2013

Vice President Steve Jean EMBA, National Chengchi University, Taiwan Graduated

in 2013

Vice President M. G. Lee EMBA, National Taiwan University of Science and Technology, Taiwan

Graduated in 2008

Vice President S. H. Lin EMBA, National Chengchi University, Taiwan Graduated

in 2008

Accounting Officer

Ai-Chen Ho EMBA Program in Finance, National Taiwan University, Taiwan

Graduated in 2010

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b. Top Management program:

Title Name Course Name Status


Ming-Cheng Hsiao

Executive Management Training Program, National Taiwan University, Taiwan

During the period of Apr. to Jul. 2013

Senior Vice President & CFO

Patrick Lin

Participated in Advanced Seminar on General Management of National Taiwan University, Taiwan

During the period of Feb. to Jul. 2009

Top Management Training Course by National Taiwan University, Taiwan



Participated in Advanced Executive Program for Senior Manager of National Taiwan University, Taiwan

During the period of Dec. 2008 to Aug. 2009




During the period of Sep. 2009 to Mar. 2010

Vice President Teh-Ming Tao




During the period of Mar. to Jun. 2013

Vice President M. G. Lee Top Management Training Course by National Taiwan University, Taiwan


Vice President S. H. Lin





Accounting Officer

Ai-Chen Ho Top Management Training Course by National Taiwan University, Taiwan


c. Training program about Corporate Governance:

Name Date Sponsoring

Organization Course Hours

Ming-Cheng Hsiao / Todd Chen / T. C. Huang / Patrick Lin / Casey Yeh / M. G. Lee / Po-Chien Wang / Tsai-Ming Wang / Jing-Shing Wu / S. H. Lin / Connie Lin / Shih-Wei Chung / Ai-Cheng Ho / Ai-ling Hsu

2018/05/04 Center for Corporate Sustainability


3

Ming-Cheng Hsiao / Todd Chen / Patrick Lin / Po-Chien Wang / M. G. Lee / Tsai-Ming Wang / Jing-Shing Wu / S. H. Lin / Connie Lin / Shih-Wei Chung / Vincent Liu / Ai-Cheng Ho / Ai-ling Hsu

2018/08/03

Taiwan Corporate Governance Association


3

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C. Employees’ training:

The Company establishes the workers’ training system in accordance with the Company’s view, mission and long-term business objectives, and plans the training development blueprint for various professional areas and job ranks. In addition to enhancing the workers’ professional ability, the Company also works hard to train their multi-departmental integration professional ability. The training programs include traditional lecturing courses, and also OJT, Lesson & Learnt, e-Learning and knowledge database in order to upgrade the employees’ knowledge about the know-how and skill, language, computer, management and leadership. As of June 2010, the Company started to perform the Mentor & Mentee (M&M) plan with respect to new employees in order to assist new employees to adapt to the enterprise culture and rapidly acquire the professional attitude and ability required by independent operation through structured (professional guidance) and non-structured (environmental adaption) one-on-one instruction. The training management applies the omnibus training management system, GTS (Global Training System), to enhance the e-Learning function and enable colleagues around the world to learn the expertise synchronously, and hopes to fulfill the workers’ training systems and development blueprint effectively through the strong control mechanism. The Company’s personnel committee will recommend excellent colleagues to take on-the-job advanced studies in domestic and foreign colleges/universities on a yearly basis, and will offer them the chance to co-work with staff of foreign engineering companies on a non-scheduled basis, so as to upgrade their expertise and solidify their international competitive ability. The employees’ training costs will be NT$16.30 million approximately per year. The average training hours will be more than 93.05 hours per person/year (245,770hours/2,641 persons). The various training hours and costs are specified as following:

Type Number of class Total number of

attendees Total hours (hour) Total costs (NT$)

Orientation training 69 467 67,680 90,940

Competence training 1,371 26,981 135,420 8,067,952

Management training 36 1,278 33,025 6,531,506

General knowledge training 57 2,578 7,210 622,163

Self-development training 5 5 2,435 987,710

Total 1,538 31,309 245,770 16,300,271

a. Orientation training: Including the introduction to the overview, work rules and QHSE management

regulations of the Company, Orientation, and Mentor & Mentee (M&M) plan; b. Competence training: The various departments conduct the specialty training programs by

instructing the employees and offering the employees with the chance to practice subject to the nature of work, the Company’s business needs or requirements under contracts and laws, and have employees participate in the actual operation adequately to upgrade their competence;

c. Management training: HR Dept. arranges the management programs subject to the Company’s status and development needs, and makes the programs available to the various departments’ management.

d. General knowledge training: The employees’ specialty training committee plans general knowledge training programs together with relevant units in accordance with the employees’ training policy, objective and strategy, and make the programs available to the whole employees;

e. Self-development training: Including English comprehension training arranged in order to upgrade the colleagues’ international language ability, and on-the-job advanced studies in domestic and foreign colleges/universities to advance employees’ competence; The operations related to the employees’ training programs shall be conducted in accordance with the “CTCI Employee Training Management Procedure” and “CTCI Employee's Professional Competency Assessment and Management Procedure”.

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D. Retirement system and implementation thereof:

The Company enforces the workers' retirement rules pursuant to the Labor Standard Law and allocates the pension reserve on a monthly basis. The rules are outlined as following: a. All of the Company’s employees shall comply with the rights and obligations defined in the workers’

retirement rules. b. The Company allocated the pension reserve equivalent to 5% of the total salary on a monthly basis

before the end of September 2002, and 6.5% thereof after October 2002. The pension reserve will be deposited to the exclusive account maintained at the Bank of Taiwan. As of July 2005, the Company has executed the new system according to the employees’ will and choice, and allocated the pension fund according to the Labor Pension Act.

c. Payment of pension fund: The Company paid the pension fund pursuant to the Labor Standard Act or Labor Pension Act pursuant to laws subject to the employees’ choice as of Jul. 1, 2005.

d. The Company has the supervisory committee of workers' retirement reserve fund that meets quarterly.

E. Other important agreements:

a. The Company is engaged in the engineering service and possesses qualified personnel, a definite management philosophy, and a well-founded management system. In addition to the ordinary organization and system, the communication channels also include employees’ forums and labor and employer meetings held on a scheduled or non-scheduled basis, and installation of a suggestions box, so as to establish common consensus and a harmonious relationship between the employees and employer through the various channels.

b. The Company is engaged in the business where the Labor Standard Law may apply and, therefore, it shall operate in accordance with the Labor Standard Law.

c. Written undertaking for non-disclosure, non-competition and intellectual property right to secure the going concern, protect the group members’ interest and complete the corporate governance, the Company amends the “written undertaking for non-disclosure and copyright & patent right” to the “written undertaking for non-disclosure, non-competition and intellectual property right” and hopes that all employees may comply with the undertaking. All employees of CTCI and its domestic affiliates and overseas companies have already signed the undertaking.

5.5.2 Loss suffered by the Company due to dispute between labor and employer in the most recent

fiscal years The Company is used to valuing the employees’ benefits and calling a labor and employer meeting and welfare committee meeting on a quarterly basis, and also installs the suggestions box to make a two-way communication channel available to employees. Therefore, the relationship between labor and employer is harmonious and no dispute over labor has arisen in the past. No material loss or punishment has been suffered by the Company due to dispute between labor and employer in the past three years. In the future, the Company will continue to adhere to the same principle and solidify the relationship between labor and employer further.

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5.5.3 Guidelines for ethical conduct 1.0 Purpose

Guidelines for ethical conduct (“the Guidelines”) are adopted to assist CTCI to foster a corporate culture of ethical management, preventing employees taking advantage of their positions in exchange for improper benefits.

2.0 Scope These Guidelines are applicable to CTCI employees, subsidiaries, and other institutions or juridical persons which are substantially controlled by CTCI ("business group").

3.0 Definition 3.1 Vendor: Including suppliers, third parties and subcontractors. 3.2 Family: Employee and their spouse and relatives within three degrees of consanguinity. 3.3 Confidential information: Including all CTCI methods, techniques, processes, programs, or

other information that can be used for production, sale or business operation. 3.4 Intellectual property: Including all CTCI patents, trademarks, copyrights and trade secrets.

4.0 Responsibility 4.1 Human Resource Department: Establish guidelines of ethical conduct and accept

accusations. 5.0 Operation Procedure

5.1 Gift receiving norm 5.1.1 If CTCI is the Party A in contract:

A. Shall not ask for, expect or receive any money and goods gifted by the downstream vendor (Party B in contract) having existing contractual relationship or might establish cooperation relationship with CTCI, including but not limited to: cash, coupon, present, entertainment ticket, fruit, food, liquor, tea, stationery, travel hospitality, commodity discount coupon, membership card, painting and other properties or preference in personal shopping.

B. But under general social etiquette and custom circumstances below, the gift may be received when not affecting the specific rights and obligations: a. The gift is the souvenir distributed extensively and with the Logo of gifting

company, such as calendar, notebook, pen drive, card case, tie, tie clip etc. or other management or inspirational books.

b. When being invited to dinner party or other communicative activities, CTCI employee has reported to the supervisor (*Notes) and been approved in advance.

* Notes: the supervisor of CTCI is the head of BU, the supervisor of subordinate unit is the President, so is the other companies under the Group.

5.1.2 If CTCI is the Party B in contract: For the present gifted to our company by Party A’s customer (landlord) and partner of our company, dinner party or other communicative activities, it may be accepted with prior report to the supervisor (*Notes).

5.2 Preventing conflicts of interest CTCI employees are allowed to conduct personal investments and other business activities under the limitation of following requirements, in order to avoid conflicts of interest between employee and CTCI, which may further affect the loyalty of such employee: 5.2.1 Avoid personal gain during business operations:

A. CTCI employees shall not participate in business operations if business relationship appears between CTCI and their family.

B. CTCI employees shall not directly or indirectly accept any improper benefits when conducting business operation.

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5.2.2 Avoid part-time job and/or competing with CTCI: A. CTCI employees shall not accept other company’s employment during tenure. B. Direct or indirect relationship with competitors shall be avoid, including part-

time/full-time employment and contractor of companies in the same business, CTCI’s clients or vendors, CTCI’s competitors and its supplier.

C. Effects on CTCI clients and/or vendors lead to disadvantage of CTCI shall not occur. 5.2.3 The measures of relatives’ employment of related industries:

A. To avoid disadvantaging CTCI and conflicting with interests of CTCI, CTCI employees shall not sharing confidential information with their relatives who is employed by a company in the related industries, and their companies as well.

B. CTCI employees shall proactively submit to Human Resource Department in written form if his/her relatives hold a business relationship with CTCI.

5.2.4 CTCI employees shall submit to Executive Management Office in advance if he/she is a director of the board, supervisor or consultant of a company in the related industries, excluding those of CTCI affiliates.

5.3 Protection of business confidentiality and intellectual property rights 5.3.1 All types of documents and information shall not be altered or modified by CTCI

employees. 5.3.2 CTCI employees shall not discuss their work with non-CTCI employees and leak

confidential information which has not been revealed by CTCI to others. The article above is still valid after resigning or retiring.

5.3.3 Before CTCI patent or confidential information is revealed, CTCI employees shall not disclose it in any ways, including disclosing it in CTCI. The disclosure in CTCI should be authorized or assigned, and the disclosure out of CTCI should be done after subscribing the contract of confidentiality.

5.4 Fair trade with vendors 5.4.1 Vendor selection

A. Vendors shall be fairly selected based on the technical specification, quality, duration and business requirements with the most competitive price. CTCI employees shall not choose vendors with preference and ignore CTCI’s interests.

B. Employees participating in vendor selection shall avoid doing any activity that might be seen as the cause for vendor selection result.

C. Employees participating in vendor selection shall not provide any information relating to the contract or proposal to irrelevant third parties.

D. CTCI’s goals in procurement are “Best price, suitable quality, and prompt delivery”. CTCI employees should assist our vendors to accomplish the quality and quantity of their products or services.

5.4.2 Dealing with vendors A. CTCI employees should treat all vendors in positivity, fairness, and politeness. B. CTCI employees shall not disclose confidential information to vendors. C. CTCI employees should avoid contacting vendors due to non-business-related

affairs

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5.5 Steps to determine the ethicalness of behavior 5.5.1 Ethical Decision Making

When CTCI employees have concerns about their own acts, or find anyone has suspected unethical behavior within CTCI, employees should take the following steps：

A. Assess that if there is any adverse effect to CTCI, other people, and yourself, due to the behaviors, according to the section 5.2 in Guideline.

B. Taking action after assessing the above statement, and should be noted the following principles：

a. The action plan shall comply with laws and regulations. b. The action plan shall meet CTCI’s policies. c. CTCI’s employees may consult ethic-responsible department before deciding to

take the action. 5.5.2 Questions to consider

When CTCI employees are faced with a situation not stated in this Guideline, the following questions may help them decide the right course of action: A. Am I personally uncomfortable about the course of action? B. Would I be unwilling or embarrassed to tell my family, friends, or coworkers? C. Could someone’s life, health, safety, or reputation be endangered by my action? D. Would such action damage CTCI’s reputation if it appears on the news? E. Would I be regret of such action?

5.6 Reporting and disciplinary procedures for violation 5.6.1 Disciplinary system

A. CTCI employees shall acknowledge the rules and their obligations. Employee violates the Codes of Ethical Conduct shall be reviewed by the Rewards and Punishment Committee, and penalized according to “CTCI Employees Reward and Punishment Regulations”. Employees who are in significant violation of this Conduct may be subject to disciplinary action up to and including termination of the labor contract.

B. Apart from being penalized according to the CTCI internal rewards and punishment related policies, CTCI may conduct civil or criminal lawsuit based on the severity of violation.

5.6.2 Reporting system A. CTCI employees who discover any violation of this Conduct or other unethical

activities shall report under their real name or anonymously according to “Accusation Management Regulations”.

B. Reporter shall provide specific descriptions and relevant evidences on the concerned person, matter, time, place and object for further investigation. Reporting channels including: Online rep6.1orting (https://www.reportnow.com.tw/ctci) and email ([email protected]).

C. The reporting channel stated above is run by an independent third-party service provider to ensure the unethical activities being reported is conveyed truthfully. CTCI promise to keep the confidentiality of reporters’ identity, protecting reporters from inappropriate disciplinary actions due to their whistle-blowing.

D. CTCI may not conduct investigation or further action if reporters could not provide descriptions and relevant evidences on the concerned person involved. Such reporters may be penalized for malicious complaints.

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5.6 Important Contracts

Agreement Counterparty Period Major Contents Restrictions

EPC CPC Corporation 2018/11/21 2024/08/30

Taiwan CPC Third LNG Receiving Terminal Tank EPC

Project

According to contract

content stipulation

BTO Kaohsiung City Government 2018/10/31 2021/10/30

Taiwan KCG 33,000 CMD Linhai WWRU BTO Project


content stipulation

EPC Fujian Gulei Petrochemical

Company Limited 2018/09/15 2020/08/22

GSPC Gulei EVA Project, BEPC


content stipulation

Engineering and

Purchasing

China Synthetic Rubber Corporation

2018/09/07 2019/06/28

India CSRC/CCIL Carbon Black Plant EPs Project


content stipulation

EPC China General Terminal & Distribution Corporation

2018/09/06 2020/12/31

Taiwan CGTD Tank Farm EPC Project


content stipulation

BOT Taoyuan City Government 2018/08/13 2021/12/31

Taoyuan City Biomass Energy Center BOT Project


content stipulation

Engineering Saudi Basic Industry

Corporation 2018/07/31 2019/03/30

Singapore SABIC Sasffron B Polyetherimide Project, FEED


content stipulation

EPC Taiwan Power Company 2018/07/09 2023/01/15

Taichung Power Plant Coal Handling System

Improvement Project (EPCC)


content stipulation

EPC PTT LNG Company Limited 2018/07/01 2022/02/28

Thailand PTTLNG Nong Fab LNG Receiving Terminal

Project, EPCC


content stipulation

EPC

Department of Rapid Transit Systems Taipei City

Government, SEMPO

2018/06/12 2027/06/30

Taipei MCT Wanda Line System E&M Phase 1 Project

(EPCC)


content stipulation

EPC Adani Dhamra LNG

Terminal Private Limited 2018/05/09 2021/02/08

India DLTPL Dhamra LNG Receiving Terminal EPC

Project


content stipulation

EPC Department of Rapid Transit

Systems Taipei City Government, SEMPO

2018/04/20 2023/03/31

Taipei MRT Xinyi Eastern Extension and Xinzhuang

Depot Power Supply System and Depot Equipment Project,

EPC


content stipulation

126


EPC CPC Corporation 2018/03/26 2018/09/30

Taiwan CPC Taoyuan Refinery Emergency Restoration

Project


content stipulation

Engineering ExxonMobil Chemical

Company 2018/02/01 2019/01/31

Singapore ExxonMobil CRISP Project, FEED


content stipulation

EPC JG Summit Petrochemical

Corporation 2017/12/11 2019/07/21

Philippines, JG Summit Aromatics and Butadiene

Extraction Units, EPC


content stipulation

EPC Global Power Synergy

Company Limited 2017/10/27 2019/07/27

Thailand GPSC CUP 4 Co-generation Project, EPC


content stipulation

EPC Chimei Corporation 2017/10/01 2018/12/31

Taiwan Chimei 240 CMH EDR WWRU EPC Project


content stipulation

EPC MAXIHUB Company Limited 2017/10/01 2019/09/30

Vietnam Maxihub Lube Oil Blending and Tank Farm Terminal Project, EPCC


content stipulation

EPC PRPC Refinery and Cracker

SDN. BHD. 2017/09/01 2020/02/29

Malaysia RAPID P28B Euro 5 Project, EPCC


content stipulation

Engineering Jupiter MLP 2017/08/28 2018/01/28

Jupiter-Light Condensate Project, FEED


content stipulation

EPC Prasarana Malaysia

Berhad 2017/06/16 2021/02/27

Malaysia Kuala Lumpur KLLRT Line 3 Power Supply

System Project, EPC


content stipulation

EPC Southern Power

Generation SDN. BHD. 2017/03/01 2020/01/01

SPG 1,440MW Track 4A IPP Project, EPC


content stipulation

EPC Formosa Plastics

Corporation, Texas 2017/01/09 2018/02/06

FPC-Tx Offsite Pipe Rack Modularization & Erection

Project, EPC


content stipulation


Dah-Tarn 600MW Emergency GTG Project,

EPCK


content stipulation

127


BOT Taoyuan City Government 2016/08/19 2054/08/18

TYCG 156,000CMD Chungli Sewerage System BOT

Project


content stipulation

BTO Kaohsiung City Government

2016/08/15 2019/08/14

KCG 45,000 CMD Fengshan WWRU BTO Project


content stipulation

EPC Petronet LNG Limited 2016/07/01 2019/06/30

Petronet Dahej LNG IIIB-1 Expansion Project


content stipulation

EPC Taiwan Power Co., Ltd.

Taichung Power Plant

2015/12/31

2020/12/31

TPC Taichung Power Plant 550MWX4 Existing Unit

1~4 AQCS Retrofit Project, EPC


content stipulation

EPC

Oman Oil Refineries and

Petroleum Industries

Company SAOC (ORPIC)

2015/12/17

2019/12/17

Oman ORPIC PKG-1 Steam Cracker and U&O, EPC


content stipulation

EPC Land Transport Authority 2015/04/08

2019/11/30

Singapore Gali Batu Depot Stabling Trackworks, EPC


content stipulation

EP Land Transport Authority 2014/07/25

2020/12/30

Singapore Thomson Line Trackwork Project


content stipulation

EPC PRPC Refinery and

Cracker SDN. BHD.

2014/08/01

2019/05/31

Malaysia Petronas RAPID Package 1 RFCC, EPC


content stipulation

EPC Taiwan Power Company 2013/09/03

2020/12/31

Tunghsiao Combined Cycle Power Plant Project


content stipulation


TPC Talin Power Plant Renewal Project


content stipulation


800 MW x 3 Lin Kou Power Plant Renewal Project, EPC,

Taiwan


content stipulation

EPC Taichung City Government

2011/05/08 2019/04/23

DORTS, Taichung MCT Power Supply EPC, Taiwan


content stipulation

128

VI. Financial Information

6.1 Five-Year Financial Summary

6.1.1 Condensed Consolidated Balance Sheet - International Financial Reporting Standards

Unit: NT$ thousands

Year Item

Five-Year Financial Summary

2014 2015 2016 2017 2018

Current Assets 42,090,608 45,298,807 51,394,621 54,762,209 56,534,559

Property, Plant and Equipment

7,026,878 7,001,676 6,876,224 6,660,116 10,432,036

Intangible Assets 118,638 121,469 127,686 97,201 191,198

Other Assets 7,647,224 7,808,634 7,826,358 8,548,463 9,339,540

Total Assets 56,883,348 60,230,586 66,224,889 70,067,989 76,497,333

Current Liabilities

Before distribution

31,033,931 34,389,605 40,297,705 43,960,316 51,420,086

After distribution

32,732,020 36,218,420 42,282,217 46,428,518 Note2

Non-current Liabilities 6,365,262 6,112,898 5,737,135 5,067,516 4,451,088

Total Liabilities

Before distribution

37,399,193 40,502,503 46,034,840 49,027,832 55,871,174

After distribution

39,097,282 42,331,318 48,019,352 51,496,034 Note2

Equity Attributable to Shareholders of The Parent

16,918,949 17,019,448 17,098,343 17,952,032 17,458,729

Capital Stock 7,575,303 7,611,076 7,632,738 7,632,738 7,632,738

Capital Surplus 3,230,033 3,297,703 3,322,098 3,395,620 3,545,053

Retained Earnings

Before distribution

5,874,885 6,097,988 6,343,847 7,105,963 6,540,307

After distribution

4,176,796 4,269,173 4,359,335 4,637,761 Note2

Other Equities 250,563 24,516 (188,505) (170,454) (247,534)

Treasury Stocks (11,835) (11,835) (11,835) (11,835) (11,835)

Non-controlling Interests

2,565,206 2,708,635 3,091,706 3,088,125 3,167,430

Total Equity

Before distribution

19,484,155 19,728,083 20,190,049 21,040,157 20,626,159

After distribution

17,786,066 17,899,268 18,205,537 18,571,955 Note2

Note1: The post-distribution numbers are based on the Shareholder’s Resolution in the following year.

Note2: The 2018 earnings distribution has not been resolved by the Shareholder’s Meeting, hence not applicable.

129

Condensed Balance Sheet - International Financial Reporting Standards

Unit: NT$ thousands

Year Item


2014 2015 2016 2017 2018

Current Assets 27,948,158 27,683,068 30,226,145 31,969,258 36,642,462

Property, Plant and Equipment

354,847 344,367 320,512 301,716 300,724

Intangible Assets 108,317 112,131 121,127 90,863 40,343

Other Assets 12,721,418 12,983,703 13,650,508 13,851,788 13,919,371

Total Assets 41,132,740 41,123,269 44,318,292 46,213,625 50,902,900

Current Liabilities

Before distribution

20,713,133 20,493,816 23,623,778 24,616,947 30,146,321

After distribution

22,411,222 22,322,631 25,608,290 27,085,149 Note 2

Non-current Liabilities 3,500,658 3,610,005 3,596,171 3,644,646 3,297,850

Total Liabilities

Before distribution

24,213,791 24,103,821 27,219,949 28,261,593 33,444,171

After distribution

25,911,880 25,932,636 29,204,461 30,729,795 Note 2

Equity Attributable to Shareholders of The Parent

16,918,949 17,019,448 17,098,343 17,952,032 17,458,729

Capital Stock 7,575,303 7,611,076 7,632,738 7,632,738 7,632,738

Capital Surplus 3,230,033 3,297,703 3,322,098 3,395,620 3,545,053

Retained Earnings

Before distribution

5,874,885 6,097,988 6,343,847 7,105,963 6,540,307

After distribution

4,176,796 4,269,173 4,359,335 4,637,761 Note 2

Other Equities 250,563 24,516 (188,505) (170,454) (247,534)

Treasury Stocks (11,835) (11,835) (11,835) (11,835) (11,835)

Non-controlling Interests

0 0 0 0 0

Total Equity

Before distribution

16,918,949 17,019,448 17,098,343 17,952,032 17,458,729

After distribution

15,220,860 15,193,633 15,113,831 15,483,830 Note 2

Note1: The post-distribution numbers are based on the Shareholder’s Resolution in the following year.

Note2: The 2018 earnings distribution has not been resolved by the Shareholder’s Meeting, hence not applicable.

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Condensed Consolidated Income Statement - International Financial Reporting Standards

Unit: NT$ thousands; EPS: NT$

Year Item


2014 2015 2016 2017 2018

Operating Revenues 57,691,937 67,057,640 70,509,675 71,606,604 64,069,542

Gross Profit 4,374,365 5,436,078 6,185,829 5,111,500 4,599,753

Operating Income 2,702,331 3,001,912 4,162,523 3,015,026 2,715,778

Non-Operating Income & Expenses

462,501 318,740 (184,055) 976,327 349,495

Income Before Income Tax

3,164,832 3,320,652 3,978,468 3,991,353 3,065,273

Net Income from continuing operations

2,536,396 2,570,143 3,013,715 3,290,098 2,300,063

Net Income(Loss) 2,536,396 2,570,143 3,013,715 3,290,098 2,300,063

Other Comprehensive Income (Income after tax)

114,414 (393,515) (379,303) (47,446) (51,170)

Total Comprehensive Income

2,650,810 2,176,628 2,634,412 3,242,652 2,248,893

Net Income Attributable to Shareholders of The Parent

2,092,199 2,040,610 2,222,888 2,805,348 1,827,537

Net Income Attributable to Non-controlling Interests

444,197 529,533 790,827 484,750 472,526

Total Comprehensive Income (Loss) Attributable to Shareholders of the Parent

2,205,850 1,695,145 1,861,653 2,764,679 1,762,037

Total Comprehensive Income (Loss) Attributable to Non-controlling Interests

444,960 481,483 772,759 477,973 486,856

Earnings Per Share (NT$)

2.79 2.69 2.92 3.68 2.40

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Condensed Income Statement - International Financial Reporting Standards

Unit: NT$ thousands; EPS: NT$

Year Item


2014 2015 2016 2017 2018

Operating Revenues 38,060,203 42,049,227 42,764,443 48,591,380 35,684,680

Gross Profit 2,068,143 2,827,102 2,594,191 3,876,582 3,203,459

Operating Income 1,282,847 1,193,000 1,419,547 2,865,455 2,154,906

Non-Operating Income & Expenses

1,084,562 1,271,157 1,175,111 337,642 20,226

Income Before Income Tax

2,367,409 2,464,157 2,594,658 3,203,097 2,175,132

Net Income from continuing operations

2,092,199 2,040,610 2,222,888 2,805,348 1,827,537

Net Income(Loss) 2,092,199 2,040,610 2,222,888 2,805,348 1,827,537

Other Comprehensive Income (Income after tax)

113,651 (345,465) (361,235) (40,669) (65,500)

Total Comprehensive Income

2,205,850 1,695,145 1,861,653 2,764,679 1,762,037

Net Income Attributable to Shareholders of The Parent

- - - - -

Net Income Attributable to Non-controlling Interests

- - - - -

Total Comprehensive Income (Loss) Attributable to Shareholders of the Parent

- - - - -

Total Comprehensive Income (Loss) Attributable to Non-controlling Interests

- - - - -

Earnings Per Share (NT$) 2.79 2.69 2.92 3.68 2.40

6.1.2 Auditors’ Opinions in Past Five Years:

CPA Firm/Year 2014 2015 2016 2017 2018

PriceWaterhouseCoopers

Shih-Jung Weng

Shih-Jung Weng

Shih-Jung Weng

Shu-Chiung Chang

Yi-Fan Lin

Huei-Shyang Wang

Huei-Shyang Wang

Shu-Chiung Chang

Shih-Jung Weng

Shu-Chiung Chang

Auditing Opinion modified

unqualified opinion

modified unqualified

opinion

unqualified opinion

unqualified opinion

unqualified opinion

132

6.2 Five-Year Financial Analysis

1. Consolidated Financial Ratio Analysis -International Financial Reporting Standards

Year Item


2014 2015 2016 2017 2018

Financial Structure

(%)

Debt to Asset Ratio 65.75 67.25 69.51 69.97 73.04

Long-term Funds to Properties, Plants and Equipment Ratio

367.86 369.07 377.06 392.00 240.39

Liquidity (%)

Current ratio 135.63 131.72 127.54 124.57 109.95

Quick ratio 122.90 121.46 116.56 114.70 101.35

Interest Coverage Ratio 3,655.79 3,811.55 5,051.79 3,932.68 2041.18

Operating Performance

Accounts Receivable Turnover (times)

8.24 9.85 11.75 14.07 8.26

Average Collection Period (days)

44.29 37.05 31.06 25.94 44.18

Inventory Turnover (times)

N/A N/A N/A N/A N/A

Accounts Payable Turnover (times)

3.67 3.88 3.97 4.56 4.92

Average Inventory Turnover Period (Days)

N/A N/A N/A N/A N/A

Properties, Plant and Equipment Turnover (times)

8.14 9.56 10.16 10.58 7.50

Total Assets Turnover (times)

1.09 1.15 1.12 1.05 0.87

Profitability

Return on Assets (%) 4.09 3.61 3.62 4.24 2.67

Return on Equity (%) 12.73 12.03 13.03 16.01 10.32

Income before tax to Capital Ratio (%)

41.78 43.63 52.12 52.29 40.16

Net Margin (%) 3.63 3.04 3.15 3.91 2.85

Earnings per share (NT$) 2.79 2.69 2.92 3.68 2.40

Cash flow

Cash flow Ratio (%) 16.27 (17.51) 37.57 10.96 (8.61)

Cash flow adequacy Ratio (%)

126.58 11.49 99.23 122.60 103.49

Cash reinvestment Ratio (%)

12.15 (30.64) 47.21 8.48 (27.66)

Leverage Operating leverage 4.60 4.48 3.54 4.49 4.84

Financial leverage 1.03 1.03 1.02 1.04 1.06

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2. Financial Ratio Analysis -International Financial Reporting Standards

Year Item


2014 2015 2016 2017 2018

Financial Structure (%)

Debt to Asset Ratio 58.87 58.61 61.42 61.15 65.70

Long-term Funds to Properties, Plants and Equipment Ratio

5,754.48 5,990.54 6,456.70 7,157.95 6,902.20

Liquidity (%)

Current ratio 134.93 135.08 127.95 129.87 121.55

Quick ratio 122.37 124.86 118.09 123.03 114.88

Interest Coverage Ratio

1,797,032.20 49,225.94 57,707.86 27,801.26 5096.63

Operating Performance

Accounts Receivable Turnover (times)

9.40 11.67 16.48 39.84 11.69

Average Collection Period (days)

38.82 31.27 22.15 9.16 31.22

Inventory Turnover (times)

N/A N/A N/A N/A N/A

Accounts Payable Turnover (times)

3.27 3.54 4.02 5.33 5.25

Average Inventory Turnover Period (Days)

N/A N/A N/A N/A N/A

Properties, Plant and Equipment Turnover (times)

104.12 120.28 128.64 156.19 118.47

Total Assets Turnover (times)

1.02 1.02 1.00 1.07 0.73

Profitability

Return on Assets (%)

5.59 4.97 5.21 6.22 3.84

Return on Equity (%)

12.73 12.03 13.03 16.01 10.32

Income before tax to Capital Ratio (%)

31.25 32.38 33.99 41.97 28.50

Net Margin (%) 5.50 4.85 5.20 5.77 5.12

Earnings per share (NT$)

2.79 2.69 2.92 3.68 2.40

Cash flow

Cash flow Ratio (%) 6.66 (18.21) 32.45 21.45 (2.77)

Cash flow adequacy Ratio (%)

75.28 (33.08) 14.15 79.86 92.49

Cash reinvestment Ratio (%)

(0.61) (27.28) 29.18 14.09 (21.04)

Leverage Operating leverage 4.50 5.15 4.78 2.88 3.33

Financial leverage 1.00 1.00 1.00 1.00 1.02

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The formulas for the above table:

1. Financial Structure

(1) Debts to Assets Ratio = Total Liabilities / Total Assets

(2) Long-term Funds to Properties, Plants and Equipment Ratio = (Total Shareholders' Equity plus Noncurrent Liabilities) / Net of Properties, Plants and Equipment

2. Liquidity

(1) Current Ratio = Current Assets / Current Liabilities

(2) Quick Ratio = (Current Assets - inventory - Prepaid Expense) / Current Liabilities

(3) Interest Coverage Ratio = (Net Income before Income Tax and Interest Expenses) / Interest Expense

3. Operating Performance

(1) Account Receivable Turnover = Net Sales / Average Accounts Receivable

(2) Average Collection Period = 365/ Accounts Receivable Turnover

(3) Inventory Turnover = Costs of Goods Sold / Average Inventory

(4) Accounts Payable Turnover = Costs of Goods Sold / Average Accounts Payable

(5) Average Inventory Turnover Period = 365 / Inventory Turnover

(6) Properties, Plant and Equipment Turnover = Net Sales / Average of Net Properties, Plants and Equipment

(7) Total Assets Turnover Ratio = Net Sales / Average of Total Assets

4. Profitability Analysis

(1) Return on Assets =[Net Income +Interest Expense×(1-Tax Rate)] / Average Total Assets

(2) Return on Equity =Net Income / Average Shareholders' Equity

(3) Net Margin = Net Income / Net Sales

(4) Earnings per Share = (Net Income Attribute to Controlling Interest - Preferred Stock Dividend) / Weighed-average Number of Outstanding Shares

5. Cash Flow

(1) Cash Flow Ratio = Cash Flows from Operating Activities / Current Liabilities

(2) Cash Flow adequacy Ratio = Net Cash Flow from Operating Activities for the past 5 years / (Capital Expenditure + Increase in Inventory + Cash Dividends) for the past 5 years

(3) Cash Reinvestment Ratio = (Net Cash Flow from Operating Activities - Cash Dividends) / (Gross Properties, Plants and Equipment + Long-term Investment + Other Noncurrent Assets + Working Capital)

6. Leverage Ratio

(1) Operating Leverage = (Net Sales - Variable Operating Costs and Expenses) / Operating Income

(2) Financial Leverage = Operating Income / (Operating Income-Interest Expenses)

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6.3 Audit Committee’s Review Report in the Most Recent Year

136

6.4 Annual Consolidated Financial Report in the Most Recent Year Please refer to the Appendix 1.

6.5 Annual Parent Company only Financial Report in the Most Recent Year Please refer to the Appendix 2.

6.6 Impact of the Financial Distress Occurred to the Company and Affiliates in the Recent Years until the Annual Report being published None.

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VII. Review of Financial Conditions, Financial Performance, and Risk Management 7.1 Analysis of Financial Status 7.1.1 Analysis of Financial Status Unit: NT$ thousands

Year Item

2018 2017 Difference

Remark Amount %

Current Assets 56,534,559 54,762,209 1,772,350 3.24

Properties, Plants and Equipment 10,432,036 6,660,116 3,771,920 56.63 Note 1

Intangible Assets 191,198 97,201 93,997 96.70 Note 2

Other Assets 9,339,540 8,548,463 791,077 9.25

Total Assets 76,497,333 70,067,989 6,429,344 9.18

Current Liabilities 51,420,086 43,960,316 7,459,770 16.97

Non-current Liabilities 4,451,088 5,067,516 (616,428) (12.16)

Total Liabilities 55,871,174 49,027,832 6,843,342 13.96

Equity attributable to owners of the parent

17,458,729 17,952,032 (493,303) (2.75)

Capital stock 7,632,738 7,632,738 0 0.00

Capital surplus 3,545,053 3,395,620 149,433 4.40

Retained Earnings 6,540,307 7,105,963 (565,656) (7.96)

Other equity interest (247,534) (170,454) (77,080) 45.22

Treasury stocks (11,835) (11,835) 0 0.00

Non-controlling interest 3,167,430 3,088,125 79,305 2.57

Total Equity 20,626,159 21,040,157 (413,998) (1.97)

Note1: Properties, Plants and Equipment increased, due to acquisition of land for second headquarters building and business acquisitions.

Note2: Intangible assets increased, due to goodwill generate from by business acquisition.

7.1.2 The evaluation basis of the balance sheet valuation items

Item B/S valuation item Evaluation reference Evaluation basis 1 Monetary assets

denominated in foreign currency

Spot rate on balance sheet date

Compute exchange gain or loss based on the spot rate

2 Financial instruments carried at fair value, available for sales and derivatives

Fair market value on balance sheet date

Evaluate based on the fair market value

3 Allowances for doubtful accounts

Historical records and credit references

The recognition and valuation of allowance-for-bad-debts are based on the controlling credit risks of our clients which are categorized such as excellent customers, general customers, individual assessment customers. etc. A certain percentage of allowances for bad debts are determined according to the valuation of aging of accounts receivable in each category. Note: The accounts receivables from related

parties are not subject for allowances-for-bad-debts. However if special credit risk prevails, the allowance for bad debts will be evaluated according to the risk.

4 Allowances for inventory valuation and obsolescence losses

Not applicable to the Company

Not applicable to the Company

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7.2 Analysis of Financial Performance 1. Analysis of Financial Performance

Unit: NT$ thousands

Year Item

2018 2017 Difference

Remark Amount %

Operating Revenue 64,069,542 71,606,604 (7,537,062) (10.53)

Operating Costs (59,469,789) (66,495,104) 7,025,315 (10.57)

Gross Profit 4,599,753 5,111,500 (511,747) (10.01)

Operating Expenses (1,883,975) (2,096,474) 212,499 (10.14)

Operating Income 2,715,778 3,015,026 (299,248) (9.93)

Non-operating Income and expenses 349,495 976,327 (626,832) (64.20) Explanation 2

Profit before Income Tax 3,065,273 3,991,353 (926,080) (23.20) Explanation 3

Income Tax Expense (765,210) (701,255) (63,955) 9.12

Non-controlling Interest (472,526) (484,750) 12,224 (2.52)

Income attributable to owners of the parent

1,827,537 2,805,348 (977,811) (34.86) Explanation 3

2. The analysis of the differences：

Compared to 2017, the consolidated non-operating income and expense for 2018 decreased is mainly due to gains on bad debt recoveries in 2017.

3. Analysis of gross profit: Compared to 2017, the consolidated revenue for 2018 decrease, this is mainly because new signing amount in 2017 is lower than previous year, and non-operating income and expenses decreased compared to the same period of last year. Therefore, the pre-tax net profit and the current period's net profit are lower than last year.

4. The explanation of occurred or expected operational, policy, market status, economic environment and other internal and external: None.

5. The drivers of the following year that affect company expected operating revenue: The operating revenue of the following year is expected to be flat compared to 2018 accounting to the backlog.

7.3 Analysis of Cash Flow 7.3.1 Cash Flow Analysis for the Past 2 Year

Unit: NT$ thousands

Year Item

2018/12/31 2017/12/31 Difference ratio (%)

Cash Flow Ratio (%) (8.61) 10.96 (178.56)

Fund Flow Adequacy Ratio (%) 103.49 122.60 (15.59)

Cash Re-investment Ratio (%) (27.66) 8.48 (426.18)

Explanation to changes: 1. Cash flow ratio decreased due to cash inflow from operating activities reduced. 2. Fund flow adequacy ratio decreased due to cash outflow from operating activities. 3. Cash re-investment ratio decreased due to cash inflow from operating activities reduced.

7.3.2 Analysis of Cash Liquidity

The cash inflow of Year 2018 is NT$4,283.888 million. The cash balance in the end of the year is NT$15,070.992 million. Cash liquidity is fine.

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7.3.3 Analysis of Cash Liquidity for the Coming Year Unit: NT$ thousands

Cash Balance at Beginning for the Year

Expected Net Cash Flow from

Operating Activities

Expected Cash Inflow

(Outflow)

Expected Cash Surplus (Deficit)

Leverage of Expected Cash Deficit

Investment Plans Investment Plans

15,070,992 3,865,259 (5,191,775) 9,879,217 - -

1. Analysis of change in cash flow in Year 2019: (1) Operating activities: The sufficient backlog of CTCI Group and cost down policy will create net

cash inflow. (2) Investing activities: The expected cash outflow is mainly due to new business investment. (3) Financing activities: The expected cash outflow is mainly due to cash dividends distribution and

repayment of bank loans. 2. Liquidity analysis and remedial measures against cash deficit: None.

7.4 Major Capital Expenditure Items: None. 7.5 Investment Policy in the Most Recent Year, Main Causes for Profits or Losses, Improvement Plans

and the Investment Plans for the Coming Year The Company has established subsidiaries in China, Thailand, Malaysia, Vietnam, India, the Middle East, the United States, Singapore and the Netherlands; branches in United Arab Emirates, Japan and Qatar; CTCI Indonesia representative office. In accordance with strategy of development of U.S.A, the possibility of enlargement investment in US market is under evaluation recently. To strengthen global market position, CTCI would keep assessing overseas markets and future growth, and expand its global footprints timely to enhance the international competitiveness.

7.6 Analysis of Risk Management 7.6.1 Effects of Changes in Interest Rates, Foreign Exchange Rates and Inflation on Corporate Finance,

and Future Response Measures

A. Interest rate Unit：NT$ Thousands

Item 2018 2017

Interest Income 216,808 131,658

Interest Expense 157,908 104,140

Investment gain on money market fund 2,184 1,684

Sales 64,069,542 71,606,604

Net Income before Tax 3,065,273 3,991,353

Besides equity products and deposits, the Company invests inactive money mainly in money market funds, which highly correlate with market interest rates. However, the investment gain on money market fund is not credited to interest income but to gain on disposal of investment. Therefore, to analyze the effects of changes in interest rates should consolidate interest income/expense and gain on disposal of money market fund. The inactive money was increased in this year, while interest income increased by NT$ 85,150 thousand over 2018. As FED raise the USD interest rates four times in 2018, resulted in financing costs was increased, while interest expense increased by NT$ 53,768 thousand over 2017. For inactive money, the Company will continue to look for higher-yield financial products with safety and proper liquidity to achieve the purpose of earning stable investment profits.

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B. Foreign exchange rates Unit：NT$ Thousands

Item 2018 2017

Net Foreign Exchange Gain/Loss(A) 59,774 (151,026)

Sales (B) 64,069,542 71,606,604

Net Income before Tax (C) 3,065,273 3,991,353

A/B(%) 0.09 (0.21)

A/C(%) 1.95 (3.78)

The business line of CTCI includes engineering design, procurement, fabrication, construction, supervision, project management, test & commissioning and environmental protection. All business work can be separated into two parts as domestic projects and overseas projects according to its location. For cash-in side, domestic projects are usually signed in New Taiwan dollar, and sometimes in other foreign currencies; overseas projects are usually signed in US dollar and local currency. For cash-out side, the currencies of payment are usually decided by service location or procurement region. Therefore, the Company must keep appropriate foreign assets and liabilities to operate general activities. Thus the appreciation or depreciation of major currencies, like US dollar, Japanese Yen, and Euro, will influence foreign exchange profit/loss of the Company. To lower the influence on changes in foreign exchange rates, the Company adopts natural hedge strategy, including contracts in different currencies or asking multiple-currency contracts to cover major payment in different currencies. For other FX exposure, the Company also has concrete methods to hedge the risks. Thus, the changes in foreign exchange rates little affect the income of the Company. According to above table, the ratios of foreign exchange profit/loss to sales and net income before tax are slight. That means the changes in foreign exchange rates have limited influence on the sales and net income before tax. The concrete methods to hedge FX risks are as below, a. To know well update trends of major currencies, and adjust FX position timely. b. To create internal hedge effect by netting foreign receivables and payables. c. For payment in foreign currencies, to forecast the direction of payment currencies and analyze the

potential profit and loss of foreign exchange, and then choose leads or lags strategy to hedge FX risks and achieve the goal of saving costs.

d. In order to allocate optimal capital position, to open foreign currency deposit accounts to collect foreign income and convert it into New Taiwan dollar or other strong currencies based on actual cash flow demand or FX tendency.

e. To use forward contracts or other tools to hedge FX risks. C. Inflation

Item 2018 2017

CPI 101.98 100.62

Annual Change of CPI(%) 1.35 0.62

Construction Cost Indices 105.84 102.40

Annual Change of Construction Cost Indices(%) 3.36 2.4

profit margin(%) 7.18 7.14 Source：Directorate General of Budget, Accounting and Statistics, Executive Yuan (DGBAS)/ Base year 2016.

Due to the industry nature of the Company, the analysis of inflation should be referred to not only CPI but also Construction Cost Indices.

In 2018, the consumer price index was 101.98 with an annual growth rate of 1.35%, which rose mainly by the rising cigarette tax effect and the base effect of 2017. DGBAS estimates that the annual growth rate of the consumer price index for 2019 will be 0.73%. Taiwan Institute of Economic Research stated that the Taiwan economy grew by 2.63% in 2018, as global economic expansion continued, and that the domestic prices of 2019 will hardly rise sharply as the cigarette tax effect subsided and the international raw material prices are expected to remain stable.

http://eng.stat.gov.tw/public/Data/1151634271.xls



141

In 2018, the total Construction Cost Indices rose by 3.36% mainly because firstly the metal products category indices rose by 10.61% with rising international metal prices and steel prices, secondly the cement & related products category indices and electrical equipment & apparatus category indices rose respectively by 3.11% and 2.98% with the rising shipping fees and international copper prices, and thirdly timber & related product category indices rose by 6.20% with rising imported timber prices.

The Company will do the best to take potential inflation and raw material prices into account during whole project period in bidding stage. However, the profits will still be eroded once the price increase is more than expected. The Company will continue to watch price changes closely and reflect them to project contract quotation simultaneously; furthermore the Company also executes derivatives to hedge operational risks from potential inflation.

7.6.2 Policies, Main Causes of Gain or Loss and Future Response Measures with Respect to High-risk, High-leveraged Investments, Lending or Endorsement Guarantees, and Derivatives Transactions The Company is devoted to develop EPC service business and does not engage in high-risk and high-leveraged investment. As for lending to others, guarantees and derivatives transactions all are executed according to the Company’s “Rules Governing Procedure for Loaning of Funds”, ”Rules Governing Procedure for Making of Endorsements or Guarantees” and “The Procedure for Acquisition and Disposition of Assets”.

7.6.3 Future Research & Development Projects and Corresponding Budget A. Current Project Progress (as of end of March, 2019), Budget and Estimated Time to Finish

Item Project Name Current Progress

(%) Budget

Estimated Time

to Finish

1 Research and Development for Unified Project Information applied to the plant entire life cycle

21 11,297,500 2019.12.31

2 Development of Engineering Digital Information Acquisition Technology

25 7,591,500 2019.12.31

3 Development of Intelligent Program for Plot Plan (process area)

30 2,629,200 2019.12.31

4 Research and Development of Intelligent Technology Applied to the Construction Site Management

28 9,933,400 2019.12.31

5 Development of iSP cloud platform 16 19,619,000 2019.12.31

6 Implementation, Maintenance and Upgrade of Process Operation Systems

25 660,000 2019.12.31

7 Develop Process iEPC Intelligent Design System 17 5,280,000 2019.12.31

8 Wastewater Treatment System Research and Development 35 1,320,000 2019.12.31

9 Webpage and Log in System Module Development 10 528,000 2019.12.31

10 Dynamic Simulation of LNG Tank 20 716,000 2019.12.31

11 Develop Civil & Building iEPC Intelligent Design System 25 7,016,000 2019.12.31

12 Design Data Transferring Rule Research 62 10,112,520 2019.12.31

13 Implementation, Maintenance and Upgrade of Civil & Building Operation Systems

25 1,980,000 2019.12.31

14 Research of Cryogenic Tank 15 5,667,600 2019.12.31

15 Development of Design Tool for Floating Slab Track 14 1,700,000 2019.12.31

16 Develop Equipment iEPC Intelligent Design System 25 2,310,000 2019.12.31

17 Implementation, Maintenance and Upgrade of Equipment Operation Systems

24 1,940,400 2019.12.31

18 Research of Packaged Equipment-Pneumatic Conveying Systems

20 5,093,000 2019.12.31

19 Develop Instrumentation iEPC Intelligent Design System 24 3,168,000 2019.12.31

20 Implementation, Maintenance and Upgrade of Instrumentation Operation Systems

24 2,851,200 2019.12.31


142

Item Project Name Current Progress

(%) Budget

Estimated Time

to Finish

21 Implementation, Maintenance and Upgrade of Piping Operation Systems

25 2,640,000 2019.12.31

22 Develop Piping iEPC Intelligent Design System 25 10,890,000 2019.12.31

23 Analysis of Influence from Creep on High Temperature Pipelines - Main Steam System of Power Plant

40 1,710,000 2019.12.31

24 Implementation of E3D/MDS/Clash Manager 25 4,090,000 2019.12.31

25 Develop Electrical iEPC Intelligent Design System 23 5,346,000 2019.12.31

26 Implementation, Maintenance and Upgrade of Electrical Operation Systems

24 2,772,000 2019.12.31

27 Power Plant & High Voltage Substation Grounding System Analysis

24 1,995,000 2019.12.31

28 i-Procurement Applications 2019 31 4,263,600 2019.12.31

29 Welding Robot Applied to Piping Erection Work 22 5,368,000 2019.12.31

30 The Study of Function Requirements for i-Construction Development

28 3,198,000 2019.12.31

31 Material management system (Smart Materials) maintenance and customization

25 5,940,000 2019.12.31

32 Document management system (Smart plant Foundation) maintenance and customization

24 8,700,000 2019.12.31

33 AP Service 25 660,000 2019.12.31

B. Major Factor to Influence Future RD Success

a. Right RD strategy and definition of key performance Index. b. Good communication with users to make sure production meet market requirement. c. Stable RD resource to accomplish development task effectively. d. Accurate progress control to ensure the timeliness of RD results.

7.6.4 Effects of and Response to Changes in Policies and Regulations Relating to Corporate Finance and Sales None.

7.6.5 Effects of and Response to Changes in Technology and in Industry Relating to Corporate Finance

and Sales None.

7.6.6 The Impact of Changes in Corporate Image on Corporate Risk Management, and the Company’s

Response Measures None.

7.6.7 Expected Benefits from, Risks Relating to and Response to Merger and Acquisition Plans

None. 7.6.8 Expected Benefits from, Risks Relating to and Response to Factory Expansion Plans

Not Applicable. 7.6.9 Risks Relating to and Response to Excessive Concentration of Purchasing Sources and Excessive

Customer Concentration None.

143

7.6.10 Effects of, Risks Relating to and Response to Large Share Transfers or Changes in Shareholdings by Directors, or Shareholders with Shareholdings of over 10% The fluctuated security price and the possibility of changing directors are the effect and risk, and strengthening company’s information transparency is the countermeasure. The Company has established functional committees beneath Board of Directors, such as Corporate Governance Committee, Audit Committee, Remuneration Committee and Nomination Committee to strengthen Board of Directors functions, furthermore, to promote the corporate governance.

7.6.11 Effects of, Risks Relating to and Response to Changes in Control over the Company None.

7.6.12 Litigation or Non-litigation Matters A. CTCI Corporation and Mitsubishi Heavy Industries, Ltd. were joint venture in the Kaohsiung

Country Ren-Wu Resource Recovery Plant Project. The project completed on Feb. 19, 2000 and accepted by Environmental Protection Administration on May 16, 2000. CTCI claimed for release of the guarantee bond in the amount of NTD 141,690 thousands, Environmental Protection Administration, however, declined the request due to one unsolved dispute between Kaohsiung City Government and O&M Contractor. After CTCI remitted in NTD 73,253 thousands to bank for exempting from the execution of the guarantee bond and filed a lawsuit to Taiwan Taipei District Court, Environmental Protection Administration returned the amount of NTD 9,299 thousands to CTCI. As a result, CTCI reduced the claim amount to NTD 63,954 thousands, with the interest in the amount of NTD 117 thousands and the liquated damages in the amount of NTD 2,421 thousands. CTCI was then awarded a winning adjudication except for the damages in the amount of NTD 1,708 thousands has been rejected. Afterwards, the Environmental Protection Administration appealed to the Taiwan High Court but failed. Further, the Environmental Protection Administration continued to appeal to the Taiwan Supreme Court, but the judgment of Taiwan High Court was not in favor of the assertion of Environmental Protection Administration. The Environmental Protection Administration then appealed to Taiwan Supreme Court for the third time, and the judgment of Taiwan Supreme Court remanded this case to Taiwan High Court. Taiwan High Court then made a judgment in November 2018, finding CTCI’s liability in guarantee was no more than the amount of NTD 2,346,500, and the Environment Protection Administration shall pay CTCI NTD 61,706,518 and the interest. CTCI, Mitsubishi Heavy Industries, Ltd. and the Environmental Protection Administration all appealed to the Taiwan Supreme Court, and this lawsuit is now under the trial. There is no material impact to CTCI’s finance as well as business development so far.

B. CTCI Corporation, Ishikawajima-Harima Heavy Industries Co., Ltd., Resource Engineering

Services Inc. and East Construction Industry Co., Ltd were joint venture in the CPC Northern LNG Receiving Terminal Project and entered into a contract on Jul. 23, 2004. CPC Corporation alleged it has limited budget and cannot pay the compensation of price escalation, so CTCI claimed for compensation of price escalation in the amount of USD 7,983 thousands and NTD 384,159 thousands and filed a lawsuit to Taipei District Court on Mar. 5, 2010. The judgment of Taipei District Court is not awarded to CTCI. CTCI appealed to Taiwan High Court but was overruled. CTCI appealed to Taiwan Supreme Court and Taiwan Supreme Court remanded this case to Taiwan High Court to re-decide. Taiwan High Court then made a judgment in January 2019, finding that CPC shall pay CTCI USD 5,943,199, NTD 149,782,305 and interest. CPC and the joint-venture parties (CTCI, Ishikawajima-Harima Heavy Industries Co., Ltd., Resource Engineering Services Inc. and East Construction Industry Co., Ltd) all petitioned for an appeal, and this lawsuit is currently under the trial at Taiwan Supreme Court. There is no material impact to CTCI’s finance as well as business development so far.

144

C. During 2015, Sinopec Engineering Group Saudi Co., Ltd. (formerly known as “Sinopec E&C Middle Ease co., Ltd.”, hereafter referred to as "Sinopec Co., Ltd."), previously a subcontractor of the Company’s subsidiary-CTCI Arabia Ltd.’s for IBN RUSHD-II Aromatic Project, filed a claim against CTCI Arabia Ltd. at International Chamber of Commerce(“ICC”) for NTD 721.039 thousands (SAR 84,000 thousands) for costs suffered due to termination of the sub-contract agreement. And after ICC made a partial arbitration award in March 2018, CTCI Arabia Ltd. and Sinopec Co., Ltd. reached a settlement agreement in June 2018 over the partial arbitration award and together with all other issues previously submitted to ICC. This arbitration has no material impact to the accompanying financial statements.

D. Jun-wei LLC., one of CTCI’s subcontractors since 2013, was responsible for scaffold lapping and

removal work in Lin-Kou power plant, Da-Lin power plant, Tong-Xiao power plant renewal and expansion construction. Jun-wei took advantage of its works and overstated the scaffold amount to get undue payment. CTCI stopped paying Jun-wei and filed a criminal complaint for Jun-wei’s offense in August 2016. Basing on the testimony by the accountant who is selected as an expert witness, the public prosecutor considered that CTCI had suffered a loss of NTD 387,498 thousand-671,005 thousand from overpaying. Despite of the abovementioned fact, Jun-wei still claimed that CTCI shall pay it NTD244,636 thousand more and applied to the court for issuance of a payment order against CTCI in March 2017. CTCI then filed an objection to the payment order, and the payment order was consequently deemed the initiation of the action and the lawsuit is now under the trial of Taipei district court. Since the amount claimed by Jun-wei is still overstated, and CTCI will be able to offset the reasonable amount with the overpayment, the lawsuit is no material impact to CTCI’s finance as well as business development so far.

145

7.6.13 Information Security Risk

Modern enterprises use IT systems extensively. In order to maintain corporate governance and reduce operational risks, companies must develop complete information security measures to protect the Company's important information assets in order to pursue sustainable business. Faced with the challenges of new-type technology and business model transformation, the Company will adhere to the protection of customers' important intellectual assets and strengthen the reliability and quality of project execution to enhance customer trust. And in line with the owner's requirements or laws and regulations, such as the Business Secrets Act, the Personal Data Protection Act, and the Information and Communication Security Management Act.

The main possible potential security threats include: Fraudulent groups use Business Email Compromise (BEC) to trick employees into remittances

or transactions. Commercial spy or competitors use hacking technology to continuously infiltrate internal

hosts and steal internal corporate data. Criminal groups combined with hackers to distribute maliciously linked content through

emails, newsletters, social media app, and communications software, so that victim computer data is encrypted and abducted, requiring high ransom.

Hackers use the Internet to launch a large number of connection requests to block the Company's normal network operations.

Internal employees use illegal software or copy company confidential information to their portable storage devices, resulting in the loss of data.

Natural disasters and man-made disasters cause information hardware and software or damage, resulting in service interruption or data loss.

For these security threats, CTCI officially began risk management by introducing ISO 27001:2013 standards in 2014. Committed to reducing the probability and impact of risk occurrence and enhancing the Company's ability to continue operations. At the same time, various security measures are introduced to carry out risk management and control in response to the above-mentioned major security threats, including items as below. Continue to conduct social engineering attack simulation exercises and provide training on

security education to enhance employees' awareness of email security. The client installs anti-virus and supervision agent, blocks the connection of the USB storage

device as well as the permission to install the software by user. Provide personal cloud service to backup user’s important information.

For the network layer, CTCI introduces Chunghwa Telecom's information security cloud service, combined with a firewall, to control the traffic and applications of the network. Development of intranet protection and database access monitoring and management mechanism.

Protect file confidentiality through a sensitive file management system and disk encryption technology.

Centralized management of the host, establishment of the server room control and environment monitor mechanism. Perform data backups on a regular basis and perform disaster recovery drills each year.

Regular internal and external audits to improve the operation of the information security system.

CTCI understands that in the management of security risks, it is necessary to continue to improve with the practice of PDCA. The promotion and implementation of the security management to support the sustainable operation and development of various businesses within the Group is also an important cornerstone for the CTCI IT in the new century.

146

7.6.14 Risk management organization framework A. Organization chart

Note: The dashed line indicates the communication mechanism between Risk Management Executive Committee

and Audit department rather than the reporting relationship.

B. Responsibility a. Risk Management Executive Committee

The Risk Management Executive Committee is the major monitoring mechanism for risk management of the Company, its members mainly include President and Head of Executive Management Office, Business Operations and Supporting Operations, President is the Chairman of committee, and the convener is Head of Executive Management Office. Major responsibilities are as follows: -Approve risk management policy and rules of the Company; -Examine risk management report and strategy of the Company, and improvement plan; -Supervise execution of risk control measure and improvement plan, communicate and deliver risk management affairs with and to all employees;

-Examine and assess the effectiveness of risk management measure and ask relevant unit to propose improvement plan.

b. Risk Management Secretary Service The convener of Risk Management Executive Committee will designate dedicated personnel (or unit) to be responsible for overall risk management secretary service to ensure continuous effectiveness of risk management mechanism. Major responsibilities are as follows: -Contact window of risk management mechanism of the Company; -Summarize and submit the risk management report, real time report and other works related to risk management;

-Issue relevant procedures; -Convene risk management review meeting.

c. Audit Department Audit Department can make and execute annual audit plan in accordance with the result of risk evaluation.

風險管理執行委員會

Risk Management Executive Committee 稽核室

Audit Department

Risk management representative of Risk Management Unit

全體員工 All Employees

秘書業務 Secretary Service

147

d. Risk Management Representative Company sets several risk management units in accordance with the functions and each unit designates risk management representative to undertake relevant affairs and contact windows. Roles and responsibilities of risk management representative are as follows: -Promote the supervision, identification and management of significant risks on behalf of risk management units;

-Summarize and prepare risk registers and improvement plan of the risk management unit; -Collect and monitor significant risk event and evaluate the impact; -Report significant risk and relevant improvement plan to Head of Business Operations and provide a copy to the unit of risk management secretary service;

-Deliver the notice of risk management to members of the unit.

e. All employees Comply with company policy, perform duty in accordance with the R&R, implement relevant operations of risk management, and report to the supervisor immediately in case of a risk.

7.6.15 Other Major Risks Competiveness is enhanced with CTCI tracking international business and economic conditions and assessing the impact on corporate finance, sales and business implementation which is responded to through various means including the control of cash flows to facilitate capital turnover; development of new markets for added business; and strengthened core technology which including project management and quality control. 7.7 Other Important Information: None.

148

VIII. Special Disclosure 8.1 Summary of Affiliated Companies 8.1.1 Consolidated Business Report of Affiliates

(1) Organizational chart of the affiliates

150

(2) General information of the affiliates: March 31st, 2019 ; Unit : $Thousands

Company Date of

Incorporation Address

Paid-up Capital

Major Business Activities


1980.05.27 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei City, Taiwan

NTD 608,720 Planning and design of construction projects

CTCI Resources Engineering Inc. 1984.05.29 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei City, Taiwan

NTD 250,000 Planning, design and supervision of mechanical and electrical engineering projects

CTCI Advanced Systems Inc. 1987.08.03 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei City, Taiwan

NTD 234,915 Design and installation of software

ECOVE Environmental Service Corporation


NTD 151,000 Environmental engineering

CTCI Development Corporation 1999.02.24 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei City, Taiwan

NTD 1,870,000 Real estate and leasing business

CTCI Investment Corporation 1999.02.05 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei City, Taiwan

NTD 2,072,000 Investments

ECOVE Environment Corporation


NTD 671,051 Investments

CTCI Chemicals Corporation 1999.08.04 10Fl, 89, Sec. 6, Zhongshan North Rd., Taipei City, Taiwan

NTD 71,000 Manufacturing of chemical products

ECOVE Wujih Energy Corporation



ECOVE Waste Management Corporation

2001.06.01 No.69, Ln. 373, Changchun St., Wuri Dist., Taichung City, Taiwan


ECOVE Miaoli Energy Corporation



CTCI Machinery Corporation 2007.04.02 5, Xinggong Rd., Dashe Dist., Kaohsiung City, Taiwan

NTD 200,000 Planning and design of construction projects

CTCI (Thailand) Co., Ltd. 1987.08.15 19th Floor, Phairojkijja Tower 825, Bangna-Trad K.M.4, Bangna Bangkok 10260 Thailand

THB 255,000 Planning and design of construction projects

CTCI Overseas (BVI) Corporation

1997.04.30 P.O.Box 662, Road Town, Tortola British Virgin Islands

HKD 67,400 Investment, planning and design of construction

151

March 31st, 2019 ; Unit : $Thousands

Company Date of


Paid-up Capital


CTCI Beijing Co., Ltd. 1993.02.17 10F Royal City International Centre B, No. 138, Andingmenwai Street, Dongcheng District, Beijing, China

USD 13,930 Planning and design of construction projects

CTCI Shanghai Co., Ltd. 2003.09.24 Room.12, Floor.8, No.441, He Nang Bai Road, Zhabei District, Shanghai, China

CNY 123,413 Consulting services for construction projects

CTCI Overseas Corporation Limited

1993.06.01 Suite 1801-5,18/F.,Tower 2,China Hong Kong City, 33 Canton Road,Tsim Sha Tsui, Kowloon Hong Kong

HKD 67,400 Planning and design of construction projects


1983.09.21 SUITE 22-03B, 22nd Fl., Menara Tan & Tan 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

MYR 750 Planning and design of construction projects

CTCI Arabia Ltd. 2002.10.27 P.O.Box 1962 Al Khobar 31952 Kindom of Saudi Arabia

SAR 5,000 Design and construction of chemical factories

CIMAS Engineering Company Limited

2001.03.28 6th Floor, Charmvit Building 117Tran Duy HungCau Giay District Hanoi, Vietnam


Century Ahead Ltd. 2000.10.12 Offshore Chambers, P.O.Box 217, Apia, Samoa

USD 750 Investments, planning and design of construction projects

Superiority (Thailand) Co., Ltd. 2006.01.01 19th Floor, Phairojkijja Tower 825, Bangna-Trad Road, K.M.4, Bangna, Bangkok 10260 Thailand

THB 350 Investments

CTCI Advanced Systems Shanghai Inc.

2001.09.11 Room 704, 7Fl, 26, Lane 168, Daduhe Road, Putuo District, Shanghai, China

USD 750 Computer skills services

CTCI Malaysia Sdn. Bhd. 2002.06.04 SUITE 22-03B, 22nd Fl., Menara Tan & Tan 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

MYR 750 Planning and design of construction projects

SUMBER MAMPU Sdn. Bhd. 2003.06.04 SUITE 22-03B, 22nd Fl., Menara Tan & Tan 207 Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

MYR 100 Investments

CIPEC Construction Inc. 2003.07.03 Unit 402 SEDCCO 1 Building Roda St. Legaspi Village Makati City, Philippines.

PHP 2,500 Planning and design of construction projects

152


Company Date of


Paid-up Capital


SINOGAL - Waste Services Co., Ltd.

2009.06.25 Rua Dr. Pedro Jose Lobo, ns 1-3, Edificio Banco Luso Internacional,15 andar, salas 1501 e 1510, em Macau

MOP 4,000 Environmental engineering

CINDA Engineering & Construction Pvt. Ltd.

2008.08.08 B-92, 9th Floor, Himalaya House, 23 Kasturba Gandhi Marg, New Delhi – 110001, India

INR 80,000 Planning and design of construction projects

CTCI Trading Shanghai Co., Ltd. 2009.07.17 Room 701, 7Fl, 26, Lane 168, Daduhe Road, Putuo District, Shanghai, China

CNY 5,000 General trade.

CTCI Americas, Inc. 2009.10.02 9555 West Sam Houston Pkwy South, Suite 420 Houston, Texas 77099, USA

USD 100 Business development and related engineering services and planning

Universal Engineering(BVI) Corporation

2003.03.06 Akara Bldg.,24 De Castro Street, Wickhams Cay I, Road Town, Tortola, British Virgin Islands.

USD 50 Planning and design of construction projects

CTCI Singapore Pte. Ltd. 2011.01.10 80 Robinson Road #02-00 Singapore(068896)


Yuan Ding Resources Corporation



ECOVE Environment Consulting Corporation

2013.07.26 Room 2206-G,NO.89,East Yunling Rd., Putuo District, Shanghai, China

USD 140 Environmental engineering


2014.05.20 SUITE D23, 2nd Floor, Plaza Pekeliling, No.2, Jalan Tun Razak, 50400 Kuala Lumpur, Malaysia

MYR 250 Planning of construction projects

CTCI Netherlands B.V. 2016.01.04 Jan Pietersz. Coenstraat 7, 2595WP's-Gravenhage, Netherlands

EUR 300 Engineers and other technical design and consultancy

Crown Asia 2 Investment Limited


NTD 250 Investments


2016.08.15 16Fl., No.65, Sec. 2, Daxing W. Rd., Taoyuan Dist., Taoyuan City, Taiwan

NTD 500,000 Environmental engineering with BOT

153


Company Date of


Paid-up Capital


CTCI CMCE JV Sdn. Bhd. 2017.07.10

7th Floor, Wisma MIE, No 2, Jalan Industri PBP 2, Taman Industri Pusat Bandar Puchong, 47100 Puchong, Selangor Darul Ehsan, Malaysia

MYR 750 Planning of construction projects

ECOVE Solar Energy Corporation 2011.6.2 13F., No. 366, Bo’ai 1st Rd., Sanmin Dist.,

Kaohsiung City 807, Taiwan (R.O.C.) NTD 632,455 Energy technology service

ECOVE Solar Power Corporation 2013.8.9 13F., No. 366, Bo’ai 1st Rd., Sanmin Dist.,


ECOVE Central Corporation Ltd. 2013.2.6 10F., No. 89, Sec. 6, Zhongshan N. Rd., Shilin Dist., Taipei City 111, Taiwan (R.O.C.)

NTD 7,500 Energy technology service

ECOVE South Corporation Ltd. 2013.2.6 13F., No. 366, Bo’ai 1st Rd., Sanmin Dist.,


G.D. International, LLC 2011.12.12 251 Little Falls Drive, Wilmington, DE 19808, U.S.A.

USD 11,053 Energy technology service

LUMBERTON SOLAR W2-090, LLC

2011.10.28 Wilentz,Goldman&Spitzer,P.A.,90 Woodbridge Center Drive ,Woodbridge, New Jersey 07095

USD 10,942 Energy technology service

ECOVE Solvent Recycling Corporation

2013.7.15 No. 7-1, Guojian 3rd Rd., Guanyin Dist., Taoyuan City 328, Taiwan (R.O.C.)

NTD 90,000 Operating basic chemical industry and manufacture of other chemical products

154

(3) Common Shareholders of the Company and Its Subsidiaries or Its Affiliates with Actual of Deemed Control: Not Applicable.

(4) Industries covered by the business operated by all affiliates:

The business of the Company and its subsidiaries and affiliates provide include engineering, environmental, chemical and investment.

(5) Directors, supervisors, and general managers of the Company and affiliates

March 31st, 2019

Company Title Name of Representative Shareholding

Shares %


Chairman CTCI Corporation Representative: S. C. Chun

59,098,624 97.09

Vice Chairman

CTCI Corporation Representative: Simon Liao

Director

CTCI Corporation Representative: Hwei-Nan Yih Shuh-Gong Lou Yang-Ting Chen

Supervisor CTCI Investment Corporation Representative: Connie Lin

1,000 0.00

President Simon Liao 0 0

CTCI Resources Engineering Inc.

Chairman CTCI Corporation Representative: Kuo-Ann Wu

24,762,252 99.05

Director

CTCI Corporation Representative: DingGo Ku Hwei-Nan Yih Michael Chung Benjamin C. N. Tsai

Supervisor CTCI Development Corporation Representative: Gino Tsai

1,388 0.01

President Ding-Go Ku 0 0

CTCI Advanced Systems Inc.

Chairman CTCI Corporation Representative: Teng-Yaw Yu

11,444,842 48.72

Director

CTCI Corporation Representative: Chen-Chin Chen

Shyue-Ching Lu 0 0

Bao-Lang Chen 0 0

Hou-Sheng Chan 0 0

Hung-I Chen 416,000 1.77


Ray Chang 0 0

Victor Tsan 0 0

Amy Lee 0 0

President Chen-Chin Chen 0 0

155

March 31st, 2019


Shares %

ECOVE Environment Services Corporation

Chairman ECOVE Environment Corporation Representative: Yun-Peng Shih

14,065,936 93.15 Director

ECOVE Environment Corporation Representative: J.J. Liao Eric Tiao Mike Chiou Daniel Hsin-I Ting

Supervisor ECOVE Waste Management Corporation Representative: Chien-Lung Yen

1,000 0.01

President Eric Tiao 0 0


Chairman CTCI Corporation Representative: John T. Yu

187,000,000 100.00 Director CTCI Corporation Representative: Shih-Wei Chung Jim D. Chen

Supervisor CTCI Corporation Representative: Jeff Hsu

President Patrick Lin 0 0

CTCI Investment Corporation

Chairman CTCI Corporation Representative: Todd Chen

207,200,000 100.00 Director CTCI Corporation Representative: Patrick Lin James Liu

Supervisor CTCI Corporation Representative: Hope Sun

President Patrick Lin 0 0

ECOVE Environment Corporation

Chairman CTCI Corporation Representative: J.J. Liao

38,457,105 57.31

Director

CTCI Corporation Representative: Yun-Peng Shih

Eugene Chien 0 0

Wen-Whe Pan 0 0

Yang-Min Liu 0 0

Parkwell Investment Limited Representative: Kuan-Shen Wang

1,060,000 1.58


Shuh-Woei Yu 0 0

Shean-Bii Chiu 0 0

James Tsai 0 0

President Yun-Peng Shih 4,000 0.00

156

March 31st, 2019


Shares %

CTCI Chemicals Corporation

Chairman CTCI Investment Corporation Representative: Kevin S.P. Jen

1,657,207 23.34

Director

CTCI Investment Corporation Representative: M.H. Wang M.L. Lee Yeu-Wen Chen

Shirley Chou 576,910 8.13

Supervisor CTCI Development Corporation Representative: Henderson Ko

480,661 6.77

President Sam Kuo 13,186 0.19

ECOVE Wujih Energy Corporation


29,400,000 98.00 Director

ECOVE Environment Corporation Representative: J.J. Liao Pei-Feng Chu

Supervisor ECOVE Environment Services Corporation Representative: Nicole Ku

600,000 2.00

President Pei-Feng Chu 0 0

ECOVE Waste Management Corporation


2,000,000 100.00 Director

ECOVE Environment Corporation Representative: J.J. Liao

Hsiu-Yu Mike Kuo Eric Tiao Alex Chen

Supervisor ECOVE Environment Corporation Representative: Jig-Wen Chang

President Hsiu-Yu Mike Kuo 0 0

ECOVE Miaoli Energy Corporation


56,249,000 75.00

Director

ECOVE Environment Corporation Representative: J.J. Liao

Topco Scientific Co., Ltd. Representative: Fa-Siang Tan

18,700,000 24.93

Supervisor

ECOVE Environment Services Corporation Representative: Ping-Kun Lin

1,000 0.00

Topco International Investment Co., Ltd. Representative: Su-Qing Lu

50,000 0.07

President Pei-Feng Chu 0 0

157

March 31st, 2019


Shares %

CTCI Machinery Corporation

Chairman CTCI Corporation Representative: Chen-San Hu

20,000,000 100.00 Director

CTCI Corporation Representative: M.H. Wang Ting-Kuo Li M.C. Wu Y.W. Cheng

Supervisor CTCI Corporation Representative: Yuan-Shuang Kuan

President M.C. Wu 0 0

CTCI (Thailand) Co., Ltd.

Chairman Ting-Kuo Li 0 0

Director Alex I-Kang Ho 0 0

Rungthip Chin 0 0

Managing Director

Chun-Jung Hung 0 0

CTCI Overseas (BVI) Corporation

Director

Andy Sheu 0 0

Patrick Lin 0 0

S. H. Lin 0 0

CTCI Beijing Co., Ltd.

Chairman CTCI Overseas Corporation Limited Representative: Tieh-Shih Chang

USD 13,930,443

100.00 Director

CTCI Overseas Corporation Limited Representative: Todd Chen Ho-Chuang Lee Y. S. Liao Jeff C. F. Wu

Supervisor CTCI Overseas Corporation Limited Representative: Ai-Cheng Ho

President Ho-Chuang Lee 0 0

CTCI Shanghai Co., Ltd.

Chairman CTCI Beijing Co., Ltd. Representative: Tieh-Shih Chang

CNY 123,412,513

100.00 Director

CTCI Beijing Co., Ltd. Representative: Ho-Chuang Lee Paul Wu John Hsu

Supervisor CTCI Beijing Co., Ltd. Representative: Sharon Chiang


CTCI Overseas Corporation Limited

Director

John T. Yu 0 0

Andy Sheu 0 0

Michael Yang 0 0


Chairman Ming-Cheng Hsiao 0 0

Director Jenq-Shyong Chung 0 0

T.C. Li 0 0

Managing Director

Eric Chiu 0 0

158

March 31st, 2019


Shares %

CTCI Arabia Ltd.

Chairman CTCI Corporation Representative: M. H. Wang

500 50.00

Director

CTCI Corporation Representative: Paul Yang

CTCI Overseas Corporation Limited Representative: Edward Yuan

500 50.00 Managing Director

CTCI Overseas Corporation Limited Representative: Scott Chen

CIMAS Engineering Company Limited

Chairman CTCI Overseas Corporation Limited Representative: Ting-Kuo Li

USD 3,154,000 83.00

BOM Member

CTCI Overseas Corporation Limited Representative: James Y.H. Wang Neil Chen

Sincerity Engineering Co., Ltd. Representative: Yi-Chung Yang

USD 646,000 17.00

General Director

Neil Chen 0 0

Century Ahead Ltd.

Director

Chen-Chin Chen 0 0

Benjamin C. N. Tsai 0 0

Ai-Cheng Ho 0 0

Superiority (Thailand) Co., Ltd.

Director

Ting-Kuo Li 0 0

Chun-Jung Hung 0 0

Rungthip Chin 0 0

CTCI Advanced Systems Shanghai Inc.

Chairman Century Ahead Ltd. Representative: Chen-Chin Chen

USD 750,000 100.00 Director Century Ahead Ltd. Representative: Benjamin C. N. Tsai Ming-Hsiung Fann

Supervisor Century Ahead Ltd. Representative: Ai-Cheng Ho

President Ming-Hsiung Fann 0 0

CTCI Malaysia Sdn. Bhd.

Chairman Mohamed Nor Bin Abu Bakar 0 0

Director

Kamaruddin Bin Anuar 0 0

Muhammad Anas Bin Marjunit 0 0

Jenq-Shyong Chung 0 0

Eric Chiu 0 0

159

March 31st, 2019


Shares %

SINOGAL- Waste Services Co., Ltd.

Chairman Helder Jose Moura Dos Santos 0 0

Director

Pereira Taveira Pinto, Carlos Manuel 0 0

Yun-Peng Shih 0 0

Eric Tiao 0 0

Patrick Lin 0 0

President Peter Wang 0 0

CIPEC Construction Inc.

Chairman Ming-Cheng Hsiao 1 0.00

Director

Wen-Pin Lo 1 0.00

Romuel Consunji 1 0.00

Randolph Ang 1 0.00

Grace Fernandez 1 0.00

President Romuel Consunji 1 0.00

CINDA Engineering & Construction Pvt. Ltd.

Chairman Todd Chen 0 0

Director Ming-Shyan Lee 0 0

T.M. Wang 0 0

Managing Director

C. S. Kao 0 0

CTCI Trading Shanghai Co., Ltd.

Chairman CTCI Shanghai Co., Ltd. Representative: Tieh-Shih Chang

CNY 5,000,000 100.00 Director CTCI Shanghai Co., Ltd. Representative: Ho-Chuang Lee Qiang Chai

Supervisor CTCI Shanghai Co., Ltd. Representative: Ai-Cheng Ho


CTCI Americas, Inc.

Chairman Andy Sheu 0 0

Director

Michael Yang 0 0

M. H. Wang 0 0

Ming-Cheng Hsiao 0 0

Ting-Kuo Li 0 0

Todd Chen 0 0

Ebrahim Fatemizadeh 0 0

President Hal Ankrum 0 0 Universal Engineering (BVI) Corporation

Chairman Ming-Cheng Hsiao 0 0

CTCI Singapore Pte. Ltd.

Chairman Patrick Lin 0 0

Director Mike Chi-Min Chien 0 0

Lu Kee Hong 0 0 Managing Director Eric Chiu 0 0

Yuan Ding Resources Corporation

Chairman ECOVE Environment Corporation Representative: J.J. Liao

2,700,000 60.00 Director

ECOVE Environment Corporation Representative: Yun-Peng Shih Eric Tiao

Supervisor ECOVE Waste Management Corporation Representative: Patrick Lin

1,800,000 40.00

President Yun-Peng Shih 0 0

160

March 31st, 2019


Shares %

ECVOE Environment Consulting Corporation

Executive Director

ECOVE Environment Services Corporation Representative: Yun-Peng Shih

USD 140,000 100.00

Supervisor ECOVE Environment Services Corporation Representative: Patrick Lin

President Eric Wang 0 0


Director

M. H. Wang 0 0

Eric Chiu 0 0

Rick Wu 0 0

Takahashi Akemi 0 0

CTCI Netherlands B.V.

Director David Wang 0 0

Crown Asia 2 Investment Limited

Chairman CTCI Development Corporation Representative: Michael Yang

TWD 250,000 100.00 Director

CTCI Development Corporation Representative: Ming-Cheng Hsiao


Chairman CTCI Corporation Representative: Ting-Kuo Li

25,500,000 51.00

Director

CTCI Corporation Representative: Y. S. Liao

Jeff Hsu

HSIN DAR Environment Corporation Representative: Sheng-Le Chen

Li-Ming Zhou 24,500,000 49.00

Supervisor Shu-Mei Sie 0 0

President William Chung 0 0

Sumber Mampu Sdn. Bhd.

Director

Frank Wu 0 0

Eric Chiu 0 0

Mohamed nor bin abu bakar 30,000 30.00

Kamaruddin Bin Anuer 30,000 30.00

Muhammad Anas Bin Marjunit 30,000 30.00

CTCI CMCE JV Sdn. Bhd.

Director

Mike Chi-Min Chien 0 0

Ming-Shyan Lee 0 0

Hazwan Alif Bin Abdul Rahman 0 0

Nazatul Najla Binti Abdul Rahman 0 0

ECOVE Solvent Recycling Corporation


8,099,000 89.99 Director

ECOVE Environment Corporation Representative: J. J. Liao

Chao-Tsung Chiang

Supervisor ECOVE Environment Services Corporation Representative: Helen Hsu

1,000 0.01

President Cheng-Lung Su 0 0

161

March 31st, 2019


Shares %

ECOVE Solar Energy Corporation


63,245,452 100 Director ECOVE Environment Corporation Representative: J. J. Liao

Ming-Cheng Hsiao

Supervisor ECOVE Environment Corporation Representative: S. H. Lin


ECOVE Solar Power Corporation

Chairman ECOVE Solar Energy Corporation Representative: Yun-Peng Shih

18,000,000 100


ECOVE Central Corporation Ltd.

Director ECOVE Solar Energy Corporation Representative: Yun-Peng Shih

TWD7,500,000 100

ECOVE South Corporation Ltd.

Director ECOVE Solar Energy Corporation Representative: Yun-Peng Shih

TWD16,500,000 100

G.D. International, LLC

Chairman Yun-Peng Shih USD 11,052,826 100 Managing

Director J. J. Liao

Lumberton Solar W2-090, LLC

Chairman Yun-Peng Shih USD 10,941,907 100 Managing

Director J. J. Liao

162

8.1.2 Operation overview of the Company and affiliates

December 31st, 2018; Unit: NT$ Thousands

Company Paid-up Capital

Total Assets Total

Liabilities

Total Stockholders’

Equity

Total Operating Revenue

Operating Income (Loss)

Net Income (Loss)


CTCI Smart Engineering Corporation $ 608,720 $ 2,673,689 $ 2,519,617 $ 154,073 $ 2,513,743 $ (353,914) $ (325,492) $ (5.35)

CTCI Resources Engineering Inc. 250,000 910,936 621,768 289,168 1,086,273 24,161 33,446 1.34

CTCI Advanced Systems Inc. 234,915 1,367,521 823,004 544,517 1,351,630 74,129 76,235 3.25

ECOVE Environmental Service Corporation 151,000 2,086,583 1,120,249 966,334 3,405,140 352,833 366,557 24.28

CTCI Development Corporation 1,870,000 6,941,776 4,212,509 2,729,267 328,792 167,832 125,829 0.67

CTCI Investment Corporation 2,072,000 1,759,070 24,506 1,734,564 (184,030) (184,776) (192,058) (0.93)

ECOVE Environment Corporation 671,051 4,909,044 30,806 4,878,238 788,260 737,985 806,912 12.04

ECOVE Wujih Energy Corporation 300,000 1,568,795 301,387 1,267,408 705,067 364,789 275,512 9.18

ECOVE Miaoli Energy Corporation 750,000 1,512,633 174,007 1,338,626 347,786 176,683 129,055 1.72

CTCI Chemicals Corporation 71,000 356,863 118,193 238,670 504,072 69,985 58,813 8.28

ECOVE Waste Management Corporation 20,000 472,228 359,058 113,170 1,203,941 62,292 58,382 29.19

CTCI (Thailand) Co., Ltd. 242,021 1,032,723 912,855 119,868 1,417,917 (76,465) 111,154 43.59

CTCI Overseas (BVI) Corporation 265,803 1,745,574 72 1,745,501 0 (642) 169,270 25.12

CTCI Overseas Company Limited 265,803 3,393,819 1,671,815 1,722,004 2,691,929 (76,795) 169,394 25.13

CTCI Beijing Co., Ltd. 437,124 2,486,380 704,132 1,782,248 1,828,647 159,568 266,912 -

CTCI Engineering & Construction Sdn. Bhd. 5,545 1,733,242 1,718,979 14,264 2,842,347 (159,520) (88,105) (139.27)

CIMAS Engineering Company Limited 88,353 121,608 29,424 92,184 122,705 324 (283) 0.00

Century Ahead Ltd. 23,678 32,732 0 32,732 0 (41) 7,609 -

CTCI Arabia Ltd. 40,961 571,883 1,694,686 (1,122,803) 1,382,033 244,683 161,861 334.19

CTCI Shanghai Co., Ltd. 552,172 1,966,272 1,467,630 498,642 1,779,332 11,869 82,025 -

CTCI Advanced Systems Shanghai Inc. 23,822 44,422 11,279 33,143 66,569 9,016 6,771 -

163


Total Assets Total

Liabilities


Equity



Net Income (Loss)


CTCI Machinery Corporation 200,000 2,241,131 1,760,696 480,435 2,619,476 94,228 67,207 3.36

Superiority (Thailand) Co., Ltd. 332 (16,861) 67,031 (83,893) 0 0 54,804 -

Universal Engineering(BVI) Co., 1,537 116,652 84,034 32,618 0 (147) 57,182 -

CIPEC Construction Inc. 1,463 238,439 264,257 25,817 142,243 (26,495) (26,413) (104.52)

CINDA Engineering & Construction Pvt. Ltd. 35,056 8,604,568 8,217,488 387,079 550,397 (210,369) (190,669) (23.84)

Sumber Mampu Sdn. Bhd. 754 178,094 5,026 173,069 0 (145) 65,264 (1.42)

CTCI Malaysia Sdn. Bhd. 5,545 297,651 24,364 273,287 11,100 261 48,785 67.68

SINOGAL-Waste Services Co., Ltd. 15,217 407,614 213,837 193,776 649,134 158,805 167,716 -

CTCI Trading Shanghai Co., Ltd. 22,371 119,402 55,589 63,813 258,031 27,085 20,309 -

CTCI Americas, Inc. 634,428 630,474 3,954 434,141 (4,676) (3,974) 634,428 (39.74)

CTCI Singapore Pte. Ltd. 145,287 843,420 1,495,951 (652,532) 1,011,015 62,233) (79,338) (15.64)

Yuan Ding Resources Corporation 45,000 39,318 80 39,238 0 (157) 78 0.02

ECOVE Environment Consulting Corporation 3,847 0 0 0 0 0 7,629 -

CCJV P1 Engineering and Construction Sdn. Bhd.

1,848 1,235,782 1,316,096 (80,313) 4,526,457 (769,393) (705,433) (2,821.73)

CTCI Netherlands B.V. 10,570 68,114 20,668 47,447 21,351 2,967 5,738 -

Crown Asia 2 Investment Limited 250 1,202 91 1,111 761 625 504 -

CTCI & HEC Water Business Corporation 500,000 550,994 71,551 479,443 231,122 (11,565) (10,044) (0.20)

CTCI CMCE JV Sdn. Bhd. 5,545 175,013 157,286 17,727 201,264 12,790 3,132 13.26

ECOVE Solar Energy Corporation 632,455 1,462,539 731,442 731,097 83,711 8,258 43,423 0.69

ECOVE Solar Power Corporation 180,000 811,794 607,733 204,061 67,492 26,975 18,678 1.04

ECOVE Central Corporation Ltd. 7,500 26,382 17,645 8,737 3,712 1,174 719 -

ECOVE South Corporation Ltd. 16,500 32,463 14,494 17,969 3,648 1,367 918 -

164


Total Assets Total

Liabilities


Equity



Net Income (Loss)


G.D. International ,LLC 339,764 368,956 245 368,710 0 (137) 27,685 -

LUMBERTON SOLAR W2-090, LLC 336,354 914,609 546,921 367,688 109,681 32,731 27,817 -

ECOVE Solvent Recycling Corporation 90,000 155,801 80,563 75,238 1,485 (7,346) (7,957) (0.88)

165

8.1.3 The related information on the endorsements or guarantees for others, lending to others and derivative financial instruments of affiliates: A. Endorsements or guarantees for others: (as of March 31st, 2019) Unit: NT$ thousands

No. (Note 1)

Guarantor

Guarantee

The Ceiling on guarantee for single

enterprise

The highest balance

during the period

(Note 4)

Ending balance

as of March

31st,2019

Assets pledged

for guarantee

Ratio of the accumulated

guarantee to the net asset value of the Company as of

December 31st,2018

Ceiling on total guarantee amount (Note 3)

Name

Relationship with the Company (Note 2)

1 CTCI Advanced

Systems Inc. Century Ahead

Ltd. 2

100% of the net worth from the latest audited financial statements of CTCI Advanced Systems Inc.

18,534 18,498 - 3.40%

The ceiling for total guarantee is $1,089,036, 200% of the net worth from the latest audited financial statements of CTCI Advanced Systems Inc.

2 CTCI

Machinery Corporation


5

300% of the net worth from the latest audited financial statements of CTCI Machinery Corporation

560,000 560,000 - 116.56%

The ceiling for total guarantee is $2,882,607, 600% of the net worth from the latest audited financial statements of CTCI Machinery Corporation

3 CTCI

Chemicals Corporation

CTCI Corporation 3

300% of the net worth from the latest audited financial statements of CTCI Chemicals Corporation

18,817 18,817 - 7.88%

The ceiling for total guarantee is $1,432,019, 600% of the net worth from the latest audited financial statements of CTCI Chemicals Corporation

3 CTCI

Chemicals Corporation

CTCI Machinery Corporation

5

300% of the net worth from the latest audited financial statements of CTCI Chemicals Corporation

532,830 532,830 - 223.25%

The ceiling for total guarantee is $1,432,019, 600% of the net worth from the latest audited financial statements of CTCI Chemicals Corporation

4 CTCI Shanghai

Co., Ltd. CTCI Trading

Shanghai Co., Ltd. 2

300% of the net worth from the latest audited financial statements of CTCI Shanghai Co., Ltd.

68,981 68,657 - 13.46%

The ceiling for total guarantee is $3,060,661, 600% of the net worth from the latest audited financial statements of CTCI Shanghai Co., Ltd.

166

No. (Note 1)

Guarantor

Guarantee


enterprise

The highest balance

during the period

(Note 4)

Ending balance

as of March

31st,2019

Assets pledged

for guarantee



December 31st,2018


Name


5

CTCI Resources

Engineering Inc.


5

300% of the net worth from the latest audited financial statements of CTCI Resources Engineering Inc.

267,102 267,102 - 92.37%

The ceiling for total guarantee is $1,735,011, 600% of the net worth from the latest audited financial statements of CTCI Resources Engineering Inc.

6 ECOVE

Environment Corporation

ECOVE Solar Energy

Corporation 2

200% of the net worth from the latest audited financial statements of ECOVE Environment Corporation

1,345,376 1,344,661 - 27.56%

The ceiling for total guarantee is $14,634,714, 300% of the net worth from the latest audited financial statements of ECOVE Environment Corporation

6 ECOVE


ECOVE Solar Power

Corporation 2


217,000 217,000 - 4.45%


6 ECOVE


EVER ECOVE Corporation

6


17,500 17,500 - 0.36%


7 ECOVE Solar

Energy Corporation


2

400% of the net worth from the latest audited financial statements of


16,790 16,790 - 2.30%

The ceiling for total guarantee is $4,386,581,

600% of the net worth from the latest audited financial statements of ECOVE Solar

Energy Corporation

167

No. (Note 1)

Guarantor

Guarantee


enterprise

The highest balance

during the period

(Note 4)

Ending balance

as of March

31st,2019

Assets pledged

for guarantee



December 31st,2018


Name


7 ECOVE Solar

Energy Corporation


2



14,000 14,000 - 1.91%



Energy Corporation

7 ECOVE Solar

Energy Corporation

ECOVE Solar Power

Corporation 2



708,699 708,699 - 96.94%



Energy Corporation

8 ECOVE Solar

Power Corporation

ECOVE Solar Energy

Corporation 3


ECOVE Solar Power Corporation

12,420 12,420 - 6.09%



Power Corporation

Note 1: 1. Company：0.

2. Subsidiaries：Please fill in the number with a sequence from 1 to 10.

Note 2: Eligibility of endorsements or Guarantees：

1. A company with which it does business. 2. A company in which the company directly or indirectly holds more than 50% of the voting shares. 3. A company directly and indirectly holds more than 50% of the voting shares in the company. 4. Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares 5. Contract required. 6. The relationship of Joint venture. 7. The performance guarantees for the sale of pre-sales contracts under the Consumer Protection Law.

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 maximum outstanding balance of endorsements/guarantees provided during the year ended March 31st, 2018.

168

B. Lending to others: (as of March 31st, 2019)

No. (Note1)

Lender Borrower Account item

(Note2)

The highest balance during period (Note3)

Ending balance as of

March 31st,2019 (Note8)

Interest rate

Nature of Lending (Note4)

Amount for operation (Note5)

Reason of short-term financing (Note6)

Allowance for bad debts

Collateral

Limit on lending for

single enterprise (Note7)

Ceiling for total

amount (Note7) Name Value

1 CTCI Advanced

Systems Inc. CTCI

Corporation

Accounts receivable-related

parties 45,000 45,000 - 2 0

For operational

needs 0 NA 0 54,452 217,807

2 CTCI Overseas Corporation

Limited

Superiority (Thailand) Co.,

Ltd.


parties 67,865 67,038 2.830% 2 0

For operational

needs 0 NA 0 690,818 690,818


Limited

CCJV P1 Engineering & Construction

Sdn. Bhd.


parties 308,300 308,300 2.644% 2 0

For operational

needs 0 NA 0 690,818 690,818


Limited

CTCI Americas Inc.


parties 126,403 126,403 2.595% 2 0

For operational

needs 0 NA 0 690,818 690,818


Limited

CIPEC Construction

Inc.


parties 312,344 21,334 2.625% 2 0

For operational

needs 0 NA 0 690,818 690,818


Limited

CTCI CMCE JV Sdn. Bhd.


parties 21,581 21,581 3.751% 2 0

For operational

needs 0 NA 0 690,818 690,818

3 ECOVE


ECOVE Solar Energy

Corporation


parties 200,000 200,000 1.010% 2 0

For operational

needs 0 NA 0 487,824 1,951,295

4

ECOVE Environment

Services corporation

ECOVE Solvent Recycling

Corporation


parties 70,000 70,000 1.570% 2 0

For operational

needs 0 NA 0 96,633 386,534

4

ECOVE Environment


ECOVE Miaoli Energy

Corporation


parties 70,000 70,000 - 2 0

For operational

needs 0 NA 0 96,633 386,534

169

No. (Note1)

Lender Borrower Account item

(Note2)

The highest balance during period (Note3)

Ending balance as of

March 31st,2019 (Note8)

Interest rate

Nature of Lending (Note4)

Amount for operation (Note5)

Reason of short-term financing (Note6)

Allowance for bad debts

Collateral Limit on

lending for single

enterprise (Note7)

Ceiling for total

amount (Note7) Name Value

4

ECOVE Environment


CTCI Corporation


parties 70,000 30,000 - 2 0

For operational

needs 0 NA 0 96,633 386,534

4

ECOVE Environment


CTCI Machinery

Corporation


parties 35,000 30,000 - 2 0

For operational

needs 0 NA 0 96,633 386,534

4

ECOVE Environment




parties 70,000 30,000 - 2 0

For operational

needs 0 NA 0 96,633 386,534

5 ECOVE Solar

Energy Corporation

ECOVE Central Corporation

Ltd.


parties 17,000 17,000 - 2 0

For operational

needs 0 NA 0 292,439 292,439

5 ECOVE Solar

Energy Corporation

ECOVE South Corporation

Ltd.


parties 14,000 14,000 1.710% 2 0

For operational

needs 0 NA 0 292,439 292,439

5 ECOVE Solar

Energy Corporation

ECOVE Solar Power

Corporation


parties 200,000 156,000 - 2 0

For operational

needs 0 NA 0 292,439 292,439

6 CTCI Beijing

Co. Ltd. CTCI Shanghai

Co. Ltd.


parties 275,922 274,626 - 2 0

For operational

needs 0 NA 0 716,593 716,593

7 ECOVE Waste Management Corporation

CTCI Machinery

Corporation


parties 7,000 7,000 - 2 0

For operational

needs 0 NA 0 11,317 45,268

7 ECOVE Waste Management Corporation



parties 7,000 7,000 - 2 0

For operational

needs 0 NA 0 11,317 45,268

170

Note 1： Number for items explain as follows：

■ Company：0.

■ Subsidiaries：Please fill in the number with a sequence from 1 to 10.

Note 2： This item is for account receivable-related parties, owner’s equity, prepayments, temporary payments etc. If any item belongs to Lending to others needs to

be filled in this column. Note 3： The highest balance during period.

Note 4： Description for Lending to others as follows：

■1：Having business relationship.

■2：Operational needs.

Note 5： Belongs to item 1, please fill in the amount for operation.

Note 6： Belongs to item 2, please explain the reason and lending purpose of short-term financing. For example, repayment for loans, purchasing equipments, or

needs for operations and working capital, etc. Note 7： Please fill in the limit of amount on lending to single enterprise and total limit of amount on lending to others by the Company, according to the stipulation

of the Procedures of Lending to Others, and express the calculation of the aforesaid figures in the column of remarks. Note 8： The amounts of funds to be loaned to others which have been approved by board of directors of a public company in accordance with Article 14, Item 1 of

the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they have not yet been appropriated. However, this balance should exclude the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if board of directors of a public company has authorized the chairman to loan funds in installments or in revolving within certain lines and within one year in accordance with Article 14, Item 2 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by board of directors, and these lines of loaning should not be excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.

171

C. Derivative Transactions Information: a. Derivatives transactions by Dec. 31, 2018

(1) Up to Dec. 31, 2018, CTCI Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 2,210,179 thousand. As the counter-party has good credit, the financial risk is limited. The exchange gain of aforesaid forward contracts is 45,024 thousand, listed in non-operating income.

(2) Up to Dec. 31, 2018, CTCI Corporation engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 7,821,644 thousand. As the counter-party has good credit, the financial risk is limited. The exchange gain of aforesaid SWAP contracts is 3,213 thousand, listed in non-operating income.

(3) Up to Dec. 31, 2018, CTCI Corporation engaged in Commodity SWAP transactions to hedge the risks from fluctuation in raw material prices. Total contract amount is 201,045 thousand. As the counter-party has good credit, the financial risk is limited. The exchange gain of aforesaid SWAP contracts is 4,335 thousand, listed in non-operating income.

(4) Up to Dec. 31, 2018, CTCI Overseas Corporation Limited engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 188,179 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid SWAP contracts is 541 thousand, listed in non-operating income.

(5) Up to Dec. 31, 2018, CTCI Chemicals Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 350,921 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid forward contracts is 4,361 thousand, listed in non-operating income.

b. Derivatives transactions by Mar. 31, 2019 (1) Up to Mar. 31, 2019, CTCI Corporation engaged in FX forward transactions to hedge

the risks from FX commitment. Total contract amount is 958,312 thousand. As the counter-party has good credit, the financial risk is limited. The exchange gain of aforesaid forward contracts is 12,107 thousand, listed in non-operating income.

(2) Up to Mar. 31, 2019, CTCI Corporation engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 5,538,963 thousand. As the counter-party has good credit, the financial risk is limited. The exchange gain of aforesaid SWAP contracts is 6,896 thousand, listed in non-operating income.

(3) Up to Mar. 31, 2019, CTCI Corporation engaged in Commodity SWAP transactions to hedge the risks from fluctuation in raw material prices. Total contract amount is 146,205 thousand. As the counter-party has good credit, the financial risk is limited. The exchange gain of aforesaid SWAP contracts is 8,690 thousand, listed in non-operating income.

(4) Up to Mar. 31, 2019, CTCI Overseas Corporation Limited engaged in FX SWAP transactions to hedge the risks from FX commitment. Total contract amount is 65,197 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange loss of aforesaid SWAP contracts is 1,305 thousand, listed in non-operating expense.

(5) Up to Mar. 31, 2019, CTCI Chemicals Corporation engaged in FX forward transactions to hedge the risks from FX commitment. Total contract amount is 70,970 thousand. As the counter-party has good credit, the financial risk is limited. The total exchange gain of aforesaid forward contracts is 1,115 thousand, listed in non-operating income.

8.1.4 Consolidated Financial Statements of Affiliated Enterprises of the Company: None.

8.1.5 Affiliation Report: None.

172

8.2 Private Placement Securities in the Most Recent Year: None. 8.3 The Shares in the Company Held or Disposed of by Subsidiaries in the Most Recent Year:

Unit: NT$ thousands; Shares; %

Name of subsidiary

Stock capital

collected

Fund source

Shareholding ratio of the

Company (%)

Date of acquisition

or disposition

Shares and

amount acquired

Shares and

amount disposed

of

Investment gain (loss)

Shareholdings & amount in the most recent

year

Mortgage

Endorsement amount made

for the subsidiary

Amount loaned to

the subsidiary

ECOVE Environment Services Corporation

$ 151,000 own reserves

93.16 1997.08

50,000 $1,764

1,028

$61 None None None

1997.10 50,000 $2,021

$258

1997.10 50,000 $1,893

1997.12 50,000 $1,780

1997.12 100,000

$3,673 $185

1998.08 50,000 $3,092

1998.12 Stock dividend

11,500

1998.12 61,000 $3,112

$45

1999.12 971,160 $31,475

1999.12 831,560 $26,951

$721

2001.12 505,871 $13,256

2002.12 645,000


9

2005.10 9

173

Name of subsidiary

Stock capital

collected

Fund source


Company (%)

Date of acquisition

or disposition

Shares and

amount acquired

Shares and

amount disposed

of



year

Mortgage


for the subsidiary

Amount loaned to

the subsidiary

Stock dividend


7


20


12


$1,690,000 own reserves

100 1999.03 550,000 $21,878

912,170 $53,818

None None None

1999.03 200,000

$8,104 $303

1999.04 450,000 $19,056

1999.04 450,000 $18,791

$586

1999.05 350,000 $14,677

1999.05 620,000 $27,053

$831

1999.06 776,000 $28,919


168,200

1999.07 15,000

$584 $18

1999.08 100,000

$3,044

2000.02 427,000 $14,663

$1,274

174

Name of subsidiary

Stock capital

collected

Fund source


Company (%)

Date of acquisition

or disposition

Shares and

amount acquired

Shares and

amount disposed

of



year

Mortgage


for the subsidiary

Amount loaned to

the subsidiary


68,220


108,060


8,710


8,671


6,954


18,539


10,816


$1,402,000 own reserves

100 1999.04

328,000 $14,198

344,436 $20,322

None None None

1999.04 105,000

$4,582 $108

1999.05 350,000 $14,826

1999.05 400,000 $17,881

$769

1999.06 250,000

$9,659


84,600

2000.02 308,840

$8,841 $420


84,600

175

Name of subsidiary

Stock capital

collected

Fund source


Company (%)

Date of acquisition

or disposition

Shares and

amount acquired

Shares and

amount disposed

of



year

Mortgage


for the subsidiary

Amount loaned to

the subsidiary


40,803


3,289


3,274


2,625


7,000


4,084

Crown Asia 2 Investment Limited Note

$ 250 Donation 100 2011.04 500 $18

500 $18

None None None

Note: Acquired in March 2016, the funding source is by donation.

176

8.4 Other Supplementary Information 8.4.1 KPI by industry:

A. CTCI Group budget for conclusion of contract, operating revenue and gross profit

Unit : NT$100 million

Item Budget in 2018 Performance

New Order 907.80 1,017.06

Operating Revenue 693.38 641.00

Gross Profit 52.43 46.08

B. Social responsibility

a. Concern about safety and health environment, carry out HSE management system. b. Aggressively build positive ties throughout the community and promote local activities of

culture and education. c. Foster engineering expertise with close attention employee training and education and the

exchange of knowledge which also enhances Industry-academic cooperation d. Provide employment opportunities, assist job related activities and build long term ties with

marginally listed workers. e. Offer a friendly workplace, health promotion activities in order to improve the physical and

mental health of the employee. f. KPI for energy saving and carbon reduction and health management:

Item KPI in 2018 Performance

Water consumption in the workplace

Less than 11.145M3/person (average water consumption

over the past two years) 9.542 M3/person

Power consumption in workplace

Less than 3,332 degree/person

(average amount consumed electricity over the past two

years)

2,623 degree/person

Health management - Promotion

More than 12 seminars 1044 persons/

14 seminars

g. To enhance the urgent response ability, there are a total of 39 qualified first-aid personnel.

8.4.2 Material Event Impact on Shareholders' Equity or Share Price in Recent Years until the Annual

Report being published: None.

CTCI CORPORATION 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.

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Appendix 1

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CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2018 AND 2017 (EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS)

~6~

December 31, 2018 December 31, 2017 Assets Notes AMOUNT % AMOUNT %

Current assets 1100 Cash and cash equivalents 6(1) $ 15,070,992 20 $ 19,354,880 28 1110 Financial assets at fair value

through profit or loss - current

6(2)

554,638 1 581,194 1 1120 Financial assets at fair value

through other comprehensive

income - current

6(3)

500,327 1 - - 1125 Available-for-sale financial assets

- current

12(4)

- - 647,629 1 1140 Contract assets - current 6(22) 24,823,432 32 - - 1150 Notes receivable, net 6(4) 75,006 - 33,150 - 1170 Accounts receivable, net 6(4) 9,092,332 12 5,325,391 8 1180 Accounts receivable - related

parties

7

944,071 1 42,359 - 1190 Receivables from customers on

construction contracts

- - 23,759,310 34 1200 Other receivables 338,381 - 225,175 - 1210 Other receivables - related parties 7 96 - 15,309 - 1220 Current income tax assets 134,826 - 106,134 - 130X Inventories 167,345 - 193,174 - 1410 Prepayments 6(5) 4,253,895 6 4,147,122 6 1470 Other current assets 6(6) and 8 579,218 1 331,382 - 11XX Current Assets 56,534,559 74 54,762,209 78 Non-current assets 1517 Financial assets at fair value


income - non-current

6(3)

788,611 1 - - 1543 Financial assets measured at cost

- non-current

12(4)

- - 676,511 1 1550 Investments accounted for using

equity method

6(7)

3,680,933 5 3,627,018 5 1600 Property, plant and equipment,

net

6(8) and 8

10,432,036 13 6,660,116 10 1760 Investment property, net 6(9) and 8 808,129 1 812,652 1 1780 Intangible assets 191,198 - 97,201 - 1840 Deferred income tax assets 6(28) 493,335 1 513,339 1 1900 Other non-current assets 6(10) and 8 3,568,532 5 2,918,943 4 15XX Non-current assets 19,962,774 26 15,305,780 22 1XXX Total assets $ 76,497,333 100 $ 70,067,989 100

(Continued)

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CTCI CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS


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

~7~

December 31, 2018 December 31, 2017 Liabilities and Equity Notes AMOUNT % AMOUNT %

Current liabilities 2100 Short-term borrowings 6(11) $ 13,414,459 18 $ 6,539,017 9 2120 Financial liabilities at fair value

through profit or loss - current 6(2)

548 - 8,819 - 2130 Contract liabilities - current 6(22) 13,920,198 18 - - 2150 Notes payable 18,788 - 4,069 - 2170 Accounts payable 6(12) 9,991,262 13 11,878,274 17 2180 Accounts payable - related parties 7 1,359,712 2 926,710 1 2190 Payable to customers on


- - 13,880,106 20 2200 Other payables 6(13) 4,691,267 6 2,748,644 4 2220 Other payables - related parties 7 1,249 - 20 - 2230 Current income tax liabilities 371,943 - 420,312 1 2300 Other current liabilities 6(14)(15) 7,650,660 10 7,554,345 11 21XX Current Liabilities 51,420,086 67 43,960,316 63 Non-current liabilities 2540 Long-term borrowings 6(15) 1,423,586 2 1,921,150 3 2570 Deferred income tax liabilities 6(28) 411,810 1 429,286 - 2600 Other non-current liabilities 6(16) 2,615,692 3 2,717,080 4 25XX Non-current liabilities 4,451,088 6 5,067,516 7 2XXX Total Liabilities 55,871,174 73 49,027,832 70 Equity attributable to owners of

parent

Share capital 6(19) 3110 Common stock 7,632,738 10 7,632,738 11 Capital surplus 6(20) 3200 Capital surplus 3,545,053 4 3,395,620 5 Retained earnings 6(21) 3310 Legal reserve 3,558,894 5 3,278,360 5 3320 Special reserve 763,794 1 765,904 1 3350 Unappropriated retained earnings 2,217,619 3 3,061,699 4 Other equity interest 3400 Other equity interest ( 247,534 ) - ( 170,454 ) - 3500 Treasury stocks 6(19) ( 11,835 ) - ( 11,835 ) - 31XX Equity attributable to owners

of the parent

17,458,729 23 17,952,032 26 36XX Non-controlling interest 4(3) 3,167,430 4 3,088,125 4 3XXX Total equity 20,626,159 27 21,040,157 30 Significant contingent liabilities

and unrecognised contract

commitments

9

Significant events after the

balances sheet date 11

3X2X Total liabilities and equity $ 76,497,333 100 $ 70,067,989 100

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS, EXCEPT EARNIINGS PER SHARE AMOUNTS)


~8~

Year ended December 31

2018 2017

Items Notes AMOUNT % AMOUNT %

4000 Operating revenue 6(22) and 7 $ 64,069,542 100 $ 71,606,604 100

5000 Operating costs 6(26)(27) and 7 ( 59,469,789 ) ( 93 ) ( 66,495,104 ) ( 93 )

5900 Gross Profit 4,599,753 7 5,111,500 7

Operating expenses 6(26)(27)

6200 General and administrative expenses ( 1,739,023 ) ( 3 ) ( 1,966,023 ) ( 3 )

6300 Research and development expenses ( 144,952 ) - ( 130,451 ) -

6000 Total operating expenses ( 1,883,975 ) ( 3 ) ( 2,096,474 ) ( 3 )

6900 Operating income 2,715,778 4 3,015,026 4

Non-operating income and expenses

7010 Other income 6(23) 321,605 1 1,201,897 2

7020 Other gains and losses 6(24) 219,355 - ( 220,438 ) -

7050 Finance costs 6(25) ( 157,908 ) - ( 104,140 ) -

7060 Share of profit of associates and joint

ventures accounted for under equity

method

6(7)

( 33,557 ) - 99,008 -

7000 Total non-operating income and

expenses

349,495 1 976,327 2

7900 Profit before income tax 3,065,273 5 3,991,353 6

7950 Income tax expense 6(28) ( 765,210 ) ( 1 ) ( 701,255 ) ( 1 )

8200 Profit for the year $ 2,300,063 4 $ 3,290,098 5

Components of other comprehensive

income that will not be reclassified to

profit or loss

8311 Other comprehensive income, before tax,

actuarial gains (losses) on defined benefit

plans

6(17)

$ 15,131 - ( $ 75,893 ) -

8316 Unrealized gain or loss on valuation of

financial assets at fair value through other

comprehensive income

31,159 - - -

8320 Share of other comprehensive income of

associates and joint ventures accounted

for using equity method, components of

other comprehensive income that will not

be reclassified to profit or loss

( 50,797 ) - 225 -

8349 Income tax related to components of other

comprehensive income that will not be

reclassified to profit or loss

6(28)

17,083 - 12,902 -


income that will be reclassified to profit or

loss

8361 Cumulative translation differences of

foreign operations

( 63,746 ) - 6,552 -

8362 Unrealized gain on valuation of available-

for-sale financial assets

- - 8,768 -

8300 Total other comprehensive loss for the year ( $ 51,170 ) - ( $ 47,446 ) -

8500 Total comprehensive income for the year $ 2,248,893 4 $ 3,242,652 5

Profit attributable to:

8610 Owners of the parent $ 1,827,537 3 $ 2,805,348 4

8620 Non-controlling interest 472,526 1 484,750 1

Total $ 2,300,063 4 $ 3,290,098 5

Comprehensive income attributable to:

8710 Owners of the parent $ 1,762,037 3 $ 2,764,679 4

8720 Non-controlling interest 486,856 1 477,973 1

Total $ 2,248,893 4 $ 3,242,652 5

9750 Basic earnings per share 6(29) $ 2.40 $ 3.68

9850 Diluted earnings per share 6(29) $ 2.39 $ 3.67

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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

Common stock

Capital surplus

Legal reserve

Special reserve

Unappropriated

earnings

Cumulative translation

differences of foreign

operations

Unrealized gains

(losses) from

financial assets

measured at fair

value through other

comprehensive

income

Unrealized gain or

loss on available-

for-sale financial

assets

Treasury stocks

Total

Non-controlling

interest

Total equity


~9~

For the year ended December 31, 2017 Balance at January 1, 2017 $ 7,632,738 $ 3,322,098 $ 3,056,071 $ 768,121 $ 2,519,655 ( $ 235,466 ) $ - $ 46,961 ( $ 11,835 ) $ 17,098,343 $ 3,091,706 $ 20,190,049 Profit for the year - - - - 2,805,348 - - - - 2,805,348 484,750 3,290,098 Other comprehensive income - - - - ( 58,720 ) 9,184 - 8,867 - ( 40,669 ) ( 6,777 ) ( 47,446 ) Total comprehensive income - - - - 2,746,628 9,184 - 8,867 - 2,764,679 477,973 3,242,652 Appropriation of 2016 earnings 6(21) Legal reserve - - 222,289 - ( 222,289 ) - - - - - - - Special reserve - - - ( 2,217 ) 2,217 - - - - - - - Cash dividends - - - - ( 1,984,512 ) - - - - ( 1,984,512 ) ( 515,844 ) ( 2,500,356 ) Employee stock options exercised by subsidiary

6(20) - 6,590 - - - - - - - 6,590 30,822 37,412

Share-based payment transactions 6(21) - 65,027 - - - - - - - 65,027 373 65,400 Long-term investment did not change according to the proportion of shareholdings

- 1,905 - - - - - - - 1,905 ( 1,905 ) - Increase in non-controlling interests - - - - - - - - - - 5,000 5,000 Balance at December 31, 2017 $ 7,632,738 $ 3,395,620 $ 3,278,360 $ 765,904 $ 3,061,699 ( $ 226,282 ) $ - $ 55,828 ( $ 11,835 ) $ 17,952,032 $ 3,088,125 $ 21,040,157 For the year ended December 31, 2018 Balance at January 1, 2018 $ 7,632,738 $ 3,395,620 $ 3,278,360 $ 765,904 $ 3,061,699 ( $ 226,282 ) $ - $ 55,828 ( $ 11,835 ) $ 17,952,032 $ 3,088,125 $ 21,040,157 Effect of retrospective application and retrospective restatement

- - - - 166,900 - ( 47,643 ) ( 55,828 ) - 63,429 - 63,429

Balance at 1 January after adjustments 12(4) 7,632,738 3,395,620 3,278,360 765,904 3,228,599 ( 226,282 ) ( 47,643 ) - ( 11,835 ) 18,015,461 3,088,125 21,103,586 Profit for the year - - - - 1,827,537 - - - - 1,827,537 472,526 2,300,063 Other comprehensive income - - - - ( 32,913 ) ( 63,746 ) 31,159 - - ( 65,500 ) 14,330 ( 51,170 ) Total comprehensive income - - - - 1,794,624 ( 63,746 ) 31,159 - - 1,762,037 486,856 2,248,893 Appropriation of 2017 earnings 6(21) Legal reserve - - 280,534 - ( 280,534 ) - - - - - - - Special reserve - - - ( 2,110 ) 2,110 - - - - - - - Cash dividends - - - - ( 2,468,202 ) - - - - ( 2,468,202 ) ( 449,992 ) ( 2,918,194 ) Employee stock options exercised by subsidiary

6(20) - 5,241 - - - - - - - 5,241 25,094 30,335

Share-based payment transactions 6(20) - 144,192 - - - - - - - 144,192 3,658 147,850 Disposal of investments in equity instruments designated at fair value through other comprehensive income

- - - - ( 58,978 ) - 58,978 - - - - - Increase in non-controlling interest - - - - - - - - - - 13,689 13,689 Balance at December 31, 2018 $ 7,632,738 $ 3,545,053 $ 3,558,894 $ 763,794 $ 2,217,619 ( $ 290,028 ) $ 42,494 $ - ( $ 11,835 ) $ 17,458,729 $ 3,167,430 $ 20,626,159

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CONSOLIDATED STATEMENTS OF CASH FLOWS



Years ended December 31

Notes 2018 2017

~10~

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax $ 3,065,273 $ 3,991,353 Adjustments Adjustments to reconcile profit (loss) (Gain) loss on valuation of financial assets 6(24) ( 38,022 ) 51,566 (Gain) loss on reduction of capital of investments 6(24) ( 94,727 ) 2,503 Adjustment on evaluation of exchange rate of available-for-sale

foreign currency bond investment

- 1,700 Gain on disposal of property, plant and equipment 6(24) ( 69,979 ) ( 2,484 ) Share of profit of associates and joint ventures accounted for under

equity method 6(7)

33,557 ( 99,008 ) Depreciation 6(26) 405,239 360,564 Amortization 6(26) 164,384 160,991 (Reversal of) allowance for doubtful accounts 12(2) 28,317 ( 873,699 ) Interest income 6(23) ( 216,808 ) ( 131,658 ) Dividends revenue 6(23) ( 32,056 ) ( 25,799 ) Interest expense 6(25) 157,908 104,140 Compensation costs for employee stock options 6(27) 147,850 65,603 Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss 165,719 120,413 Notes receivable ( 41,856 ) 28,458 Notes receivable - related parties - 959,245 Accounts receivable ( 3,795,258 ) ( 707,147 ) Accounts receivable - related parties ( 901,712 ) ( 32,363 ) Contract assets - current ( 1,064,122 ) - Receivables from customers on construction contracts - ( 443,470 ) Other receivables ( 137,216 ) 22,725 Decrease in other receivables - related parties 15,213 ( 10,659 ) Inventories 25,829 ( 3,625 ) Prepayments ( 76,945 ) 86,074 Other current assets ( 247,836 ) 2,846,580 Other non-current assets 75,206 236,456 Changes in operating liabilities Notes payable 14,719 ( 2,954 ) Accounts payable ( 1,892,257 ) ( 3,911,046 ) Accounts payable - related parties 433,002 386,974 Contracts liabilities - current 40,092 - Payables to customers on construction contracts - ( 4,363,616 ) Other payables 126,368 31,795 Other payables-related parties 1,229 4 Other current liabilities 172,843 6,862,816 Other non-current liabilities ( 325,440 ) ( 376,358 )

Cash (outflow) inflow generated from operations ( 3,861,486 ) 5,336,074 Interest received 246,327 113,365 Dividends received 6(7) 121,761 209,190 Interest paid ( 159,773 ) ( 103,127 ) Income tax paid ( 772,534 ) ( 736,101 )

Net cash flows (used in) from operating activities ( 4,425,705 ) 4,819,401

(Continued)

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CONSOLIDATED STATEMENTS OF CASH FLOWS



Years ended December 31

Notes 2018 2017


~11~

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received $ - $ 521

Decrease in other receivables - related parties - 29,000

Decrease in financial assets at fair value through other comprehensive

income - current

132,855 -

Increase in available-for-sale financial assets - ( 110,004 )

Proceeds from disposal of available-for-sale financial assets - 32,894

Increase in financial assets measured at cost - non-current 12(4) - ( 132,773 )

Decrease in financial assets measured at cost-non-current - 3,610

Increase in financial assets at fair value through profit or loss - non-current ( 159,452 ) -

Capital withdrawal from liquidation of investee f company - 30,828

Increase in investments accounted for under the equity method 6(7) ( 530,000 ) ( 943,086 )

Acquisition of property, plant and equipment 6(32) ( 982,011 ) ( 157,088 )

Proceeds from disposal of property, plant and equipment 230,905 3,669

Increase in intangible assets ( 13,357 ) ( 42,662 )

Decrease in refundable deposits 1,975 11,351

Increase in other non-current assets ( 112,387 ) ( 121,898 )

Net cash flow from acquisition of subsidiaries ( 206,659 ) -

Net cash flows used in investing activities ( 1,638,131 ) ( 1,395,638 )

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in short-term borrowings 6,732,442 4,833,331

Repayment of long-term borrowings ( 2,117,746 ) ( 338,000 )

Increase (decrease) in deposits received (recognized in other non-current

liabilities)

49,012 61,439

Proceeds from employee stock options exercised 30,334 37,412

Cash dividends paid ( 2,918,194 ) ( 2,500,356 )

Increase in non-controlling interest 4,100 5,000

Net cash flows from financing activities 1,779,948 2,098,826

Net (decrease) increase in cash and cash equivalents ( 4,283,888 ) 5,522,589

Cash and cash equivalents at beginning of year 19,354,880 13,832,291

Cash and cash equivalents at end of year $ 15,070,992 $ 19,354,880

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~12~


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANISATION

CTCI Corporation (the “Company”) was incorporated as a company limited by shares under the

provisions of the Company Law of the Republic of China on April 6, 1979 and commenced its operations

on May 1, 1979. The main business activities of the Company and its subsidiaries (collectively referred

herein as the “Group”) are the design, survey, construction and inspection of various engineering and

construction projects, plants, machinery and equipment and environmental protection projects. The

Company’s shares have been listed and traded on the Taiwan Stock Exchange since May 1993.

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

STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised by the Board of Directors on March 8, 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 2018 are as

follows:

New Standards, Interpretations and Amendments

Effective date by

International

Accounting

Standards Board

Amendments to IFRS 2, ‘Classification and measurement of share-based

payment transactions’

January 1, 2018

Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with

IFRS 4,

Insurance contracts’

January 1, 2018

IFRS 9, ‘Financial instruments’ January 1, 2018

IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018

Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from

contracts with customers’

January 1, 2018

Amendments to IAS 7, ‘Disclosure initiative’ January 1, 2017

Amendments to IAS 12, ‘Recognition of deferred tax assets for

unrealised

January 1, 2017

Amendments to IAS 40, ‘Transfers of investment property’ January 1, 2018

IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018

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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 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 that has objective

evidence of impairment, interest revenue after the impairment would be calculated on the book

value of net carrying amount (i.e. net of credit allowance). The Group shall always measure the

loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do

not contain a significant financing component.

C. The Group has elected not to restate prior period financial statements using the modified

retrospective approach under IFRS 9. For details of the significant effect as at January 1, 2018,

please refer to Notes 12(4) B and C.


Effective date by

International

Accounting

Standards Board

Annual 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 IFRS

12, ‘Disclosure of interests in other entities’

January 1, 2017

Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS

28, ‘Investments in associates and joint ventures’

January 1, 2018

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~14~

In adopting the new standards endorsed by the FSC effective from 2018, the Group applied the new

rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted

under the statement. The significant effects of applying the new standards as of January 1, 2018 are

summarized below:

(A)In accordance with IFRS 9, the Group reclassified available-for-sale financial assets and financial

assets measured at cost in the amounts of $647,629 and $1,169,148, respectively, and made an

irrevocable election at initial recognition on equity instruments not held for dealing or trading

purpose, by increasing financial assets at fair value through profit and loss, financial assets at fair

value through other comprehensive income-current and financial assets at fair value through other

comprehensive income-non-current by $83,692, $647,629 and $656,249, respectively, and

increasing retained earnings, decreasing other equity interest and decreasing accumulated

impairment of financial assets measured at cost in the amounts of $166,900, $103,470 and

$492,637, respectively.

(B) Presentation of contract assets and contract liabilities

In line with IFRS 15 requirements, the Group changes the presentation of certain accounts in the

balance sheet as follows:

a. Under IFRS 15, contracts whereby services have been rendered but not yet billed are

recognised as contract assets, but were previously presented as part of receivables from

customers on construction contracts in the balance sheet. As of January 1, 2018, the balance

would amount to $23,759,310.

b. Under IFRS 15, liabilities in relation to contracts are recognised as contract liabilities, but were

previously presented as payable to customers on construction contracts in the balance sheet.

As of January 1, 2018, the balance would amount to $13,880,106.

(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 2018 are as

follows:


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

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~15~


Group’s financial condition and financial performance based on the Group’s assessment. The

quantitative impact will be disclosed when the assessment is complete.

IFRS 16, ‘Leases’

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard

requires lessees to recognize a ‘right-of-use asset’ and a lease liability (except for those leases with

terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors,

which is to classify their leases as either finance leases or operating leases and account for those two

types of leases differently. IFRS 16 only requires enhanced disclosures to be provided by lessors.

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”). The effects will be adjusted on January 1, 2019.

(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 SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements

are set out below. These policies have been consistently applied to all the periods presented, unless

otherwise stated.

(1) Compliance statement

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

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

Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC

Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”).


Effective date by

International Accounting

Standards Board

Amendment 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

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


Standards Board

IFRS 17, ‘Insurance contracts’ January 1, 2021

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(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 and liabilities at fair value through other comprehensive income/ Available-

for-sale financial assets measured at fair value.

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

present value of defined benefit obligation.

B. The preparation of financial statements in conformity with IFRS, 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

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 detail 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 unrealised 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.

193

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(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.

B. Subsidiaries included in the consolidated financial statements:

Name of Investor Name of SubsidiaryMain Business

Activities

December 31,

2018

December 31,

2017Description

CTCI Corp. CTCI Advanced

Systems Inc.

Design and installation

of software

48.72 48.72 Note 1

CTCI Corp. CTCI Development

Corp.

Real estate and leasing

business

100.00 100.00 Note 2

CTCI Corp. CTCI Investment

Corp.

Investments 100.00 100.00

CTCI Corp.

CTCI Investment

Corp.

CTCI Smart

Engineering Corp.

Planning and design of

Construction projects

97.09 97.09

CTCI Corp.

CTCI Development

Corp.

CTCI Resources

Engineering Inc.

Planning, design and

supervision of

mechanical and

electrical engineering

projects

99.06 99.06

CTCI Corp. CTCI Americas, Inc. Business development

and related engineering

services and planning

100.00 100.00

CTCI Corp. CTCI Singapore Pte.

Ltd.


construction projects

100.00 100.00

CTCI Investment

Corp.

CTCI Development

Corp.

ECOVE Environment

Services Corp.

CTCI Smart

Engineering Corp.

CTCI Resources

Engineering Inc.

CTCI Chemical

Corp.

Manufacturing of

chemical products

75.49 75.49

CTCI Corp.

CTCI Investment

Corp.

CTCI Development

Corp.

ECOVE

Environment Corp.


Ownership (%)

194

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矩形

~18~


Activities

December 31,

2018

December 31,

2017Description

ECOVE Environment

Corp.

ECOVE Environment

Services Corp.

ECOVE Wujih

Energy Corp.

Environmental

engineering

100.00 100.00

ECOVE Environment

Corp.

ECOVE Waste

Management Corp.

Environmental

engineering

100.00 100.00

ECOVE Environment

Corp.

ECOVE Waste

Management Corp.

ECOVE

Environment

Services Corp.

Environmental

engineering

93.16 93.16

ECOVE Environment

Corp.

ECOVE Environment

Services Corp.

ECOVE Miaoli

Energy Corp.

Environmental

engineering

75.00 75.00

ECOVE Environment

Corp.

ECOVE Waste

Management Corp.

Yuan Ding

Resources

Management Corp.

Environmental

engineering

100.00 100.00

ECOVE Environment

Services Corp.

ECOVE

Environment

Consulting Corp.

Environmental

engineering

100.00 100.00

CTCI Corp.

ECOVE Environment

Services Corp.

SINOGAL-Waste

Services CO.,Ltd

Environmental

engineering

60.00 60.00

CTCI Corp. CTCI Overseas

(BVI) Corp.


CTCI Overseas (BVI)

Corp.

CTCI Overseas Co.,

Ltd.



100.00 100.00

CTCI Overseas Co.,

Ltd.

CTCI Beijing Co.,

Ltd.



100.00 100.00

CTCI Overseas Co.,

Ltd.

CIMAS Engineering

Company



50.00 50.00 Note 3

CTCI Overseas Co.,

Ltd.

Universal

Engineering (BVI)

Corp.



100.00 100.00

CTCI Overseas Co.,

Ltd.

CIPEC Construction

Company Inc.



39.89 39.89 Note 3,4

Ownership (%)

195

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Activities

December 31,

2018

December 31,

2017Description

CTCI Overseas Co.,

Ltd.

CINDA Engineering

& Construction

Private Limited



100.00 100.00 Note 3

CTCI Corp.

CTCI Overseas Co.,

Ltd.

CTCI Arabia Ltd. Design and construction

of chemical factories

100.00 100.00

CTCI Smart

Engineering

Corp.

CTCI Overseas Co.,

Ltd.

CTCI Shanghai Co.,

Ltd.

Consulting services for


- 100.00 Note 7

CTCI Beijing Co., Ltd. CTCI Shanghai Co.,

Ltd.

Consulting services for


100.00 - Note 7

CTCI Shanghai Co.,

Ltd.

CTCI Trading

Shanghai Co., Ltd.

General trade 100.00 100.00

CTCI Corp.

CTCI Overseas Co.,

Ltd.

CTCI Engineering

& Construction

Sdn. Bhd.



100.00 100.00 Note 3

CTCI Overseas Co.,

Ltd.

Sumber Mampu

Sdn. Bhd.

Investments 10.00 10.00 Note 1, 3

Sumber Mampu Sdn.

Bhd.

CTCI Engineering &

Construction Sdn.

Bhd.

CTCI Corp.

Superiority (Thailand)

Co., Ltd.

CTCI (Thailand) Co.,

Ltd.



100.00 100.00

CTCI Advanced

Systems Inc.

Century Ahead Ltd. Investments 100.00 100.00

Century Ahead Ltd. CTCI Advanced

Systems Shanghai

Inc.

Computer skills services 100.00 100.00

Universal Engineering

(BVI) Corp.

Superiority

(Thailand) Co.,Ltd



100.00 100.00

CTCI Corp. CTCI Machinery

Corp.



100.00 100.00

Note 3CTCI MALAYSIA

Sdn. Bhd.



100.00 100.00

Ownership (%)

196

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矩形

~20~


Activities

December 31,

2018

December 31,

2017Description

CTCI Corp. CCJV P1

Engineering &

Construction Sdn.

Bhd.

Planning of construction

projects

99.00 99.00 Note 3

CTCI Development

Corporation

Crown Asia-2

Investment Limited


CTCI Singapore Pte.

Ltd.

CTCI Netherlands

B.V.

Engineers and other

technical design and

consultancy

100.00 100.00

CTCI Corp. CTCI & HEC Water

Business Co., Ltd.

Waste water treatment

Sewerage System

51.00 51.00

CTCI Corp. CTCI CMCE JV

SDN. BHD.



51.00 51.00 Note 3

ECOVE Environment

Corp.

ECOVE Environment

Services Corp.

ECOVE Solvent

Recycling

Corporation

Environmental

engineering

90.00 - Note 5

ECOVE Environment

Corp.

ECOVE Solar

Energy Corporation

Electric Power Supply 100.00 - Note 6

ECOVE Solar Energy

Corporation

ECOVE Solar Power

Corporation


ECOVE Solar Energy

Corporation

ECOVE Central

Corporation Ltd.


ECOVE Solar Energy

Corporation

ECOVE South

Corporation Ltd.


ECOVE Solar Energy

Corporation

G.D International,

LLC.


G.D International,

LLC.

Lumberton Solar

W2-090, LCC.


Ownership (%)

197

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矩形

~21~

Note 1: Being the Company’s controlled entities, these subsidiaries that were under 50% owned

by the Company directly or indirectly were included in the consolidated financial

statements.

Note 2: On December 12, 2018, the Company's Board of Directors decided to increase its share

in the subsidiary, CTCI Development Corp., with a total investment amount of

$1,800,000. As of December 31, 2018, the Company has invested $180,000.

Note 3: The company was audited by other independent accountants for the years ended

December 31, 2018 and 2017.

Note 4: In June 2017, the Group sold 25 equity shares (approximately 0.11%) to a non-related

party, Accuracy International Inc.

Note 5: In May 2018, the subsidiaries, ECOVE Environment Corp. and ECOVE Environment

Services Corp., acquired ECOVE Solvent Recycling Corp. by cash, which became a

subsidiary whose 90% equity was indirectly held by the Company. The acquiree was

consolidated into the financial statements effective from the date of acquisition.

Note 6: In September 2018, the subsidiary, ECOVE Environment Corp., acquired the remaining

shares of ECOVE Solar Energy Corporation by cash, which became a subsidiary whose

100% equity was indirectly held by the Group. The acquiree was consolidated into the

financial statements effective from the date of acquisition.

Note 7: In August 2018, the subsidiary, CTCI Beijing Co., Ltd, acquired a 100% equity interest

of the subsidiaries, CTCI Smart Engineering Corp. and CTCI Overseas Co., Ltd. by cash

and shares.

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

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

E. Significant restrictions：None.

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

As of December 31, 2018 and 2017, the non-controlling interest amounted to $3,167,430 and

$3,088,125, respectively. The information of non-controlling interest and respective subsidiaries

is as follows:

Name of subsidiary

Principal place

of business Amount

Ownership

(%) Amount

Ownership

(%)

ECOVE Environment

Corp.

Taiwan 2,571,278$ 42.28% 2,451,173$ 42.01%

Non-controlling interest

December 31, 2018 December 31, 2017

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Summarized financial information of the subsidiaries:

Balance sheets

Statements of comprehensive income

Statements of cash flows


Current assets 3,574,782$ 3,695,572$

Non-current assets 5,500,925 3,361,557

Current liabilities 1,496,920)( 1,326,188)(

Non-current liabilities 2,157,428)( 500,059)(

Total net assets 5,421,359$ 5,230,882$

ECOVE Environment Corp.

2018 2017

Revenue 4,847,097$ 4,479,587$

Profit before income tax 1,235,238 1,116,343

Income tax expense 254,298)( 156,919)(

Profit for the year 980,940 959,424

Other comprehensive loss, net of tax 3,708)( 53,608)(

Total comprehensive income for the year 977,232$ 905,816$

Comprehensive income attributable

to non-controlling interest 170,709$ 184,732$

Dividends paid to non-controlling interest 183,364$ 220,219$


For the years ended December 31,

2018 2017

Net cash provided by operating activities 1,565,883$ 1,200,009$

Net cash (used in) provided by investing

activities

643,689)( 305,025

Net cash used in financing activities 1,036,987)( 1,077,023)(

(Decrease) increase in cash and cash

equivalents 114,793)( 428,011

Cash and cash equivalents, beginning of year 1,657,955 1,229,944

Cash and cash equivalents, end of year 1,543,162$ 1,657,955$



199

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(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

recognised 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 recognised 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 recognised 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 recognised in other comprehensive income. However, non-

monetary assets and liabilities denominated in foreign currencies that are not measured at fair

value are translated using the historical exchange rates at the dates of the initial transactions.

(d) All foreign exchange gains and losses are presented in the statement of comprehensive income

within ‘other gains and losses’.

B. Translation of foreign operations

The operating results and financial position of all the group entities, associates and joint

arrangements that have a functional currency different from the presentation currency are

translated into the presentation currency as follows:

(a) Assets and liabilities for each balance sheet presented are translated at the closing exchange

rate at the date of that balance sheet;

(b) When the foreign operation partially disposed of or sold is an associate or joint arrangement,

exchange differences that were recorded in other comprehensive income are proportionately

reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the

Group retains partial interest in the former foreign associate or joint arrangement after losing

significant influence over the former foreign associate, or losing joint control of the former

joint arrangement, such transactions should be accounted for as disposal of all interest in these

foreign operations.

200

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(c) Income and expenses for each statement of comprehensive income are translated at average

exchange rates of that period; and

(d) All resulting exchange differences are recognised in other comprehensive income.

(5) Classification of current and non-current items

A. As the operating cycle for construction contracts usually exceeds one year, the Group uses the

operating cycle (typically 3～4 years) as its criteria for classifying current and non-current assets

and liabilities related to construction contracts. For other assets and liabilities, the criterion is one

year.

B. Assets that meet one of the following criteria are classified as current assets; otherwise they are

classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realized, or are intended to be

sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes;

(c) Assets that are expected to be realized within twelve months from the balance sheet date;

(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are

to be exchanged or used to settle liabilities more than twelve months after the balance sheet

date.

C. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they

are classified as non-current liabilities:

(a) Liabilities that are expected to be settled within the normal operating cycle;

(b) Liabilities arising mainly from trading activities;

(c) Liabilities that are to be settled within twelve months from the balance sheet date;

(d) Liabilities for which the repayment date cannot be extended unconditionally to more than

twelve months after the balance sheet date. Terms of a liability that could, at the option of the

counterparty, result in its settlement by the issue of equity instruments do not affect its

classification.

(6) Cash equivalents

Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits that

meet the definition above and are held for the purpose of meeting short-term cash commitments in

operations are classified as cash equivalents.

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

A. Financial assets at fair value through profit or loss are financial assets that are not measured at

amortised cost or fair value through other comprehensive income.

201

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B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are

recognised and derecognised using settlement 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 fair value through other comprehensive income

A. Financial assets at fair value through other comprehensive income comprise equity securities

which are not held for trading, and for which the Group has made an irrevocable election at initial

recognition to recognise changes in fair value in other comprehensive income and debt instruments

which meet all of the following criteria:

(a) The objective of the Group’s business model is achieved both by collecting contractual cash

flows and selling financial assets; and

(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 fair value through other comprehensive

income are recognised and derecognised using settlement date accounting.

C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs.

The Group subsequently measures the financial assets at fair value:

(a) The changes in fair value of equity investments that were recognised in other comprehensive

income are reclassified to retained earnings and are not reclassified to profit or loss following

the derecognition of the investment. Dividends are recognised as revenue when the right to

receive payment is established, future economic benefits associated with the dividend will

flow to the Group and the amount of the dividend can be measured reliably.

(b) Except for the recognition of impairment loss, interest income and gain or loss on foreign

exchange which are recognised in profit or loss, the changes in fair value of debt instruments

are taken through other comprehensive income. When the financial asset is derecognised, the

cumulative gain or loss previously recognised in other comprehensive income is reclassified

from equity to profit or loss.

(9) Loans and receivables

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.

202

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(10) Impairment of financial assets

For debt instruments measured at fair value through other comprehensive income and financial

assets at amortised cost, at each reporting date, the Group recognises the impairment provision for

12 months expected credit losses if there has not been a significant increase in credit risk since initial

recognition or recognises the impairment provision for the lifetime expected credit losses (ECLs) if

such credit risk has increased since initial recognition after taking into consideration all reasonable

and verifiable information that includes forecasts. On the other hand, for accounts receivable or

contract assets that do not contain a significant financing component, the Group recognises the

impairment provision for lifetime ECLs.

(11) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.

B. The contractual rights to receive cash flows of the financial asset have been transferred and the

Group has transferred substantially all risks and rewards of ownership of the financial asset.

C. The contractual rights to receive cash flows of the financial asset have been transferred; however,

the Group has not retained control of the financial asset.

(12) Inventories

Inventories are stated at the lower of cost and net realizable value. Cost is determined using the

moving average method. The item by item approach is used in applying the lower of cost and net

realizable value. Net realizable value is the estimated selling price in the ordinary course of business,

less the estimated cost of completion and applicable variable selling expenses.

(13) Investments accounted for using the equity method-associates

A. Associates are all entities over which the Group has significant influence but not control. In

general, it is presumed that the investor has significant influence, if an investor holds, directly or

indirectly 20 percent or more of the voting power of the investee. Investments in associates are

accounted for using the equity method and are initially recognized at cost.

B. The Group’s share of its associates’ post-acquisition profits or losses is recognized in profit or

loss, and its share of post-acquisition movements in other comprehensive income is recognized

in other comprehensive income. When the Group’s share of losses in an associate equals or

exceeds its interest in the associate, including any other unsecured receivables, the Group does

not recognize further losses, unless it has incurred legal or constructive obligations or made

payments on behalf of the associate.

C. When changes in an associate’s equity that are not recognized in profit or loss or other

comprehensive income of the associate and such changes not affecting the Group’s ownership

percentage of the associate, the Group recognizes change in ownership interests in the associate

in ‘capital surplus’ in proportion to its ownership.

203

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D. Unrealized gains on transactions between the Company and its associates are eliminated to the

extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless

the transaction provides evidence of an impairment of the asset transferred. Accounting policies

of associates have been adjusted where necessary to ensure consistency with the policies adopted

by the Group.

E. In the case that an associate issues new shares and the Group does not subscribe or acquire new

shares proportionately, which results in a change in the Group’s ownership percentage of the

associate but maintains significant influence on the associate, then ‘capital surplus’ and

‘investments accounted for using the equity method’ shall be adjusted for the increase or decrease

of its share of equity interest. If the above condition causes a decrease in the Group’s ownership

percentage of the associate, in addition to the above adjustment, the amounts previously

recognized in other comprehensive income in relation to the associate are reclassified to profit

or loss proportionately on the same basis as would be required if the relevant assets or liabilities

were disposed of.

F. When the Group disposes its investment in an associate and loses significant influence over this

associate, the amounts previously recognised in other comprehensive income in relation to the

associate, are reclassified to profit or loss, on the same basis as would be required if the relevant

assets or liabilities were disposed of. If it retains significant influence over this associate, the

amounts previously recognised in other comprehensive income in relation to the associate are

reclassified to profit or loss proportionately in accordance with the aforementioned approach.

(14) Joint operation and investment accounted for using equity method-joint ventures

Investment of joint arrangements are classified as joint operations or joint ventures based on its

contractual rights and obligations.

A. Joint operation

For the interest in a joint operation, the Group recognises direct interest in (and other shares of)

the joint operation’s assets, liabilities, revenue and expense which are included in the financial

statements.

B. Investment accounted for using equity method - joint ventures

The Group accounts for its interest in a joint venture using equity method. Unrealised profits and

losses arising from the transactions between the Group and its joint venture are eliminated to the

extent of the Group’s interest in the joint venture. However, when the transaction provides

evidence of a reduction in the net realisable value of current assets or an impairment loss, all

such losses shall be recognised immediately.When the Group’s share of losses in a joint venture

equals or exceeds its interest in the joint venture together with any other unsecured receivables,

the Group does not recognise further losses, unless it has incurred legal or constructive

obligations or made payments on behalf of the joint venture.

204

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(15) Property, plant and equipment

A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during the

construction period are capitalized.

B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset,

as appropriate, only when it is probable that future economic benefits associated with the item

will flow to the Group and the cost of the item can be measured reliably. The carrying amount of

the replaced part is derecognized. All other repairs and maintenance are charged to profit or loss

during the financial period in which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are

depreciated using the straight-line method to allocate their cost over their estimated useful lives.

Each part of an item of property, plant, and equipment with a cost that is significant in relation

to the total cost of the item must be depreciated separately.

D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if

appropriate, at each financial year-end. If expectations for the assets’ residual values and useful

lives differ from previous estimates or the patterns of consumption of the assets’ future economic

benefits embodied in the assets have changed significantly, any change is accounted for as a

change in estimate under IAS 8, “Accounting Policies, Changes in Accounting Estimates and

Errors”, from the date of the change. The estimated useful lives of property, plant and equipment

are as follows:

(16) Investment property

An investment property is stated initially at its cost and measured subsequently using the cost model.

Except for land, investment property is depreciated on a straight-line basis over its estimated useful

life of 48 years.

(17) Intangible assets

A. Computer software is stated at cost and amortized on a straight-line basis over its estimated useful

life of 3 to 5 years.

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

Buildings and structures 3~60 years

Machinery 2~20 years

Transportation equipment 2~10 years

Office equipment 2~10 years

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(18) 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. When the circumstances or reasons for

recognizing impairment loss for an asset in prior years no longer exist, the impairment loss shall be

reversed to the extent of the loss previously recognized in profit or loss.

(19) Borrowings

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.

(20) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes

payable are those resulting from operating and non-operating activities.

B. The short-term accounts and notes payable without bearing interest are subsequently measured


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

A. Financial liabilities are classified in this category of held for trading if acquired principally for

the purpose of repurchasing in the short-term. Derivatives are also categorised as financial

liabilities held for trading unless they are designated as hedges.

B. At initial recognition, the Company measures the financial liabilities at fair value. All related

transaction costs are recognised in profit or loss. The Company subsequently measures these

financial liabilities at fair value with any gain or loss recognised in profit or loss.

(22) Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability specified in the contract

is discharged or cancelled or expires.

(23) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when

there is a legally enforceable right to offset the recognized amounts and there is an intention to settle

on a net basis or realize the asset and settle the liability simultaneously.

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(24) Non-hedging derivatives

Non-hedging derivatives are initially recognised at fair value on the date a derivative contract is

entered into and recorded as financial assets or financial liabilities at fair value through profit or loss.

They are subsequently remeasured at fair value and the gains or losses are recognised in profit or

loss.

(25) Provisions

Provisions (decommissioning) are recognized when the Group has a present legal or constructive

obligation as a result of past events, and it is probable that an outflow of economic resources will be

required to settle the obligation and the amount of the obligation can be reliably estimated.

Provisions are measured at the present value of the expenditures expected to be required to settle the

obligation on the balance sheet date, which is discounted using a pre-tax discount rate that reflects

the current market assessments of the time value of money and the risks specific to the obligation.

When discounting is used, the increase in the provision due to passage of time is recognized as

interest expense. Provisions are not recognized for future operating losses.

(26) 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

expense in that period when the employees render service.

B. Pensions

(a) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expenses when

they are due on an accrual basis. Prepaid contributions are recognized as an asset to the extent

of a cash refund or a reduction in the future payments.

(b) Defined benefit plans

i. Net obligation under a defined benefit plan is defined as the present value of an amount

of pension benefits that employees will receive on retirement for their services with the

Group in current period or prior periods. The rate used to discount is determined by using

interest rates of high-quality corporate bonds that are denominated in the currency in

which the benefits will be paid, and that have terms to maturity approximating the terms

of related pension liability; when there is no deep market in high-quality corporate bonds,

the Group uses interest rates of government bonds (at the balance sheet date) instead.

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.

iii. Past service costs are recognised immediately in profit or loss.

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C. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of

employment as a result from either the Group’s decision to terminate an employee’s employment

before the normal retirement date, or an employee’s decision to accept an offer of redundancy

benefits in exchange for the termination of employment. The Group recognizes expense as it can

no longer withdraw an offer of termination benefits or it recognizes relating restructuring costs,

whichever is earlier. Benefits that are expected to be due more than 12 months after balance sheet

date shall be discounted to their present value.

D. Employees’ compensation, directors’ and supervisors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognized as

expenses and liabilities, provided that such recognition is required under legal obligation or

constructive obligation and those amounts can be reliably estimated. Any difference between the

resolved amounts and the subsequently actual distributed amounts is accounted for as changes in

estimates.

(27) Employee share-based payment

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 recognized 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 recognized is based on the number of equity

instruments that eventually vest.

(28) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit or

loss, except to the extent that it relates to items recognized in other comprehensive income or

items recognized directly in equity, in which cases the tax is recognized in other comprehensive

income or equity.

B. The current income tax charge 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.

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C. Deferred tax is recognized, using the balance sheet liability method, on temporary differences

arising between the tax bases of assets and liabilities and their carrying amounts in the

consolidated balance sheet. Deferred tax is determined using tax rates (and laws) that have been

enacted or substantially enacted by the balance sheet date and are expected to apply when the

related deferred tax asset is realized or the deferred income tax liability is settled.

D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit

will be available against which the temporary differences can be utilized. At each balance sheet

date, unrecognized and recognized deferred tax assets are reassessed.

E. Current tax assets and liabilities are offset and the net amount reported in the balance sheet when

there is a legally enforceable right to offset the recognized amounts and there is an intention to

settle on a net basis or realize the asset and settle the liability simultaneously. Deferred tax assets

and liabilities are offset on the balance sheet when the entity has the legally enforceable right to

offset current tax assets against current tax liabilities and they are levied by the same taxation

authority on either the same entity or different entities that intend to settle on a net basis or realize

the asset and settle the liability simultaneously.

F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from

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 utilized.

(29) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of

new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

B. Where the Company repurchases the Company’s equity share capital that has been issued, the

consideration paid, including any directly attributable incremental costs (net of income taxes) is

deducted from equity attributable to the Company’s equity holders. Where such shares are

subsequently reissued, the difference between their book value and any consideration received,

net of any directly attributable incremental transaction costs and the related income tax effects,

is included in equity attributable to the Company’s equity holders.

(30) 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.

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(31) Revenue recognition

A. The Group provides engineering construction related services. Revenue from providing services

is recognised in the accounting period in which the services are rendered. For fixed-price contracts,

revenue is recognised based on the actual service provided to the end of the reporting period as a

proportion of the total services to be provided. This is determined based on the actual costs

incurred relative to the total expected costs. The customer pays at the time specified in the

payment schedule. If the services rendered exceed the payment, a contract asset is recognised. If

the payments exceed the services rendered, a contract liability is recognised.

B. Some contracts include sales and installation services of equipment. The equipment and the

installation services provided by the Group are not distinct and are identified to be one

performance obligation satisfied over time since the installation services involve significant

customisation and modification. The Group recognises revenue on the basis of costs incurred

relative to the total expected costs of that performance obligation.

C. The Company’s estimate about revenue, costs and progress towards complete satisfaction of a

performance obligation is subject to a revision whenever there is a change in circumstances. Any

increase or decrease in revenue or costs due to an estimate revision is reflected in profit or loss

during the period when the management become aware of the changes in circumstances.

(32) Service concession arrangements

A. The Group contracted with the government (grantor) a service concession arrangement whereby

the Group shall provide construction of the government’s infrastructure assets for public services

and operate those assets during the term of the arrangement, and when the term of the operating

period expires, the underlying infrastructure assets will be transferred to the government without

consideration. The Group allocates the fair value of the consideration received or receivable in

respect of the service concession arrangement between construction services and operating

services provided based on their relative fair values, and recognizes such allocated amounts as

revenues in accordance with IAS 15, ‘Revenue’, respectively.

B. The consideration received or receivable from the grantor in respect of the service concession

arrangement is recognized at its fair value. Such considerations are recognized as a financial

asset or an intangible asset based on how the considerations from the grantor to the operator are

made as specified in the arrangement. The Group recognizes a financial asset to the extent that

it has an unconditional contractual right to receive cash or another financial asset from or at the

direction of the grantor for the construction services.

(33) 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.

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(34) Business combinations

A. The Group uses the acquisition method to account for business combinations. The consideration

transferred for an acquisition is measured at the fair value of the assets transferred, liabilities

incurred or assumed and equity instruments issued at the acquisition date, plus the fair value of

any assets and liabilities resulting from a contingent consideration arrangement. All acquisition-

related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent

liabilities assumed in a business combination are measured initially at their fair values at the

acquisition date. For each business combination, the Group measures at the acquisition date

components of non-controlling interests in the acquiree that are present ownership interests and

entitle their holders to the proportionate share of the entity’s net assets in the event of liquidation

at either fair value or the present ownership instruments’ proportionate share in the recognised

amounts of the acquiree’s identifiable net assets. All other non-controlling interests should be

measured at the acquisition-date fair value.

B. The excess of the consideration transferred, the amount of any non-controlling interest in the

acquiree and the fair value of any previous equity interest in the acquiree over the fair value of

the identifiable assets acquired and the liabilities assumed is recorded as goodwill at the

acquisition date. If the total of consideration transferred, non-controlling interest in the acquiree

recognised and the fair value of previously held equity interest in the acquiree is less than the

fair value of the identifiable assets acquired and the liabilities assumed, the difference is

recognised directly in profit or loss on the acquisition date.

(35) Operating segments

The Group’s 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. Such assumptions

and estimates have a significant risk of causing a material adjustment to the carrying amounts of assets

and liabilities within the next financial year; and the related information is addressed below:

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

None.

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(2) Critical accounting estimates and assumptions

Revenue recognition

The Group relies on the project condition and objective factors to estimate total cost. The revenue is

recognised based on the percentage of input cost, and the reasonableness of estimates is reviewed

regularly. The estimated total cost will be affected by industry environment transition and

construction status to adjust the revenue recognition amount.

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. Details of the Group’s cash and cash equivalents pledged to others as collateral are provided in

Note 8.

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


Cash on hand and revolving funds $ 353,440 88,221$

Checking accounts and demand deposits 8,820,471 4,470,962

Time deposits 5,897,081 14,795,697

15,070,992$ 19,354,880$

Items December 31, 2018

Current items:

Financial assets mandatorily measured at fair value through profit or loss

Beneficiary certificates 505,965$

Derivatives 50,315

556,280

Valuation adjustment 1,642)(

554,638$

Financial liabilities mandatorily measured at fair value through profit or loss

Derivatives 548$

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A. Amounts recognised in profit or loss in relation to financial assets at fair value through profit or

loss are listed below:

B. The Group entered into contracts relating to derivative financial assets and liabilities which were

not accounted for under hedge accounting. The information is listed below:

The Group entered into forward foreign exchange contracts to hedge exchange rate risk of import

or export proceeds. However, these forward foreign exchange contracts are not accounted for

under hedge accounting.

C. Information relating to credit risk of financial assets at fair value through profit or loss is provided

in Note 12(2).

D. The information on financial assets at fair value through profit or loss as of December 31, 2017 is

provided in Note 12(4) C.

For the year ended

December 31, 2018



Derivatives 309)(

Unlisted shares 49,159

105,802$

Contract Period

Foreign exchange swap contract (1 item) THB 69,250 thousand 2018.05.18~2019.05.22

Foreign exchange swap contract (5 items) USD 50,000 thousand 2018.12.05~2019.01.09

Foreign exchange contract-buy (11 items) USD 35,370 thousand 2018.05.02~2019.09.17

Merchandise exchange contract (3 items) USD 3,580 thousand 2018.10.31~2019.03.29

December 31, 2018

Contract Amount

(notional principal)

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A. The Group has elected to classify investments that are considered to be strategic investments or

steady dividend income as financial assets at fair value through other comprehensive income.

B. Amounts recognised in profit or loss and other comprehensive income in relation to the financial

assets at fair value through other comprehensive income are listed below:

C. Information relating to credit risk of financial assets at fair value through other comprehensive

income is provided in Note 12(2).

D. The information on available-for-sale financial assets and financial assets at cost as of December

31, 2017 is provided in Note 12(4) C.


Current items:

Debt instruments

Corporate bonds 26,953$

Valuation adjustment 175)(

26,778

Equity instruments

Listed stocks 349,894

Valuation adjustment 123,655

473,549

500,327$

Non-current items:

Equity instruments

Unlisted shares 919,414$


788,611$

For the year ended

December 31, 2018

Equity instruments at fair value through other comprehensive income

Fair value change recognised in other comprehensive income 31,009$

Debt instruments at fair value through other comprehensive income

Fair value change recognised in other comprehensive income 150$

Exchange loss recognised in profit or loss 606)($

Interest income recognised in profit or loss 970$

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(4) Notes and accounts receivable

For the long-term receivables due in one year, please refer to Note 6 (10)、12 (2) C. (b) for detailed

information.

The ageing analysis of notes receivable and accounts receivable that were past due but not impaired

is as follows:

The above analysis is calculated based on booking date.

(5) Prepayments

(6) Other current assets

Note : Other financial assets are time deposits with maturity over three months.


Notes receivable 75,006$ 33,591$

Accounts receivable 8,839,281 5,142,150

Long-term receivable due in one year 278,646 267,720

Less: Allowance for bad debts 25,595)( 84,920)(

9,167,338$ 5,358,541$

December 31, 2018

Up to 30 days 6,504,537$

31 to 90 days 1,956,758

91 to 180 days 218,242

Over 181 days 487,801

9,167,338$


Prepayment for materials 2,581,564$ 2,816,458$

Prepayment for construction in progress 480,547 114,183

Others 1,191,784 1,216,481

4,253,895$ 4,147,122$


Other financial assets (Note) 370,331$ 309,202$

Others 208,887 22,180

579,218$ 331,382$

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(7) Investments accounted for under the equity method

A. Associates

(a) The basic information of the associates that are material to the Group is as follows:

2018 2017

At January 1 3,627,018$ 2,802,110$ Addition of investments accounted for using

equity method 530,000 943,086

Disposal of investments accounted for using

equity method - 5,309)(

Reclassified as a subsidiary 358,790)( -

Share of profit or loss of investments accounted

for using equity method 33,557)( 99,008

Earnings distribution of investments accounted

for under equity method 89,705)( 183,391)(

Changes in other equity items 5,967 28,486)(

At December 31 3,680,933$ 3,627,018$

Associates: December 31, 2018 December 31, 2017

Pan Asia Corp. 526,590$ 537,527$

Powertec Energy Corp. 1,227,090 1,484,377

Boretech Resource Recovery Engineering Co.,

Ltd. (Cayman) 438,252 440,162

MIE Industrial SDN. BHD 556,704 489,429

Blue Whale Water Technology Co., Ltd. 434,937 364,397

EVER ECOVE Corp. 295,971 -

HDEC-CTCI (Linhai) Corporation 201,389 -

Joint ventures:

ECOVE Solar Energy Corporation - 311,126

3,680,933$ 3,627,018$

Company

name

Principal

place

of business

December

31, 2018

December

31, 2017

Nature of

relationship

Methods of

measurement

Powertec

Energy Corp.

Taiwan 16.03% 18.89% Associates Equity method

Shareholding ratio

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(b) The summarised financial information of the associates that are material to the Group is as

follows:

Balance sheet

Statement of comprehensive income

(c) The carrying amount of the Group’s interests in all individually immaterial associates and the

Group’s share of the operating results are summarized below:

As of December 31, 2018 and 2017, the carrying amount of the Group’s individually

immaterial associates amounted to $2,453,843 and $1,831,515, respectively.

(d) The associate, GranSino Environmental Technology Co., Ltd., had completed the liquidation

in September 2017, and returned the equity investments amounting to $5,127. As a result, the

Group recognised loss on disposal of investment amounting to $182.

(e) The Board of Directors had resolved to invest in Blue Whale Water Technology Co., Ltd., in

December 2017. The Group invested in Blue Whale Water Technology Co., Ltd., amounting

to $186,200.


Current assets 1,636,879$ 1,234,407$


Current liabilities 707,663)( 974,559)(

Non-current liabilities 10,572,795)( 8,803,976)(

Total net assets 11,261,462$ 10,816,252$

Share in associate's net assets 1,805,212$ 2,043,190$

Carrying amount of the associate 1,227,090$ 1,484,377$

Powertec Energy Corp.

2018 2017

Revenue -$ -$

Total comprehensive loss 1,558,142)($ 589,464)($

Powertec Energy Corp.


2018 2017

Total comprehensive income -$ 428,838$


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(f) The Board of Directors had resolved to invest in Powertec Energy Corp., in May 2017. The

Group invested in Powertec Energy Corp., amounting to $667,412.

(g) In August 2018, the Board of Directors during their meeting resolved to jointly establish Ever

Ecove Corporation with Evergreen Steel Corporation, and the investment amount is $300,000.

(h) In September 2018, the Board of Directors during their meeting resolved to jointly establish

HDEC-CTCI (Linhai) Corporation with Hsin Dar Environment Corp., and the investment

amount is $202,500.

(i) The above investments accounted for using the equity method, Pan Asia Corp., Powertec

Engergy Corp., Blue Whale Water Technology Co., Ltd. EVER ECOVE Corp., and HDEC-

CTCI (Linhai Corporation) were recognized based on the financial statements which have

been audited by other auditors as of December 31, 2018.

B. Joint venture

(a) The basic information of the joint ventures that are material to the Group is as follows:

Company

name

Principal

place

of business

December

31, 2018

December

31, 2017

Nature of

relationship

Methods of

measurement

ECOVE

Solar Energy

Corporation

Taiwan 100.00% 50.00% Joint

ventures

Equity

method

Shareholding ratio

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(b) The summarised financial information of the joint ventures that are material to the Group is as

follows:

Balance sheet



Cash and cash equivalents -$ 101,988$

Other current assets - 11,483

Current assets - 113,471

Non-current assets - 1,031,074

Total assets -$ 1,144,545$

Current financial liabilities -$ 197,049$

Other current liabilities - 51,160

Current liabilities - 248,209

Non-current liabilities - 274,084

Total liabilities -$ 522,293$

Total net assets -$ 622,252$

Share in associate's net assets -$ 311,126$

Carrying amount of the associate -$ 311,126$


2018 2017

Revenue 41,927$ 59,167$

Depreciation and amortisation 16,135)($ 24,060)($

Interest income 404$ 1,153$

Interest expense 5,910)($ 4,694)($

Profit before income tax 39,676$ 27,601$

Income tax expense 5,220)( 2,762)(

Profit for the year 34,456 24,839

Other comprehensive income (loss)-

net of tax 7,930 25,111)(

Total comprehensive income (loss) 42,386$ 272)($



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C. Explanation for holding ECOVE Solar Energy Corporation shares:

(a) The Group holds 50% equity in the joint venture - ECOVE Solar Energy Corporation and its

main activity is environmental engineering.

(b) The Board of Directors had resolved to invest in ECOVE Solar Energy Corporation, in March

2018 and December, 2016. The Group invested in ECOVE Solar Energy Corporation,

amounting to $27,500 and $89,474 in March 2018 and February 2017, respectively.

(c) On September 20, 2018, the Group acquired 50% equity interest of ECOVE Solar Energy

Corporation by cash, which became a subsidiary whose 100% equity was indirectly held by

the Group. The acquiree was consolidated into financial statements from the date of acquisition.

Please refer to Note 6(30) for further information.

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Land

Buildings and

structures Machinery

Transportation

equipment

Office

equipment

Unfinished

construction and

prepayments

for equipment Others Total

At January 1, 2018

Cost 3,357,596$ 4,396,599$ 961,309$ 244,873$ 238,180$ 45,951$ 750,426$ 9,994,934$

Accumulated depreciation - 1,620,322)( 826,362)( 187,730)( 225,129)( - 475,275)( 3,334,818)(

3,357,596$ 2,776,277$ 134,947$ 57,143$ 13,051$ 45,951$ 275,151$ 6,660,116$

2018

Opening net book amount 3,357,596$ 2,776,277$ 134,947$ 57,143$ 13,051$ 45,951$ 275,151$ 6,660,116$

Additions 1,984,400 16,310 465,019 17,445 1,638 262,144 21,015 2,767,971

Acquired from business

acquisition 172,038 516 1,429,080 129 - - 288 1,602,051

Disposals - 159,364)( 1,482)( 1)( 79)( - - 160,926)(

Depreciation charge - 128,101)( 114,229)( 19,116)( 4,008)( - 135,262)( 400,716)(

Reclassifications - 505)( 60)( - 79)( 18,046)( 644 18,046)(

Net exchange differences 5,016 28,403)( 4,565 266 821)( 138 825 18,414)(

Closing net book amount 5,519,050$ 2,476,730$ 1,917,840$ 55,866$ 9,702$ 290,187$ 162,661$ 10,432,036$

At December 31, 2018

Cost 5,519,050$ 4,254,061$ 2,853,926$ 262,446$ 239,739$ 290,187$ 771,729$ 14,191,138$

Accumulated depreciation - 1,777,331)( 936,086)( 206,580)( 230,037)( - 609,068)( 3,759,102)(

5,519,050$ 2,476,730$ 1,917,840$ 55,866$ 9,702$ 290,187$ 162,661$ 10,432,036$

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A. The Group had no borrowing costs capitalized for the years ended December 31, 2018 and 2017.

B. Please refer to Note 8 for the details of pledged property, plant and equipment.

Land

Buildings and

structures Machinery

Transportation

equipment

Office

equipment

Unfinished

construction and

prepayments

for equipment Others Total

At January 1, 2017

Cost 3,356,619$ 4,375,537$ 936,355$ 209,633$ 235,019$ 91,977$ 684,944$ 9,890,084$

Accumulated depreciation- 1,469,092)( 809,294)( 173,780)( 215,501)( - 346,193)( 3,013,860)(

3,356,619$ 2,906,445$ 127,061$ 35,853$ 19,518$ 91,977$ 338,751$ 6,876,224$

2017

Opening net book amount 3,356,619$ 2,906,445$ 127,061$ 35,853$ 19,518$ 91,977$ 338,751$ 6,876,224$

Additions - 8,214 54,226 23,268 1,927 58,828 10,625 157,088

Disposals - - 235)( 680)( 100)( - 170)( 1,185)(

Depreciation charge - 138,151)( 63,358)( 14,381)( 10,672)( - 129,252)( 355,814)(

Reclassifications - 12,848 17,661 13,193 4,150 105,054)( 57,202 -

Net exchange differences 977 13,079)( 408)( 110)( 1,772)( 200 2,005)( 16,197)(

Closing net book amount 3,357,596$ 2,776,277$ 134,947$ 57,143$ 13,051$ 45,951$ 275,151$ 6,660,116$


Cost 3,357,596$ 4,396,599$ 961,309$ 244,873$ 238,180$ 45,951$ 750,426$ 9,994,934$

Accumulated depreciation- 1,620,322)( 826,362)( 187,730)( 225,129)( - 475,275)( 3,334,818)(

3,357,596$ 2,776,277$ 134,947$ 57,143$ 13,051$ 45,951$ 275,151$ 6,660,116$

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Buildings and

Land structures Total

At January 1, 2018

Cost 718,428$ 126,572$ 845,000$

Accumulated depreciation - 32,348)( 32,348)(

718,428$ 94,224$ 812,652$

2018

Opening net book amount 718,428$ 94,224$ 812,652$

Depreciation charge - 4,523)( 4,523)(

Closing net book amount 718,428$ 89,701$ 808,129$


Cost 718,428$ 126,572$ 845,000$


718,428$ 89,701$ 808,129$

Buildings and

Land structures Total

At January 1, 2017

Cost 718,428$ 126,572$ 845,000$


718,428$ 98,974$ 817,402$

2017

Opening net book amount 718,428$ 98,974$ 817,402$


Closing net book amount 718,428$ 94,224$ 812,652$


Cost 718,428$ 126,572$ 845,000$


718,428$ 94,224$ 812,652$

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A. Rental income from the lease of the investment property and direct operating expenses arising

from the investment property are shown below:

B. The fair value of the investment property held by the Group as at December 31, 2018 and 2017

were both $930,000, which was valued by independent valuers. Valuations were made using the

income approach with key assumptions as follows:

C. Information about the investment property that was pledged to others as collaterals is provided in

Note 8.

(10) Other non-current assets

2018 2017

Rental income from investment property 30,076$ 31,392$

Direct operating expenses arising from the

investment property that generated rental

income in the period 4,523$ 4,750$


investment property that did not generate

rental income in the period -$ -$



Gross margin 2.55% 2.54%

Growth rate 1%~1.5% 1%~1.5%

Discount rate 3.30% 3.30%


Long-term receivables 2,670,985$ 2,682,643$ Less: Long-term receivables due in one year 278,646)( 267,720)(

2,392,339 2,414,923

Long-term prepaid rents 37,897 43,297

Restricted bank deposits 188,619 57,097

Refundable deposits 130,167 132,142

Prepayments for business facilities 546,344 40,500

Air pollution fee 54,267 54,267

Others 218,899 176,717

3,568,532$ 2,918,943$

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A. Long-term receivables:

The Group contracted with the government (grantor) a service concession arrangement. The

consideration receivable from the grantor in respect of the service concession arrangement is

recognized at its fair value. Such consideration is recognized as a financial asset based on the

way of the consideration from the grantor to the operator being made as specified in the

arrangement. The consideration receivable from the grantor is recognized as accounts receivable

if it is expected to be realized within 12 months after the balance sheet date (please refer to Note

6(4)), and is recognized as long-term accounts receivable if it is expected to be realized more

than 12 months after the balance sheet date. The major terms of the arrangement are as follows:

(a) The subsidiary, ECOVE Wujih Energy Corp., obtained the operation for the construction of

Wujih Refuse Incineration Plant by build - operate - transfer (BOT) mode since April, 2000.

In September, 2000, the “Taichung City waste incineration, commission contract” between

ECOVE Wujih Energy Corp., and Taichung Government had been signed. The operating

period is for 20 years starting from September 6, 2004. However, according to the contract,

if it is expired in advance or extended during construction or operation, duration of the

operation will be deemed to be matured or extended, but not to exceed 50 years. In order to

work the “Waste Incineration Taichung City Commission Contract”, ECOVE Wujih Energy

Corp., obtained the land-use right that has continued for 20 years since the plant began

operation.

(b) The subsidiary, ECOVE Miaoli Energy Corp., obtained the operation for the construction of

Miaoli County Refuse Incineration Plant by build - operate - transfer (BOT) mode since

August, 2002. In September, 2002, the “Waste incineration commission contract” between

ECOVE Miaoli Energy Corp., and Miaoli County Government had been signed. The

operating period is for 20 years starting from February 29, 2008. However, according to the

contract, if it is expired in advance or extended during construction or operation, duration of

the operation will be deemed to be matured or extended. In order to work the “Waste

Incineration Miaoli County Commission Contract”, ECOVE Miaoli Energy Corp., obtained

the land-use right of Miaoli Refuse Incineration Plant. Therefore, duration of the land – use

right is from September 13, 2002 to March 12, 2026.

(c) ECOVE Wujih Energy Corp., and Fortune Energy Corp. need to comply with the guarantee

tonnage of waste from government according to the contract during construction or operation.

(d) Per service cost is calculated and adjusted based on the “Waste incineration commission

contract”, “Index of average regular earnings of employees-manufacturing” and “Consumer

price index”.

B. Long-term prepaid rents were due to the land-use rights obtained by ECOVE Wujih Energy Corp.,

and ECOVE Miaoli Energy Corp., according to the “BOT Agreement”.

C. Information about the restricted bank deposits and refundable deposits that were pledged to

others as collaterals is provided in Note 8.

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D. Information about the air pollution fee is provided in Note 9(7).

(11) Short-term borrowings

Type of borrowing December 31, 2018 Interest rate range Collateral

Unsecured borrowings

Land Bank of Taiwan 1,447,000$ 0.97% -

Citibank 1,389,339 2.54%-4.50% -

Bank SinoPac 1,346,500 0.90%-0.98% -

HSBC 1,240,000 0.68% -

BBVA 900,000 0.75% -

Mizuho Bank, Ltd. 652,865 0.70%-8.05% -

United Overseas Bank 606,290 2.50% -

DBS Bank 551,546 2.20%-8.00% -

MUFG Bank Ltd. 548,000 0.81% -

Credit Agricole CIB 519,735 3.14%-8.00% -

KGI Bank 415,000 1.04%-1.24% -

Hua Nan Bank 400,000 0.87% -

Mega International

Commercial Bank 396,000 1.10%-5.50% -

Bank of Taiwan 300,000 0.92% -

Sumitomo Mitsui Banking

Corporation 251,910 3.20% -

BNP Paribas 223,124 4.30%-4.35% -

First Bank 100,000 1.07% -

Subtotal 11,287,309

Secured borrowings

KGI Bank 2,127,150 1.04%-1.24% Properties pledged by

subsidiary-CTCI

Development Corp.

and time deposits of

USD 4,560 thousand

mortgaged to banks,

and all were

guaranteed and

endorsed by the

Company

13,414,459$

226

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(12) Accounts payable

(13) Other payables

Note: Payables on land purchases arise from the payment that the subsidiary, CTCI Development

Corp. purchases the land, please refer to Note 11(2) for more information.

Type of borrowing December 31, 2017 Interest rate range Collateral


Citibank 1,717,822$ 1.89%-4.24% -

Mizuho Bank, Ltd. 1,250,000 0.70% -

HSBC 1,241,907 0.68%-7.8% -

The Bank of Tokyo-Mitsubishi UFJ 580,000 0.72% -

Mega International Commercial Bank 503,615 1.1%-2.5741% -

First Bank 300,000 1.09% -

Bank SinoPac 269,000 0.875%-1% -

DBS Bank 228,797 1.55% -

KGI Bank 136,000 1.086%-1.286% -

Ctbcbank 93,126 7.50% -

United Overseas Bank 65,632 1.90% -

KBC Bank NV 49,007 4.60% -

E.SUN Bank 38,000 1.07% -

Sumitomo Mitsui Banking Corporation 34,924 0.75%-2.05% -

BNP Paribas 31,187 2.5%-4.5% -

6,539,017$


Materials payable 4,743,519$ 4,216,705$

Sub-contract costs payable 4,818,197 7,093,760

Maintenance costs payable 281,003 338,051

Equipment burying costs payable 36,861 40,936

Others 111,682 188,822

9,991,262$ 11,878,274$


Accrued payroll 1,664,616$ 1,635,441$ Accrued employees’ compensation, directors’

and supervisors’ remuneration 148,763 141,451

Accrued insurance 83,359 87,301

Accrued pension 33,206 31,809

Payables on land purchases (Note) 1,785,960 -

Others 975,363 852,642

4,691,267$ 2,748,644$

227

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(14) Other current liabilities

As of December 31, 2018, due to the accumulated cost was greater than the accumulated capital

injection, the joint venture was recognized in “other current liabilities”.


Joint venture 7,323,938$ 6,984,781$

Long-term borrowings - current portion 128,268 344,000 Receipt in advance 161,659 170,111

Others 36,795 55,453

7,650,660$ 7,554,345$

228

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(15) Long-term borrowings

Type of borrowings

Borrowing period

and repayment term

Interest

rate range Collateral

Financing

amount

Actual using

amount December 31, 2018

Subsidiary- ECOVE Miaoli

Energy Corp.

Mega International

Commercial Bank

secured borrowings (Note 1)

Borrowing period is

from November 2010

to April 2019; interest

is repayable monthly.

1.3915% Machineries and other

equipment

constructed or

acquired

523,200$ 523,200$ 4,000$

Subsidiary -ECOVE Solvent

Recycling Corp.

Chang Hwa Bank

secured borrowings (Note 3)

Borrowing period is

from September 2014

to September 2021;

interest is repayable

monthly.

2.47% Land and buildings

and structures

29,500 29,500 25,645

Subsidiary - ECOVE Solar

Energy Corporation

The Shanghai Commercial &

Savings Bank, Ltd.

secured borrowings

Borrowing period is

from June 2018 to

June 2033; Principal

and interest are

repayable monthly.

1.7% ECOVE Solar Energy

Corporation issued a

promissory note of

$302,760 thousand,

which is guaranteed

by the Company.

310,000 310,000 302,755


Energy Corporation

KGI Bank

secured borrowings

Borrowing period is

from May 2015 to

May 2021; Principal

and interest are

repayable monthly.

1.5% G.D. Development

Corp. issued a

promissory note of

$152,690 thousand,

which is guaranteed

by the Company

220,000 214,151 151,191

229

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Type of borrowings

Borrowing period

and repayment term

Interest


Financing

amount

Actual using



Energy Corporation

Chang Hwa Bank

secured borrowings

Borrowing period is

from June 2016 to

August 2030; interest


1.89% Guaranteed by the

Company

155,000$ 154,744$ 141,124$

Subsidiary -ECOVE Solar

Power Corporation.

First Bank

secured borrowings

Borrowing period is

from January 2014 to

December 2029;


monthly.



promissory note of

$81,760 thousand, which

is guaranteed by ECOVE

Solar Energy Corporation

108,000 107,735 77,794


Power Corporation

Bank SinoPac

secured borrowings

Borrowing period is

from August 2014 to





promissory note of




149,800 129,457 118,360

230

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Type of borrowings

Borrowing period

and repayment term

Interest


Financing

amount

Actual using



Power Corporation

Bank SinoPac

secured borrowings

Borrowing period is

from August 2018 to





promissory note of $280

million, which is

guaranteed by ECOVE


280,000$ 227,000$ 226,996$


Power Corporation

Hua Nan Bank

secured borrowings

Borrowing period is

from June 2015 to

June 2030 interest is

repayable monthly.



promissory note of




38,430 26,456 24,423


Power Corporation

Far Eastern International Bank

Co., Ltd.

secured borrowings

Borrowing period is

from September 2015

to September 2020;

principal is repayable

seasonally, and


monthly.




million, which is

guaranteed by ECOVE


27,000 11,500 4,480

231

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Type of borrowings

Borrowing period

and repayment term

Interest


Financing

amount

Actual using



Power Corporation

KGI Bank

secured borrowings

Borrowing period is

from November 2017

to November 2032;


monthly.




million, which is

guaranteed by ECOVE


100,000$ 85,000$ 81,113$

Subsidiary-ECOVE Central

Corporation Ltd.

Bank SinoPac

secured borrowings

Borrowing period is

from December 2018

to December 2023;


monthly.

1.6% The Company issued a


million, which is

guaranteed by the parent

company

16,000 16,000 16,000

Subsidiary -ECOVE South

Corporation Ltd.

Bank SinoPac

secured borrowings

Borrowing period is

from December 2018

to December 2023;


monthly.

1.6% The Company issued a


million, which is

guaranteed by the parent

company

14,000 14,000 14,000

Subsidiary-LUMBERTON

SOLAR

Bank SinoPac

secured borrowings

Borrowing period is

from September 2017

to August 2023;


monthly.



promissory note of

USD$14,640 thousand,

which is guaranteed by

ECOVE Solar Energy

Corporation

449,931 449,931 363,973

Less: Current portion 128,268)(

1,423,586$

232

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Note 1: Secured by the assets, including machineries and other equipment constructed or acquired, under the Miaoli County Government project of

“Miaoli BOT Incinerator Build-operate plan”.

Note 2: ECOVE Miaoli Energy Corp,commited to maintain the following financial ratios and criteria during the period of the contract:

a. Current ratio (current assets+ restricted assets provided as a compensation for the credit loan)/current liabilities: More than 100%

b. Liability ratio (total liabilities/ net equity): Less than 190%.

c. Interest coverage ratio ((income before tax + interest expense) / interest expense): At least 150%.

Note 3: ECOVE Solvent Recycling Corporation committed that if the construction has finished, ECOVE Solvent Recycling Corporation will complete

the registration of ownership on the construction and pledge with the basement of construction in first priority to Chang Hwa Bank.

Type of borrowings

Borrowing period

and repayment term

Interest

rate range

Financing

amount

Actual using


Subsidiary-ECOVE Miaoli

Energy Corp.Mega International

Commercial Bank

secured borrowings

Borrowing period is from

November, 2010 to April, 2019;

interest is repayable monthly.

1.3874% 523,200$ 523,200$ 180,000$

Subsidiary-CTCI Development Corp.

Taiwan Cooperative

Bank secured

borrowings

Borrowing period is from April

23, 2009 to April 23, 2029;

interest is repayable monthly.

1.3504% 3,600,000 3,433,150 2,085,150

Less: Current portion 344,000)(

1,921,150$

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(16) Other non-current liabilities

Note: Deferred revenue is a cash grant received from New Jersey government since Lumberton

builds and operates a solar power station in New Jersey. The construction period of the solar

power station is 15 years.

(17) Pensions

A. Defined benefit pension plan

(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 contributes monthly

an amount equal to 6.5% of the employees’ monthly salaries and wages to the retirement fund

deposited with Bank of Taiwan, the trustee, under the name of the independent retirement

fund committee. Also, the Company would assess the balance in the aforementioned labor

pension reserve account by the end of December 31, every year. If the account balance is

insufficient to pay the pension calculated by the aforementioned method, to the employees

expected to be qualified for retirement next year, the Company will make contributions to

cover the deficit by next March.

(b) The amounts recognised in the balance sheet are as follows:


Net defined benefit liabilities 1,847,269$ 2,193,035$

Deposits received 407,649 358,637

Accrued recovery costs 98,932 92,034

Deferred revenue(Note) 169,741 -

Others 92,101 73,374

2,615,692$ 2,717,080$


Present value of defined benefit obligations 4,287,335$ 4,468,519$

Fair value of plan assets 2,440,066)( 2,275,484)(

Net defined benefit liability 1,847,269$ 2,193,035$

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(c) Movements in net defined benefit liabilities are as follows:

Present value of

defined benefit Fair value of Net defined

obligations plan assets benefit liability

2018

At January 1 4,468,519$ 2,275,484)($ 2,193,035$

Current service cost 35,862 - 35,862

Interest expense (income) 40,662 20,886)( 19,776

4,545,043 2,296,370)( 2,248,673

Remeasurements:

Returns on plan assets - - -

Change in demographic

assumptions

- - -

Change in financial assumptions 34,964 - 34,964

Experience adjustments 21,252 71,347)( 50,095)(

56,216 71,347)( 15,131)(

Pension fund contribution - 386,036)( 386,036)(

Paid pension 313,924)( 313,687 237)(

At December 31 4,287,335$ 2,440,066)($ 1,847,269$

Present value of

defined benefit Fair value of Net defined

obligations plan assets benefit liability

2017

At January 1 4,625,309$ 2,219,385)($ 2,405,924$



4,725,208 2,247,080)( 2,478,128

Remeasurements:

Actual returns on plan assets - 631 631


assumptions

51,189 - 51,189

Change in financial assumptions 119,857 2,066 121,923

Experience adjustments 99,309)( 1,459 97,850)(

71,737 4,156 75,893


Paid pension 328,426)( 320,655 7,771)(

At December 31 4,468,519$ 2,275,484)($ 2,193,035$

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(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

by the Regulator. The Company and domestic subsidiaries have no right to participate in

managing and operating that fund and hence the Company and domestic subsidiaries are

unable to disclose the classification of plan assets fair value in accordance with IAS 19

paragraph 142. The 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:

Assumptions regarding future mortality experience are set based on actuarial advice in

accordance with published statistics and experience in each territory.

Because the main actuarial assumption changed, the present value of defined benefit

obligation is affected. The analysis was as follows:

2018 2017

Discount rate 0.80%~1.00% 0.9%~1.1%

Future salary increases 1.50%~3.00% 1.5%~3%

Years ended December 31,

Increase Decrease Increase Decrease

0.25% 0.25% 0.25% 0.25%

December 31, 2018

Effect on present value of

defined benefit obligation 86,229)($ 88,924$ 76,113$ 74,329)($

Increase Decrease Increase Decrease

0.25% 0.25% 0.25% 0.25%

December 31, 2017



Discount rate Future salary increases


236

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The sensitivity analysis above is based on one assumption which changed while the other

conditions remain unchanged. In practice, more than one assumption may change all at once.

The method of 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 Group for the year ending

December 31, 2019 amount to $86,581.

B. Defined contribution pension plan

(a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined

contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”),

covering all regular employees with R.O.C. nationality. Under the New Plan, the Company

and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’

monthly salaries and wages to the employees’ individual pension accounts at the Bureau of

Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of

employment.

(b) The pension costs under defined contribution pension plans of the Group for the years ended

December 31, 2018 and 2017 were $204,373 and $202,713, respectively.

(c) Some overseas subsidiaries adopted a defined benefit pension plan, covering all regular

employees. Appropriation of pension cost for the years ended December 31, 2018 and 2017

were $103,043 and $84,971, respectively.

(18) Share-based payment - employee compensation

A. The Company

(a) For the years ended December 31, 2018 and 2017, the Company’s share-based payment

arrangements were as follows:

(b) The above employee stock options are set forth below:

i. Details of the fifth plan of employee stock options outstanding as of December 31, 2018

and 2017 are set forth below:

Type of arrangement Grant date

Quantity

granted

Contract

period

Vesting

conditions

Fifth plan of employee

stock options

2017.04.11 20,000 units 6 years Service of 2 to

4 years

Sixth plan of employee

stock options


4 years

237

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ii. Details of the sixth plan of employee stock options outstanding as of December 31, 2018


(c) The weighted-average stock price of stock options at exercise dates for the years ended

December 31, 2018 and 2017 were NT$46.68 and NT$52.20, respectively.

(d) As of December 31, 2018 and 2017, the range of exercise prices of stock options outstanding

were NT$45.90~NT$49.60 and $49.60, respectively; the weighted-average remaining

contractual period was as follows:

No. of units

Weighted-

average No. of units

Weighted-

average

(shares in exercise price (shares in exercise price

Stock options thousand) (in dollars) thousand) (in dollars)

Options outstanding

at beginning of

year 19,125.30 NT$49.60 - -

Options granted - - 20,000.00 NT$52.20

Options waived 796.75)( - 875.00)( -

Options exercised - - - -

Options outstanding

at end of year 18,328.55 NT$49.60 19,125.00 NT$49.60

Options exercisable

at end of year - - - -


2018 2017

No. of units

Weighted-


Weighted-

average



Options outstanding

at beginning of year - - - -

Options granted 20,000.00 NT$45.90 - -

Options waived 705.46)( - - -

Options revoked - - - -

Options outstanding

at end of year 19,294.54 NT$45.90 - -

Options exercisable at

end of year - - - -


2018 2017

Type of arrangement December 31, 2018 December 31, 2017

Fifth plan of employee stock options 4~5 years 4~5 years

Sixth plan of employee stock options 4~5 years -

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(e) The fair value of stock options is measured using the Black-Scholes option-pricing model or

other. Relevant information is as follows:

(f) For years ended December 31, 2018 and 2017, expense recognised arising from share-based

payment amounted to $108,439 and $49,853, respectively.

B. Subsidiary – CTCI Advanced Control & System Inc.

(a) For the years ended December 31, 2018 and 2017, the subsidiary’s share-based payment

transactions are set forth below:


i. Details of the fifth plan of employee stock options outstanding as of December 31, 2018

and 2017 are set forth below: all options were exercised

Type of

arrangement

Grant

date

Stock

price

Exercise

price

Expected

price

volatility

Expected

option

life

Expected

dividends

Risk free

interest

rate

Fair value

per unit

Fifth plan of

employee stock

options

2017.4.11 NT$ 52.2 NT$ 52.2 28.06%~

29.05%

4~5

years

0% 0.80%~

0.89%

NT$ 12.19~

NT$14.17

Sixth plan of

employee stock

options

2018.3.9 NT$ 45.9 NT$ 45.9 24.96%~

26.37%

4~5

years

0% 0.63%~

0.72%

NT$ 9.56~

NT$11.29


Quantity

granted

Contract

period

Vesting

conditions


stock options

2011.06.22 600 units 6 years Service of

2 to 4 years


stock options

2018.03.23 600 units 6 years Service of

2 to 4 years

No. of units

Weighted-


Weighted-

average



Options outstanding

at beginning of year - - 387.25 NT$44.90

Options waived - - 4.00)( -

Options revoked - - 383.25)( -

Options outstanding

at end of year - - - NT$44.90

Options exercisable



2018 2017

239

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ii. Details of the sixth plan of employee stock options outstanding as of December 31, 2018


(c) As of December 31, 2018 and 2017, the exercise price of stock options outstanding were

NT$46.85 and NT$44.90, respectively the weighted-average remaining contractual period

was as follows:

(d) The fair value of stock options is measured using the Black-Scholes option-pricing model or


(e) For the years ended December 31, 2018 and 2017, the expenses incurred on share-based

payment transactions were $1,459 and $0, respectively.

C. Subsidiary – ECOVE Environment Corp.

(a) For the years ended December 31, 2018 and 2017, the subsidiary’s share-based payment

transactions are set forth below:

No. of units

Weighted-


Weighted-

average



Options outstanding

at beginning of year - - - -

Options granted 600.00 NT$46.85 - -

Option waived - - - -

Options revoked - - - -

Options outstanding

at end of year 600.00 NT$46.85 - -

Options exercisable



2018 2017


Fifth plan of employee stock options - -

Sixth plan of employee stock options 5.5 years -

Type of

arrangement Grant date Stock price

Exercise

price

Expected

price

volatility

rate

Expected

option life

Expected

dividends

Risk

free

interest

rate

Fair value

per unit

Fifth plan of

employee stock

options

2011.06.22 NT$63.40 NT$ 63.40 44.41% 4.5 years - 1.07% NT$ 23.95

Sixth plan of

employee stock

options

2018.03.23 NT$46.85 NT$ 46.85 21.33%~2

2.13%

4.5 years - 0.65%~

0.72%

NT$ 27.51

240

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i. Details of the fourth plan of employee stock options outstanding as of December 31, 2018

and 2017 are set forth below: all option were exercised.

ii. Details of the fifth plan of employee stock options outstanding as of December 31, 2018

and 2017 are set forth below: all option were exercised.

Quantity Contract Vesting

Type of arrangement Grant date granted period conditions

Fourth plan of employee

stock options

2011.6.17 1,200 units 6 years Service of

2 years


stock options


2 years


stock options


2 years

No. of units

Weighted-


Weighted-

average



Options outstanding

at beginning of year 3.00 NT$106.30 215.25 NT$106.30

Options waived 3.00)( NT$106.30 - -

Options exercised - - 212.25)( NT$106.30

Options outstanding

at end of year - - 3.00 NT$106.30

Options exercisable

at end of year - - 3.00 NT$106.30


2018 2017

No. of units

Weighted-


Weighted-

average



Options outstanding

at beginning of year 298.25 NT$103.00 435.25 NT$110.00

Options waived 3.75)( - - -

Options exercised 294.50)( NT$103.00 137.00)( NT$108.95

Options outstanding

at end of year - - 298.25 NT$103.00

Options exercisable

at end of year - - 298.25 NT$103.00


2018 2017

241

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iii. Details of the sixth plan of employee stock options outstanding as of December 31, 2018

are set forth below:

(c) The weighted-average stock price of stock options at exercise dates for the years ended

December 31, 2018 and 2017 were NT$172.63 and NT$171.9, respectively.

(d) As of December 31, 2018, and 2017, the range of exercise prices of stock options outstanding

were NT$103.00 and NT$103.00 ～ NT$110.00, respectively; the weighted-average

remaining contractual period was as follows:

(e) The fair value of stock options is measured using the Black-Scholes option-pricing model or


Note: Subsidiary -ECOVE Environment Corp. has been officially listed in the OTC market

on May 27, 2010 whose net value was measured at fair value before being listed in the

OTC market and measured at market value after being listed in the OTC market. The

compensation cost for employee stock options in 2008 and 2009 had been adjusted

retroactively.

No. of units

Weighted-

average

(shares in exercise price

Stock options thousand) (in dollars)

Options outstanding at beginning of year - -

Options granted 1,500.00 NT$173.50

Options waived 52.00)( -

Options exercised - -

Options outstanding at end of year 1,448.00 NT$173.50

Options exercisable at end of year 1,448.00 -

For the year ended December 31, 2018


Fourth plan of employee stock options - -

Fifth plan of employee stock options - 0.5 year

Sixth plan of employee stock options 5.75 years -

Type of

arrangement Grant date

Stock price

(Note)

Exercise

price

Expected

price

volatility

Expected

option life

Expected

dividend

yield

rate

Risk

free

interest

rate

Fair value

per unit

Fourth plan of

employee stock

options

2011.6.17 NT$146.0 NT$146.0 38.65% 4.50

years

0% 1.05% NT$48.82

Fifth plan of

employee stock

options

2012.6.28 NT$145.0 NT$145.0 33.63% 4.60

years

0% 1.00% NT$42.79

Sixth plan of

employee stock

options

2018.7.9 NT$173.5 NT$173.5 11.38%~

12.71%

4~5

years

0% 0.66%~

0.71%

NT$17.88

242

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(19) Share capital

A. As of December 31, 2018, the Company’s authorized capital was $9,000,000, (including 800,000

thousand shares reserved for employee stock options), the paid-in capital was $7,632,738

consisting of 763,273,848 shares with a par value of NT$10 per share.

B. Treasury shares

(a) Reason for share reacquisition and movements in the number of the Company’s treasury

shares are as follows:

(b) Pursuant to the R.O.C. Securities and Exchange Law, the number of shares bought back as

treasury share should not exceed 10% of the number of the Company’s issued and

outstanding shares and the amount bought back should not exceed the sum of retained

earnings, paid-in capital in excess of par value and realized capital surplus.

(c) Pursuant to the R.O.C. Securities and Exchange Law, treasury shares should be reissued to

the employees within three years from the reacquisition date and shares not reissued within

the three-year period are to be retired. Treasury shares to enhance the Company’s credit rating

and the stockholders’ equity should be retired within six months of acquisition.

Name of company Reason for Number of shares

holding the shares reacquisition (shares in thousand) Carrying amount

Subsidiary-ECOVE

Environmental Services

Corp.

To maintain

stockholders’ equity

1 $ 10

Subsidiary-CTCI Investment

Corp."

344 3,241

Subsidiary-CTCI Development

Corp."

912 8,584

$ 11,835

Name of company Reason for Number of shares

holding the shares reacquisition (shares in thousand) Carrying amount

Subsidiary-ECOVE

Environmental Services

Corp.

To maintain

stockholders’ equity

1 $ 10


Corp.

"

344 3,241


Corp.

"

912 8,584

$ 11,835

December 31, 2018

December 31, 2017

243

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(20) Capital surplus

A. Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of

par value on issuance of common stocks and donations can be used to cover accumulated deficit

or to issue new stocks or cash to shareholders in proportion to their share ownership, provided

that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law

requires that the amount of capital surplus to be capitalized mentioned above should not exceed

10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated

deficit unless the legal reserve is insufficient.

B. The details and movements of capital surplus are provided as follows:

C. Please refer to Note 6 (18) for details about the capital surplus - employee stock options.

Share premium

Treasury share

transactions

Difference

between

consideration and

carrying amount of

subsidiaries

acquired or

disposed

Employee stock

options Others Total

At January 1, 2018 2,865,969$ 5,043$ 205,931$ 309,435$ 9,242$ 3,395,620$

Employee stock

options exercised

by subsidiary - - 5,241 - - 5,241

Share-based

payment

transaction - - - 144,192 - 144,192

At December 31, 2018 $ 2,865,969 $ 5,043 $ 211,172 $ 453,627 $ 9,242 $ 3,545,053

Share premium

Treasury share

transactions

Difference

between

consideration and

carrying amount of

subsidiaries

acquired or

disposed

Employee stock


At January 1, 2017 2,865,969$ 5,043$ 197,436$ 244,408$ 9,242$ 3,322,098$

Employee stock options

exercised by subsidiary - - 6,590 - - 6,590

Share-based payment

transaction - - - 65,027 - 65,027

Adjustment of long-term

equity investment due to

changes in shareholding ratio - - 1,905 - - 1,905

At December 31, 2017 $ 2,865,969 $ 5,043 $ 205,931 $ 309,435 $ 9,242 $ 3,395,620

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(21) Retained earnings

Note: The Company has adopted the modified retrospective approach under IFRS 9. For details of

the effect as at January 1, 2018, please refer to Note 12(4) B.

A. When net profit occurs in the annual accounts, the Company may, after reserving a sufficient

amount of the income before tax to cover the accumulated losses, with the resolution of the Board

of Directors, distribute 1.5% to 5% of the income before tax to pay to the employees as

remuneration, and distribute no more than 1.5% of the income before tax to pay to the Board of

Directors as remuneration. The remuneration could be in the form of stock or cash, and the

employee remuneration could be distributed to the employees of subsidiaries of the Company

under certain conditions. A report of the distribution of employee remuneration or the Board of

Directors’ remuneration shall be submitted to the stockholders’ meeting.

B. The Company shall, after all taxes and dues have been paid and its losses have been covered and

at the time of allocating surplus profits, first set aside 10% of such profits as legal reserve.

However, when the legal reserve amounts to the authorized capital, this shall not apply.

Furthermore, in accordance with the provisions of laws and regulations and the rules prescribed

by the central competent authority, a special reserve shall be set aside. If there is recovery of the

balance of special reserve, the recovered amount shall be included in the distribution of the profit

for the current year.

The allocable profit for the current year, which is the balance after the profit distribution and

covering losses aforementioned as the preceding paragraph, together with the undistributed

retained earnings accrued from prior years shall be referred to as accumulated distributable

earnings, which shall be distributed as dividends to shareholders according to shareholders’

resolutions.

2018 2017

At January 1 3,061,699$ 2,519,655$

Effect of retrospective restatement (Note) 166,900 -

At January 1 (revised) 3,228,599$ 2,519,655$

Profit for the year 1,827,537 2,805,348

Legal reserve appropriated 280,534)( 222,289)(

Cash dividends 2,468,202)( 1,984,512)(

Reversal of special reserve 2,110 2,217

Remeasurement on post employment benefit

obligations, net of tax 52,291)( 58,720)(

Impact of change in tax rate 19,378 -

Valueation adjustment transferred to retained

earnings 58,978)( -

At December 31 $ 2,217,619 $ 3,061,699

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To meet the requirements in business expansion and industry growth, fulfilling future operating

needs and stabilizing financial structure is the priority of the Company's dividend policy. Thus,

the distribution of the accumulated distributable earnings is in accordance with the shareholders’

resolutions. And, the amount of shareholders’ bonus shall not be less than 50% of accumulated

distributable earnings of the Company, and in particular cash dividend shall not be less than 20%.

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 balance of the reserve exceeds 25% of the

Company’s paid-in capital.

D. Special reserve

(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.

E. The appropriation of 2017 and 2016 earnings had been resolved at the stockholders’ meeting on

May 29, 2018 and June 28, 2017, respectively. Details are summarized below:

F. Details of the appropriation of 2018 earnings as proposed by the Board of Directors on March 8,

2019 are as follows:

Amount

Dividends

per share

(in NT dollars) Amount

Dividends

per share

(in NT dollars)

Set aside as legal reserve 280,534$ -NT$ 222,289$ -NT$

Reversal of special reserve 2,110)( - 2,217)( -

Cash dividends 2,468,202 3.23 1,984,512 2.60

2,746,626$ 3.23$ 2,204,584$ 2.60$

2017 2016

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As of March 14, 2019, the appropriation of 2018 earnings has not been resolved by the

shareholders.

G. For information relating to employees’ compensation (bonuses) and directors’ remuneration,

please refer to Note 6(27).

(22) Operating revenue

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services over time and at a point in

time in the following major product lines and geographical regions:

Dividends per share

Amount (in NT dollars)

Legal reserve 182,754$ -$

Reversal of special reserve 1,417)( -

Cash dividends 1,721,210 2.255

Total 1,902,547$ 2.255$

Year ended December 31, 2018

For the year

December 31, 2018

Revenue from contracts with customer contracts 63,261,414$

Other-service concession revenue 808,128

64,069,542$

For the year ended

December 31, 2018

Construction

Engineering

Revenue Service Revenue

Other Operating

Revenue Total

Total segment

revenue

57,122,560$ 4,819,569$ 1,319,285$ 63,261,414$

Inter-segment

revenue 3,447,220 27,527 481,556 3,956,303

60,569,780$ 4,847,096$ 1,800,841$ 67,217,717$

Revenue from

external

customer

contracts

Timing of

revenue

recognition At a point time -$ 4,819,569$ 1,319,285$ 6,138,854$

In over time 57,122,560 - - 57,122,560

57,122,560$ 4,819,569$ 1,319,285$ 63,261,414$

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B. Contract assets and liabilities

The Group has recognised the following revenue-related contract assets and liabilities:

(23) Other income

(24) Other gains and losses

(25) Finance costs

December 31, 2018

Contract assets-construction contract revenue 24,823,432$

Contract liabilities-construction contract revenue 13,920,198)(

10,903,234$

2018 2017

Interest income： Interest income from bank deposits 216,808$ 131,658$

Rental revenue 7,576 9,022

Dividend income 32,056 25,799

Gains on reversal of bad debt 3,894 960,795

Other income-others 61,271 74,623

321,605$ 1,201,897$


2018 2017

Gains on disposal of property, plant and

equipment

69,979$ 2,484$

Gains (losses) on disposal of investments 94,727 2,503)(

Foreign exchange gains (losses) 59,774 151,026)(

Gains (losses) on financial liabilities at fair value

through profit or loss38,022 51,566)(

Other gains and losses 43,147)( 17,827)(

219,355$ 220,438)($


2018 2017

Interest expense 157,908$ 104,140$


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(26) Expenses by nature

(27) Employee benefit expense

A. According to the Articles of Incorporation of the Company, when distributing earnings, the

Company shall distribute bonus to the employees and pay remuneration to the directors that

should be 1.5% to 5% and not be higher than 1.5%, respectively, of the total distributed amount.

B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at

$54,826 and $84,160, respectively; directors’ remuneration was accrued at $13,250 and $16,537,

respectively. The aforementioned amounts were recognized in other expenses.

The employees’ compensation and directors’ remuneration were estimated and accrued based on

an amount of 1.5% to 5% and not higher than 1.5% of distributable profit of current period for

the year ended December 31, 2018.

Employees’ compensation and directors’ remuneration of 2017 as resolved at the meeting of

Board of Directors were in agreement with those amounts recognized 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.

2018 2017

Subcontract costs 23,353,600$ 24,407,010$

Materials 24,463,718 30,067,520

Employee benefit expense 9,546,007 9,702,795

Amortisation charges on buried equipment 323,629 283,938

Temporary equipment 83,259 547,619 Depreciation charges on property, plant and

equipment 405,239 360,564

Amortisation on intangible assets 164,384 160,991

Others 3,013,928 3,061,141

61,353,764$ 68,591,578$


2018 2017

Salaries and wages 8,231,080$ 8,420,445$

Employee stock options 147,850 65,603

Labor and health insurance fees 478,550 552,775

Pension costs 363,054 359,888

Other personnel expenses 325,473 304,084

9,546,007$ 9,702,795$


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(28) Income tax

A. Income tax expense

(a) Components of income tax expense:

B. Reconciliation between income tax expense and accounting profit:

2018 2017

Current tax:

Current tax on profits for the period 739,979$ 738,533$ Prior year income tax (over) under

estimation 5,340 1,260

Total current tax 745,319 739,793

Deferred tax:

Origination and reversal of temporary

differences 3,025 38,153)(

Effect of foreign exchange 280 385)(


Total deferred tax 19,891 38,538)(

Income tax expense 765,210$ 701,255$


2018 2017

Income tax calculated by applying statutory rate

to the profit before tax

610,933$ 574,463$

Effects from items adjusted in accordance with

tax regulation 164,786 56,718

Prior year income tax under estimation 5,340 1,260

Effect from investment tax credits 6,766)( 10,963)(

Taxable (loss) income not recognised as

deferred tax assets 9,083)( 79,777



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C. Amounts of deferred tax assets or liabilities as a result of temporary differences, tax losses and

investment tax credits are as follows:

Recognised in

Recognised in

other

comprehensive

At January 1 profit or loss income At December 31

Deferred income tax assets:

-Temporary differences:

Unrealised loss (gain) on

financial assets

28,637$ 28,002)($ -$ 635$

Unrealised exchange loss (gain) 7,127 4,152)( - 2,975

Unrealised loss on foreign

investments 6,423 18,832 - 25,255

Unrealised loss on unfinished

construction 31,202 26,689 - 57,891

Unrealised losses on

doubtful debts 17,898 2,902 - 20,800

Unrealised compensated absences 36,879 7,437 - 44,316

Unrealised maintenance costs 8,939 2,559 - 11,498

Unrealised loss for market value

decline and obsolete and slow-

moving inventories 80 140 - 220

Unrealised golf card annual fee 918 162 - 1,080

Unrealised gain on sales of fixed

assets - 1,516 - 1,516

Reserve for retirement plan 332,194 24,366)( 17,928 325,756

Others 43,042 41,625)( 24)( 1,393

Subtotal 513,339 37,908)( 17,904 493,335

－Deferred tax liabilities:

Unrealised exchange (gain) loss 22)($ 843)($ -$ 865)($

Unrealised gain on foreign

investments 234,723)( 37,900 - 196,823)(

Unrealised pension - 1,156)( 339 817)(

Unrealised gain on concessions 156,373)( 25,018)( - 181,391)(

Investment property - 12,108)( - 12,108)(

Others 38,168)( 19,522 1,160)( 19,806)(

Subtotal 429,286)( 18,297 821)( 411,810)(

Total 84,053$ 19,611)($ 17,083$ 81,525$

2018

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Recognised in

Recognised in

other

comprehensive

At January 1 profit or loss income At December 31

Deferred income tax assets-

-Temporary differences:

Unrealised loss (gain) on

financial assets

37,410$ 8,773)($ -$ 28,637$

Unrealised exchange loss (gain) 5,117 2,010 - 7,127

Unrealised loss on foreign

investments

- 6,423 - 6,423

Unrealised loss on unfinished

construction

31,132 70 - 31,202

Unrealised losses on

doubtful debts

17,191 707 - 17,898

Unrealised compensated absences 38,133 1,254)( - 36,879

Unrealised maintenance costs 11,578 2,639)( - 8,939

Unrealised loss for market value

decline and obsolete and slow-

moving inventories

105 25)( - 80

Unrealised golf card annual fee 918 - - 918

Reserve for retirement plan 366,589 47,297)( 12,902 332,194

Others 25,975 17,067 - 43,042

Subtotal 534,148 33,711)( 12,902 513,339

－Deferred tax liabilities:

Unrealised exchange (gain) loss -$ 22)($ -$ 22)($

Unrealised gain on foreign

investments

325,112)( 90,389 - 234,723)(

Unrealised gain on concessions 156,790)( 417 - 156,373)(

Others 19,248)( 18,920)( - 38,168)(

Subtotal 501,150)( 71,864 - 429,286)(

Total 32,998$ 38,153$ 12,902$ 84,053$

2017

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D. Expiration dates of unused tax losses and amounts of unrecognised deferred tax assets are as

follows:

E. The amounts of deductible temporary difference that are not recognised as deferred tax assets

are as follows:

F. The Company’s income tax returns through 2014 to 2016 have been assessed and approved by

the Tax Authority.

G. The Company’s subsidiary CTCI Arabia Ltd. was ordered by the local tax authorities to pay back

taxes in the amount of $134,635 (SAR 17,212) for the years 2007 through 2010. CTCI Arabia

Ltd. has appealed the decision and paid tax beforehand in the amount of $134,635 (SAR 17,212)

in order to conduct subsequent administrative litigation, therefore it is difficult to assess the

maximum possible loss that CTCI Arabia Ltd. could incur from this tax dispute.

H. 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.

Amount filed/ Unrecognised

Year incurred assessed Unused amount deferred tax assets Expiry year

2013 154,975$ 154,975$ 154,975$ 2018

2014 98,149 98,149 98,149 2019

2016 107,330 80,556 80,556 2026

2016 427,405 64,538 64,538 2021

2017 284,663 270,340 270,340 2027

2017 597,982 597,982 597,982 2022

2018 1,030,449 1,030,449 1,030,449 2028

2,700,953$ 2,296,989$ 2,296,989$

Amount filed/ Unrecognised

Year incurred assessed Unused amount deferred tax assets Expiry year

2013 154,975$ 154,975$ 154,975$ 2018

2014 98,149 98,149 98,149 2019

2015 11,135 11,135 11,135 2025

2016 107,330 107,330 107,330 2026

2016 445,995 445,995 445,995 2021

2017 174,448 174,448 174,448 2027

2017 229,973 229,973 229,973 2022

1,222,005$ 1,222,005$ 1,222,005$

December 31, 2018

December 31, 2017


Deductible temporary differences 494,653$ 282,434$

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(29) Earnings per share

Amount

after tax

Weighted-average

number of ordinary

shares outstanding

(share in thousands)

Earnings per share

(in dollars)

Basic earnings per share

Profit attributable to the ordinary

shareholders of the parent1,827,537$ 762,016 2.40NT$

Diluted earnings per share

Assumed conversion of all

dilutive potential ordinary shares

Employees' compensation - 1,354

Profit attributable to ordinary

shareholders of the parent plus

assumed conversion of all

dilutive potential ordinary shares 1,827,537$ 763,370 2.39NT$

Amount

after tax

Weighted-average

number of ordinary

shares outstanding

(share in thousands)

Earnings per share

(in dollars)


Profit attributable to the ordinary

shareholders of the parent2,805,348$ 763,274 3.68NT$



dilutive potential ordinary shares


Profit attributable to ordinary

shareholders of the parent plus

assumed conversion of all

dilutive potential ordinary shares 2,805,348$ 765,252 3.67NT$



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(30) Business combinations

A. ECOVE Solvent Recycling Corporation

(a) On May 10, 2018, the Group acquired a 90% equity interest of ECOVE Solvent Recycling

Corporation in the amount of $49,590 in the form of cash, and had control over ECOVE

Solvent Recycling Corporation which is primarily engaged in operating basic chemical

industry and manufacture of other chemical products. As a result of the acquisition, the Group

is expected to increase its presence in these markets. It also expects to reduce costs through

economies of scale.

(b) The following table summarises the consideration paid for ECOVE Solvent Recycling

Corporation and the fair values of the assets acquired and liabilities assumed at the acquisition

date, as well as the non-controlling interest’s proportionate share of the recognised amounts

of acquiree’s identifiable net assets at the acquisition date:

(c) The operating revenue included in the consolidated statement of comprehensive income since

May 10, 2018 contributed by ECOVE Solvent Recycling Corporation was $0. ECOVE

Solvent Recycling Corporation also contributed loss before income tax of ($7,014) over the

same period. Had ECOVE Solvent Recycling Corporation been consolidated from January 1,

2018, the consolidated statement of comprehensive income would show operating revenue

of $1,485 and profit before income tax of ($2,834).

B. ECOVE Solar Energy Corporation

(a) On September 20, 2018, the Group acquired a 50% equity interest of ECOVE Solar Energy

Corporation in the amount of $455,384 by cash, and have control over ECOVE Solar Energy

Corporation.

May 10, 2018

Purchase consideration

Cash paid 49,590$

Non-controlling interest’s proportionate share of the recognised

amounts of acquiree’s identifiable net assets 4,126

53,716

Fair value of the identifiable assets acquired and liabilities

assumed Cash 150

Prepayments 291

Property, plant and equipment 68,492

Other non-current assets 588

Other payables 143)(

Other current liabilities 325)(

Long-term borrowings 27,800)(

Total identifiable net assets 41,253

Goodwill 12,463$

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(b) The following table summarises the consideration paid for ECOVE Solar Energy Corporation

and the fair values of the assets acquired and liabilities assumed at the acquisition date, as

well as the non-controlling interest’s proportionate share of the recognised amounts of

acquiree’s identifiable net assets at the acquisition date:

(c) The operating revenue included in the consolidated statement of comprehensive income since

September 20, 2018 contributed by ECOVE Solar Energy Corporation was $83,600, also

contributed profit before income tax of $12,047 over the same period. Had ECOVE Solar

Energy Corporation been consolidated from January 1, 2018, the consolidated statement of

comprehensive income would show operating revenue of $199,161and profit before income

tax of $48,845.

(d) The fair value of the identifiable property, plant and equipment obtained is tentatively set at

$1,533,559 and the assets are subject to final valuation.

September 20, 2018

Purchase consideration

Cash paid 455,384$

Fair value of equity interest in ECOVE Solar Energy

Corporation held before the business combination 388,193

843,577

Fair value of the identifiable assets acquired and liabilities

assumed Cash 298,165

Accounts receivable 13,501

Other receivables 5,509

Prepayments 29,536

Property, plant and equipment 1,533,559

Deferred income tax assets 1,516

Other non-current assets 721,902

Short-term borrowings 143,000)(

Accounts payable 5,245)(

Current income tax liabilities 8,903)(

Other payables 33,310)(

Other current liabilities 138,880)(

Long-term borrowings 1,376,650)(

Deferred income tax liabilities 2,773)(

Other non-current liabilities 175,040)(

Total identifiable net assets 719,887

Goodwill 123,690$

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(31) Operating leases

The Group’s future aggregate minimum lease payments under non-cancellable operating leases are

as follows:

(32) Supplemental cash flow information

Investing activities with partial cash payments

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship


Not later than one year 143,352$ 265,183$

Later than one year but not later than five years 254,239 262,979

Later than five years 370,879 6,115

768,470$ 534,277$

2018 2017

Purchase of property, plant and equipment 2,767,971$ 157,088$

Add: Opening balance of payable on equipment - -

Less: Endinging balance of payable on equipment 1,785,960)( -

Cash paid during the year 982,011$ 157,088$

Names of related parties Relationship with the Group

Pan Asia Corp. Associates

Boretech Resource Recovery Associates

MIE Industrial Sdn. Bhd. Associates

ZheJiang Boretech Environmental

Engineering Co., Ltd.Associates

Blue Whale Water Technology Corp. Associates

Powertech Energy Corp. Associates

EVER ECOVE CORP. Associates

HDEL-CTCI (Linhai) Associates


The Group was a joint venture before

September 20, 2018, and became a subsidiary

starting from September 20, 2018.

Hsin Dar Environment Corp. Other related parties

Gintech Energy Corporation Other related parties

CTCI Foundation Other related parties

CTCI Education Foundation Other related parties

Gintech (Thailand) Limited Associates


It was a related party before September 20,

2018, and became a subsidiary starting from

September 20, 2018.


It was a related party before September 20,

2018, and became a subsidiary starting from

September 20, 2018.

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(2) Significant transactions and balances with related parties

A. Sales of services

(a) The price on the construction contracts entered into with related parties are set through

negotiation by both parties. The collection terms were approximately the same as those with

third parties.

(b) The subsidiary, Innovest Investment Corp. invested in Powertec Energy Corporation which

became an associated enterprise in August 2014. As of December 31, 2018 and 2017, the

Company recognized total operating revenue amounting to $10,519,722 and $10,096,241,

respectively. Accounts receivable amounted to $0 and $13,859, respectively.

The doubtful accounts of $959,245 were collected in May, 2017. As a result, bad debt expense

of $ 959,245 was reversed and recognized as other gains and losses.

B. Purchases of services

The price on the construction subcontracts entered into with related parties are set through

negotiation by both parties.

C. Accounts receivable

D. Accounts payable

2018 2017

Associates 1,310,529$ 724,225$

Joint ventures 188,211 134,952

Other related parties 5,329 22,770

1,504,069$ 881,947$


2018 2017

Associates 3,348,151$ 1,542,634$


3,450,911$ 1,544,744$



Associates 942,076$ 18,009$

Joint ventures - 16,642


944,071$ 42,359$


Associates 1,359,712$ 926,710$

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E. Other receivables

Note 1: Mainly consist of due from personnel transfer and payments on behalf of others.

Note 2: Consist of due from personnel transfer and system usage fees.

F. Loans to related parties

(a) Receivables from related parties

(b) Interest income

The loans to associates are receivable monthly and carry interest at 1.8% per annum for the

year ended December 31, 2017.

G. Other payables-related parties

It mainly arises from employee transfer expense.

H. Rental expense


Joint ventures (Note 1) -$ 7,213$

Associates (Note 2) 96 8,096

96$ 15,309$


ECOVE Solar Energy Corporation -$ -$

2018 2017

Joint ventures -$ 508$



Associates -$ 20$

Other related parties 1,249 -

1,249$ 20$

Lessor Leased assets Rental amount 2018 2017

Other related parties Land / Buildings $698/month/

semiannual

payment8,372$ 8,372$


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I. Acquisition of financial assets:

J. Disposal of financial assets

K. Provision for endorsements and guarantees

L. The Group donated $15,000 and $15,000 to the CTCI Education Foundation in March, 2018 and

May, 2017, respectively for personnel training and enterprise social responsibility.

(3) Key management compensation

For the year ended

December 31, 2018

Accounts No. of shares Objects Acquisition Price

Other related parties Investments

accounted for

using equity

method

31,622,726 ECOVE Solar

Energy

Corporation

455,384$

Accounts No. of shares Objects Proceeds Gain/(loss)

Other related parties Financial assets

at fair value

through profit

or loss-non

current

17,556,000 Utech Solar Corp. 132,851$ 64,277$

For the year ended

December 31, 2018


Associates 1,984,300$ 769,300$

Joint ventures - 631,253

1,984,300$ 1,400,553$

2018 2017

Salaries and other short-term employee

benefits

217,434$ 234,067$

Post-employment benefits 1,933 23,602

Other long-term benefits 9,933 6,314

Share-based payments 2,508 950

Total 231,808$ 264,933$


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8. PLEDGED ASSETS

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNISED CONTRACT

COMMITMENTS

In addition to those items which have been disclosed in Notes 6(22), (28) and (31), the significant

contingent liabilities and unrecognized contract commitments of the Group as of December 31, 2018

were as follows:

A. Guarantee

(a) The Group had outstanding notes payable for security deposits under various construction

projects amounting to $6,528,590.

(b) The Group had outstanding notes payable for bank financing amounting to $96,124,411.

B. The Group had unused and outstanding letters of credit of $598,683.

C. The Group had outstanding commitments for construction subcontracts and services contracts, less

accounts payable that were already paid and accrued in the future, of $25,471,018.

D. The Group had issued contracts for acquisition of inventory amounting to $1,391,876.

E. The Company had a joint procurement project with Mitsubishi Heavy Industries, Ltd. in 1997. The

construction was completed on February 19, 2001 and accepted by the Environmental Protection

Administration (the “EPA”) on May 16, 2011. According to the contract, the Company provided

warranty deposit amounting to $141,690 on the materials of the equipment. As the Kaohsiung County

government, the user of the incineration, had a dispute with the operating manufacturer, the EPB

rejected to repay the deposit. The EPA availed of the warranty deposit on February 4, 2010. As a result,

the Company had to remit $73,253 to the procurement department of Bank of Taiwan Co., Ltd.

Consequently, the Company took action to cancel the deposit of $141,690 and filed a lawsuit requiring

EPA to repay the $73,253. The EPA indicated that it had repaid $9,299 to the Company in 2010.

Therefore, the Company reduced the lawsuit claim to $63,954 plus interest of $830 and damage loss

of $1,708. The case was reverted back to the Taiwan High Court after being taken up by the Supreme

Pledged assets December 31, 2018 December 31, 2017 Purpose

Other current assets

Guarantee for wages 5,816$ 11,383$ Guarantee for wages

Other non-current assets

Pledged time deposits 141,948 19,029 Guarantee for oil expense, litigation

deposits and short-term borrowingRefundable deposits 130,167 132,142 Guarantee for oil expense, rent,

golf certificates, tender bonds,

construction contractsLong-term prepaid rent 16,530 18,836 Guarantee for long-term borrowings

Property, plant and

equipment

5,937,741 3,781,289 Guarantee for long-term and short-

term borrowings

Investment property 808,129 812,652 Guarantee for long-term and short-

term borrowings7,040,331$ 4,775,331$

Book value

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Court. The Taiwan High Court then reverted the case back again to the Supreme Court. The Taiwan

High Court reversed the original judgement and denied the Group’s claim, the Group then filed to the

third instance. The Supreme Court remanded the case to the Taiwan High Court. The Taiwan High

Court denied the appeal of EPA, who then filed to the third instance, and remanded the case to the

Taiwan High Court as well. The case is being taken up by the Taiwan High Court as 105-Zhong-

Shang-Geng-3-11. According to the Company’s lawyer, the outcome of the case is still uncertain and

it is difficult to estimate any potential gain or loss on the case.

F. The subsidiary, CTCI Smart Engineering Corp., has entered into an electrical and mechanical contract

with RPTI International Ltd. (RPTI) on behalf of the joint venture by RSEA Engineering Corporation

and CTCI Smart Engineering Corp. for partial permanent work of electrical and mechanical

engineering. However, as RPTI International Ltd. was behind the schedule, it agreed that CTCI

SMART ENGINEERING CORP. hire others to carry out the pending construction. In addition,

because RPTI was unable to perform the air conditioning construction as stated in the contract, CTCI

SMART ENGINEERING CORP. revoked the air conditioning construction, and re-contract out to

JEHNG LONG ENGINEERING CORP. The aforementioned construction expenses for hiring others

and for working on the terminated construction and losses were expected to be paid using RPTI’s

estimated assessment amount and retention payment. However, RPTI filed a lawsuit with the Taiwan

Taipei District Court, alleging improper deduction by CTCI SMART ENGINEERING CORP. and

requesting construction payment of $72,024 along with an interest at 5% per annum from November

28, 2007 until the date of repayment. The case was still in trial and CTCI SMART ENGINEERING

CORP. filed a counter-claim on August 8, 2008, for alleging RPTI’s estimated assessment amount

and retention amount were insufficient to cover all payables, and requesting payment of $94,569. The

amount of $22,947 of the requested payment of $94,569 shall be paid along with an interest at 5%

per annum from July 16, 2008 until the date of repayment, while the remaining request amount shall

be paid along with an interest at 5% per annum from the date when RPTI receives the transcription

of counter-complaint until the date of repayment. RPTI expanded its claim to request a payment of

$111,079 along with an interest. On April 27, 2015, Taiwan Taipei District Court rendered a

judgement (Year 2008, Zian-Zi No. 21, Civil case) that CTCI SMART ENGINEERING CORP. needs

to pay RPTI an amount of $84,305 which comprises of $72,574 along with an interest at 5% per

annum from November 28, 2007 and of the remaining $11,731 along with an interest at 5% per annum

from December 15, 2010 until the date of repayment. RPTI’s remaining appeal and CTCI SMART

ENGINEERING CORP.’s counter-claim were refuted. CTCI SMART ENGINEERING CORP.

disagreed with the verdict and filed an appeal with the Taiwan High Court in the prescribed time,

asking for rejection to RPTI’s claim and judgment of the counter-claim. The counter-claim is

requesting RPTI to pay an amount of $75,166 which comprises of $22,947 along with an interest at

5% per annum from July 16, 2008 and of remaining $52,218 along with an interest at 5% per annum

from August 9, 2008 until the date of repayment. RPTI filed an incidental appeal requesting CTCI

SMART ENGINEERING CORP. to pay another amount of $7,092 along with an interest at 5% per

annum from November 28, 2007 until the date of repayment. Taiwan High Court rendered the

judgement on August 30, 2017. Refuted the verdict above and commanded that RPTI needs to pay

CTCI SMART ENGINEERING CORP. $57,899 along with an interest at 5% per annum from August

9, 2008 until the date of repayment. RPTI appealed to the Supreme Court during the legal period

because they disagreed with the judgement. The Supreme Court rendered the judgement that the

262

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verdict Taiwan High Court rendered was void and reverted the case back to the Taiwan High Court

for a retrial. According to the Company’s appointed lawyers, the case is still pending in the Taiwan

High Court, and the case number is Year 2018, Chong-Shang-Gang-Yi-Zi No. 65.

G. The Company’s subsidiary ECOVE Environment Services Corp. was ordered to pay $54,267 in air

pollution prevention fees by the Environmental Protection Department of the New Taipei City

Government on October 28, 2014, and the penalty was upheld after filing an administrative appeal.

On July 6, 2015, ECOVE Environment Services Corp. asked the Taipei High Administrative Court to

revoke both the original penalty and the subsequent decision on the administrative appeal, but the

request was denied. ECOVE Environment Services Corp. appealed the decision, and the case is still

pending in the Supreme Administrative Court.

The attorney representing ECOVE Environment Services Corp. regards the original penalty to be

illegal and invalid, therefore no provisions for the lawsuit have been recognized in the financial

statements.

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE

A. Details of the appropriation of earnings as proposed by the Board of Directors on March 8, 2019

are provided in Note 6(21) E.

B. CTCI Development Corp signed a property contract with Xintianmu Development Co., Ltd., to

purchase a land located in No. 33, Xinzhoumei Section, Beitou District, Taipei City with a price of

$1,266 per square footage, a total land area of 5,180.47 square meters and 1,567.092 square footage,

for a total price of $1,984,400 on January 23, 2018. On December 20, 2018, the Group obtained the

land ownership certificate, and the transfer of the land was completed. As of December 31, 2018,

the consideration paid by the Group amounting to $198,440, remaining consideration of $1,785,960

was paid on January 3, 2019.

C. To fulfil operating capital and repay the bank borrowings, the Board of Directors resolved to issue

domestic unsecured corporate bonds at face value in full or instalments, depending upon the market,

under a range of $6 billion on December 12, 2018. As of March 14, 2019, the Company has not

submitted an application to the competent authority for approval for raising domestic unsecured

corporate bonds.

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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. Total borrowings are including ‘current

and non-current borrowings’ as shown in the consolidated balance sheet. Total capital is calculated

as ‘equity’ as shown in the consolidated balance sheet.

The gearing ratios as of December 31, 2018 and 2017, were as follows:


Total borrowings 14,966,313$ 8,804,167$

Total equity 20,626,159$ 21,040,157$

Gearing ratio 72.56% 41.84%

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(2) Financial risk of financial instruments

A. Financial instruments by category


Financial assets

Financial assets at fair value through profit

or loss Financial assets mandatorily measured at

fair value through profit or loss 554,638$ 581,194$

Financial assets at fair value through other

comprehensive income 1,288,938$ -$

Available-for-sale financial assets

Available-for-sale financial assets - 647,629

Financial assets at cost - 676,511

-$ 1,324,140$

Financial assets at amortised cost

Cash and cash equivalents 15,070,992$ 19,354,880$

Notes receivable 75,006 33,150

Accounts receivable 9,092,332 5,325,391

Accounts receivable due from related

parties 944,071 42,359

Other receivables 338,381 225,175

Other receivables due from related

parties 96 15,309


Long-term accounts receivable 2,392,339 2,414,923

Other financial assets 558,950 366,299

28,602,334$ 27,909,628$

Financial liabilities

Financial liabilities at fair value through

profit or loss Financial liabilities mandatorily measured

at fair value through profit or loss 548$ 8,819$

Financial liabilities at amortised cost

Short-term borrowings 13,414,459$ 6,539,017$

Notes payable 18,788 4,069

Accounts payable 9,991,262 11,878,274

Accounts payable due to related parties 1,359,712 926,710

Other payables (including related parties) 4,692,516 2,748,664

Long-term borrowings (including current

portion) 1,551,854 2,265,150

Guarantee deposits received 407,649 358,637

31,436,240$ 24,720,521$

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B. 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.

(b) Risk management is carried out by a central treasury department (Group treasury) under

policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges

financial risks in close co-operation with the Group’s operating units. The Board provides

written principles for overall risk management, as well as written policies covering specific

areas and matters, such as foreign 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 exchange rate risk arising from the

transactions of the Company and its subsidiaries used in various functional currency,

primarily with respect to the USD and EUR. Exchange rate risk arises from future

commercial transactions and recognised assets and liabilities.

ii. Management has set up a policy to require group companies to manage their foreign

exchange risk against their functional currency. The companies are required to hedge their

entire foreign exchange risk exposure with the Group treasury.

iii The Group’s businesses involve some non-functional currency operations (the Company’s

and certain subsidiaries’ functional currency: NTD; other certain subsidiaries’ functional

currency: USD and RMB). The information on assets and liabilities denominated in foreign

currencies whose values would be materially affected by the exchange rate fluctuations is

as follows:

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Foreign Currency

Amount

(In Thousands) Exchange Rate Book Value

(Foreign currency: functional

currency)

Financial assets

Monetary items

USD : NTD 275,169$ 30.7400 8,458,695$

THB : NTD 817,495 0.9491 775,884

EUR : NTD 7,889 35.2327 277,951

USD : MYR 8,888 4.1575 273,217

MOP : NTD 53,270 3.8042 202,650

JPY : NTD 556,648 0.2779 154,692

RMB : NTD 23,979 4.4742 107,287

USD : THB 3,186 32.3886 97,938

SGD : NTD 4,271 22.4552 95,898

THB：USD 71,220 0.0309 67,595

RMB：USD 4,240 0.1455 18,971

USD：SAR 247 3.7523 7,593

SAR：NTD 555 8.1922 4,547

EUR：USD 80 1.1462 2,819


Monetary items

USD : SAR 32,700 3.7523 1,005,198

USD : NTD 10,733 30.7400 329,932

USD : MYR 4,298 4.1575 132,121

EUR : MYR 2,297 4.7651 80,930

EUR : NTD 1,316 35.2327 46,366

EUR：USD 1,198 1.1462 42,209

SGD : NTD 537 22.4552 12,064

MOP : NTD 2,723 3.8042 10,359

RMB：NTD 1,764 4.4742 7,892

SAR：NTD 406 8.1922 3,325

USD：SGD 95 1.3689 2,920

December 31, 2018

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v. The unrealized exchange gain (loss) 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 $83,512 and ($151,026), respectively.

Foreign Currency

Amount


(Foreign currency:

functional currency)

Financial assets

Monetary items

USD：NTD 382,582$ 29.8480 11,419,308$

EUR：NTD 15,185 35.6743 541,714

JPY：NTD 443,049 0.2649 117,364

GBP：NTD 42 40.2053 1,689

AUD：NTD 1,863 23.2635 43,340

MOP：NTD 13,610 3.7378 50,871

HKD：NTD 1,830 3.8190 6,989

SGD：NTD 50,193 22.3238 1,120,498

THB：NTD 3,659 0.9153 3,349

RMB：NTD 8,052 4.5789 36,869

SAR：NTD 5,230 7.9593 41,627

USD：THB 1,202 32.6101 3,587

USD：SGD 1,171 1.3370 5,979

USD：MYR 13,430 4.0545 373,676

EUR：MYR 807 4.8459 30,748


Monetary items

USD：NTD 9,265 29.8480 276,542

EUR：NTD 2,257 35.6743 80,517

JPY：NTD 2,150 0.2649 570

GBP：NTD 5 40.2053 201

SGD：NTD 663 22.3238 14,801

THB：NTD 3,659 0.9153 3,349

SEK：NTD 18,368 3.6187 66,468

MOP：NTD 13,608 3.7378 50,864

RMB：NTD 32,786 4.5789 150,124

CHF：NTD 276 30.5507 8,432

EUR：MYR 101 4.8459 1,869

USD：MYR 8,065 4.0545 224,401

GBP：MYR 817 5.4614 179,395

December 31, 2017

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vi. Analysis of foreign currency market risk arising from significant foreign exchange

variation:

Degree of Effect on Profit

Effect on Other

Comprehensive

Variation or Loss Income

( Foreign currency:


Financial assets

Monetary items

USD : NTD 1% 84,587$ -$

THB : NTD 1% 7,759 -

EUR : NTD 1% 2,780 -

USD : MYR 1% 2,732 -

MOP : NTD 1% 2,027 -

JPY : NTD 1% 1,547 -

RMB : NTD 1% 1,073 -

USD：THB 1% 979 -

SGD：TWD 1% 959 -

THB：USD 1% 676 -

RMB：USD 1% 190 -

USD：SAR 1% 76 -

SAR：NTD 1% 45 -

EUR：USD 1% 28 -


Monetary items

USD : SAR 1% 10,052 -

USD : NTD 1% 3,299 -

USD : MYR 1% 1,321 -

EUR : MYR 1% 809 -

EUR : NTD 1% 464 -

EUR：USD 1% 422 -

SGD : TWD 1% 121 -

MOP : TWD 1% 104 -

RMB：NTD 1% 79 -

SAR：NTD 1% 33 -

USD：SGD 1% 29 -

December 31, 2018

Sensitivity Analysis

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Degree of Effect on Profit

Effect on Other

Comprehensive

Variation or Loss Income

( Foreign currency:


Financial assets

Monetary items

USD : NTD 1% $ 114,193 -$

EUR : NTD 1% 5,417 -

JPY : NTD 1% 1,174 -

GBP : NTD 1% 17 -

AUD : NTD 1% 433 -

MOP : NTD 1% 509 -

HKD : NTD 1% 70 -

SGD : NTD 1% 11,205 -

THB : NTD 1% 33 -

RMB : NTD 1% 369 -

SAR : NTD 1% 416 -

USD : THB 1% 36 -

USD : SGD 1% 60 -

USD : MYR 1% 3,737 -

EUR : USD 1% 307 -


Monetary items

USD : NTD 1% 2,765 -

EUR : NTD 1% 805 -

JPY : NTD 1% 6 -

GBP : NTD 1% 2 -

SGD : NTD 1% 148 -

THB : NTD 1% 33 -

SEK : NTD 1% 665 -

MOP : NTD 1% 509 -

RMB : NTD 1% 1,501 -

CHF : NTD 1% 84 -

EUR : MYR 1% 19 -

USD : MYR 1% 2,244 -

GBP : MYR 1% 1,794 -

December 31, 2017


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Price risk

The Group’s equity securities, which are exposed to price risk, are the held financial assets at

fair value through other comprehensive income, financial assets at fair value through profit or

loss and available-for-sale financial assets. 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.

Cash flow and fair value interest rate risk

The Group’s interest rate risk arises from borrowings. Borrowings issued at variable rates

expose the Group to cash flow interest rate risk which is partially offset by cash and cash

equivalents held at variable rates. During the years ended December 31, 2018 and 2017, the

Group’s borrowings at variable rate were denominated in NTD and USD.

(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Group arising from default by the

clients or counterparties of financial instruments on the contract obligations. According to

the Group’s credit policy, each local entity in the Group is responsible for managing and

analyzing the credit risk for each of their new clients before standard payment and delivery

terms and conditions are offered.

ii. Individual risk limited is controlled by internal risk that assesses the credit quality of the

customers, taking into account their financial position, past experience and other factors.

iii. The Group adopts the assumptions under IFRS 9, if the contract payments were past due

over 30 days based on the terms, there has been a significant increase in credit risk on that

instrument since initial recognition.

iv. The Group adopts the assumptions under IFRS 9, the default occurs when the customers’

contract payments are past due over 90 days.

v. The Group classifies customers’ accounts receivable and contract assets in accordance

with customer types. The Group applies the simplified approach using provision matrix

and loss rate methodology to estimate expected credit loss under the provision matrix basis.

vi. The Group used the forecastability of Taiwan Institute of Economic Research boom

observation report to adjust historical and timely information to assess the default

possibility of accounts receivable. On December 31, 2018, the provision matrix is as

follows:

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Note 1: Government institutions, state-owned enterprises and listed companies

Note 2: Companies that are not included in Note 1.

Movements in relation to the group applying the simplified approach to provide loss

allowance for accounts receivable, contract assets and lease payments receivable are as

follows:

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Group and aggregated

by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity

requirements to ensure it has sufficient cash to meet operational needs 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.

ii. The table below analyses the Group’s non-derivative financial liabilities and net-settled

derivative financial liabilities into relevant maturity groupings based on the remaining

period at the balance sheet date to the contractual maturity date for non-derivative

financial liabilities and to the expected maturity date for derivative financial liabilities.

The amounts disclosed in the table are the contractual undiscounted cash flows.

Excellent

customers

(Note 1)

General

customers

(Note 2)

Individual

assessment

customers Total

December 31, 2018

Expected loss rate 0.03%~0.40% 0.03%~100% 50%~100%

Total book value 4,488,537$ 4,699,248$ 5,148$ 9,192,933$

Loss allowance 2,749)( 19,019)( 3,827)( 25,595)(

2018

Accounts receivable

At January 1_IAS 39 84,920$

Adjustments under new standards -

At January 1_IFRS 9 84,920

Provision for impairment 32,211

Reversal of impairment 3,894)(

Write-offs 87,642)(

At December 31 25,595$

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(d) Cash flow risk from variations of rates

There is no significant cash flow risk from variations of rates since accounts payable are due

less than one year.

Non-derivative financial liabilities

December 31, 2018 Less than 1 year More than 1 year

Short-term borrowings 13,457,335$ -$

Notes payable 18,788 -

Accounts payable (including related parties) 11,350,974 -

Other payables (including related parties) 4,692,516 -

Long-term borrowings (including current portion) 131,788 1,670,586

Non-derivative financial liabilities:



Notes payable - -

Accounts payable (including related parties) - -

Other payables (including related parties) - -

Long-term borrowings (including current portion) 348,794 2,180,678

Derivative financial liabilities:

Between 3 months

December 31, 2018 Less than 3 months and 1 year

Exchange rate swaps (net-settled) $ - $ -

Forward exchange contracts 548 -


Between 3 months

December 31, 2017 Less than 3 months and 1 year

Exchange rate swaps (net-settled) $ - $ 3,580

Forward exchange contracts 5,239 -

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(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of

financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date. A market is regarded as active if it meets

all the following conditions: the items traded in the market are homogeneous; willing

buyers and sellers can normally be found at any time; and prices are available to the

public. The fair value of the Group’s investment in listed stocks, beneficiary

certificates with quoted market prices 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 most derivative instruments is included in Level 2.

Level 3: Inputs for the asset or liability that are not based on observable market data.

B. 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 are as follows:

(a) The related information of natures of the assets and liabilities is as follows:

December 31, 2018 Level 1 Level 2 Level 3 Total

Financial assets:

Financial assets at fair value

through profit or loss

　Beneficiary certificates 504,323$ -$ -$ 504,323$

　Derivative instruments - 50,315 - 50,315



income

　Equity securities-current 473,549 - - 473,549

　Equity securities

-non-current

- - 788,611 788,611

　Debt securities - 26,778 - 26,778

Total 977,872$ 77,093$ 788,611$ 1,843,576$

Financial liabilities：

Financial liabilities at fair value


　Derivative instruments -$ 548$ -$ 548$

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(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.

C. There was no transfer between Level 1 and Level 2 for the years ended December 31, 2018 and

2017.


Financial assets：Financial assets at fair value


　Beneficiary certificates 580,697$ -$ -$ 580,697$

　Derivative instruments - 497 - 497

Available-for-sale financial

assets

　Equity securities 515,074 - - 515,074

　Bond securities - 132,555 - 132,555

Total 1,095,771$ 133,052$ -$ 1,228,823$

Financial liabilities：

Financial liabilities at fair value


　Derivative instruments -$ 8,819$ -$ 8,819$

Listed shares Open-end fund

Market quoted price Closing price Net asset value

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D. Movements on Level 3 for the year ended December 31, 2018 are as follows:

E. For the year ended December 31, 2018, there was no transfer into or out from Level 3.

F. Group finance segment is in charge of valuation procedures for fair value measurements being

categorised within Level 3, which is to verify independent fair value of financial instruments.

Such assessment is to ensure the valuation results are reasonable by applying independent

information to make results close to current market conditions, confirming the resource of

information is independent, reliable and in line with other resources and represented as the

exercisable price, and frequently calibrating valuation model, performing back-testing, updating

inputs used to the valuation model and making any other necessary adjustments to the fair value.

Investment property is valuated regularly by the Group’s Finance segment based on the valuation

methods and assumptions announced by the Financial Supervisory Commission, Securities and

Futures Bureau or through outsourced appraisal performed by the external valuer.

G. The following is the qualitative information of significant unobservable inputs and sensitivity

analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair

value measurement:

2018

Equity securities

At January 1 739,940$

Gains and losses recognised in profit or loss

Recorded as non-operating income and expenses 49,159

Recorded as unrealised gains (losses) on

valuation of investments in equity

instruments measured at fair value

through other comprehensive income

27,102)(

Purchases in this year 159,452

Sales in this year 132,851)(

Effects of changes in foreign exchange rates 13


Fair value at

December 31,

2018

Valuation

technique

Significant

unobservable

input

Range (weighted

average)

Relationship of

inputs to fair

value

Non-derivative

equity

instrument:

Unlisted shares 239,615$ Market

comparable

companies

Price to book

ratio multiple,

discount for

lack of

marketability

Median:1.86

Average:1.79

Liquidity discount:

17.5%

The higher the

multiple and

control

premium, the

higher the fair

value

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H. 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:

(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. They are financial assets held for trading. Financial assets are classified in this category

of held for trading if acquired principally for the purpose of selling in the short-term.

Derivatives are also categorized as financial assets held for trading unless they are

designated as hedges.

ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss

are recognised and derecognised using settlement date accounting.

iii. Financial liabilities at fair value through profit or loss are initially recognised at fair value.

Related transaction costs are expensed in profit or loss. These financial liabilities are

subsequently remeasured and stated at fair value, and any changes in the fair value of

these financial liabilities are recognised in profit or loss.

(b) Available-for-sale financial assets

i. They are non-derivatives that are either designated in this category or not classified in any

of the other categories.

ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognised

and derecognised using settlement date accounting.

Input

Chang

e

Favourable

change

Unfavourable

change

Favourable

change

Unfavourable

change

Financial assets

Equity

instrument

Price to book

ratio multiple,

discount for

lack of

marketability

± 1% $ - $ - $ 24,521 ($ 24,521)

December 31, 2018

Recognised in profit or

loss

Recognised in other


277

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iii. They are initially recognised at fair value plus transaction costs. These financial assets are


these financial assets are recognised in other comprehensive income. Investments in

equity instruments that do not have a quoted market price in an active market and whose

fair value cannot be reliably measured or derivatives that are linked to and must be settled

by delivery of such unquoted equity instruments are presented in ‘financial assets

measured at cost’.

(c) Loans and receivables

Accounts receivable are loans and receivables originated by the entity. They are created by

the entity by selling goods or providing services to customers in the ordinary course of

business. They are initially 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 the effect of discounting is immaterial.

(d) Impairment of financial assets

i. The Group assesses at each balance sheet date whether there is objective evidence that a

financial asset or a group of financial assets is impaired as a result of one or more 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;

278

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(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:

(i) Financial assets at amortised cost

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 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.

(ii) Financial assets at cost



current market return rate of similar financial asset, and is recognised in profit or

loss. Impairment loss recognised for this category shall not be reversed subsequently.

Impairment loss is recognised by adjusting the carrying amount of the asset through

the use of an impairment allowance account.

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(iii) Available-for-sale financial assets


acquisition cost (less any principal repayment and amortisation) and current fair

value, less any impairment loss on that financial asset previously recognised in profit

or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If,

in a subsequent period, the fair value of an investment in a debt instrument increases,

and the increase can be related objectively to an event occurring after the impairment

loss was recognised, such impairment loss is reversed through profit or loss.

Impairment loss of an investment in an equity instrument recognised in profit or loss

shall not be reversed through profit or loss. Impairment loss is recognised and

reversed by adjusting the carrying amount of the asset through the use of an

impairment allowance account.

(e) Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered

into and are subsequently remeasured at their fair value. Any changes in the fair value are

recognised in profit or loss.

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B. The reconciliations of carrying amount of financial assets transfered from December 31, 2017,

IAS 39, to January 1, IFRS 9, were as follows:

Available-

for-sale

-equity

Available-

for-sale

-liability

Measured at

fair value

through other

comprehensive

income-equity

Measured at

fair value

through other

comprehensive

income-liability Total

Retained

earnings

Others

equity

Transferred into and

measured at fair

value through

profit or loss $ - $ - $ 96,980 $ 96,980 13,288)($ -$ Transferred into and

measured at fair

value through other

comprehensive

income-equity 515,074 - 579,531 1,094,605 - -

Impairment loss

adjustment - - - - 180,418 ( 180,418)

Fair value adjustment - - - - - 76,717 Gain or loss of

changes in fair

value attributable

to non-controlling

interests - - - - 230)( 230


measured at fair

value through other

comprehensive

income-liability - 132,555 - 132,555 - -

$ 515,074 $ 132,555 $ 676,511 $ 1,324,140 $ 166,900 ($ 103,471)

Measured

at cost

Effects

IAS 39

IFRS 9

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(a) Under IAS 39, because the cash flows of debt instruments, which were classified as:

available-for-sale financial assets amounting to $132,555, met the condition that it is intended

to settle the principal and interest on the outstanding principal balance, they were reclassified

as " financial assets at fair value through other comprehensive income (debt instruments)" on

initial application of IFRS9.

(b) Under IAS 39, because the equity instruments, which were classified as: available-for-sale

financial assets, financial assets at cost, amounting to $515,074, $579,531, respectively, were

not held for the purpose of trading, they were reclassified as "financial assets at fair value

through other comprehensive income (equity instruments)" on initial application of IFRS 9.

(c) Under IAS 39, the equity instruments, which were classified as: financial assets at cost,

amounting to $96,980, were reclassified as "financial assets at fair value through profit or

loss (equity instruments)", under IFRS 9.

C. The significant accounts as of December 31, 2017, are as follows:

(a) Financial assets and liabilities at fair value through profit or loss

i. The Group recognised net loss amounting to $51,566 on financial assets held for trading

for the year ended December 31, 2017.

ii. The trading items and contracts information of derivatives are as follows:


Current items:

Financial assets held for trading


Non-hedging derivatives 497

577,496

Valuation adjustment of financial assets held for trading 3,698

581,194$

Non-current items:

Financial liabilities held for trading non-hedging derivatives 8,819$

Contract amount

(notional principal) Contract period

Foreign exchange swap

contract (1 item) THB 67,900 thousand 2017.05.25~2018.05.25

Non-delivery of forward

exchange contract-buy (14 item) USD 28,370 thousand 2017.12.19~2018.01.31

Foreign exchange contract-

buy (2 item) EUR 1,200 thousand 2017.12.20~2018.01.22

December 31, 2017

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i. The Group recognised $12,448 in other comprehensive income for fair value change for


ii. Due to the global financial crisis in year 2008, listed (TSE and OTC) stocks amounting

to $152,810 which were initially classified as “financial assets at fair value through profit

or loss” were reclassified to “available-for-sale financial assets” on July 1, 2008, in

accordance with paragraph 50 (c) of IAS 39. The relevant information is set forth below:

(i.) The above reclassified assets which have not yet been disposed of were as follows:

(ii.) The changes in fair value of the above listed stocks that were recognized in profit or

loss and other comprehensive income were $0 and $9,110, respectively, for the year

ended December 31, 2017. The accumulated total changes in fair value of the above

listed stocks that were recognized in profit or loss and other comprehensive income

before January 1, 2016 were $0 and ($20,558), respectively.

(iii.) If the above listed stocks had not been reclassified to “available-for-sale financial

assets” on July 1, 2008, the (loss) gain from change in fair value of those assets

should have been recognized for the following periods:

iii. No financial assets at fair value through profits or loss held by the Group was pledged to

others.


Current items:

Listed stocks 532,676$

Corporate bonds 143,649

676,325


647,629$

December 31, 2017

Book value/Fair value

Listed (TSE or OTC) stocks 175,828$

For the year ended

December 31, 2017


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(c) Financial assets at cost

i. Based on the Group’s intention, its investment in stocks should be classified as available-

for-sale financial assets. However, as these investments are not traded in active markets,

the fair value of the investment cannot be measured reliably. The Group classified those

stocks as ‘financial assets measured at cost’.

ii. As the operating results of investee companies accounted for using the cost method had

deteriorated, their net worth has declined significantly. The Company expects that the

probability of a recovery in their net worth is remote. As a result, loss on decline in market

value of $13 were recognized for the year ended December 31, 2017.

iii. As of December 31, 2017, no financial assets at cost held by the Group were pledged to

others.

iv. In August 2016, the Board of Directors approved the Group’s investment of US $13,200

in Ever Victory Global Limited for an ownership stake of 2.32%. The investment will be

made in several installments over several years. In December 2016, Investment

Commission, Ministry of Economic Affairs approved the investment of US $13,181. In

2017, the Company invested $74,347 (US $2,309) and $58,426 (US $1,921) in March and

September, respectively.


Non-Current items:

CDIB & Partners Investment Holding Corp 250,000$

Core Pacific City Co., Ltd. 190,000

Ever Victory Global Limited. 132,773

Utech Solar Corp. 96,980

Metro-consultant Co., Ltd. 3,000

Global Strategic Investment Inc. 2,886

TeamWIN Opto-Electronics Co., Ltd. 475

CHIYODA(Thailand) Co. Ltd. 329

Eastern Pacific Energy Sdn. Bhd. 68

Total 676,511$

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D. As of December 31, 2017, information of credit risk is as follows：

(a) Credit risk information for the year ended December 2017 are as follows :

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


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. Credit

risk arises from cash and cash equivalents, derivative financial instruments and deposits with

banks and financial institutions, as well as credit exposures to wholesale and retail customers,

including outstanding receivables. For banks and financial institutions, only independently

rated parties with a minimum rating of 'A' are accepted.

(b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting

periods, and management does not expect any significant losses from non-performance by

these counterparties.

(c) The credit quality information of financial assets that are neither past due nor impaired is as

follows:

Group 1：Government or State- owned Enterprises.

Group 2：Listed companies.

Group 3：The company does not belong to either Group 1 or Group 2.

(d) The analysis of the Group’s accounts receivable which have been impaired is as follows:

(i.) As of December 31, 2017, the Group’s accounts receivable that were impaired amounted

to $ 84,920.

(ii.) Movements in the provision for impairment of accounts receivable are as follows:

Group 1 Group 2 Group 3

Notes and accounts receivable 991,740$ 848,016$ 2,738,145$

December 31, 2017

2017

At Januay 1 1,011,847$

Provision of impairment 87,096

Write-offs during the period 53,228)(

Reversal for impairment 960,795)(


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

(5) Effects of initial application of IFRS 15 and information on application of IAS11 and IAS 18 in

2017

A. The significant accounting policies applied on revenue recognition for the year ended December

31, 2017 are set out below:

(a) Construction contracts

i. IAS 11, ‘Construction Contracts’, defines a construction contract as a contract specifically

negotiated for the construction of an asset. If the outcome of a construction contract can

be estimated reliably and it is probable that this contract would make a profit, contract

revenue should be recognised by reference to the stage of completion of the contract

activity, using the percentage-of-completion method of accounting, over the contract term.

Contract costs are expensed as incurred. The stage of completion of a contract is measured

by the proportion of contract costs incurred for work performed to date to the estimated

total costs for the contract. An expected loss where total contract costs will exceed total

contract revenue on a construction contract should be recognised as an expense as soon as

such loss is probable. If the outcome of a construction contract cannot be estimated reliably,

contract revenue should be recognised only to the extent of contract costs incurred that it

is probable will be recoverable.

ii. Contract revenue should include the revenue arising from variations from the original

contract work, claims and incentive payments that are agreed by the customer and can be

measured reliably.

iii.The excess of the cumulative costs incurred plus recognised profits (less recognised losses)

over the progress billings on each construction contract is presented as an asset within

‘Receivables from customers on construction contracts’. While, the excess of the progress

billings over the cumulative costs incurred plus recognised profits (less recognised losses)

on each construction contract is presented as a liability within ‘Payables to customers on

construction contracts’.

December 31, 2017

Note and accounts receivable

Up to 30 days 130,961$

31 to 90 days 343,060

91 to 180 days 207,751

Over 181 days 98,868

780,640$

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B. The construction contract receivable/payable recognised by using above construction contract

accounting policies as of December 31, 2017 are as follows:

As of December 31, 2017, there were no retentions relating to construction contracts; the

advances received before the related construction work is performed amounted to $978,958.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

A. Loans to others: Please refer to table 1.

B. Provision of endorsements and guarantees to others: Please refer to table 2.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates

and joint ventures): Please refer to table 3.

D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or

20% of the Company’s paid-in capital: Please refer to table 4.

E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: Please

refer to table 5.

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-

in capital or more: Please refer to table 6.

H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:

Please refer to table 7.

I. Derivative financial instruments undertaken during the reporting periods: Please refer to Notes

6(2) and 12(2).

J. Significant inter-company transactions during the reporting periods: Please refer to table 8.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland

China)：Please refer to table 9.

December 31, 2017

Aggregate costs incurred plus recognised profits (less recognised

losses)

410,766,276$

Less: Progress billings 400,887,072)(

Net balance sheet position for construction in progress 9,879,204$

Presented as:

Receivables from customers on construction contracts 23,759,310$

Payables to customers on construction contracts 13,880,106)(

9,879,204$

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(3) Information on investments in Mainland China

A. Basic information: Please refer to table 10.

B. Significant transactions, either directly or indirectly through a third area, with investee companies

in the Mainland Area: None.

14. SEGMENTAL FINANCIAL INFORMATION

(1) General information

A. The Group has identified which segments should be reported based on the information used by

the Board of Directors to make decisions.

B. The Board of Directors classify reportable segments as construction engineering department,

environmental resource department, sales department and other operating departments.

(2) Measurement of segmental financial information

The Board of Directors evaluates the performance of segments based on segmental income. Interest

income and expenses cannot be attributed to any segment because such activity is handled by the

Company’s financial department.

(3) Segmental income, assets and liabilities of segments

The segmental financial information provided to the Board of Directors is as follows:

Construction

Engineering

Environmental

Resource Sales Other Operating

Department Department Department Departments Total

External revenues 57,122,560$ 4,819,569$ 1,276,827$ 850,586$ 64,069,542$

Internal revenues 3,447,220 27,528 - 481,556 3,956,304

Segmental revenues 60,569,780$ 4,847,097$ 1,276,827$ 1,332,142$ 68,025,846$

Segmental income 1,258,748$ 1,128,916$ 160,491$ 120,586$ 2,668,741$

Depreciation and

amortization 396,142$ 88,240$ 3,596$ 81,645$ 569,623$


Construction

Engineering

Environmental

Resource Sales Other Operating

Department Department Department Departments Total

External revenues 66,610,992$ 4,479,587$ 184,704$ 331,321$ 71,606,604$

Internal revenues 3,417,034 172,185 - 462,066 4,051,285

Segmental revenues 70,028,026$ 4,651,772$ 184,704$ 793,387$ 75,657,889$

Segmental income 1,637,235$ 1,077,417$ 21,985$ 235,345$ 2,971,982$

Depreciation and

amortization 398,521$ 30,902$ 518$ 91,614$ 521,555$


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(4) Reconciliation information of segmental income

Intra-segment sales are arm’s length transactions. The measurement of external revenues reported

to the Board of Directors is consistent with revenues in the statement of comprehensive income. The

reconciliation information of income from continuing operations before income tax and segmental

income is as follows:

(5) Information on products and services

Details of revenue is as follows:

2018 2017

Segmental income 2,668,741$ 2,971,982$

Adjustment and elimination 47,038 43,044

Share of profit (loss) of associates and

joint ventures accounted for using equity

method 33,557)( 99,008

Interest income 216,808 131,658

Foreign exchange gain (loss) 59,774 151,026)(

Finance costs 157,908)( 104,140)(

Reversal of provision for bad debt expense - 960,795

Others 264,377 40,032

Income from continuing operations before

income tax 3,065,273$ 3,991,353$


2018 2017

Engineering service revenue 57,122,560$ 66,610,992$

Environmental resource service revenue 4,819,569 4,479,587

Sales revenue 1,276,827 184,704

Other operating revenue 850,586 331,321

Total 64,069,542$ 71,606,604$


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(6) Geographical information

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

(7) Major customer information

Information of major customer which present 10% operating revenue in the consolidated income

statements of the Group for the years ended December 31, 2018 and 2017 is as follows:

Non-current Non-current

Revenue assets Revenue assets

Taiwan 47,071,069$ 8,742,232$ 59,020,133$ 8,696,232$

Asia 16,670,848 5,439,061 12,239,718 1,788,422

America 327,625 818,602 346,753 4,258

Total 64,069,542$ 14,999,895$ 71,606,604$ 10,488,912$


2018 2017

Revenue Segment Revenue Segment

Company F 7,682,647$ Construction

service segment

11,893,499$ Construction

service segment

Company C 13,847,797 〞 15,413,235 〞

2018 2017


290

01100480

矩形

Item Value

0 CTCI Corp. CTCI

Engineering

& Construction

Sdn. Bhd.

Other

receivables

Yes 1,075,900$ 1,075,900$ -$ - 2 - For

operational

need

-$ - -$ 3,491,746$ 6,983,492$ -

0 CTCI Corp. CTCI

Singapore Pte.

Ltd.

Other

receivables

Yes 1,383,300 1,383,300 - - 2 - For

operational

need

- - - 3,491,746 6,983,492 -

0 CTCI Corp. CTCI Arabia Ltd. Other

receivables

Yes 1,444,780 1,444,780 - - 2 - For

operational

need

- - - 3,491,746 6,983,492 -

0 CTCI Corp. CTCI

Machinery

Corp.

Other

receivables

Yes 650,000 650,000 432,000 1.01% 2 - For

operational

need

- - - 3,491,746 6,983,492 -

0 CTCI Corp. CTCI Smart

Engineering

Corp.

Other

receivables

Yes 500,000 500,000 50,000 1.01% 2 - For

operational

need

- - - 3,491,746 6,983,492 -

Allowance

for

doubtful

accounts

CollateralLimit on loans

granted to

a single party

（Note 7）

Ceiling on

total loans

granted

（Note 7） Footnote

Reason

for short-term

financing

（Note 6）

No.

（Note 1） Creditor Borrower

General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

CTCI Corporation and its subsidiaries

Loans to others


Table 1 Expressed in thousands of NTD

(Except as otherwise indicated)

Tabl e 1 Page 1291

01100480

矩形

01100480

文字框

291

Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

0 CTCI Corp. CTCI Shanghai

Co., Ltd.

Other

receivables-

related

parties

Yes 92,019$ -$ -$ - 2 - For

operational

need

-$ - -$ 3,491,746$ 6,983,492$ -

0 CTCI Corp. CTCI

(Thailand) Co.,

Ltd.

Other

receivables

Yes 500,000 500,000 397,044 1.01% 2 - For

operational

need

- - - 3,491,746 6,983,492 -

0 CTCI Corp. CIPEC

Construction Inc.

Other

receivables

Yes 614,800 614,800 - - 2 - For

operational

need

- - - 3,491,746 6,983,492 -

1 CTCI Advanced

Systems Inc.

CTCI Corp. Other

receivables

Yes 45,000 45,000 - - 2 - For

operational

need

- - - 54,452 217,807 -

2 CTCI Overseas

Co., Ltd.

Superiority

(Thailand) Co.,

Ltd.

Other

receivables

Yes 65,778 65,778 65,778 2.83% 2 - For

operational

need

- - - 688,802 688,802 -

2 CTCI Overseas

Co., Ltd.

CIPEC

Construction Inc.

Other

receivables

Yes 313,926 312,472 - - 2 - For

operational

need

- - - 688,802 688,802 -

2 CTCI Overseas

Co., Ltd.

CTCI CMCE

JV SDN. BHD.

Other

receivables

Yes 38,552 37,704 - - 2 - For

operational

need

- - - 688,802 688,802 -

Tabl e 1 Page 2292

01100480

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文字框

292

Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

2 CTCI Overseas

Co., Ltd.

CTCI

Netherlands

B.V.

Other

receivables-

related

parties

Yes 36,497$ -$ -$ - 2 - For

operational

need

-$ - -$ 688,802$ 688,802$ -

3 CTCI Overseas

(BVI) Co., Ltd.

CIPEC

Construction Inc.

Other

receivables

Yes 20,949 20,811 20,802 2.22% 2 - For

operational

need

- - - 698,646 698,646 -

4 ECOVE

Enviroment

Corporation

ECOVE Solar

Energy

Corporation

Other

receivables-

related

parties

Yes 200,000 200,000 87,000 1.01% 2 - For

operational

need

- - - 487,824 1,951,295 -

5 ECOVE Waste

Management

Corporation

CTCI Corp. Other

receivables

Yes 14,000 7,000 - - 2 - For

operational

need

- - - 11,346 45,385 -

5 ECOVE Waste

Management

Corporation

CTCI

Machinery

Corp.

Other

receivables

Yes 14,000 7,000 - - 2 - For

operational

need

- - - 11,346 45,385 -

5 ECOVE Waste

Management

Corporation

CTCI Smart

Engineering

Corp.

Other

receivables

Yes 14,000 7,000 7,000 1.01% 2 - For

operational

need

- - - 11,346 45,385 -

6 ECOVE

Environmental

Services

Corporation

ECOVE Solvent

Recycling

Corporation

Other

receivables

Yes 70,000 70,000 50,000 1.57% 2 - For

operational

need

- - - 96,634 386,534 -

Tabl e 1 Page 3293

01100480

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01100480

文字框

293

Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

6 ECOVE

Environmental

Services

Corporation

ECOVE

Miaoli Energy

Corporation

Other

receivables

Yes 70,000$ 70,000$ 39,500$ 1.01% 2 - For

operational

need

-$ - -$ 96,634$ 386,534$ -

6 ECOVE

Environmental

Services

Corporation

CTCI

Machinery

Corp.

Other

receivables

Yes 140,000 35,000 - - 2 - For

operational

need

- - - 96,634 386,534 -

6 ECOVE

Environmental

Services

Corporation

CTCI Resources

Engineering

Inc.

Other

receivables

Yes 140,000 35,000 - - 2 - For

operational

need

- - - 96,634 386,534 -

6 ECOVE

Environmental

Services

Corporation

CTCI Corp. Other

receivables

Yes 140,000 70,000 - - 2 - For

operational

need

- - - 96,634 386,534 -

6 ECOVE

Environmental

Services

Corporation

CTCI Smart

Engineering

Corp.

Other

receivables

Yes 140,000 70,000 - - 2 - For

operational

need

- - - 96,634 386,534 -

Tabl e 1 Page 4294

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Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

7 CTCI Shanghai

Co., Ltd.

CTCI Trading

Shanghai

Co., Ltd.

Other

receivables-

related

parties

Yes 92,334$ -$ -$ - 2 - For

operational

need

-$ - -$ 196,870$ 196,870$ -

8 ECOVE Solar

Energy Corporation

ECOVE South

Corporation Ltd.

Other

receivables

Yes 14,000 14,000 - - 2 - For

operational

need

- - - 292,439 292,439 -

8 ECOVE Solar

Energy Corporation

ECOVE Solar

Power

Corporation

Other

receivables

Yes 200,000 200,000 - - 2 - For

operational

need

- - - 292,439 292,439 -

8 ECOVE Solar

Energy Corporation

ECOVE Central

Corporation Ltd.

Other

receivables

Yes 17,000 17,000 1,000 1.71% 2 - For

operational

need

- - - 292,439 292,439 -

9 CTCI Beijing Co.,

Ltd.

CTCI Shanghai

Co., Ltd.

Other

receivables

Yes 269,502 268,452 - - 2 - For

operational

need

- - - 712,899 712,899 -

Tabl e 1 Page 5295

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Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1)The Company is ‘0’.

(2)The subsidiaries are numbered in order starting from ‘1’.

Note 2: Fill in the name of account in which the loans are recognised, such as receivables-related parties, current account with stockholders, prepayments, temporary payments, etc.

Note 3: Fill in the maximum outstanding balance of loans to others during the year ended December 31, 2018

Note 4:.The numbers filled in for the nature of loans are as follows:

　　　(1) Business association is labeled as “1”

　　　(2) Short-term financing is labeled as “2”.

Note 5: Fill in the amount of business transactions when nature of the loan is related to business transactions, which is the amount of business transactions occurred between the creditor and borrower in the current year.

Note 6: Fill in purpose of loan when nature of loan belongs to short-term financing, for example, repayment of loan, acquisition of equipment, working capital, etc.

Note 7: The calculation and amount on ceiling of loans are as follows:

　　　[The company]

　　　(1) The limit on loans granted to a single party shall not exceed 20% of the Company's net assets value.

　　　(2) The ceiling on total loans shall not exceed 40% of the Company's net assets value.

　　　[Domestic subsidiaries and overseas subsidiaries]

　　　(1) The limit on loans granted to a single party by domestic subsidiaries and overseas subsidiaries shall not exceed 10% and 40% of the Company's net value, respectively.


Note 8: The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14, Item 1 of the “Regulations Govering Loaning of Funds and Making

of Endorsements/Guarantees by public Companies” should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they

have not yet been appropriated. However, this balance should excluded the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if the board of directors of a public company has

authorised the chairman to loan funds in instalments or in revolving within certain lines and within one year in accordance with Article 14, Item 2,of the “Regulations Governing Loaning of Funds and Making of Endorsements/

Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be

excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.

Tabl e 1 Page 6296

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Company name

Relationship

with the

endorser/

guarantor

（Note 2）

0 CTCI Corp. Universal Engineering

(BVI) Corporation

2 52,376,187$ 30,944$ 30,740$ -$ -$ 0.18% 104,752,374$ Y N N -

0 CTCI Corp. CTCI Development

Corporation

2 52,376,187 500,000 500,000 130,000 - 2.86% 104,752,374 Y N N -

0 CTCI Corp. CTCI Americas, Inc. 2 52,376,187 1,412,068 1,402,759 85,567 - 8.03% 104,752,374 Y N N -

0 CTCI Corp. CTCI Engineering &

Construction Sdn.

Bhd.

2 52,376,187 1,896,077 1,820,025 1,389,665 - 10.42% 104,752,374 Y N N -

0 CTCI Corp. CTCI Machinery

Corp.

2 52,376,187 2,074,388 2,074,115 2,033,001 - 11.88% 104,752,374 Y N N -

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）


Provision of endorsements and guarantees to others




Number

（Note 1）

Endorser/

guarantor

Party being

endorsed/guaranteedLimit on

endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

Tabl e 2 Page 1297

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Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

0 CTCI Corp. CTCI Singapore Pte.

Ltd.

2 52,376,187$ 2,464,164$ 2,452,437$ 1,449,722$ -$ 14.05% 104,752,374$ Y N N -

0 CTCI Corp. CINDA Engineering

& Construction Pvt.

Ltd.

2 52,376,187 2,896,201 2,851,682 1,666,208 - 16.33% 104,752,374 Y N N -

0 CTCI Corp. CTCI Arabia Ltd. 2 52,376,187 3,988,604 3,778,442 3,408,411 - 21.64% 104,752,374 Y N N -

0 CTCI Corp. CTCI Overseas

Co., Ltd.

2 52,376,187 7,029,248 4,823,865 1,465,674 - 27.63% 104,752,374 Y N N -

0 CTCI Corp. CTCI Trading

Shanghai Co., Ltd.

2 52,376,187 162,734 161,239 - - 0.92% 104,752,374 Y N Y -


Co., Ltd.

2 52,376,187 899,291 865,925 482,960 - 4.96% 104,752,374 Y N Y -

0 CTCI Corp. CTCI Beijing

Co., Ltd.

2 52,376,187 1,068,175 1,068,175 49,412 - 6.12% 104,752,374 Y N Y -

Tabl e 2 Page 2298

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Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

0 CTCI Corp. CCJV P1 E&C Sdn.

Bhd.

2 52,376,187$ 1,222,288$ 1,214,230$ -$ -$ 6.95% 104,752,374$ Y N N -


Engineering Corp.

2 52,376,187 29,010 28,819 - - 0.17% 104,752,374 Y N N -

0 CTCI Corp. CTCI (Thailand)

Co., Ltd.

2 52,376,187 2,439,869 1,152,996 496,564 - 6.60% 104,752,374 Y N N -

0 CTCI Corp. CTCI Chemical

Corp.

2 52,376,187 19,727 19,597 12,101 - 0.11% 104,752,374 Y N N -

0 CTCI Corp. CTCI CMCE JV

Sdn. Bhd.

6 52,376,187 471,076 467,970 - - 2.68% 104,752,374 N N N -

0 CTCI Corp. CTCI & HEC Water

Business Co., Ltd.

6 52,376,187 102,000 102,000 102,000 - 0.58% 104,752,374 Y N N -

0 CTCI Corp. CB&I-CTCI B.V. 6 52,376,187 6,556,996 6,513,769 6,513,769 - 37.31% 104,752,374 N N N -

Tabl e 2 Page 3299

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299

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

0 CTCI Corp. Blue Whale Water

Technology Co.,

Ltd.

6 52,376,187$ 769,300$ 769,300$ 722,260$ -$ 4.41% 104,752,374$ N N N -

0 CTCI Corp. HDEC-CTCI (Linhai)

Corporation

6 52,376,187 1,215,000 1,215,000 180,000 - 6.96% 104,752,374 N N N -

0 CTCI Corp. CIPEC Construction

Inc.

2 52,376,187 525,193 524,599 206,599 - 3.00% 104,752,374 Y N N -

0 CTCI Corp. CTCI Malaysia Sdn.

Bhd.

2 52,376,187 863,840 829,980 15,527 - 4.95% 104,752,374 Y N N -

1 CTCI Advanced

Systems Inc.

Century Ahead Ltd. 2 544,517 18,566 18,444 - - 0.54% 1,089,034 N N N -

2 CTCI Smart

Engineering

Corp

CTCI Shanghai

Co., Ltd.

5 462,218 253,413 - - - - 924,435 N N Y -

2 CTCI Smart

Engineering

Corp.

CTCI Machinery

Corp.

5 462,218 1,698,800 - - - - 924,435 N N N -

Tabl e 2 Page 4300

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300

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

3 CTCI Machinery

Corp.

CTCI Smart

Engineering Corp.

5 1,438,350$ 560,000$ 560,000$ 560,000$ -$ 116.80% 2,876,700$ N N N -

4 CTCI Chemical

Corp.

CTCI Machinery

Corp.

5 716,009 245,000 - - - - 1,432,018 N N N -

4 CTCI Chemical

Corp.

CTCI Corp. 3 716,009 18,817 18,817 18,817 - 7.88% 1,432,018 N Y N -

5 CTCI Shanghai

Co., Ltd.

CTCI Trading

Shanghai Co., Ltd.

2 1,476,525 169,071 67,113 67,113 - 13.64% 2,953,050 N N Y -

6 CTCI Resources

Engineering

Inc.

CTCI Smart

Engineering Corp.

5 867,505 267,102 267,102 267,102 - 92.37% 1,735,011 N N N -

7 CTCI Overseas

Co., Ltd.

CTCI Americas, Inc. 3 5,166,013 5,936 - - - - 10,322,026 N N N -

8 ECOVE

Environment

Corp.

ECOVE Solar Energy

Corporation

2 9,756,476 1,143,589 1,143,589 968,043 - 23.44% 14,634,714 N N N -

Tabl e 2 Page 5301

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Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

9 ECOVE Solar

Energy

Corporation

ECOVE South

Corporation Ltd.

2 1,462,194$ 14,000$ 14,000$ 14,000$ -$ 1.91% 2,193,291$ N N N -

9 ECOVE Solar

Energy

Corporation

ECOVE Central

Corporation Ltd.

2 1,462,194 19,790 16,790 16,790 - 2.71% 2,193,291 N N N -

9 ECOVE Solar

Energy

Corporation

ECOVE Solar Power

Corporation

2 1,462,194 694,248 694,248 600,355 - 94.96% 2,193,291 N N N -

10 ECOVE Solar

Power

Corporation

ECOVE Solar

Energy Corporation

5 408,122 12,420 12,420 12,420 - 6.09% 612,183 N N N -

Tabl e 2 Page 6302

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Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:



Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories; fill in the number of category each case belongs to:

(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 90% 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.

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.

　　[The company]

　　　(1)The limit on endorsements and guarantees granted to a single party shall not exceed 300% of the Company’s net assets value in last financial statements which was audited by accountant.

　　　(2)The ceiling on total endorsements and guarantees shall not exceed 600% of the Company’s net assets value in last financial statements which was audited by accountant.

　　[Domestic subsidiaries and overseas subsidiaries]

　　　(1)The limit on endorsements and guarantees granted to a single party shall not exceed 100% to 300% of the Company's net assets value in last financial statements which was audited by accountant.

　　　(2)The ceiling on total endorsements and guarantees shall not exceed 200% to 600% of the Company's net assets value in last financial statements which was audited by accountant.

Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period.

Note 5: Once endorsement/guarantee contracts or promissory notes are signed/issued by the endorser/guarantor company to the banks, the endorser/guarantor company bears endorsement/guarantee liabilities. And all other

events involve endorsements and guarantees should be included in the balance of outstanding endorsements and guarantees.

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.

Table 2 Page 7303

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Type of marketable

securities Name of Investee company

Number of shares/

denominations

Book value

(Note 3) Ownership (%) Market value

CTCI Corp. Fund Fuh Hwa China New Economy

Balance

N/A Financial assets at fair

value through profit or

loss-current

500,000 5,000$ - 4,610$ -

CTCI Corp. Fund BlackRock Global Fund - European

Value Fund A2 USD Hedged



loss-current

12,438 4,602 - 3,835 -

CTCI Corp. Fund Fubon US Preferred Stock ETF N/A Financial assets at fair


loss-current

500,000 10,000 - 9,115 -

19,602$ 17,560$

Adjustment 2,042)(

17,560$

CTCI Corp. Common Stock China Steel Chemical Corp. The Company is the

supervisor

Financial asset at fair value


income-current

1,776,916 100,615$ - 239,883$ -

CTCI Corp. Common Stock United Renewable Energy Co., Ltd. N/A Financial asset at fair value


income-current

1,717,015 17,342 - 12,380 -

CTCI Corp. Common Stock Taiwan Cement Corp. N/A Financial asset at fair value


income-current

1,980,000 68,447 - 70,092 -

186,404$ 322,355$

Adjustment 135,951

322,355$

Footnote

（Note 4）


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

For the year ended December 31, 2018Table 3 Expressed in thousands of NTD


Securities held by

(Note 1)

Relationship with the

securities issuer

(Note 2)

General

ledger account

As of December 31, 2018

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Type of marketable


Number of shares/

denominations

Book value


Footnote

（Note 4）Securities held by

(Note 1)


securities issuer

(Note 2)

General

ledger account


CTCI Corp. Common Stock Core Pacific City Co., Ltd. N/A Financial assets at fair value


income-non-current

22,428,000 360,000$ 2.26 239,615$ -

CTCI Corp. Common Stock CDIB & Partners

Investment Holding

Corp.

The Company is the

supervisor



income-non-current

27,000,000 250,000 2.48 250,000 -

CTCI Corp. Common Stock Metro-consultant Co.,

Ltd.

The Company is the

Board of director



income-non-current

300,000 3,000 6.00 3,000 -

CTCI Corp. Common Stock Ever Victory Global Limited. N/A Financial assets at fair value


income-non-current

4,230,000 292,225 2.32 292,225 -

CTCI Corp. Common Stock Heng Keng Corp. N/A Financial assets at fair value


income-non-current

20,000 3,000 5.12 - -

908,225 784,840$

Less: Accumulated impairment 123,385)(

784,840$

CTCI Investment Corp. Fund Franklin Templeton Sinoam Money

Market Fund

N/A Financial assets at fair value

through profit or loss-current

671,211 6,927$ - 6,927$ -

CTCI Investment Corp. Common Stock United Renewable Energy Co., Ltd. N/A Financial assets at fair value


income-current

265,030 1,911 - 1,911 -

CTCI Investment Corp. Common Stock CTCI Corp. The Company Financial assets at fair value


income-non-current

344,436 15,155 0.05 15,155 -

CTCI Investment Corp. Common Stock Global Strategic Investment Inc. N/A Financial assets at fair value


income non-current

283,500 962 0.65 962 -

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


CTCI Development Corp. Common Stock CTCI Corp. The Company Financial assets at fair value


income-non-current

912,170 40,135$ 0.12 40,135$ -

CTCI Development Corp. Common Stock CTCI Advanced

System Inc.

Subsidiary Financial assets at fair value


income-non-current

324,417 13,463 1.38 13,463 -

CTCI Development Corp. Common Stock United Renewable Energy Co., Ltd. N/A Financial assets at fair value


income-current

675,010 4,867 - 4,867 -

CTCI Development Corp. Fund FSITC Taiwan Money Market N/A Financial assets at fair value


100,539 1,536 - 1,536 -

CTCI Development Corp. Fund Taishin 1699 Money Market Fund N/A Financial assets at fair value


8,143,624 109,997 - 109,997 -

CTCI Resources

Engineering Inc.

Common Stock United Renewable Energy Co., Ltd. N/A Financial assets at fair value


income-current

726,080 5,235 - 5,235 -

CTCI Resources

Engineering Inc.

Common Stock Global Strategic Investment Inc. N/A Financial assets at fair value


income-non-current

567,000 1,924 1.29 1,924 -

CTCI Resources

Engineering Inc.

Fund Yuanta De-Li Money Market Fund N/A Financial assets at fair value


3,685,390 59,999 - 59,999 -

CTCI Resources

Engineering Inc.

Fund Taishin 1699 Money Market Fund N/A Financial assets at fair value


1,850,906 25,000 - 25,000 -

ECOVE Waste

Management Corporation

Fund Prudential Financial Money Market N/A Financial assets at fair value


207,498 3,277 - 3,277 -

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


ECOVE Waste


Fund FSITC Taiwan Money Market N/A Financial assets at fair value


1,311,441 20,033$ - 20,033$ -

ECOVE Waste




1,333,007 18,005 - 18,005 -

ECOVE Waste


Fund Franklin Templeton Sinoam Money

Market Fund



891,706 9,202 - 9,202 -

ECOVE Waste


Common Stock Taiwan Cement Corp. N/A Financial assets at fair value


income-current

478,841 16,951 - 16,951 -

ECOVE Wujih Energy

Corporation



65,511 1,001 - 1,001 -

ECOVE Wujih Energy

Corporation



148,083 2,000 - 2,000 -

ECOVE Wujih Energy

Corporation


Market Fund



4,616,996 47,650 - 47,650 -

ECOVE Wujih Energy

Corporation



income-current

475,508 16,833 - 16,833 -

ECOVE Environment

Corp.



income-current

472,758 16,735 - 16,735 -

ECOVE Environment

Corp.


Market Fund



198,085 2,044 - 2,044 -

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


ECOVE Environment

Corp.



income-current

455,157 3,282$ - 3,282$ -

ECOVE Environment

Corp.

Common Stock TeamWIN Opto-Electronics

Co., Ltd.



income-non-current

150,000 475 2.46 475 -

ECOVE Environment

Corp.

Common Stock Eastern Pacific Energy Sdn. Bhd. ECOVE Environment

Corp.'s President is the

director



income-non-current

10,000 68 10.00 68 -

ECOVE Environmental

Services Corporation

Common Stock CTCI Corp. The Company Financial assets at fair value


income-current

1,028 45 - 45 -

ECOVE Environmental




income-current

1,251,971 44,320 - 44,320 -

ECOVE Environmental




income-current

559,567 4,034 - 4,034 -

ECOVE Environmental


Fund Schroder 2022 Emerging Market

Sovereign Bond Fund



35,000 10,596 - 10,596 -

ECOVE Environmental




3,366,412 45,470 - 45,470 -

ECOVE Environmental


Fund Capital Money Market Fund N/A Financial assets at fair value


620,717 10,000 - 10,000 -

ECOVE Mioali Energy

Corporation



518,246 7,000 - 7,000 -

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


ECOVE Mioali Energy

Corporation



65,579 1,001$ - 1,001$ -

ECOVE Mioali Energy

Corporation


Market Fund



581,852 6,005 - 6,005 -


Ltd.

Common Stock CHIYODA(Thailand) Co. Ltd. N/A Financial assets at fair value


income-non-current

3,600 342 9.00 342 -

Crown Asia-2

Investment Limited



income-current

500 22 - 22 -

CTCI Advanced System

Inc.



6,547,236 100,016 - 100,016 -


Inc.



income-current

908,578 32,164 - 32,164 -


Inc.



income-current

674,430 4,862 - 4,862 -


Inc.

Bonds BANK OF CHINA LTD PARIS N/A Financial assets at fair value


income-current

6,000,000 26,778 - 26,778 Note 5

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities in accordance with IAS 39, ‘Financial instruments: recognition and measurement’.

Note 2: Leave the column blank if the issuer of marketable securities is non-related party.

Note 3: Fill in the book value without deduction of allowance for valuation loss of the marketable securities.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Note 5: The book value of bonds denominated in CNY.

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Number of

shares

(thousands) Amount

Number of

shares

(thousands) Amount

Number of

shares

(thousands) Selling price Book value

Gain (loss) on

disposal

Number of

shares

(thousands) Amount

CTCI Advanced

Systems Inc.

FSITC Taiwan Money Market Financial assets at fair


loss-current

- - 3,946 $ 60,000 34,645 $ 528,000 32,043 $ 488,294 $ 488,000 $ 294 6,547 $ 100,000

ECOVE

Environment

Corp.

ECOVE Solar Energy Corporation Equity investments

accounted for under the

equity method

Gintech Energy

Corporation.

Other related

party

28,270 311,114 34,976 532,213

(Note 5)

- - - - 63,246 854,787

ECOVE

Environmental

Services

Corporation

Franklin Templeton Sincom Money

Market Fund

Financial assets at fair


loss

- - 18,013 185,030 13,614 140,000 31,627 325,408 325,030 378 - -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more.

Note 4: 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.

Note 5: The company additionally invest in ECOVE Solar Energy Corporation on September, 2018 at total amount of $482,884. Included total amount of remeasured original holding shares, investment income of this period, and net value adjustment $49,329.



Balance as at December 31,

2018


Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital


Addition

（Note 3）

Disposal

（Note 3）

Investor

Marketable

securities

（Note 1）

General

ledger account

Counterparty

（Note 2）

Relationship

with

the investor

（Note 2）

Balance as at

January 1, 2018

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Reason for

Relationship Basis or acquisition of

Relationship Original owner who between the

originalDate of the reference used real estate and

Real estate Real estate Date of the Transaction Status of with the sold the real estate owner and the original in setting the status of the Other

acquired by acquired event amount payment Counterparty counterparty to the counterparty acquirer transaction Amount price real estate commitments

CTCI

Development

Corp.

Land 2018/1/23 1,984,400$ 198,440$ Xintianmu

Development

Co., Ltd.

None - - - -$ Appraisal report To build second

office building

None

Note 1: The appraisal result should be presented in the ‘Basis or reference used in setting the price’ column if the real estate acquired should be appraised pursuant to the regulations.



Note 3: Date of the event referred to herein is the date of contract signing date, date of payment, date of execution of a trading order, date of title transfer, date of board resolution, or other date that can confirm the counterparty and the

monetary amount of the transaction, whichever is earlier.

Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more


the real estate is disclosed below:

If the counterparty is a related party, information as to the last transaction of


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Purchases

(sales) Amount

Percentage of total

purchases (sales) Credit term Unit price Credit term Balance

Percentage of

total notes/accounts

receivable (payable)

ECOVE Environmental


ECOVE Waste Management

Corporation

Second-tier

subsidiary(Sales) 572,562)($ 0.89% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference100,417$ 1.00% -

ECOVE Environmental


ECOVE Wujih Energy

Corporation

Second-tier

subsidiary(Sales) 236,890)( 0.37% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference83,809 0.84% -

ECOVE Environmental


ECOVE Mioali Energy

Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


ECOVE Environmental



Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


ECOVE Wujih Energy

Corporation


Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Corp.Blue Whale Water

Technology Co., Ltd.Associate (Sales) 369,767)( 0.58% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference539 0.01% -

CTCI Corp. Powertec Energy Corp. Associate (Sales) 423,310)( 0.66% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference- - -


Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more




FootnotePurchaser/seller Counterparty

Relationship

with the

counterparty

Transaction

Differences in transaction terms

compared to third party

transaction Notes/accounts receivable (payable)

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Purchases

(sales) Amount

Percentage of total


Percentage of


receivable (payable) FootnotePurchaser/seller Counterparty

Relationship

with the

counterparty

Transaction




CTCI Corp. CTCI Overseas Co., Ltd Subsidiary (Sales) 565,150)($ 0.88% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference86,164$ 0.86% -

CTCI Overseas Co., Ltd. CTCI Corp. The Company (Sales) 316,188)( 0.49% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Engineering &

Construction Sdn. Bhd.

CCJV P1 Engineering &

Construction Sdn. Bhd.Subsidiary (Sales) 400,143)( 0.62% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Advanced Systems

Inc.CTCI Corp. The Company (Sales) 293,102)( 0.46% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Development Corp. CTCI Corp. The Company (Sales) 302,282)( 0.47% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Machinery Corp. CTCI Corp. The Company (Sales) 347,699)( 0.54% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI (Thailand) Co., Ltd. CTCI Corp. The Company (Sales) 360,643)( 0.56% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Smart Engineering

Corp.

ECOVE Solar Energy

Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Beijing Co., Ltd. CTCI Corp. The Company (Sales) 211,770)( 0.33% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CIMAS Engineering

CompanyCTCI Corp. The Company (Sales) 123,762)( 0.19% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant


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Purchases

(sales) Amount

Percentage of total


Percentage of



Relationship

with the

counterparty

Transaction




CTCI Engineering &


MIE INDUSTRIAL SDN.

BHD.Associate (Sales) 463,873)($ 0.72% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference565,408$ 5.63% -

CTCI Corp. EVER ECOVE Corp. Associate (Sales) 44,447)( 0.07% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant



Corporation

ECOVE Environmental


Second-tier

subsidiaryPurchases 572,562 0.89%

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference100,417)( 0.89% )( -


Corporation

ECOVE Wujih Energy

Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference69,964)( 0.62% )( -

ECOVE Wujih Energy

Corporation

ECOVE Environmental


Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference83,809)( 0.74% )( -

ECOVE Mioali Energy

Corporation

ECOVE Environmental


Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference23,224)( 0.21% )( -


Corporation

ECOVE Environmental


Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference38,491)( 0.34% )( -

CTCI Corp. Pan Asia Corp. Associate Purchases 145,731 0.23% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference91,867)( 0.81% )( -

CTCI Corp.CTCI Advanced Systems

Inc.Subsidiary Purchases 293,102 0.46%

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference35,490)( 0.31% )( -

CTCI Corp. CTCI Machinery Corp. Subsidiary Purchases 347,699 0.54% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference5,120)( 0.05% )( -

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Purchases

(sales) Amount

Percentage of total


Percentage of



Relationship

with the

counterparty

Transaction




CTCI Corp. CTCI Development Corp. Subsidiary Purchases 302,282$ 0.47% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference1,457)($ 0.01% )( -

CTCI Corp. CTCI (Thailand ) Co., Ltd. Subsidiary Purchases 360,643 0.56% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference8,299)( 0.07% )( -

CTCI Corp. CTCI Overseas Co., Ltd. Subsidiary Purchases 316,188 0.49% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference91,955)( 0.81% )( -

CTCI Engineering

& Construction Sdn. Bhd.

MIE INDUSTRIAL SDN.

BHD.Associate Purchases 1,598,407 2.49%

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference205,489)( 1.82% )( -



MIE INDUSTRIAL SDN.


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference1,060,653)( 9.39% )( -



CTCI Engineering &

Construction Sdn. Bhd.Subsidiary Purchases 400,143 0.62%

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference68,015)( 0.60% )( -

CTCI Overseas Co., Ltd. CTCI Corp. The Company Purchases 565,150 0.88% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference86,164)( 0.76% )( -

CTCI Corp. CTCI Beijing Co., Ltd.Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference2,741)( 0.02% )( -

CTCI Corp.CIMAS Engineering

Company

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference4,312)( 0.04% )( -

Note: ECOVE Solvent Recycling Corporation are accuunted in property, plant, and equipment.

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Table 7

Amount Action taken

CTCI Corp.CTCI Machinery Corp.

Subsidiary 432,000$ Note 1 -$ - -$ -

CTCI Corp. EVER ECOVE Corp. Associate 374,425 0.24 - - - -

CTCI Corp. CTCI Development Corp. Subsidiary 121,054 Note 2 - - - -

CTCI Engineering & Construction Sdn.

Bhd.MIE INDUSTRIAL SDN. BHD. Associate 565,408 1.64 - - - -

CTCI Corp. CTCI (Thailand ) Co., Ltd. Subsidiary 397,044 Note 1 - - - -

ECOVE Environmental Services

Corporation.


Corporation.Second-tier subsidiary 100,417 3.83 - - - -

Note 1：Other accounts receivable arise from lending capital.

Note 2：Cash dividends


Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more


Expressed in thousands of NTD


Amount collected

subsequent to the

balance sheet date

Allowance for

doubtful accounts Creditor Counterparty

Relationship

with the counterparty


2018 Turnover rate

Overdue receivables

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General ledger account Amount Transaction terms

Percentage of consolidated total operating

revenues or total assets (Note 3)

0 CTCI Corp. CTCI Overseas Co., Ltd. 1 Sales revenue 565,150)($ Negotiated by both parties 0.88% )(

1 ECOVE Environmental Services

Corporation


Corporation

3 〃 572,562)( 〃 0.89% )(

1 〃 ECOVE Mioali Energy

Corporation

3 〃 149,943)( 〃 0.23% )(

1 〃 ECOVE Wujih Energy

Corporation

3 〃 236,890)( 〃 0.37% )(

1 〃 ECOVE Solvent Recycling

Corporation

3 〃 108,464)( 〃 0.17% )(

2 CTCI Machinery Corp. CTCI Corp. 2 〃 347,699)( 〃 0.54% )(

3 CTCI (Thailand ) Co., Ltd. 〃 2 〃 360,643)( 〃 0.56% )(

4 CTCI Advanced Systems Inc. 〃 2 〃 293,102)( 〃 0.46% )(

5 CTCI Development Corp. 〃 2 〃 302,282)( 〃 0.47% )(

6 CTCI Engineering & Construction Sdn.

Bhd.



3 〃 400,143)( 〃 0.62% )(

7 ECOVE Wujih Energy Corporation ECOVE Waste Management

Corporation

3 〃 382,669)( 〃 0.60% )(

8 CTCI Overseas Co., Ltd. CTCI Corp. 2 〃 316,188)( 〃 0.49% )(

9 CTCI Smart Engineering Corp ECOVE Solar Energy

Corporation

3 〃 211,230)( 〃 0.33% )(

10 CTCI Beijing Co., Ltd. CTCI Corp. 2 〃 211,770)( 〃 0.33% )(

11 CIMAS Engineering Company 〃 2 〃 123,762)( 〃 0.19% )(


Significant inter-company transactions during the reporting years




Number

(Note 1) Company name Counterparty

Relationship

(Note 2)

Transaction

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Number


Relationship

(Note 2)

Transaction


Corporation


Corporation

3 Accounts receivable 100,417$ Negotiated by both parties 0.16%

3 CTCI (Thailand ) Co., Ltd. CTCI Corp. 2 Other receivables 392,251 〃 0.61%

0 CTCI Corp. CTCI Machinery Corp. 1 〃 432,000 〃 0.67%

0 〃 CTCI (Thailand ) Co., Ltd. 1 〃 397,044 〃 0.62%

0 〃 CTCI Overseas (BVI) Co.

and its subsidiaries.

1 Advance construction

receipt

5,795,050 〃 9.04%

0 〃 CTCI Machinery Corp. 1 〃 132,269 〃 0.21%

2 CTCI Machinery Corp. CTCI Corp. 2 〃 2,497,560 〃 3.90%

12 CTCI Resources Engineering Inc. 〃 2 〃 252,390 〃 0.39%

3 CTCI (Thailand ) Co., Ltd. 〃 2 〃 720,506 〃 1.12%

0 CTCI Corp. CTCI Development Corp. 1 Refundable deposits 128,300 〃 0.20%

0 〃 CTCI (Thailand ) Co., Ltd. 1 Guarantee 1,152,996 Not applicable Not applicable

0 〃 CCJV P1 E&C SDN. BHD. 1 〃 1,214,230 〃〃

0 〃 CTCI Overseas Co., Ltd. 1 〃 4,823,865 〃〃

0 〃 CINDA Engineering &

Construction Private Limited

1 〃 2,851,682 〃〃

0 〃 CTCI Arabia Ltd. 1 〃 3,778,442 〃〃

0 〃 CTCI Engineering &


1 〃 1,820,025 〃〃

0 〃 CTCI Americas, Inc. 1 〃 1,402,759 〃〃

0 〃 CTCI Beijing Co., Ltd. 1 〃 1,068,175 〃〃

0 〃 CTCI Shanghai Co., Ltd. 1 〃 865,925 〃〃

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Number


Relationship

(Note 2)

Transaction

0 CTCI Corp. CTCI Trading Shanghai Co.,

Ltd.

1 Guarantee 161,239$ Not applicable Not applicable

0 〃 CTCI Singapore Pte. Ltd. 1 〃 2,452,437 〃〃

0 〃 CTCI Machinery Corp. 1 〃 2,074,115 〃〃

0 〃 CTCI & HEC Water Business

Co., Ltd.

1 〃 102,000 〃〃

0 〃 CTCI Malaysia Sdn. Bhd. 1 〃 829,980 〃〃

0 〃 CTCI Development Corp. 1 〃 500,000 〃〃

0 〃 CTCI CMCE JV Sdn. Bhd. 1 〃 467,970 〃〃

0 〃 CIPEC Construction Inc. 1 〃 524,599 〃〃

2 CTCI Machinery Corp. CTCI Smart Engineering

Corp.

3 〃 560,000 〃〃

12 CTCI Resources Engineering Inc. CTCI Smart Engineering

Corp.

3 〃 267,102 〃〃

13 ECOVE Environment Corp. ECOVE Solar Energy

Corporation

3 〃 1,143,589 〃〃

14 ECOVE Solar Energy Corporation ECOVE Solar Power

Corporation

3 〃 694,248 〃〃

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1)Parent company is ‘0’.


Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between

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.

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Balance as at

December 31, 2018

Balance as at

December 31, 2017 Number of shares Ownership (%) Book value

CTCI Corp. CTCI Smart Engineering

Corp.

Taiwan Design, management,

and building of nuclear

power, thermal power,

fire pumped storage

power generation and

others related to

engineering.

$ 456,251 $ 456,251 59,098,624 97.09 $ 150,695 ($ 325,492) ($ 316,020) A subsidiary

CTCI Corp. CTCI Resources

Engineering Inc.

Taiwan Mining of geology, sea oil

and gas, marbal and

rare；planning, design,

monitor of civil, traffic

environment and various

mechanical and

electrical equipment.

263,455 263,455 24,762,252 99.05 284,047 33,446 30,724 A subsidiary


Systems Inc.

Taiwan Systems planning, design,

integration, and

engineering for various

IT systems, etc.

44,409 44,409 11,444,842 48.72 265,289 76,235 37,141 A subsidiary


Corp.

Taiwan Real estate and leasing business. 1,870,000 1,690,000 187,000,000 100.00 2,527,615 126,065 126,065 A subsidiary


Corporation

Taiwan General investment. 2,072,000 2,072,000 207,200,000 100.00 1,730,250 ( 192,980) ( 192,980) A subsidiary

CTCI Corp. ECOVE Environment

Corp.

Taiwan General investment. 938,889 938,889 38,457,105 57.31 2,795,718 806,912 462,434 A subsidiary

CTCI Corp. CTCI (Thailand)

Co., Ltd.

Thailand Design and building of

petrochemical plant.

116,894 116,894 1,249,500 49.00 58,735 111,154 54,465 A subsidiary


Corp.

Taiwan Secondary processing

of steel, piping, heat

treatment, manufacture

of pollution control

equipment and non-

destructive testing, etc.

293,800 293,800 20,000,000 100.00 480,434 67,207 67,207 A subsidiary

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)） Footnote Investor

Investee

(Notes 1 and 2) Location Main business activities

Initial investment amount Shares held as at December 31, 2018


Information on investees (not including investees in Mainland China)




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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Corp. CTCI Arabia Ltd. Arabia Construction and

maintenance of refinery, storage

tanks and

chemical plant.

$ 23,312 $ 23,312 500 50.00 ($ 562,811) $ 164,510 $ 82,255 A subsidiary

CTCI Corp. Sinogal-Waste

Services Corp.

Macao Management of waste recycling

site and

maintenance of related

mechanical and

equipment, etc.

4,958 4,958 - 30.00 57,921 167,023 50,107 A subsidiary


Ltd.

Singapore Investment and planning

of related engineering.

152,254 152,254 5,100,000 100.00 ( 652,532) ( 79,338) ( 79,338) A subsidiary


(BVI) Corp.

BVI Investment and planning


308,554 308,554 6,740,000 100.00 1,833,752 170,375 170,375 A subsidiary

CTCI Corp. CTCI Engineering &


Malaysia Investment and planning


4,118 4,118 450,000 60.00 ( 3,066) ( 124,226) ( 74,535) A subsidiary

CTCI Corp. CTCI CMCE JV SDN.

BHD.

Malaysia Construction planning. 2,759 2,759 382,500 51.00 9,041 9,945 8,739 A subsidiary

CTCI Corp. CTCI Americas, Inc. USA To extend foreign business, the

Group strengthen the collaborative

relationship with local business

owner and supplier, developing

adequate potential supplier, and

help them to operate projects,

purchase and other related

businesses.

3,217 3,217 100,000 100.00 3,954 ( 3,974) ( 3,974) A subsidiary

CTCI Corp. CCJV P1

Engineering &

Construction Sdn.

Bhd.

Malaysia Construction planning. 2,259 2,259 247,500 99.00 ( 79,510) ( 705,433) ( 698,379) A subsidiary


Business Co., Ltd.

Taiwan Sewerage System BOT Project. 255,000 255,000 25,500,000 51.00 244,516 ( 10,045) ( 5,123) A subsidiary

CTCI Corp. Blue Whale Water

Technology Co., Ltd.

Taiwan Wastewater Reclamation Unit BTO

Project.

347,900 347,900 34,790,000 49.00 434,937 143,958 70,539 An investee under

equity method

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Corp. Pan Asia Corp. Taiwan Input of foreign labor

and technologies,

technical cooperation

with foreign construction

business, and construction of

engineering construction, etc.

$ 71,543 $ 71,543 39,219,509 34.27 $ 526,590 $ 19,375 $ 6,640 An investee under

equity method

CTCI Corp. EVER ECOVE Corp. Taiwan Waste service, waste clear and

steam power cogeneration.

250,000 - 25,000,000 25.00 246,635 ( 13,460) ( 3,365) An investee under

equity method

CTCI Corp. HDEC-CTCI (Linhai)

Corporation

Taiwan Reclaimed water operators. 202,500 - 20,250,000 45.00 201,389 ( 2,469) ( 1,111) An investee under

equity method

$ 10,553,599 ($ 208,134)

CTCI Development

Corp.

CTCI Chemical

Corp.

Taiwan Manufacture wholesale,

and retail of industrial

chemicals.

13,522 13,522 480,661 6.77 16,158 58,813 3,982 A second-tier subsidiary

CTCI Development

Corp.

ECOVE Environment

Corp.

Taiwan General investment. 11,270 11,270 243,918 0.36 17,762 806,912 3,084 A subsidiary

CTCI Development

Corp.

CTCI Resources

Engineering Inc.


and gas, marbal and




mechanical and


23 23 1,388 0.01 16 33,446 2 A subsidiary

CTCI Development

Corp.

Crown Asia-2

Investment Limited

Taiwan General investment. 2,531 2,531 25,000 100.00 1,111 504 504 A second-tier subsidiary

CTCI Investment

Corporation

CTCI Chemical

Corp.



chemicals.

32,153 32,153 1,657,207 23.34 55,708 58,813 13,728 A second-tier subsidiary

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Investment

Corporation

ECOVE Environment

Corp.

Taiwan General investment. $ 1,374 $ 1,374 32,132 0.05 $ 2,339 $ 806,912 $ 406 A subsidiary

CTCI Investment

Corporation


Corp.




fire pumped storage


others related to

engineering.

11 11 1,000 0.002 3 ( 325,492) ( 2) A subsidiary

CTCI Investment

Corporation

Powertec Energy

Corp.

Taiwan Basically chemical industry

power generation, rotation

electric, machinery

manufacturing of electric

power and services of

energy technologies.

1,832,107 1,832,107 211,291,668 16.03 1,227,090 ( 1,565,744) ( 257,825) An investee under

equity method

CTCI Investment

Corporation

MIE INDUSTRIAL

SDN. BHD.

Malaysia Equipment & Instrument,

Procurement & Contruction &

Panel.


equity method

CTCI Machinery

Corp.

Boretech

Resource

Recovery

Engineering

Co., Ltd.

(Cayman)

Cayman

Island

Share holding and

investment.

154,744 154,744 6,666,667 10.00 146,084 2,188 277 An investee under

equity method

ECOVE Environment

Corp.


Corporation

Taiwan International trade and

environmental service of waste

disposal, equipment installation

and mechanical installation, etc.


ECOVE Environment

Corp.

ECOVE Wujih Energy

Corporation

Taiwan Environmental service of

waste disposal device

installation, steam power

cogeneration, etc.

425,085 425,085 29,400,000 98.00 1,242,060 275,512 270,002 A second-tier subsidiary

ECOVE Environment

Corp.

ECOVE Environmental


Taiwan Management of waste

recycling site and maintenance of

related

mechanical and

equipment, etc.


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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



ECOVE Environment

Corp.

ECOVE Mioali

Energy Corporation




cogeneration, etc.

$ 1,012,483 $ 1,012,483 56,249,000 75.00 $ 1,003,951 $ 129,055 $ 96,790 A second-tier subsidiary

ECOVE Environment

Corp.

ECOVE Solar Energy

Corporation

Taiwan Energy technology service. 762,349 279,465 63,245,452 100.00 854,787 43,423 27,700 A second-tier subsidiary

ECOVE Environment

Corp.

Yuan Ding

Resources

Management Corp.

Taiwan Waste service, waste clear other

environmental service, and

environmental pollution service,

etc.

27,000 27,000 2,700,000 60.00 23,543 78 47 A second-tier subsidiary

ECOVE Environment

Corp.

Boretech

Resource

Recovery

Engineering

Co., Ltd.

(Cayman)

Cayman

Island

Share holding and

investment.


equity method

ECOVE Environment

Corp.


Corporation

Taiwan Operating basic chemical industry

and manufacture of other chemical

products.

86,480 - 8,099,000 90.00 80,168 ( 7,015) ( 6,312) A second-tier subsidiary

ECOVE Environment

Corp.

EVER ECOVE Corp. Taiwan Waste service, waste clear and


50,000 - 5,000,000 5.00 49,336 ( 13,460) ( 664) An investee under

equity method

ECOVE Environmental


ECOVE Wujih Energy

Corporation




cogeneration, etc.


ECOVE Environmental


CTCI Chemical

Corp.

Taiwan Manufacture, wholesale,


chemicals.


ECOVE Environmental


Sinogal-Waste

Services Corp.

Macao Management of waste

recycling site and


mechanical and

equipment, etc.

4,964 4,964 - 30.00 57,921 167,023 50,107 A second-tier subsidiary

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



ECOVE Environmental


ECOVE Mioali

Energy Corporation




cogeneration, etc.

$ 13 $ 13 1,000 0.001 $ 18 $ 129,055 $ 2 A second-tier subsidiary

ECOVE Environmental



Corporation



products.

10 - 1,000 0.01 8 ( 7,015) 2 A second-tier subsidiary

ECOVE Waste

Management

Corporation

ECOVE Environmental




related

mechanical and

equipment, etc.

53 53 1,000 0.01 64 367,025 23 A second-tier subsidiary

ECOVE Waste

Management

Corporation

Yuan Ding

Resources

Management Corp.




etc.

18,000 18,000 1,800,000 40.00 15,695 78 31 A second-tier subsidiary

ECOVE Solar Energy

Corporation

ECOVE Solar Power

Corporation

Taiwan Energy technology service. 180,000 180,000 18,000,000 100.00 204,061 18,678 18,678 A second-tier subsidiary

ECOVE Solar Energy

Corporation

ECOVE Central

Corporation

Ltd.

Taiwan Energy technology service. 7,500 7,500 750,000 100.00 8,737 719 719 A second-tier subsidiary

ECOVE Solar Energy

Corporation


Ltd.

Taiwan Energy technology service. 16,500 16,500 1,650,000 100.00 17,969 918 918 A second-tier subsidiary

ECOVE Solar Energy

Corporation

G.D. International, LLC. USA Energy technology service. 189,197 189,197 - 100.00 368,589 27,685 27,927 A second-tier subsidiary

G.D International,

LLC.

Lumberton Solar W2-090,

LLC.

USA Energy technology service. 189,197 189,197 - 100.00 367,710 27,685 27,685 A second-tier subsidiary

CTCI Overseas

(BVI) Corp.

CTCI Overseas

Co., Ltd.

Hong Kong Investment and planning


276,815 276,815 6,740,000 100.00 1,723,118 170,493 170,493 A second-tier subsidiary

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Overseas

Co., Ltd.

CTCI Arabia Ltd. Arabia Construction and


tanks and

chemical plant.

$ 22,610 $ 22,610 500 50.00 ($ 562,811) $ 164,510 $ 82,255 A subsidiary

CTCI Overseas

Co., Ltd.


(BVI) Corp.




CTCI Overseas

Co., Ltd.

CIPEC

Construction Inc.

Philippines Construction and


tanks and

chemical plant.

663 663 9,973 39.89 ( 10,282) ( 26,131) ( 10,432) A second-tier subsidiary

CTCI Overseas

Co., Ltd.

CIMAS

Engineering Corp.

Vietnam Chemical, petrochemical,

feasibility study &

planning, engineering

design, procurement &

fabrication, erection,

construction &

commissioning.

26,330 26,330 - 50.00 45,776 349 174 A second-tier subsidiary

CTCI Overseas

Co., Ltd.

CTCI Engineering &




2,879 2,879 300,000 40.00 ( 2,044) ( 124,226) ( 49,691) A subsidiary

CTCI Overseas

Co., Ltd.

CINDA

Engineering &

Construction

Private Limited

India Chemical, petrochemical,

feasibility study &




construction &

commissioning.

31,022 31,022 8,000,000 100.00 ( 33,345) ( 190,178) ( 190,178) A second-tier subsidiary

CTCI Overseas

Co., Ltd.

SUMBER MAMPU SDN.

BHD.

Malaysia Building of related engineering. 95 95 12,040 10.00 167,588 62,121 62,121 A second-tier subsidiary

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



Universal

Engineering

(BVI) Corp.

Superiority

(Thailand) Co., Ltd.

Thailand Investment and planning


$ 151 $ 151 2,156 49.00 ($ 83,961) $ 55,884 $ 55,884 A second-tier subsidiary

Superiority

(Thailand) Co.,

Ltd.

CTCI (Thailand)

Co., Ltd.



12,628 12,628 1,300,500 51.00 ( 75,577) 111,154 56,689 A subsidiary

CTCI Advanced

Systems Inc.

Century Ahead Ltd. Samoa Professional investment company. 25,097 25,097 750,000 100.00 32,800 7,609 7,609 A second-tier subsidiary

CTCI Smart

Engineering

Corp.

CTCI Chemical

Corp.



chemicals.


CTCI Resources

Engineering Inc.

CTCI Chemical

Corp.



chemicals.


CTCI Singapore

Pte. Ltd.

CTCI Netherlands B.V. Netherlands Engineers and other technical

design and consultancy.


CTCI Engineering &

Construction Sdn.

Bhd.

CTCI Malaysia SDN.

BHD.




CTCI Malaysia

SDN. BHD.

MIE INDUSTRIAL

SDN. BHD.


Procurement & Construction,

Panel.


equity method

SUMBER MAMPU

SDN. BHD.

CTCI Malaysia SDN.

BHD.




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.

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Remitted to

Mainland China

Remitted back

to Taiwan

CTCI Beijing

Co., Ltd.

Design, survey, construction

and inspection of various

engineering and construction

projects, plants, machinery

and equipment, and

environmental protection

projects.

$ 433,473 2 $ 313,998 $ - $ - 313,998$ $ 266,564 100.00 $ 266,564 $ 1,782,248 $ 295,938 Note 3

CTCI Shanghai

Co., Ltd.

Design, survey, construction and

inspection of various engineering

and construction projects.

592,787 2 534,974 - 46,265 488,709 80,530 100.00 80,530 496,930 23,530 -

CTCI Advanced

Systems

Shanghai Inc.

Computer technology services. 23,055 2 23,055 - - 23,055 7,594 48.72 3,700 31,552 - Note 4

ECOVE

Environment

Consulting Corp.

Technical development, advisory

and service in environmental field;

environmental pollution control

equipment and related parts

wholesale, import and export, etc.

4,147 1 4,147 - - 4,147 6,720 53.39 3,588 12,355 - -

FuJian Gulie

Petrochemical Co.,

Ltd.

Operating in manufacturing and selling

of ethylene and othres.

10,277,948 2 132,773 159,452 - 292,225 - 1.31 - 292,225 - Note 5

CTCI Trading

Shanghai Co., Ltd.

General trade. 23,748 2 - - - - 20,281 100.00 20,281 64,678 - Note 6





Investee in

Mainland China


Book value of

investments in

Mainland China

as of December

31, 2018

Accumulated

amount

of investment

income

remitted back to

Taiwan as of

December 31,

2018

Table 10

Footnote Main business activities Paid-in capital

Investment method

（Note 1）

Accumulated

amount of

remittance from

Taiwan to

Mainland China

as of January 1,

2018

Accumulated

amount

of remittance

from Taiwan to

Mainland China

as of 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(2)B）

Net income of

investee as of

December 31,

2018

Amount remitted from Taiwan

to Mainland China/

Amount remitted back

to Taiwan for the year ended

December 31, 2018

Table 10 Page 1328

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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

CTCI Corp. $ 1,122,134 $ 1,183,170 $ 10,475,237

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(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: In the Investment income (loss) recognised by the Company for the year ended December 31, 2018 column:

(1)FuJian Galie Petrochemical Co., Ltd did not accrue investment income or loss since it was still in preparation.

(2)Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

A.The financial statements that are audited and attested by R.O.C. parent company’s CPA.

B.It is an insignificant subsidiary, and its financial report was not audited by the independent accountant.

C.Others.

Note 3: Invested by CTCI Overseas Co., Ltd.

Note 4: Invested by Century Ahead Ltd.

Note 5: Invested in Dynamic Ever Investments Limited through Ever Victory Global Limited.

Note 6: Invested by CTCI Shanghai Co., Ltd.

Table 10 Page 2329

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CTCI CORPORATION

PARENT COMPANY ONLY FINANCIAL

STATEMENTS AND REPORT OF INDEPENDENT

ACCOUNTANTS


------------------------------------------------------------------------------------------------------------------------------------

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.

330

54600

文字方塊

Appendix 2

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CTCI CORPORATION PARENT COMPANY ONLY BALANCE SHEETS


~6~

December 31, 2018 December 31, 2017 Assets Notes AMOUNT % AMOUNT %

Current assets 1100 Cash and cash equivalents 6(1) $ 8,228,593 16 $ 9,824,161 21

1110 Financial assets at fair value


6(2) and 12(4)

66,113 - 47,678 -

1120 Financial assets at fair value


income - current

6(3)

322,355 1 - - 1125 Available-for-sale financial assets

- current

12(4)

- - 406,401 1 1140 Contract assets - current 6(20) and 7 19,713,867 39 - -

1150 Notes receivable, net 2,730 - - - 1170 Accounts receivable, net 6(4) 4,503,941 9 831,810 2

1180 Accounts receivable - related

parties

7

623,701 1 144,887 -

1190 Receivables from customers on


- - 18,262,745 40

1200 Other receivables 57,549 - 48,947 - 1210 Other receivables - related parties 7 1,058,557 2 540,270 1

1220 Current income tax assets 55,748 - 55,747 - 1410 Prepayments 6(5) 2,009,308 4 1,684,235 4

1470 Other current assets - - 122,377 -

11XX Current Assets 36,642,462 72 31,969,258 69

Non-current assets 1517 Financial assets at fair value


income - non-current

6(3)

784,840 2 - -

1543 Financial assets measured at cost

- non-current

12(4)

- - 672,753 1

1550 Investments accounted for using

equity method

6(6)

11,851,518 23 12,246,300 27

1600 Property, plant and equipment 6(7) 300,724 1 301,716 1 1760 Investment property, net 6(8) and 7 152,254 - 153,600 -

1780 Intangible assets 40,343 - 90,863 - 1840 Deferred income tax assets 6(23) 414,835 1 396,860 1

1900 Other non-current assets 6(9) and 8 715,924 1 382,275 1

15XX Non-current assets 14,260,438 28 14,244,367 31

1XXX Total assets $ 50,902,900 100 $ 46,213,625 100

(Continued)

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CTCI CORPORATION PARENT COMPANY ONLY BALANCE SHEETS


The accompanying notes are an integral part of these parent company only financial statements.

~7~

December 31, 2018 December 31, 2017 Liabilities and Equity Notes AMOUNT % AMOUNT %

Current liabilities 2100 Short-term borrowings 6(10) $ 6,330,000 12 $ 2,770,000 6

2120 Financial liabilities at fair value


6(2) and 12(4)

548 - 4,426 -

2130 Contract liabilities - current 6(20) and 7 9,470,793 19 - - 2170 Accounts payable 6(11) 4,903,869 10 5,781,063 12

2180 Accounts payable - related parties 7 442,092 1 1,253,772 3 2190 Payables to customers on


- - 6,220,855 13 2200 Other payables 6(12) 1,307,788 2 1,382,387 3

2220 Other payables - related parties 7 3,700 - 25,819 - 2230 Current income tax liabilities 182,535 - 271,919 1

2300 Other current liabilities 6(13) 7,504,996 15 6,906,706 15

21XX Current Liabilities 30,146,321 59 24,616,947 53

Non-current liabilities 2570 Deferred income tax liabilities 6(23) 170,031 1 231,917 1

2600 Other non-current liabilities 6(6)(14) 3,127,819 6 3,412,729 7

25XX Non-current liabilities 3,297,850 7 3,644,646 8

2XXX Total Liabilities 33,444,171 66 28,261,593 61

Equity Share capital

3110 Common stock 6(17) 7,632,738 15 7,632,738 17 Capital surplus 6(18)

3200 Capital surplus 3,545,053 7 3,395,620 7 Retained earnings 6(19)

3310 Legal reserve 3,558,894 7 3,278,360 7 3320 Special reserve 763,794 2 765,904 2

3350 Unappropriated retained earnings 2,217,619 4 3,061,699 7 Other equity interest

3400 Other equity interest ( 247,534 ) ( 1 ) ( 170,454 ) ( 1 ) 3500 Treasury stocks 6(17) ( 11,835 ) - ( 11,835 ) -

3XXX Total equity 17,458,729 34 17,952,032 39

Significant contigent liabilities

and unrecognised contract

commitments

9

Significant events after the

balance sheet date

11

3X2X Total liabilities and equity $ 50,902,900 100 $ 46,213,625 100

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PARENT COMPANY ONLY STATEMENTS OF INCOME


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


~8~

Year ended December 31

2018 2017

Items Notes AMOUNT % AMOUNT %

4000 Operating revenue 6(20) and 7 $ 35,684,680 100 $ 48,591,380 100

5000 Operating costs 6(21)(22) and 7 ( 32,482,095 ) ( 91 ) ( 44,716,778 ) ( 92 )

5900 Net operating margin 3,202,585 9 3,874,602 8

5910 Unrealized profit on sales ( 1,106 ) - - -

5920 Realized profit on sales 1,980 - 1,980 -

5950 Gross profit 3,203,459 9 3,876,582 8

Operating expenses 6(21)(22) and 7

6200 General & administrative expenses ( 927,704 ) ( 3 ) ( 897,134 ) ( 2 )

6300 Research and development expenses ( 120,849 ) - ( 113,993 ) -

6000 Total operating expenses ( 1,048,553 ) ( 3 ) ( 1,011,127 ) ( 2 )

6900 Operating profit 2,154,906 6 2,865,455 6

Non-operating income and expenses

7010 Other income 7 144,834 - 1,051,614 2

7020 Other gains and losses 127,058 - ( 81,852 ) -

7050 Finance costs ( 43,532 ) - ( 11,563 ) -

7070 Share of loss of associates and joint

ventures accounted for under equity

method

6(6)

( 208,134 ) - ( 620,557 ) ( 1 )

7000 Total non-operating income and

expenses

20,226 - 337,642 1

7900 Profit before income tax 2,175,132 6 3,203,097 7

7950 Income tax expense 6(23) ( 347,595 ) ( 1 ) ( 397,749 ) ( 1 )

8200 Profit for the year $ 1,827,537 5 $ 2,805,348 6

Other comprehensive income


income that will not be reclassified to

profit or loss

8311 Other comprehensive income, before tax,

actuarial gains (losses) on defined benefit

plans

6(15)

$ 30,217 - ( $ 59,470 ) -

8316 Unrealised gains (losses) from

investments in equity instruments

measured at fair value through other


31,159 - - -

8330 Share of other comprehensive income of

associates and joint ventures accounted

for using equity method, components of

other comprehensive income that will not

be reclassified to profit or loss

( 76,465 ) - ( 9,361 ) -

8349 Income tax related to components of other

comprehensive income that will not be

reclassified to profit or loss

13,335 - 10,111 -



loss

8361 Cumulative translation differences of

foreign operations

6(6)

( 63,746 ) - 9,184 -

8362 Unrealized profit or (loss) on valuation of

available-for-sale financial assets

- - 14,767 -

8380 Total Share of other comprehensive

income of associates and joint ventures

accounted for using equity method,

components of other comprehensive


loss

- - ( 5,900 ) -

8300 Other comprehensive loss for the year ( $ 65,500 ) - ( $ 40,669 ) -

8500 Total comprehensive income for the year $ 1,762,037 5 $ 2,764,679 6

Basic earnings per share 6(24)

9750 Basic earnings per share $ 2.40 $ 3.68

Diluted earnings per share 6(24)

9850 Diluted earnings per share $ 2.39 $ 3.67

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PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY


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

Retained Earnings Other equity interest

Notes

Share capital -

common stock

Capital surplus

Legal reserve

Special reserve

Unappropriated

retained earnings

Cumulative

translation

differences of forign

operations

Unrealized gains

(loss) from financial

assets measured at

fair value through

other comprehensive

income

Unrealized gain or

loss on available-for-

sale financial assets

Treasury

stocks

Total equity


~9~

For the year ended December 31,2017 Balance at January 1, 2017 $ 7,632,738 $ 3,322,098 $ 3,056,071 $ 768,121 $ 2,519,655 ( $ 235,466 ) $ - $ 46,961 ( $ 11,835 ) $ 17,098,343 Profit for the period - - - - 2,805,348 - - - - 2,805,348 Other comprehensive income - - - - ( 58,720 ) 9,184 - 8,867 - ( 40,669 ) Total comprehensive income - - - - 2,746,628 9,184 - 8,867 - 2,764,679 Appropriation of 2016 earings 6(19) Legal reserve - - 222,289 - ( 222,289 ) - - - - - Special reserve - - - ( 2,217 ) 2,217 - - - - - Cash dividends - - - - ( 1,984,512 ) - - - - ( 1,984,512 ) Employee stock options exercised by subsidiary - 6,590 - - - - - - - 6,590 Share-based payment transacions - 65,027 - - - - - - - 65,027 Long-term investment did not change according to the proportion of shareholdings - 1,905 - - - - - - - 1,905 Balance at December 31, 2017 $ 7,632,738 $ 3,395,620 $ 3,278,360 $ 765,904 $ 3,061,699 ( $ 226,282 ) $ - $ 55,828 ( $ 11,835 ) $ 17,952,032

For the year ended December 31,2018 Balance at January 1, 2018 $ 7,632,738 $ 3,395,620 $ 3,278,360 $ 765,904 $ 3,061,699 ( $ 226,282 ) $ - $ 55,828 ( $ 11,835 ) $ 17,952,032 Effect of retrospective application and retrospective restatement 12(4) - - - - 166,900 - ( 47,643 ) ( 55,828 ) - 63,429 Balance at January 1 after adjustments 7,632,738 3,395,620 3,278,360 765,904 3,228,599 ( 226,282 ) ( 47,643 ) - ( 11,835 ) 18,015,461 Profit for the period - - - - 1,827,537 - - - - 1,827,537 Other comprehensive income - - - - ( 32,913 ) ( 63,746 ) 31,159 - - ( 65,500 ) Total comprehensive income - - - - 1,794,624 ( 63,746 ) 31,159 - - 1,762,037 Appropriation of 2017 earnings 6(19) Legal reserve - - 280,534 - ( 280,534 ) - - - - - Special reserve - - - ( 2,110 ) 2,110 - - - - - Cash Dividends - - - - ( 2,468,202 ) - - - - ( 2,468,202 ) Employee stock potions exercised by subsidiary - 5,241 - - - - - - - 5,241 Share-based payment transactions - 144,192 - - - - - - - 144,192 Disposal of investments in equity instuments designated at fair-value through other comprehensive income

- - - - ( 58,978 ) - 58,978 - - -

Balance at December 31, 2018 $ 7,632,738 $ 3,545,053 $ 3,558,894 $ 763,794 $ 2,217,619 ( $ 290,028 ) $ 42,494 $ - ( $ 11,835 ) $ 17,458,729

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PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS



Notes 2018 2017

~10~

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax $ 2,175,132 $ 3,203,097 Adjustments Adjustments to reconcile profit (loss) Depreciation 6(7)(8) 40,432 42,266 Amortization 135,559 133,411 Provision for allowance for doubtful account ( 3,207 ) ( 956,578 ) (Gain) loss on valuation of financial assets 6(2) ( 31,510 ) 40,379 (Gain) loss on disposal of investments 6(2) ( 67,779 ) 5,997 Investment loss from liquidation of subsidiaries 6(6) - 525 Gain on disposal of property, plant and equipment ( 816 ) ( 326 ) Compensation costs for employee stock options 107,608 49,853 Investment income accounted for under the equity method 6(6) 208,134 620,557 Realized gain from intercompany transactions ( 1,980 ) ( 1,980 ) Unrealised gross margin 1,106 - Interest income ( 69,158 ) ( 24,858 ) Dividends income ( 22,162 ) ( 17,362 ) Interest expense 43,532 11,563 Changes in operating assets and liabilities Changes in operating assets Financial assets at fair value through profit or loss 145,871 ( 154,885 ) Contract assets - current ( 19,713,867 ) - Notes receivable, net ( 2,730 ) 959,245 Accounts receivable, net ( 4,147,738 ) 483,023 Other receivables ( 131,916 ) ( 20,682 ) Other receivables - related parties ( 3,982 ) ( 21,301 ) Receivables from customers on construction contracts 18,262,745 ( 535,832 ) Prepayments ( 325,073 ) 643,833 Other current assets 122,377 2,456,372 Other non-current assets ( 139,305 ) 3,115 Changes in operating liabilities Contract liabilities - current 9,470,793 - Notes payable - ( 759 ) Accounts payable ( 877,194 ) ( 2,946,265 ) Accounts payable - related parties ( 811,680 ) 231,576 Payables to customers on construction contracts ( 6,220,855 ) ( 6,057,623 ) Other payables ( 69,995 ) 13,066 Other payables - related parties ( 22,119 ) 14,282 Accured pension labilities ( 306,708 ) ( 282,342 ) Other current liabilities 598,290 6,770,884 Cash (outflow) inflow generated from operations ( 1,658,195 ) 4,662,251 Interest received 65,880 15,118 Interest paid ( 38,929 ) ( 8,581 ) Dividends received 707,115 849,139 Income tax paid ( 502,587 ) ( 236,397 ) Net cash flows (used in) from operating activities ( 1,426,716 ) 5,281,530

(Continued)

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CTCI CORPORATION

PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS



Notes 2018 2017


~11~

CASH FLOWS FROM INVESTING ACTIVITIES

(Increase) decrease in other receivables - related parties ( $ 393,251 ) $ 382,500

Interest received-related parties 5,537 7,255

Increase in available-for-sale financial assets - ( 72,118 )

Proceeds from disposal available-for-sale financial assets - 6,611

Increase in financial assets at fair value through other

comprehensive income - non current

( 159,452 ) -

Decrease in financial assets at fair value through other

comprehensive income - current

104,891 -

Increase in financial assets measured at cost - non-current 12(4) - ( 132,773 )

Increase in long-term investment - subsidiaries (Include

prepayment for long-term investments)

6(6)(9)

( 632,500 ) ( 1,105,649 )

Proceeds from liquidation of capital of investee company 6(6) - 10,245

Increase in computer software cost ( 2,133 ) ( 40,624 )

Increase in other non-current assets ( 107,404 ) ( 103,652 )

Acquisition of property, plant and equipment 6(7) ( 38,440 ) ( 22,155 )

Proceeds from disposal of property, plant and equipment 1,162 356

Decrease (increase) in fundable deposits (shown in other non-

current assets)

10,156 ( 399 )

Net cash flows used in investing activities ( 1,211,434 ) ( 1,070,403 )

CASH FLOWS FROM FINANCING ACTIVITIES

Decrease in short-term borrowings 6(10) 3,560,000 2,770,000

Interest paid - related parties ( 2,210 ) ( 1,381 )

Other payables - related parties - 10

(Decrease) increase in deposits received ( 47,006 ) 19,556

Cash dividends paid ( 2,468,202 ) ( 1,984,512 )

Net cash flows from financing activities 1,042,582 803,673

Net (decrease) increase in cash and cash equivalents ( 1,595,568 ) 5,014,800

Cash and cash equivalents at beginning of year 9,824,161 4,809,361

Cash and cash equivalents at end of year $ 8,228,593 $ 9,824,161

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~12~

CTCI CORPORATION

NOTES TO THE PARENT COMPANY ONLY FINANCIAL STATEMENTS


(EXPRESSED IN THOUSANDS OF NEW TAIWAN DOLLARS,

EXCEPT AS OTHERWISE INDICATED)

1. HISTORY AND ORGANIZATION

CTCI Corporation (the “Company”) was incorporated as a company limited by shares under the

provisions of the Company Law of the Republic of China on April 6, 1979 and commenced its operations

on May 1, 1979. The main business activities of the Company are the design, survey, construction and

inspection of various engineering and construction projects, plants, machinery and equipment and

environmental protection projects. The Company’s shares have been listed and traded on the Taiwan

Stock Exchange since May 1993.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE PARENT COMPANY ONLY

FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These parent company only financial statements were authorized by the Board of Directors on March 8,

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:


Effective date by

International

Accounting

Standards Board

Amendments to IFRS 2, ‘Classification and measurement of share-based

payment transactions’

January 1, 2018

Amendments to IFRS 4, ‘Applying IFRS 9, Financial instruments with IFRS 4,

Insurance contracts’

January 1, 2018

IFRS 9, ‘Financial instruments’ January 1, 2018

IFRS 15, ‘Revenue from contracts with customers’ January 1, 2018

Amendments to IFRS 15, ‘Clarifications to IFRS 15, Revenue from contracts

with customers’

January 1, 2018

Amendments to IAS 7, ‘Disclosure initiative’ January 1, 2017

Amendments to IAS 12, ‘Recognition of deferred tax assets for unrealised

losses’

January 1, 2017

Amendments to IAS 40, ‘Transfers of investment property’ January 1, 2018

IFRIC 22, ‘Foreign currency transactions and advance consideration’ January 1, 2018

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Company’s financial condition and financial performance based on the Company’s assessment.

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 that has objective evidence

of impairment, interest revenue after the impairment would be calculated on the book value of net

carrying amount (i.e. net of credit allowance). The Company shall always measure the loss

allowance at an amount equal to lifetime expected credit losses for trade receivables that do not

contain a significant financing component.

In adopting the new standards endorsed by the FSC effective from 2018, the Company applied the

new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted

under the statement. The significant effects of applying the standard as of January 1, 2018 are

summarised below.


Effective date by

International

Accounting

Standards Board

Annual 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 IFRS 12,

‘Disclosure of interests in other entities’

January 1, 2017

Annual improvements to IFRSs 2014-2016 cycle - Amendments to IAS 28,

‘Investments in associates and joint ventures’

January 1, 2018

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A. In accordance with IFRS 9, the Company reclassified available-for-sale financial assets and

financial assets measured at cost in the amounts of $406,401 and $1,157,973, respectively, and

made an irrevocable election at initial recognition on equity instruments not held for dealing or

trading purpose, by increasing financial assets at fair value through profit or loss and financial

assets at fair value through other comprehensive income by $83,691, and $1,058,892, respectively,

and increasing retained earnings, decreasing other equity interest and decreasing accumulated

impairment of financial assets measured at cost in the amounts of $166,900, $103,471 and

$485,220, respectively.

B. Presentation of contract assets and contract liabilities

In line with IFRS 15 requirements, the Company changed the presentation of certain accounts in

the balance sheet as follows:

(a) Under IFRS 15, contracts whereby services have been rendered but not yet billed are

recognized as contract assets, but were previously presented as part of receivables from

customers on construction contracts in the balance sheet. As of January 1, 2018, the balance

amounted to $18,262,745.

(b) Under IFRS 15, liabilities in relation to contracts are recognized as contract liabilities, but

were previously presented as payable to customers on construction contracts in the balance

sheet. As of January 1, 2018, the balance amounted to $6,220,855.

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

the Company

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


Company’s financial condition and financial performance based on the Company’s assessment.

IFRS 16, ‘Leases’

IFRS 16, ‘Leases’, replaces IAS 17, ‘Leases’ and related interpretations and SICs. The standard

requires lessees to recognize a ‘right-of-use asset’ and a lease liability (except for those leases with

terms of 12 months or less and leases of low-value assets). The accounting stays the same for lessors,


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

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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 Company expects to recognize the lease contract of lessees in line with IFRS 16. However, the

Company does not intend to restate the financial statements of prior period (referred herein as the

“modified retrospective approach”). The effects will be adjusted on January 1, 2019.

(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

endorsed by the FSC are as follows:

The above standards and interpretations have no significant impact to the Company’s financial

condition and financial performance based on the Company’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these parent company only financial

statements are set out below. These policies have been consistently applied to all the periods

presented, unless otherwise stated.

(1) Compliance statement

This parent company only financial statement of the Company have been prepared in accordance

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

(2) Basis of preparation

A. Except for the following items, the parent company only 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 and liabilities at fair value through other comprehensive income/ Available-

for-sale financial assets measured at fair value.

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

present value of defined benefit obligation.


Effective date by


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

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


Standards Board

IFRS 17, ‘Insurance contracts’ January 1, 2021

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

Standers, International Accounting Standers, IFRIC Interpretations, and SIC interpretations as

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

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

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

or complexity, or areas where assumptions and estimates are significant to the parent company

only financial statements are disclosed in Note 5.

C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Company has elected to apply

modified retrospective approach whereby the cumulative impact of the adoption was recognized

as retained earnings or other equity as of January 1, 2018 and the financial statements for the

year ended December 31, 2017 were not restated. The financial statements for the year 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) Foreign currency translation

Items included in the financial statements of each of the Company’s entities are measured using the

currency of the primary economic environment in which the entity operates (the “functional

currency”). The parent company only financial statements are presented in New Taiwan dollars,

which is the Company’s functional 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) When the foreign operation partially disposed of or sold is a subsidiary, cumulative exchange

differences that were recorded in other comprehensive income are proportionately transferred

to the non-controlling interest in this foreign operation. In addition, even when the Company

retains partial interest in the former foreign subsidiary after losing control of the former

foreign subsidiary, such transactions should be accounted for as disposal of all interest in the

foreign operation.

(c) 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.

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(d) 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.

B. Translation of foreign operations

(a) The operating results and financial position of all the group entities, associates and joint

arrangements that have a functional currency different from the presentation currency are

translated into the presentation currency as follows:

i. Assets and liabilities for each balance sheet presented are translated at the closing exchange

rate at the date of that balance sheet;

ii. Income and expenses for each statement of comprehensive income are translated at average

exchange rates of that period; and

iii. All resulting exchange differences are recognized in other comprehensive income.

(b) When the foreign operation partially disposed of or sold is an associate or joint arrangement,

exchange differences that were recorded in other comprehensive income are proportionately

reclassified to profit or loss as part of the gain or loss on sale. In addition, even when the

Company still retains partial interest in the former foreign associate or joint arrangement after

losing significant influence over the former foreign associate, or losing joint control of the

former joint arrangement, such transactions should be accounted for as disposal of all interest

in these foreign operations.

(4) Classification of current and non-current items

A. As the operating cycle for construction contracts usually exceeds one year, the Company uses the

operating cycle (typically 3～4 years) as its criteria for classifying current and non-current assets

and liabilities related to construction contracts. For other assets and liabilities, the criterion is one

year.

B. Assets that meet one of the following criteria are classified as current assets; otherwise they are

classified as non-current assets:

(a) Assets arising from operating activities that are expected to be realized, or are intended to be

sold or consumed within the normal operating cycle;

(b) Assets held mainly for trading purposes;

(c) Assets that are expected to be realized within twelve months from the balance sheet date;

(d) Cash and cash equivalents, excluding restricted cash and cash equivalents and those that are

to be exchanged or used to settle liabilities more than twelve months after the balance sheet

date.

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C. Liabilities that meet one of the following criteria are classified as current liabilities; otherwise they

are classified as non-current liabilities:

(a) Liabilities that are expected to be settled within the normal operating cycle;

(b) Liabilities arising mainly from trading activities;

(c) Liabilities that are to be settled within twelve months from the balance sheet date;

(d) Liabilities for which the repayment date cannot be extended unconditionally to more than

twelve months after the balance sheet date. Terms of a liability that could, at the option of the

counterparty, result in its settlement by the issue of equity instruments do not affect its

classification.


Cash equivalents refer to short-term, highly liquid investments that are readily convertible to known

amounts of cash and which are subject to an insignificant risk of changes in value. Time deposits

that meet the definition above and are held for the purpose of meeting short-term cash commitments

in operations are classified as cash equivalents.

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

A. Financial assets at fair value through profit or loss are financial assets that are not measured at

amortized cost or fair value through other comprehensive income.

B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are

recognized and derecognized using trade date accounting.

C. At initial recognition, the Company measures the financial assets at fair value and recognizes the

transaction costs in profit or loss. The Company subsequently measures the financial assets at

fair value, and recognizes the gain or loss in profit or loss.

D. The Company recognizes the dividend income when the right to receive payment is established,

future economic benefits associated with the dividend will flow to the Company and the amount

of the dividend can be measured reliably.


A. Financial assets at fair value through other comprehensive income comprise equity securities

which are not held for trading, and for which the Company has made an irrevocable election at

initial recognition to recognize changes in fair value in other comprehensive income and debt

instruments which meet all of the following criteria:

(a) The objective of the Company’s business model is achieved both by collecting contractual

cash flows and selling financial assets; and

(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 fair value through other

comprehensive income are recognized and derecognized using trade date accounting.

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C. At initial recognition, the Company measures the financial assets at fair value plus transaction

costs. The Company subsequently measures the financial assets at fair value:

(a) The changes in fair value of equity investments that were recognized in other comprehensive

income are reclassified to retained earnings and are not reclassified to profit or loss

following the derecognition of the investment. Dividends are recognized as revenue when

the right to receive payment is established, future economic benefits associated with the

dividend will flow to the Company and the amount of the dividend can be measured reliably.

(b) Except for the recognition of impairment loss, interest income and gain or loss on foreign

exchange which are recognized in profit or loss, the changes in fair value of debt instruments

are taken through other comprehensive income. When the financial asset is derecognized,

the cumulative gain or loss previously recognized in other comprehensive income is

reclassified from equity to profit or loss.

(8) Impairment of financial assets

For debt instruments measured at fair value through other comprehensive income and financial

assets at amortized cost, at each reporting date, the Company recognizes the impairment provision

for 12 months expected credit losses if there has not been a significant increase in credit risk since

initial recognition or recognizes the impairment provision for the lifetime expected credit losses

(ECLs) if such credit risk has increased since initial recognition after taking into consideration all

reasonable and verifiable information that includes forecasts. On the other hand, for accounts

receivable or contract assets that do not contain a significant financing component, the Company

recognizes the impairment provision for lifetime ECLs

(9) Derecognition of financial assets

The Company derecognizes a financial asset when one of the following conditions is met:

A. The contractual rights to receive the cash flows from the financial asset expire.

B. The contractual rights to receive cash flows of the financial asset have been transferred and the

Company has transferred substantially all risks and rewards of ownership of the financial asset.

C. The contractual rights to receive cash flows of the financial asset have been transferred; however,

the Company has not retained control of the financial asset.

(10) Investments accounted for using the equity method-subsidiaries and associates

A. Subsidiaries are all entities (including structured entities) controlled by the Company. The

Company controls an entity when the Company is exposed, or has rights, to variable returns

from its involvement with the entity and has the ability to affect those returns through its power

over the entity.

B. Inter-company transactions, balances and unrealized gains or losses on transactions between

the Company and subsidiaries are eliminated. Accounting policies of subsidiaries have been

adjusted where necessary to ensure consistency with the policies adopted by the Company.

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C. The Company’s share of its subsidiaries’ post-acquisition profits or losses is recognized in profit

or loss, and its share of post-acquisition movements in other comprehensive income is

recognized in other comprehensive income. When the Company’s share of losses in a

subsidiary equals or exceeds its interest in the subsidiary, the Company continues to recognize

the losses in proportion to the ownership.

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. Associates are all entities over which the Company has significant influence but not control. In

general, it is presumed that the investor has significant influence, if an investor holds, directly

or indirectly 20 percent or more of the voting power of the investee. Investments in associates

are accounted for using the equity method and are initially recognized at cost.

F. The Company’s share of its associates’ post-acquisition profits or losses is recognized in profit

or loss, and its share of post-acquisition movements in other comprehensive income is

recognized in other comprehensive income. When the Company’s share of losses in an

associate equals or exceeds its interest in the associate, including any other unsecured

receivables, the Company does not recognize further losses, unless it has incurred legal or

constructive obligations or made payments on behalf of the associate.

G. When changes in an associate’s equity do not arise from profit or loss or other comprehensive

income of the associate and such changes do not affect the Company’s ownership percentage

of the associate, the Company recognizes change in ownership interests in the associate in

‘capital surplus’ in proportion to its ownership.

H. Unrealized gains on transactions between the Company and its associates are eliminated to the

extent of the Company’s interest in the associates. Unrealized losses are also eliminated unless

the transaction provides evidence of an impairment of the asset transferred. Accounting policies

of associates have been adjusted where necessary to ensure consistency with the policies

adopted by the Company.

I. In the case that an associate issues new shares and the Company does not subscribe or acquire

new shares proportionately, which results in a change in the Company’s ownership percentage

of the associate but maintains significant influence on the associate, then ‘capital surplus’ and

‘investments accounted for using the equity method’ shall be adjusted for the increase or

decrease of its share of equity interest. If the above condition causes a decrease in the

Company’s ownership percentage of the associate, in addition to the above adjustment, the

amounts previously recognized in other comprehensive income in relation to the associate are

reclassified to profit or loss proportionately on the same basis as would be required if the

relevant assets or liabilities were disposed of.

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J. When the Company disposes its investment in an associate and loses significant influence over

this associate, the amounts previously recognized in other comprehensive income in relation

to the associate, are reclassified to profit or loss, on the same basis as would be required if the

relevant assets or liabilities were disposed of. If it retains significant influence over this

associate, the amounts previously recognized in other comprehensive income in relation to the

associate are reclassified to profit or loss proportionately in accordance with the

aforementioned approach.

K. Pursuant to the “Rules Governing the Preparation of Financial Statements by Securities

Issuers,” profit (loss) of the current period and other comprehensive income in the parent

company only financial statements shall equal to the amount attributable to owners of the

parent in the consolidated financial statements. Owners’ equity in the parent company only

financial statements shall equal to equity attributable to owners of the parent in the

consolidated financial statements.


A. Property, plant and equipment are initially recorded at cost. Borrowing costs incurred during

the construction period are capitalized.

B. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset,

as appropriate, only when it is probable that future economic benefits associated with the item

will flow to the Company and the cost of the item can be measured reliably. The carrying

amount of the replaced part is derecognized. All other repairs and maintenance are charged to

profit or loss during the financial period in which they are incurred.

C. Land is not depreciated. Other property, plant and equipment apply cost model and are

depreciated using the straight-line method to allocate their cost over their estimated useful lives.

Each part of an item of property, plant, and equipment with a cost that is significant in relation

to the total cost of the item must be depreciated separately.

D. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if

appropriate, at each financial year-end. If expectations for the assets’ residual values and useful

lives differ from previous estimates or the patterns of consumption of the assets’ future

economic benefits embodied in the assets have changed significantly, any change is accounted

for as a change in estimate under IAS 8, “Accounting Policies, Changes in Accounting

Estimates and Errors”, from the date of the change. The estimated useful lives of property, plant

and equipment are as follows:

Buildings 35 ~ 50 years

Machinery 3 ~ 10 years

Transportation equipment 3 ~ 10 years

Office equipment 3 ~ 5 years

Other equipment 3~ 20 years

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An investment property is stated initially at its cost and measured subsequently using the cost

model. Except for land, investment property is depreciated on a straight-line basis over its

estimated useful life of 50 years.

(13) Intangible assets

Computer software is stated at cost and amortized on a straight-line basis over its estimated useful

life of 3 to 5 years.

(14) Impairment of non-financial assets

The Company assesses at each balance sheet date the recoverable amounts of those assets where

there is an indication that they are impaired. An impairment loss is recognized for the amount by

which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the

higher of an asset’s fair value less costs to sell or value in use. 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.

(15) Borrowings

Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognized

initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at

amortized cost; any difference between the proceeds (net of transaction costs) and the redemption

value is recognized in profit or loss over the period of the borrowings using the effective interest

method.

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.

(16) Notes and accounts payable

A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes

payable are those resulting from operating and non-operating activities.

B. The short-term accounts and notes payable without bearing interest are subsequently measured


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

A. Financial liabilities are classified in this category of held for trading if acquired principally for

the purpose of repurchasing in the short-term. Derivatives are also categorized as financial

liabilities held for trading unless they are designated as hedges.

B. At initial recognition, the Company measures the financial liabilities at fair value. All related

transaction costs are recognized in profit or loss. The Company subsequently measures these

financial liabilities at fair value with any gain or loss recognized in profit or loss

(18) Derecognition of financial liabilities

A financial liability is derecognized when the obligation specified in the contract is either

discharged or cancelled or expires.

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(19) Offsetting financial instruments

Financial assets and liabilities are offset and reported in the net amount in the balance sheet when


settle on a net basis or realize the asset and settle the liability simultaneously.

(20) Non-hedging derivatives

Non-hedging derivatives are initially recognized at fair value on the date a derivative contract is

entered into and recorded as financial assets or financial liabilities at fair value through profit or

loss. They are subsequently remeasured at fair value and the gains or losses are recognized in profit

or loss.

(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 recognized as

expenses in that period when the employees render service.

B. Pensions

(a) Defined contribution plans

For defined contribution plans, the contributions are recognized as pension expenses when

they are due on an accrual basis. Prepaid contributions are recognized as an asset to the

extent of a cash refund or a reduction in the future payments.

(b) Defined benefit plans

i. Net obligation under a defined benefit plan is defined as the present value of an amount

of pension benefits that employees will receive on retirement for their services with the

Company in current period or prior periods. The rate used to discount is determined by

using interest rates of government bonds (at the balance sheet date) instead of a currency

and term consistent with the currency and term of the employment benefit obligations.

ii. Remeasurements arising on defined benefit plan are recognized in other comprehensive

income in the period in which they arise and are recorded as retained earnings.

iii. Past service costs are recognized immediately in profit or loss.

C. Termination benefits

Termination benefits are employee benefits provided in exchange for the termination of

employment as a result from either the Company’s decision to terminate an employee’s

employment before the normal retirement date, or an employee’s decision to accept an offer of

redundancy benefits in exchange for the termination of employment. The Company recognizes

expense as it can no longer withdraw an offer of termination benefits or it recognizes relating

restructuring costs, whichever is earlier. Benefits that are expected to be due more than 12

months after balance sheet date shall be discounted to their present value.

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D. Employees’ compensation, directors’ and supervisors’ remuneration

Employees’ compensation and directors’ and supervisors’ remuneration are recognized as

expenses and liabilities, provided that such recognition is required under legal obligation or

constructive obligation and those amounts can be reliably estimated. Any difference between

the resolved amounts and the subsequently actual distributed amounts is accounted for as

changes in estimates.

(22) Employee share-based payment

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 recognized

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-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. And ultimately,

the amount of compensation cost recognized is based on the number of equity instruments that

eventually vest.

(23) Income tax

A. The tax expense for the period comprises current and deferred tax. Tax is recognized in profit

or loss, except to the extent that it relates to items recognized in other comprehensive income

or items recognized directly in equity, in which cases the tax is recognized in other

comprehensive income or equity.

B. The current income tax charge 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 generates 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 tax is recognized, using the balance sheet liability method, on temporary differences

arising between the tax bases of assets and liabilities and their carrying amounts in the parent

company only balance sheet. Deferred tax is determined using tax rates (and laws) that have

been enacted or substantially enacted by the balance sheet date and are expected to apply when

the related deferred tax asset is realized or the deferred income tax liability is settled.

D. Deferred tax assets are recognized only to the extent that it is probable that future taxable profit

will be available against which the temporary differences can be utilized. At each balance sheet

date, unrecognized and recognized deferred tax assets are reassessed.

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E. Current tax assets and liabilities are offset and the net amount reported in the balance sheet when


settle on a net basis or realize the asset and settle the liability simultaneously. Deferred tax assets

and liabilities are offset on the balance sheet when the entity has the legally enforceable right to

offset current tax assets against current tax liabilities and they are levied by the same taxation

authority on either the same entity or different entities that intend to settle on a net basis or

realize the asset and settle the liability simultaneously.

F. A deferred tax asset shall be recognized for the carryforward of unused tax credits resulting from

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 utilized.

(24) Share capital

A. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of

new shares or stock options are shown in equity as a deduction, net of tax, from the proceeds.

B. Where the Company repurchases the Company’s equity share capital that has been issued, the

consideration paid, including any directly attributable incremental costs (net of income taxes)

is deducted from equity attributable to the Company’s equity holders. Where such shares are

subsequently reissued, the difference between their book value and any consideration received,

net of any directly attributable incremental transaction costs and the related income tax effects,

is included in equity attributable to the Company’s equity holders.

(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.

(26) Revenue recognition

A. The Company provides engineering construction related services. Revenue from providing

services is recognised in the accounting period in which the services are rendered. For fixed-

price contracts, revenue is recognised based on the actual service provided to the end of the

reporting period as a proportion of the total services to be provided. This is determined based on

the actual costs incurred relative to the total expected costs. The customer pays at the time

specified in the payment schedule. If the services rendered exceed the payment, a contract asset

is recognised. If the payments exceed the services rendered, a contract liability is recognised.

B. Some contracts include sales and installation services of equipment. The equipment and the

installation services provided by the Group are not distinct and are identified to be one

performance obligation satisfied over time since the installation services involve significant

customisation and modification. The Group recognises revenue on the basis of costs incurred

relative to the total expected costs of that performance obligation.

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C. The Company’s estimate about revenue, costs and progress towards complete satisfaction of a

performance obligation is subject to a revision whenever there is a change in circumstances.

Any increase or decrease in revenue or costs due to an estimate revision is reflected in profit or

loss during the period when the management become aware of the changes in circumstances.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF

ASSUMPTION UNCERTAINTY

The preparation of these parent company only financial statements requires management to make critical

judgments in applying the Company’s accounting policies and make critical assumptions and estimates

concerning future events. Judgements and estimates are continually evaluated and adjusted based on

historical experience and other factors. The above information is addressed below:

(1) Critical judgements in applying the Company’s accounting policies

None.

(2) Critical accounting estimates and assumptions

Revenue recognition

The Company relies on the project condition and objective factors to estimate total cost. The revenue

is recognised based on the percentage of input cost, and the reasonableness of estimates is reviewed

regularly. The estimated total cost will be affected by industry environment transition and

construction status to adjust the revenue recognition amount.

6. DETAILS OF SIGNIFICANT ACCOUNTS


A. The Company transacts with a variety of financial institutions all with high credit quality to

disperse credit risk, so it expects that the probability of counterparty default is remote.

B. Details of the Company’s cash and cash equivalents pledged to others as collateral are provided

in Note 8.


Cash on hand and petty cash 16,420$ 21,197$

Checking accounts and demand deposits 5,731,724 2,552,136

Time deposits 2,480,449 7,250,828

8,228,593$ 9,824,161$

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

A. Amounts recognized in profit or loss in relation to financial assets at fair value through profit or

loss are listed below:

B. The Company entered into contracts relating to derivative financial assets and liabilities which

were not accounted for under hedge accounting. The information is listed below:

The Company entered into forward foreign exchange contracts to hedge exchange rate risk of

import or export proceeds. However, these forward foreign exchange contracts are not accounted

for under hedge accounting.

C. Information relating to credit risk of financial assets at fair value through profit or loss is provided

in Note 12(2).

D. The information on financial assets at fair value through profit or loss as of December 31, 2017

is provided in Note 12(4) C.


Current items:



Derivatives 48,553

68,155


66,113$

Financial liabilities mandatorily measured at fair value through profit or loss

Derivatives $ 548

For the year ended

December 31, 2018


Beneficiary certificates 2,442)($

Derivatives 52,572

Unlisted shares 49,159

99,289$

Contract Period

Non-delivery foreign exchange contract-buy (7 items) USD 33,000,000 2018.05.02~2019.06.10

Foreign exchange swap contract (5 items) USD 50,000,000 2018.12.05~2019.01.09

Merchandise exchange contract (3 items) USD 3,580,000 2018.10.31~2019.03.29

December 31, 2018

Contract Amount

(notional principal)

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A. The Company has elected to classify investments that are considered to be strategic investments

or steady dividend income as financial assets at fair value through other comprehensive income.

B. Amounts recognized in profit or loss and other comprehensive income in relation to the financial

assets at fair value through other comprehensive income are listed below:

C. Information relating to credit risk of financial assets at fair value through other comprehensive

income is provided in Note 12(2).

D. The information on available-for-sale financial assets and financial assets at cost as of December

31, 2017 is provided in Note 12(4) C.


Current items:

Equity instruments

Listed stocks $ 186,404


$ 322,355

Non-current items:

Equity instruments

Unlisted shares $ 908,225

Valuation adjustment ( 123,385)

$ 784,840

For the year ended

December 31, 2018

Equity instrument at fair value through other comprehensive income

Fair value change recognized in other comprehensive income $ 31,316

Debt instruments at fair value through other comprehensive income

Fair value change recognized in other comprehensive income ($ 157)

Exchange loss recognized in profit or loss $ 814

Interest income recognized in profit or loss $ 3,286

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(4) Accounts receivable

The ageing analysis of notes receivable and accounts receivable that were past due but not impaired

is as follows:

The above analysis is calculated based on booking date.

(5) Prepayments

(6) Investments accounted for under the equity method


Accounts receivable 4,504,151$ 835,227$

Less: Allowance for uncollectible accouts 210)( 3,417)(

4,503,941$ 831,810$

December 31, 2018

Up to 30 days 4,455,479$

31 to 91 days 2,773

91 to 180 days 3,960

Over 180 days 41,939

4,504,151$


Prepayment for materials 1,719,721$ 1,294,706$

Prepayment for construction in progress 149,293 28,705

Excess business tax paid - 157,482

Other prepayments 140,294 203,342

2,009,308$ 1,684,235$

2018 2017

At January 1 11,048,275$ 11,318,823$

Addition of investments accounted

for using equity method

452,500 1,105,649

Remittance of liquidated share

capital from investee

- 10,600)(

Share of profit or loss of investments

accounted for using equity method

208,134)( 620,557)(

Earnings distribution of investments

accounted for under equity method

684,953)( 831,777)(

Changes in capital surplus 41,824 23,669

Changes in other equity items 95,913)( 63,068

At December 31 10,553,599$ 11,048,275$

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A. Subsidiary

(a) The basic information of the subsidiaries that are material to the Company is as follows:

Investments under equity method December 31, 2018 December 31, 2017

Subsidiaries

CTCI Smart Engineering Corporation 150,695$ 261,339$

CTCI Resources Engineering Inc. 284,047 248,464

CTCI Advanced Systems Inc. 265,289 263,086

CTCI Development Corporation 2,527,615 2,530,655

CTCI Investment Corporation 1,730,250 1,922,352

ECOVE Environment Corp. 2,795,718 2,696,371

CTCI (Thailand) Co. Ltd. 58,735 3,212

CTCI Machinery Corp. 480,434 494,480

Sinogal-waste Services Co., Ltd. 57,921 63,667

CTCI CMCE JV SDN. BHD. 9,041 392

CTCI Overseas (BVI) Co., Ltd. 1,833,752 1,923,648

CTCI Engineering & Construction Sdn. Bhd. - 70,382

CTCI Americas, Inc. 3,954 7,774

CCJV P1 Engineering & Construction Sdn. Bhd. - 608,915

CTCI & HEC Water Business Co., Ltd. 244,516 249,639

Associates

Blue Whale Water Technology Co., Ltd. 434,937 364,397

Pan Asia Corp. 526,590 537,527

EVER ECOVE Corp. 246,635 -

HDEC-CTCI (Linhai) Corporation 201,389 -

11,851,518$ 12,246,300$

Other non-current liabilities December 31, 2018 December 31, 2017

Subsidiaries

CTCI Arabia Ltd. ($ 562,811) ($ 627,735)

CTCI Singapore Pte. Ltd. ( 652,532) ( 570,290)

CTCI Engineering & Construction Sdn. Bhd. ( 3,066) -

CCJV P1 Engineering & Construction Sdn. Bhd. ( 79,510) -

($ 1,297,919) ($ 1,198,025)

December 31,

2018

December 31,

2017

CTCI Development

Corporation

Taiwan100.00% 100.00% Subsidiaries Equity method

CTCI Investment Corporation " 100.00% 100.00% " "

ECOVE Environment Corp. " 57.31% 57.57% " "

CTCI Overseas (BVI) Co., Ltd. BVI 100.00% 100.00% " "

CTCI Arabia Ltd. Saudi Arabia 50.00% 50.00% " "

CTCI Singapore Pte. Ltd. Singapore 100.00% 100.00% " "

Shareholding ratio

Company name

Principal place

of business

Nature of

relationship

Method of

measurement

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(c) The summarized financial information of the subsidiaries that are material to the Company

is as follows:

Note: Including prepayments for long-term investments (shown as ‘Non-current assets’)

amounting to $180,000.


Current assets 137,194$ 70,668$


Current liabilities 4,065,119)( 206,362)(

Non-current liabilities 147,390)( 2,063,498)(

Total net assets 2,729,267$ 2,552,307$


Carrying amount of the associate

(Note) 2,707,615$ 2,530,655$





Current liabilities 350)( 12,542)(

Non-current liabilities 23,916)( 15,325)(

Total net assets 1,735,985$ 1,928,087$







Current liabilities 28,059)( 21,610)(


Total net assets 4,878,238$ 4,683,639$




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Current liabilities 73)( 80)(

Total net assets 1,746,615$ 1,836,511$



CTCI Overseas (BVI) Co., Ltd.



Non-current assets 2,999 81,874



Total net assets 1,125,622)($ 1,255,470)($

Share in associate's net assets 562,811)($ 627,735)($

Carrying amount of the associate 562,811)($ 627,735)($

CTCI Arabia Ltd.





Non-current liabilities 3,267)( -

Total net assets 652,532)($ 570,290)($

Share in associate's net assets 652,532)($ 570,290)($

Carrying amount of the associate 652,532)($ 570,290)($


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Year ended December 31, 2018 Year ended December 31, 2017

Revenue 328,792$ 328,819$

Profit for the year from

continuing operations

126,065$ 134,541$

Other comprehensive

income (loss), net of tax 8,119 2,953)(

Total comprehensive income 134,184$ 131,588$

Dividends received from

associates -$ 102,977$



Revenue 185,191)($ 24,290)($

Loss for the year from


192,980)($ 35,760)($

Other comprehensive

(loss) income , net of tax 61)( 1,711

Total comprehensive loss 193,041)($ 34,049)($



Revenue 788,696$ 791,864$

Profit for the period from


807,348$ 761,339$

Other comprehensive loss,

net of tax 436)( 40,255)(



associates 370,967$ 435,904$

EVOCE Environment Corp.


Revenue -$ -$

Total comprehensive

income (loss) 170,375$ 358,026)($


associates -$ -$

CTCI Overseas (BVI) Co., Ltd.

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B. Associate

(a) The basic information of the associate that is material to the Company is as follows:

(b) The summarized financial information of the associate that is material to the Company is as

follows:

Balance sheet


Revenue 945,874$ 3,107,468$

Total comprehensive income 164,510$ 586,647)($

CTCI Arabia Ltd.


Revenue 1,011,015$ 721,118$

Total comprehensive income 79,338)($ 81,074)($


December

31, 2018

December

31, 2017

Pan Asia Corp. Taiwan 34.27% 34.27% Associate Equity method

Shareholding ratio

Company

name Principal place of business

Nature of

relationship Method of measurement


Current assets 4,761,098$ 3,341,120$




Total net assets 1,536,590$ 1,568,508$

Share in associate's net assets 526,590$ 537,528$

Carrying amount of

the associate 526,590$ 537,527$

Pan Asia Corp.

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C. For information on the Company’s subsidiaries, please refer to Note 4 (3) in the Company’s

consolidated financial statements for the year ended December 31, 2018.

D. The Company invested $2,759 in CTCI CMCE JV SDN. BHD for 51% of the ownership under

the resolution by the Board of Directors in March 2017.

E. The Company invested $670,000 in CTCI Investment Corp. under the resolution by the Board of

Directors in May 2017.

F. The Board of Directors during its meeting in December 2017 resolved to invest $246,690 in CTCI

Resources Engineering Inc.

G. The Board of Directors during its meeting in December 2017 resolved to invest $186,200 in Blue

Whale Water Technology Co., Ltd.


Revenue 5,677,230$ 5,380,591$

Profit for the year from

continuing operations 19,375$ 57,009$

Other comprehensive

income, net of tax 207 2,035



associates 17,649$ 7,844$

Pan Asia Corp.

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H. In December 2017, the Board of Directors approved the liquidation of CTCI and Partners

Company. The Company received $10,245 (SAR 1,287) from the proceeds of liquidation and

recognized a loss on disposal of $525 and a currency exchange gain of $170; both amounts were

included in other gains and losses.

I. In August 2018, the Board of Directors during its meeting resolved to jointly establish EVER

ECOVE Corporation with Evergreen Steel Corporation, and the investment amount is $250,000.

J. In September 2018, the Board of Directors during its meeting resolved to jointly establish HDEC-

CTCI (Linhai) Corporation with Hsin Dar Environment Corp., and the investment amount is

$202,500.

K. Under the equity method, the Company recognized investment income and other comprehensive

income of $103,927 for the year ended December 31, 2017, from Pan Asia Corp., Blue Whale

Water Technology Co., Ltd., CTCI Engineering & Construction San Bhd. CCJV P1 Engineering

& Construction Sdn. Bhd., CTCI CMCE JV SDN. BHD, Powertec Energy Corp. that were

invested by CTCI Investment Corporation. and CTCI Overseas (BVI) Corp., and its subsidiaries.

The above investments accounted for using the equity method have been audited by other

independent accountants.

L. The total investment profit or loss and other comprehensive income accounted for using equity

method in Pan Asia Corp., Blue Whale Water Technology Co., Ltd., EVER EVOCE Corporation,

HDEC-CTCI (Linhai) Corporation, CTCI CMCE JV SDN. BHD., CTCI Engineering &

Construction Sdn. Bhd., CCJV P1 Engineering & Construction Sdn. Bhd., Powertec Energy Corp.

indirectly invested by CTCI Investment Corporation and certain subsidiaries indirectly invested

by CTCI Overseas (BVI) Corp. was ($1,060,127) for the year ended December 31, 2018, which

was recognized based solely on the audit reports of other independent accountants.

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A. No borrowing costs attributable to property, plant and equipment was capitalised for the years ended December 31, 2018 and 2017.

B. No property, plant and equipment was pledged to others as collateral for the years ended December 31, 2018 and 2017.

Land Buildings Machinery

Transportation

equipment

Office

equipment

Other

equipment Total

At January 1, 2018

Cost 127,228$ 124,799$ 383,167$ 50,994$ 54,413$ 145,446$ 886,047$

Accumulated depreciation- 68,057)( 339,527)( 44,819)( 53,941)( 77,987)( 584,331)(

127,228$ 56,742$ 43,640$ 6,175$ 472$ 67,459$ 301,716$

2018

Opening net book amount

as at January 1

127,228$ 56,742$ 43,640$ 6,175$ 472$ 67,459$ 301,716$

Additions - - 32,522 - 696 5,222 38,440

Disposals - - 346)( - - - 346)(

Depreciation charge - 2,386)( 24,547)( 2,883)( 474)( 8,796)( 39,086)(

Closing net book amount

as at December 31 127,228$ 54,356$ 51,269$ 3,292$ 694$ 63,885$ 300,724$


Cost 127,228$ 124,799$ 365,715$ 38,704$ 54,974$ 150,668$ 862,088$


127,228$ 54,356$ 51,269$ 3,292$ 694$ 63,885$ 300,724$

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Land Buildings Machinery

Transportation

equipment

Office

equipment

Other

equipment Total

At January 1, 2017

Cost 127,228$ 124,799$ 375,617$ 56,498$ 54,413$ 144,270$ 882,825$


127,228$ 59,127$ 48,941$ 9,753$ 1,955$ 73,508$ 320,512$

2017


as at January 1

127,228$ 59,127$ 48,941$ 9,753$ 1,955$ 73,508$ 320,512$

Additions - - 20,024 - - 2,131 22,155

Disposals - - 30)( - - - 30)(

Depreciation charge - 2,385)( 25,295)( 3,578)( 1,483)( 8,180)( 40,921)(


as at December 31 127,228$ 56,742$ 43,640$ 6,175$ 472$ 67,459$ 301,716$


Cost 127,228$ 124,799$ 383,167$ 50,994$ 54,413$ 145,446$ 886,047$


127,228$ 56,742$ 43,640$ 6,175$ 472$ 67,459$ 301,716$

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Land Buildings Total

At January 1, 2018

Cost 115,692$ 76,683$ 192,375$


115,692$ 37,908$ 153,600$

2018


as at January 1 115,692$ 37,908$ 153,600$



as at December 31 115,692$ 36,562$ 152,254$


Cost 115,692$ 76,683$ 192,375$


115,692$ 36,562$ 152,254$

Land Buildings Total

At January 1, 2017

Cost 115,692$ 76,683$ 192,375$


115,692$ 39,253$ 154,945$

2017


as at January 1 115,692$ 39,253$ 154,945$



as at December 31 115,692$ 37,908$ 153,600$

At December 31, 2017 115,692$ 76,683$ 192,375$

Cost - 38,775)( 38,775)(

Accumulated depreciation 115,692$ 37,908$ 153,600$

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A. Rental income from the lease of the investment property and direct operating expenses arising

from the investment property are shown below:

B. The fair value of the investment property held by the Company as of December 31, 2018, and 2017

were $375,197 and $348,795, respectively. The above fair values are based on the valuation of

market trading prices of similar property belonging to close proximities.

(9) Other non-current assets

Note: It was shown as other non-current assets since the investment of $180,000 in CTCI

Development Corp. under the resolution by the Board of Directors in December 2018 had not

yet been registered.

(10) Short-term borrowings

2018 2017

Rental income from investment property 6,358$ 6,358$


investment property that generated rental

income during the year 1,942$ 1,931$


investment property that did not generate

rental income during the year -$ -$



Long-term receivables 781$ 1,078$

Restricted bank deposits 185,805 46,203


Prepayments for long-term

investments (Note) 180,000 -

Others 151,400 126,900

715,924$ 382,275$

Type of borrowings December 31, 2018 Interest rate range Collateral


Land Bank of Taiwan 1,447,000$ 0.97% -

HSBC 1,240,000 0.68% -

BBVA 900,000 0.75% -

Bank SinoPac 875,000 0.90% -

Mizuho Bank, Ltd. 620,000 0.70% -

MUFG Bank Ltd. 548,000 0.81% -

Hua Nan Bank 400,000 0.87% -

Bank of Taiwan 300,000 0.92% -

6,330,000$

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(11) Accounts payable

(12) Other payables

(13) Other current liabilities

As of December 31, 2018, as the accumulated cost was greater than the accumulated capital injection,

the joint venture was recognized in “other current liabilities”.

(14) Other non-current liabilities

Type of borrowings December 31, 2017 Interest rate range Collateral


Mizuho Bank, Ltd. 1,250,000$ 0.70% -

HSBC 920,000 0.68% -

The Bank of Tokyo-Mitsubishi UFJ 580,000 0.72% -

Sumitomo Mitsui

Banking Corporation 20,000 0.75% -

2,770,000$


Materials payable 2,369,447$ 1,970,824$

Sub-contract costs payable 2,534,422 3,810,239

4,903,869$ 5,781,063$


Accrued payroll 937,611$ 1,000,715$

Accrued employee bonuses,

directors' and supervisors'

remuneration 69,030 100,697

Accrued insurance 43,847 48,971

Accrued pension 20,275 20,584

Others 237,025 211,420

1,307,788$ 1,382,387$


Joint venture 7,431,697$ 6,847,852$

Receipts under custody 69,970 57,612

Others 3,329 1,242

7,504,996$ 6,906,706$


Net defined benefit liabilities 1,696,327$ 2,033,252$


Investment accounted for

under the equity method

(credit balance) 1,297,919 1,198,025

Others 78,876 79,749

3,127,819$ 3,412,729$

371

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(15) Pensions

A. Defined benefit pension plan

(a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act,

covering all regular employees’ service years prior to the enforcement of the Labor Pension

Act on July 1, 2005 and service years thereafter of employees who chose to continue to be

subject to the pension mechanism under the Act. Under the defined benefit pension plan, two

units are accrued for each year of service for the first 15 years and one unit for each additional

year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number

of units accrued and the average monthly salaries and wages of the last 6 months prior to

retirement. The Company contributes monthly an amount equal to 2% of the employees’

monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee,

under the name of the independent retirement fund committee. Also, the Company would

assess the balance in the aforementioned labor pension reserve account by December 31,

every year. If the account balance is insufficient to pay the pension calculated by the

aforementioned method to the employees expected to qualify for retirement in the following

year, the Company will make contributions to cover the deficit by next March.

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

(c) Movements in net defined benefit liabilities are as follows:


Present value of defined

benefit obligations

3,328,547$ 3,502,540$

Fair value of plan assets 1,632,220)( 1,469,288)(

Net defined benefit liability 1,696,327$ 2,033,252$

Present value of

defined benefit

obligations

Fair value of

plan assets

Net defined

benefit liability


At January 1 3,502,540$ 1,469,288)($ 2,033,252$



3,551,378 1,482,511)( 2,068,867

Remeasurements:


assumptions - - -

Change in financial assumptions 27,161 - 27,161

Experience adjustments 9,734)( 47,644)( 57,378)(

17,427 47,644)( 30,217)(


Paid pension 240,258)( 240,021 237)(

At December 31 3,328,547$ 1,632,220)($ 1,696,327$

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(d) The Bank of Taiwan was commissioned to manage the Fund of the Company’s defined benefit

pension plan in accordance with the Fund’s annual investment and utilization plan and the

“Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement

Fund” (Article 6: The scope of utilization for the Fund includes deposit in domestic or foreign

financial institutions, investment in domestic or foreign listed, over-the-counter, or private

placement equity securities, investment in domestic or foreign real estate securitization

products, etc.). With regard to the utilization of the Fund, its minimum earnings in the annual

distributions on the final financial statements shall be no less than the earnings attainable

from the amounts accrued from two-year time deposits with the interest rates offered by local

banks. If the earnings is less than aforementioned rates, government shall make payment for

the deficit after being authorized by the Regulator. The Company has no right to participate

in managing and operating that fund and hence the Company is unable to disclose the

classification of plan assets fair value in accordance with IAS 19 paragraph 142. The

composition of fair value of plan assets as of December 31, 2018 and 2017 is given in the

Annual Labor Retirement Fund Utilization Report announced by the government.

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

Assumptions regarding future mortality experience are set based on actuarial advice in

accordance with published statistics and experience in each territory.

Present value of

defined benefit

obligations

Fair value of

plan assets

Net defined

benefit liability


At January 1 3,589,967$ 1,333,842)($ 2,256,125$



3,653,904 1,349,848)( 2,304,056

Remeasurements:


assumptions 51,189 - 51,189

Change in financial assumptions 89,917 2,066 91,983

Experience adjustments 83,702)( - 83,702)(

57,404 2,066 59,470


Paid pension 208,768)( 204,897 3,871)(

At December 31 3,502,540$ 1,469,288)($ 2,033,252$

2018 2017

Discount rate 0.80% 0.90%

Future salary increases 3.00% 3.00%


373

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Because the main actuarial assumption changed, the present value of defined benefit

obligation is affected. The analysis was as follows:

The sensitivity analysis above is based on one assumption which changed while the other

conditions remain unchanged. In practice, more than one assumption may change all at once.

The method of analyzing sensitivity and the method of calculating net pension liability in the

balance sheet are the same.

The methods and types of assumptions used in preparing the sensitivity analysis did not

change compared to the previous period.

(f) Expected contributions to the defined benefit pension plan of the Company for the year ending

December 31, 2019 amount to $64,263

(g) As of December 31, 2018, the weighted average duration of the retirement plan is eight years.

B. Defined contribution pension plan

(a) Effective July 1, 2005, the Company has established a defined contribution pension plan (the

“New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with

R.O.C. nationality. Under the New Plan, the Company contributes monthly an amount

based on 6% of the employees’ monthly salaries and wages to the employees’ individual

pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or

in lump sum upon termination of employment.

(b) The pension costs under the defined contribution pension plan of the Company for the years

ended December 31, 2018 and 2017 were $120,224 and $119,910, respectively.

(16) Share-based payment-employee compensation

A. As of December 31, 2018 and 2017, the Company’s share-based payment arrangements were as

follows:

Increase

0.25%

Decrease

0.25%

Increase

0.25%

Decrease

0.25%

December 31, 2018



December 31, 2017





Quantity

granted

Contract

period

Vesting

conditions


stock options


4 years


stock options


4 years

374

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B. The above employee stock options are set forth below:

Details of the fifth plan of employee stock options outstanding as of December 31, 2018 and

2017 are set forth below:

Details of the sixth plan of employee stock options outstanding as of December 31, 2018 are

set forth below:

C. The weighted-average stock price of stock options at exercise dates for the years ended December

31, 2018 and 2017 were NT$46.68 and NT$52.20, respectively.

Stock options

No. of units

(shares in

thousand)

Weighted-average

exercise price

(in dollars)

No. of units

(shares in

thousand)

Weighted-average

exercise price

(in dollars)

Options outstanding at

beginning of year 19,125.30 NT$49.60 - -

Options granted - - 20,000.00 NT$52.20

Options waived 796.75)( - 874.70)( -

Options exercised - - - -

Options outstanding

at end of year 18,328.55 NT$49.60 19,125.30 NT$49.60

Options exercisable



2018 2017

Stock options

No. of units

(shares in thousand)

Weighted-average

exercise price

(in dollars)

Options outstanding at

beginning of year - -

Options granted 20,000.00 NT$45.90

Options waived 705.46)( -

Options exercised - -

Options outstanding

at end of year 19,294.54 NT$45.90

Options exercisable

at end of year - -

2018

For the year ended December 31,

375

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D. As of December 31, 2018 and 2017, the range of exercise prices of stock options outstanding

were NT$45.90~NT$49.60 and $49.60, respectively; the weighted-average remaining

contractual period was as follows:

E. The fair value of stock options is measured using the Black-Scholes option-pricing model or


F. For the years ended December 31, 2018 and 2017, expense recognized arising from share-based

payment amounted to $107,608 and $49,853, respectively.

(17) Share capital

A. As of December 31, 2018 and 2017, the Company’s authorized capital was $9,000,000 (including

800,000 thousand shares reserved for employee stock options), the paid-in capital was

$7,632,738 consisting of 763,273,848 shares with a par value of NT$10 per share.

B. Treasury shares

(a) Reason for share reacquisition and movements in the number of the Company’s treasury shares

are as follows:


Fifth plan of employee stock options 4~5 years 4~5 years

Sixth plan of employee stock options 4~5 years -

Type of

arrangement Grant date Stock price

Exercise

price

Expected

price

volatility

Expected

option

life

Expected

dividend

Risk free

interest

rate

Fair value

per unit

Fifth plan of

employee stock

options

2017.4.11 NT$52.2 NT$52.2 28.06%~

29.05%

4~5 years 0% 0.80%~

0.89%

NT$ 12.19~

NT$ 14.17

Sixth plan of

employee stock

options

2018.3.9 NT$45.9 NT$45.9 24.96%~

26.37%

4~5 years 0% 0.63%~

0.72%

NT$ 9.56~

NT$ 11.29

Name of company holding the shares Reason for reacquisition

Number of shares

(shares in

thousand) Carrying amount

Subsidiary-ECOVE

Environmental Services Corp.

To maintain

stockholders' equity

1 $ 10


Corp.

" 344 3,241


Corp.

"912 8,584

11,835$

December 31, 2018

376

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(18) Capital surplus

A. Pursuant to the R.O.C. Company Law, capital surplus arising from paid-in capital in excess of

par value on issuance of common stocks and donations can be used to cover accumulated deficit

or to issue new stocks or cash to shareholders in proportion to their share ownership, provided

that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law

requires that the amount of capital surplus to be capitalized mentioned above should not exceed

10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated

deficit unless the legal reserve is insufficient.

B. The details and movements of capital surplus are provided as follows:

C. Please refer to Note 6 (16) for details about the capital surplus - employee stock options.

Name of company holding the shares Reason for reacquisition

Number of shares

(share in

thousand) Carrying amount

Subsidiary-ECOVE

Environmental Services Corp.

To maintain

stockholders' equity

1 $ 10


Corp.

" 344 3,241


Corp.

"912 8,584

11,835$

December 31, 2017

Share premium

Treasury share

transactions

Difference between proceeds on

acquisition of disposal of equity interest

in

a subsidiary and its carrying amount

Employee

stock options

Stock


At January 1, 2018 2,865,969$ 5,043$ 205,931$ 309,435$ -$ 9,242$ 3,395,620$

Employee stock options exercised

by subsidiary

- - 5,241 - - - 5,241

Share based payment transaction - - - 144,192 - - 144,192

At December 31, 2018 2,865,969$ 5,043$ 211,172$ 453,627$ -$ 9,242$ 3,545,053$

Share premium

Treasury share

transactions

Difference between proceeds on

acquisition of disposal of equity interest

in

a subsidiary and its carrying amount

Employee

stock options

Stock


At January 1, 2017 2,865,969$ 5,043$ 197,436$ 244,408$ -$ 9,242$ 3,322,098$

Employee stock options exercised

by subsidiary

- - 6,590 - - - 6,590

Share based payment transaction - - - 65,027 - - 65,027

Adjustment of long-term equity

investment due to changes in

shareholding ratio - - 1,905 - - - 1,905

At December 31, 2017 2,865,969$ 5,043$ 205,931$ 309,435$ -$ 9,242$ 3,395,620$

377

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(19) Retained earnings

Note: The Company has adopted the modified retrospective approach under IFRS 9. For details of

the effect as at January 1, 2018, please refer to Notes 12(4) B.

A.When net profit occurs in the annual accounts, the Company may, after reserving a sufficient

amount of the income before tax to cover the accumulated losses, with the resolution of the Board

of Directors, distribute 1.5% to 5% of the income before tax to pay to the employees as

remuneration, and distribute no more than 1.5% of the income before tax to pay to the Board of

Directors as remuneration. The remuneration could be in the form of stock or cash, and the

employee remuneration could be distributed to the employees of subsidiaries of the Company

under certain conditions. A report of the distribution of employee remuneration or the Board of

Directors’ remuneration shall be submitted to the stockholders’ meeting.

B.The Company shall, after all taxes and dues have been paid and its losses have been covered and

at the time of allocating surplus profits, first set aside 10% of such profits as legal reserve.

However, when the legal reserve amounts to the authorized capital, this shall not apply.

Furthermore, in accordance with the provisions of laws and regulations and the rules prescribed

by the central competent authority, a special reserve shall be set aside. If there is recovery of the

balance of special reserve, the recovered amount shall be included in the distribution of the profit

for the current year.

The allocable profit for the current year, which is the balance after the profit distribution and

covering losses aforementioned as the preceding paragraph, together with the undistributed

retained earnings accrued from prior years shall be referred to as accumulated distributable

earnings, which shall be distributed as dividends to shareholders according to shareholders’

resolutions.

To meet the requirements in business expansion and industry growth, fulfilling future operating

needs and stabilizing financial structure is the priority of the Company's dividend policy. Thus,

the distribution of the accumulated distributable earnings is in accordance with the shareholders’

resolutions. And, the amount of shareholders’ bonus shall not be less than 50% of accumulated

distributable earnings of the Company, and in particular cash dividend shall not be less than 20%.

2018 2017

At January 1 3,061,699$ 2,519,655$

Effect of retrospective restatement (Note) 166,900 -

At January 1 (revised) 3,228,599 2,519,655

Profit for the year 1,827,537 2,805,348

Legal reserve appropriated 280,534)( 222,289)(

Cash dividends 2,468,202)( 1,984,512)(

Reversal of special reserve 2,110 2,217


Remeasurement of defined benefit plan 52,291)( 58,720)(

Valuation adjustment transferred to

retained earnings58,978)( -

At December 31 2,217,619$ 3,061,699$

378

01100480

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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 balance of the reserve exceeds 25% of the

Company’s paid-in capital.

D. Special reserve

(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.

E. The appropriation of 2017 and 2016 earnings had been resolved at the stockholders’ meeting on

May 29, 2018 and June 28, 2017, respectively. Details are summarized below:

F. Details of the appropriation of 2018 earnings as proposed by the Board of Directors on March 8,

2019 are as follow:

As of March 8, 2019, the appropriation of 2018 earnings has not been resolved by the

shareholders.

G. For information relating to employees’ compensation (bonuses) and directors’ and supervisors’

remuneration, please refer to Note 6(22).

Amount

Dividends

per share

(in NT dollars) Amount

Dividends

per share

(in NT dollars)

Sset aside as legal reserve 280,534$ -$ 222,289$ -$

Reversal of special reserve 2,110)( - 2,217)( -

Cash dividends 2,468,202 3.23 1,984,512 2.60

Total 2,746,626$ 3.23$ 2,204,584$ 2.60$

2017 2016

Amount

Dividends

per share

(in NT dollars)

Legal reserve 182,754$ -$

Reversal of special reserve 1,417)( -

Cash dividends 1,721,210 2.255

Total 1,902,547$ 2.255


379

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(20) Operating revenue

A. Disaggregation of revenue from contracts with customers

The Company derives revenue from the transfer of goods and services over time and at a point

in time in the following major product lines:

B. Contract assets and liabilities

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


Revenue from contracts with customer contracts 35,684,680$

35,684,680$

For the year ended

December 31, 2018

Construction

Engineering

Revenue

Other

Operating

Revenue Total

Segment revenue 35,537,123$ 147,557$ 35,684,680$

Inter-segment revenue - - -

35,537,123$ 147,557$ 35,684,680$

Revenue from external

customer contracts

Timing of revenue

recognition

At a point time -$ 147,557$ 147,557$

In over time 35,537,123 - 35,537,123

35,537,123$ 147,557$ 35,684,680$

December 31, 2018

Contract assets-construction contract revenue 19,713,867$

Contract liabilities-construction contract revenue 9,470,793)(

10,243,074$

380

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(21) Expenses by nature

(22) Employee benefit expense

As of December 31, 2018 and 2017, the Company had 2,641 and 2,730 employees excluding 11 and

11 directors, respectively.

A. According to the Articles of Incorporation of the Company, when distributing earnings, the

Company shall distribute bonus to the employees and pay remuneration to the directors that

should be 1.5% to 5% and not be higher than 1.5%, respectively, of the total distributed amount.

2018 2017

Materials 16,469,759$ 24,453,497$

Subcontract costs 10,082,843 12,144,113

Employee benefit expense 4,837,348 5,220,741

Temporary equipment 78,493 547,619

Rental expenses 451,226 559,593

Insurance expenses 97,549 81,079

Travel expenses 251,649 354,002

Depreciation charges on property,

plant and equipment

39,086 40,921

Amortization on intangible assets 135,559 133,411

Others 1,087,136 2,192,929

33,530,648$ 45,727,905$


Operating costs Operating expenses Total

Salaries and wages 3,456,659$ 659,931$ 4,116,590$

Employee stock options 86,489 21,119 107,608

Labor and health insurance

fees 218,942 44,016 262,958

Pension costs 126,410 29,429 155,839

Directors rernuneration - 43,703 43,703

Other personnel expenses 129,162 21,488 150,650

4,017,662$ 819,686$ 4,837,348$


Operating costs Operating expenses Total

Salaries and wages 3,912,039$ 602,760$ 4,514,799$

Employee stock options 39,952 9,901 49,853

Labor and health insurance

fees 247,514 41,478 288,992

Pension costs 142,203 25,638 167,841

Directors rernuneration - 50,946 50,946

Other personnel expenses 128,015 20,295 148,310

4,469,723$ 751,018$ 5,220,741$


381

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B. For the years ended December 31, 2018 and 2017, employees’ compensation was accrued at

$54,826 and $84,160, respectively; directors’ remuneration was accrued at $13,250 and $16,537,

respectively. The aforementioned amounts were recognized in salary expenses and other

expenses, respectively.

The employees’ compensation and directors’ remuneration were estimated and accrued based on

an amount of 1.5% to 5% and not higher than 1.5% of distributable profit of current period for


Employees’ compensation and directors’ remuneration of 2017 as resolved at the meeting of

Board of Directors were in agreement with those amounts recognized 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.

(23) Income tax

A. Components of income tax expense:

B. Reconciliation of differences between financial income and taxable income:

Note: The basis of applicable tax rate is calculated by the rate applicable to the Company.

2018 2017

Current tax :

Current tax on profits for the year 410,263$ 429,013$

Prior year income tax under

estimation 3,858 6,843

Total current tax 414,121 435,856

Origination and reversal of temporary

differences 56,765)( 38,107)(

Impact of change in tax rate 9,761)( -



2018 2017

Income tax calculated by applying statutory

rate to the profit before tax (Note) 435,026$ 544,526$

Effects disallowed by tax regulation 75,842)( 36,572)(

Prior year income tax under estimation 3,858 6,843

Effect from investment tax credits 6,603)( 10,657)(

Others 917 106,391)(

Impact of change in tax rate 9,761)( -



382

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

January 1

Recognised in

profit or loss

Recognised in

other

comprehensive

income December 31

Temporary differences:

Deferred tax assets

Unrealized loss on

unfinished construction 24,620$ 23,413$ -$ 48,033$

Unrealized losses on

doubtful debts 17,170 3,030 - 20,200

Unrealized compensated

absences 22,833 4,488 - 27,321

Unrealized exchange loss 3,569 3,569)( - -

Unrealized loss on

financial assets 510 90 - 600

Unrealized golf card

annual fee 918 162 - 1,080

Unrealized pension 311,893 25,574)( 14,495 300,814

Others 15,347 1,440 - 16,787

Subtotal 396,860$ 3,480$ 14,495$ 414,835$

Deferred tax liabilities

Unrealized gain on

foreign investment 225,346)($ 74,864$ -$ 150,482)($

Others 6,571)( 11,818)( 1,160)( 19,549)(

Subtotal 231,917)($ 63,046$ 1,160)($ 170,031)($

Total 164,943$ 66,526$ 13,335$ 244,804$

2018

383

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D. The Company’s income tax returns through 2014 and 2016 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 on February 7, 2018, the Company’s applicable income tax rate was raised

from 17% to 20% effective from January 1, 2018. The Company has assessed the impact of the

change in income tax rate

January 1

Recognised in

profit or loss

Recognised in

other

comprehensive

income December 31

Temporary differences:

Deferred tax assets

Unrealized loss on

unfinished construction 25,005$ 385)($ -$ 24,620$

Unrealized losses on

doubtful debts 17,170 - - 17,170

Unrealized compensated

absences 22,983 150)( - 22,833

Unrealized exchange loss 2,766 803 - 3,569

Unrealized loss on

financial assets 510 - - 510

Unrealized golf card

annual fee 918 - - 918

Unrealized pension 349,092 47,310)( 10,111 311,893

Others 18,982 3,635)( - 15,347

Subtotal 437,426$ 50,677)($ 10,111$ 396,860$

Deferred tax liabilities

Unrealized gain on

foreign investment 314,130)( 88,784 - 225,346)(

Others 6,571)( - - 6,571)(

Subtotal 320,701)($ 88,784$ -$ 231,917)($

Total 116,725$ 38,107$ 10,111$ 164,943$

2017

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(24) Earnings per share

Amount

after tax

Weighted-average number of

ordinary shares outstanding

(shares in thousands)

Earnings per

share

(in dollars)


Profit attributable to the

ordinary shareholders

of the parent 1,827,537$ 762,016 2.40$



dilutive potential ordinary

shares


Profit attributable to


of the parent plus

assumed conversion

of all dilutive potential

ordinary shares 1,827,537$ 763,370 2.39$


385

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(25) Operating leases

The Company leases land and buildings under operating lease agreements. These leases have terms

expiring between 2007 and 2029.The lease expense recognized for the years ended December 31,

2018 and 2017 were $451,226 and $559,593, respectively.

The Company’s future aggregate minimum lease payments under non-cancellable operating leases

are as follows:

Amount

after tax

Weighted-average

number of

ordinary shares

outstanding

(shares in thousands)

Earnings per share

(in dollars)


Profit attributable to the


of the parent 2,805,348$ 763,274 3.68$



dilutive potential ordinary

shares


Profit attributable to


of the parent plus

assumed conversion

of all dilutive potential

ordinary shares 2,805,348$ 765,252 3.67$



Not later than one year 310,948$ 315,931$

Later than one year but not later than five years 1,109,197 1,146,058

Later than five years 1,427,339 1,593,660

2,847,484$ 3,055,649$

386

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7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties Relationship with the Group

ECOVE Environment Corp. Subsidiary

CTCI Development Corporation Subsidiary

CTCI Smart Engineering Corporation Subsidiary

CTCI Resources Engineering Inc. Subsidiary

CTCI Advanced Systems Inc. Subsidiary

ECOVE Environmental Services Corporation. Subsidiary

CTCI Chemical Corp. Subsidiary

ECOVE Waste Management Corporation. Subsidiary

CTCI Overseas Co., Ltd. Subsidiary

ECOVE Miaoli Energy Corporation. Subsidiary

CTCI Shanghai Co., Ltd. Subsidiary

CTCI Beijing Co., Ltd. Subsidiary

CTCI Machinery Corp. Subsidiary

CTCI & HEC Water Business Co., Ltd Subsidiary

CTCI Engineering & Construction Sdn. Bhd. Subsidiary

CTCI CMCE JV SDN. BHD. Subsidiary

CINDA Engineering & Construction Private Limited Subsidiary

CTCI Arabia Ltd. Subsidiary

CTCI Netherlands B.V. Subsidiary

CTCI Malaysia Sdn Bhd Subsidiary

Universal Engineering (BVI) Corporation Subsidiary

CIPEC Construction Inc. Subsidiary

CCJV P1 Engineering & Construction Sdn. Bhd. Subsidiary

CIMAS ENGINEERING COMPANY Subsidiary

CTCI Americas, Inc. Subsidiary

CTCI (Thailand ) Co., Ltd. Subsidiary

CTCI Singapore Pte. Ltd. Subsidiary

Blue Whale Water Technology Corp. Associates

Powertech Energy Corp. Associates

Pan Asia Corp. Associates

Boretech Resource Recovery Associates

MIE INDUSTRIAL SDN. BHD. Associates

EVER ECOVE CORP. Associates

HDEL-CTCI (Linhai) Corporation Associates

CTCI Foundation Other related parties

CTCI Education Foundation Other related parties

387

01100480

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(2) Significant transactions and balances with related parties

A. Sales of services:

(a) The price on the construction contracts entered into with related parties are set through

negotiation by both parties. The collection terms were approximately the same as those with

third parties.

(b) The subsidiary, Innovest Investment Corp. invested in Powertec Energy Corporation which

became an associated enterprise in August 2014. As of December 31, 2018 and 2017, the

Company recognized total operating revenue amounting to $10,519,551 and $10,096,241,

respectively. Accounts receivable amounted to $0 and $13,859, respectively. The doubtful

accounts of $959,245 were collected in May, 2017. As a result, bad debt expense of $959,245

was reversed and recognized as other gains and losses.

B. Other operating revenue

The rate on the human resource support contracts entered into with related parties are set through

negotiation by both parties. The collection terms of 30 days were approximately the same as

those with third parties.

C. Purchases of services:

The rate on the construction contracts entered into with related parties are set through negotiation

by both parties. The payment terms of 30 days were approximately the same as those with third

parties.

2018 2017

Associates 833,667$ 695,387$

Subsidiaries 725,310 357,773

Other related parties 371 2,913

1,559,348$ 1,056,073$


2018 2017

Subsidiaries 23,210$ 50,796$

Associates 7,067 7,366

30,277$ 58,162$


2018 2017

Subsidiaries 1,470,896$ 2,294,389$

Associates 158,471 293,622

1,629,367$ 2,588,011$


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D. Other operating costs

The rate on the sub-contracting projects contracts entered into with related parties are set through

negotiation by both parties. The payment terms of 30 days were approximately the same as those

with third parties.

E. Accounts receivable

F. Cash dividends receivable (Shown in other receivables - related parties):

G. Other receivables-related parties

Includes advances to related parties for engineering and business travel.

H. Loans to related parties (Shown in other receivables-related parties)

(a) Receivables from related parties

(b) Interest income

The loans to subsidiaries are receivable within one year and carry interest at 1.01%~1.09%

per annum for the years ended December 31, 2018 and 2017, respectively.

2018 2017






Other related parties 420 788

623,701$ 144,887$

2018 2017

Subsidiaries 121,054$ -$




Associates 96 252

Other related parties 1 -

63,252$ 59,270$


CTCI Machinery Corp. 432,000 388,000

CTCI (Thailand) Co., Ltd. 392,251 -

CTCI Smart Engineering Corporation 50,000 93,000

874,251$ 481,000$

2018 2017



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I. Accounts payable

J. Other payables-related parties

Other payables-related party pertain to tariff and system up grade expense.

K. Progress billings (Shown as contract assets / construction contracts receivable and contract

liabilities / construction contracts payable)

L. Rental income

(a) Assets leased to related parties are as follows:

(b) Rental income

M. Rental expense


Subsidiaries 348,680$ 1,042,606$


442,092$ 1,253,772$




Subsidiaries 12,174,719$ 3,162,899$

Associates 1,737,387 10,955,178

Other related party 2,143 5,476

13,914,249$ 14,123,553$

Leased assets Lessee December 31, 2018 December 31, 2017

Land and buidings Subsidiaries 152,254$ 153,600$

Lessee Rental amount 2018 2017

Subsidiaries-A $268/month/quarterly collection 3,218$ 3,217$

Subsidiaries-B $265/month/quarterly collection 3,175 3,175

Subsidiaries-C $1,017/month/quarterly collection 12,203 12,895

18,596$ 19,287$


Lessor Leased assets Rental amount 2018 2017

Other related parties Land / Buildings$698/month/

semiannual payment8,372$ 8,372$

Subsidiaries-D Land / Buildings$22,547/month/month

Refundable deposits $128,300270,570 270,570

278,942$ 278,942$


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N. Donation expense

O. Sales of financial assets

P. Guarantees for related parties

As of December 31, 2018 and 2017, the Company had used guarantees in the amount of

$20,409,440 and $18,832,806, respectively, for related parties, and guarantees under various

construction contracts amounting to $16,094,763 and $15,580,563, respectively.

Q. Key management compensation

8. PLEDGED ASSETS


Other related party 15,000$ 15,000$

General

ledger account

Amount of

traded shares Target of trade Sales price

Gain (loss)

on sales

Other related party

Financial assets at

fair value through

profit-non current

17,556,000 UTECH SOLAR

CORPORATION132,851$ 64,277$

2018


Associates 1,984,300$ 769,300$

Subsidiaries 32,683,364 28,931,809

34,667,664$ 29,701,109$

2018 2017

Salaries and other short-term employee

benefits95,377$ 97,638$

Share-based payments 9,440 6,314$

Post-employment benefits 445 691

Other long-term benefits 2,508 950

107,770$ 105,593$


Pledged assets December 31, 2018 December 31, 2017 Purpose

Other non-current assets

Pledged bank deposits 141,948$ 8,135$ Guarantee for oil expense and bank guarantee

Refundable deposits 197,938 208,094 Guarantee for oil expense, rent, construction contracts

339,886$ 216,229$

Book value

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9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

In addition to those items which have been disclosed in Notes 6(25) and 7, the significant contingent

liabilities and unrecognized contract commitments of the Company as of December 31, 2018 were as

follows:

A. Guarantee

(a) The Company had outstanding notes payable for security deposits under various construction

projects amounting to $1,500,470.

(b) The Company had outstanding notes payable for bank financing amounting to $73,209,582.

B. The Company had unused and outstanding letters of credit of $544,401.

C. The Company had outstanding commitments for construction subcontracts and services contracts,

less accounts payable that were already paid and accrued in the future, of $22,884,153.

D. The Company had a joint procurement project with Mitsubishi Heavy Industries, Ltd. in 1996. The

construction was completed on February 19, 2000 and accepted by the Environmental Protection

Administration (the “EPA”) on May 16, 2000. According to the contract, the Company provided

warranty deposit amounting to $141,690 on the materials of the equipment. As the Kaohsiung

County government, the user of the incineration, had a dispute with the operating manufacturer,

the EPB rejected to repay the deposit.

The EPA availed of the warranty deposit on February 4, 2009. As a result, the Company had to

remit $73,253 to the procurement department of Bank of Taiwan Co., Ltd. Consequently, the

Company took action to cancel the deposit of $141,690 and filed a lawsuit requiring EPA to repay

the warranty deposit. On April 16, 2009, the EPA said that it would repay $9,299, which was the

warranty deposit of $73,253 less actual amounts used of $63,954, to the Company. Therefore, the

Company reduced the lawsuit claim to $63,954 plus interest of $117 and damage loss of $2,421.

The Company won the lawsuit apart from the loss compensation of $1,708. The case was reverted

back to the Taiwan High Court after being taken up by the Supreme Court. The Taiwan High Court

then reverted the case back again to the Supreme Court. The Taiwan High Court reversed the

original judgement and denied the EPA’s claim, the EPA then filed to the third instance. The

Supreme Court remanded the case to the Taiwan High Court. The Taiwan High Court denied the

appeal of EPA, who then filed to the third instance, and remanded the case to the Taiwan High

Court as well. After the case was taken up by the Taiwan High Court as 105-Zhong-Shang-Geng-

3-11. The EPA should pay $61,706, reject the company's request for $3,077, and the company's

judgment to win most of the cases. Both the Company and the EPA filed a third-trial appeal against

the adverse judgments, which is now being taken up by the Supreme Court.

According to the Company’s lawyer, the outcome of the case is still uncertain and the EPA

received an arbitration award as the defense. Thus, it is difficult to estimate any potential gain or

loss on the case.

10. SIGNIFICANT DISASTER LOSS

None.

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11. SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE

A. Details of the appropriation of earnings as proposed by the Board of Directors on March 8, 2019 are

provided in Note 6(19) G.

B. To fulfil operating capital and repay the bank borrowings, the Board of Directors resolved to issue

domestic unsecured corporate bonds at face value in full or instalments, depending upon the market,

under a range of $6 billion on December 12, 2018. As of March 14, 2019, the Company has not

submitted an application to the competent authority for approval for raising domestic unsecured

corporate bonds.

12. OTHERS

(1) Capital risk management

There was no significant change in the reporting period. Please refer to Note 12 in the consolidated

financial statements for the year ended December 31, 2017.

The gearing ratios as of December 31, 2018 and 2017, were as follows:

(2) Financial risk of financial instruments

A. Financial instruments by category


Total borrowings 6,330,000$ 2,770,000$

Total equity 17,458,729$ 17,952,032$

Gearing ratio 36.26% 15.43%


Financial assets

Financial assets at fair value through profit

or loss

Financial assets mandatorily measured at

fair value through profit or loss66,113$ 47,678$

Financial assets at fair value through other

comprehensive income1,107,195$ -$

Available-for-sale financial assets

Available-for-sale financial assets - 406,401

Financial assets at cost - 672,753

-$ 1,079,154$

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B. Risk management policies

(a) The Company’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.

(b) Risk management is carried out by a central treasury department (Company treasury) under

policies approved by the Board of Directors. Company treasury identifies, evaluates and

hedges financial risks in close co operation with the Company’s operating units. The Board

provides written principles for overall risk management, as well as written policies covering

specific areas and matters, such as foreign exchange risk, interest rate risk, credit risk, use of

derivative financial instruments and non-derivative financial instruments, and investment of

excess liquidity.


Financial assets at amortised cost

Cash and cash equivalents 8,228,593$ 9,824,161$

Notes receivable 2,730 -

Accounts receivable 4,503,941 831,810

Accounts receivable due from related

parties 623,701 144,887

Other receivables 57,549 48,947

Other receivables due from related

parties 1,058,557 540,270


Long-term accounts receivable 781 1,078

Other financial assets 185,805 46,203

14,859,595$ 11,645,450$


Financial liabilities at fair value through

profit or loss

Financial liabilities mandatorily measured

at fair value through profit or loss548$ 4,426$

Financial liabilities at amortised cost

Short-term borrowings 6,330,000$ 2,770,000$

Accounts payable 4,903,869 5,781,063

Accounts payable due to related parties 442,092 1,253,772

Other payables 1,307,788 1,382,387

Other payables due to related parties 3,700 25,819


13,042,146$ 11,314,744$

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C. Significant financial risks and degrees of financial risks

(a) Market risk

Foreign exchange risk

i. The Company operates internationally and is exposed to exchange rate risk arising from

the transactions of the Company and its subsidiaries used in various functional currency,

primarily with respect to the USD and EUR. Exchange rate risk arises from future

commercial transactions and recognized assets and liabilities.

ii. Management has set up a policy to require group companies to manage their foreign

exchange risk against their functional currency. The companies are required to hedge

their entire foreign exchange risk exposure with the Company treasury.

iii. The Company’s businesses involve some non-functional currency operations (the

Company’s and certain subsidiaries’ functional currency: NTD; other certain

subsidiaries’ functional currency: USD and RMB). The information on assets and

liabilities denominated in foreign currencies whose values would be materially affected

by the exchange rate fluctuations is as follows:

Foreign Currency

Amount


(Foreign currency:


Financial assets

Monetary items

USD：NTD 245,383$ 30.7400 7,543,059$

THB：NTD 817,495 0.9491 775,884

EUR：NTD 7,858 35.2327 276,866

JPY：NTD 553,133 0.2779 153,716

SGD：NTD 4,271 22.4552 95,898

SAR：NTD 555 8.1922 4,547

RMB：NTD 716 4.4742 3,205


Monetary items

USD：NTD 5,295 30.7400 162,766

EUR：NTD 932 35.2327 32,837

SGD：NTD 537 22.4552 12,064

SAR：NTD 406 8.1922 3,325

THB：TWD 1,421 0.9491 1,349

RMB：NTD 82 4.4742 368

December 31, 2018

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iv. The unrealized exchange gain (loss) arising from significant foreign exchange variation

on the monetary items held by the Company for the year ended December 31, 2018 and

2017 amounted to $81,913 and ($34,354), respectively.

Foreign Currency

Amount


(Foreign currency:


Financial assets

Monetary items

USD：NTD 299,914$ 29.84 8,949,434$

EUR：NTD 15,123 35.67 539,366

SGD：NTD 7,277 22.32 162,423

JPY：NTD 442,250 0.26 117,152

VND：NTD 80,377,528 0.0013 104,491

SAR：NTD 5,230 7.96 41,627

RMB：NTD 3,614 4.58 16,548

THB：NTD 2,005 0.92 1,835

GBP：NTD 39 40.21 1,568


Monetary items

USD：NTD 5,568 29.84 166,149

EUR：NTD 2,141 35.67 76,369

SEK：NTD 18,368 3.62 66,468

SGD：NTD 663 22.32 14,801

CHF：NTD 276 30.55 8,432

THB：NTD 3,659 0.92 3,349

RMB：NTD 1,036 4.58 4,744

December 31, 2017

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v. Analysis of foreign currency market risk arising from significant foreign exchange

variation:

Degree of

Variation

Effect on Profit

or Loss

Effect on Other

Comprehensive

Income

(Foreign currency:


Financial assets

Monetary items

USD：NTD 1% 75,431$ -$

THB：NTD 1% 7,759 -

EUR：NTD 1% 2,769 -

JPY：NTD 1% 1,537 -

SGD：NTD 1% 959 -

SAR：NTD 1% 45 -

RMB：NTD 1% 32 -


Monetary items

USD：NTD 1% 1,628 -

EUR：NTD 1% 328 -

SGD：NTD 1% 121 -

SAR：NTD 1% 33 -

THB：NTD 1% 13 -

RMB：NTD 1% 4 -

December 31, 2018


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Price risk

The Company’s equity securities, which are exposed to price risk, are the held financial assets

at fair value through other comprehensive income, financial assets at fair value through profit

or loss and available-for-sale financial assets. To manage its price risk arising from

investments in equity securities, the Company diversifies its portfolio. Diversification of the

portfolio is done in accordance with the limits set by the Company.

Cash flow and fair value interest rate risk

The Company’s interest rate risk arises from borrowings. Borrowings issued at variable rates

expose the Company to cash flow interest rate risk which is partially offset by cash and cash

equivalents held at variable rates. During the years ended December 31, 2018 and 2017, the

Company’s borrowings at variable rate were denominated in NTD and USD.

Degree of

Variation

Effect on Profit

or Loss

Effect on Other

Comprehensive

Income

(Foreign currency:


Financial assets

Monetary items

USD：NTD 1% 89,494$ -$

EUR：NTD 1% 5,394 -

SGD：NTD 1% 1,624 -

JPY：NTD 1% 1,172 -

VND：NTD 1% 1,045 -

SAR：NTD 1% 416 -

RMB：NTD 1% 165 -

THB：NTD 1% 18 -

GBP：NTD 1% 16 -


Monetary items

USD：NTD 1% 1,661 -

EUR：NTD 1% 764 -

SEK：NTD 1% 665 -

SGD：NTD 1% 148 -

CHF：NTD 1% 84 -

THB：NTD 1% 33 -

RMB：NTD 1% 47 -

December 31, 2017


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(b) Credit risk

i. Credit risk refers to the risk of financial loss to the Company arising from default by the

clients or counterparties of financial instruments on the contract obligations. According

to the Company’s credit policy, each local entity in the Company is responsible for

managing and analyzing the credit risk for each of their new clients before standard

payment and delivery terms and conditions are offered.

ii. Individual risk limited is controlled by internal risk that assesses the credit quality of the


iii. The Company adopts the assumptions under IFRS 9, if the contract payments were past

due over 30 days based on the terms, there has been a significant increase in credit risk

on that instrument since initial recognition.

iv. The Company adopts the assumptions under IFRS 9, the default occurs when the

customers’ contract payments are past due over 90 days.

v. The Company classifies customers’ accounts receivable and contract assets in

accordance with customer types. The Company applies the simplified approach using

provision matrix and loss rate methodology to estimate expected credit loss under the

provision matrix basis.

vi. The Company used the forecastability of Taiwan Institute of Economic Research boom

observation report to adjust historical and timely information to assess the default

possibility of accounts receivable. On December 31, 2018, the provision matrix is as

follows:

Note 1: Government institutions, state-owned enterprises and listed companies

Note 2: Companies that are not included in Note 1.

Excellent

customers

(Note 1)

General

customers

(Note 2)

Individual

assessment

customers Total

December 31, 2018

Expected loss rate 0% 0% 0%

Total book value 2,591,543$ 1,908,546$ 4,062$ 4,504,151$

Loss allowance - 210 - 210

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Movements in relation to the Company applying the simplified approach to provide loss

allowance for accounts receivable, contract assets and lease payments receivable are as

follows:

(c) Liquidity risk

i. Cash flow forecasting is performed in the operating entities of the Company and

aggregated by Company treasury. Company treasury monitors rolling forecasts of the

Company’s liquidity requirements to ensure it has sufficient cash to meet operational

needs so that the Company does not breach borrowing limits or covenants on any of its

borrowing facilities. Such forecasting takes into consideration the Company’s debt

financing plans, covenant compliance, compliance with internal balance sheet ratio

targets.

ii. The table below analyses the Company’s non-derivative financial liabilities and net-

settled derivative financial liabilities into relevant maturity groupings based on the

remaining period at the balance sheet date to the contractual maturity date for non-

derivative financial liabilities and to the expected maturity date for derivative financial

liabilities. The amounts disclosed in the table are the contractual undiscounted cash

flows.

2018

Accounts receivable

At January 1_IAS 39 3,417$

Adjustments under new standards -

At January 1_IFRS 9 3,417

Provision for impairment -

Reversal of impairment 3,207)(

Write-offs -

At December 31 210$




Notes payable - -



Guarantee deposits received - 54,697

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(d) Cash flow risk from variations of rates

There is no significant cash flow risk from variations of rates since accounts payable are

due less than one year.

(3) Fair value information

A. The different levels that the inputs to valuation techniques are used to measure fair value of

financial and non-financial instruments have been defined as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the

entity can access at the measurement date. A market is regarded as active if it meets all

the following conditions: the items traded in the market are homogeneous; willing

buyers and sellers can normally be found at any time; and prices are available to the

public. The fair value of the Company’s investment in listed stocks, beneficiary

certificates with quoted market prices 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 Company’s investment in

most derivative instruments is included in Level 2.

Level 3: Inputs for the asset or liability that are not based on observable market data.

B. 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 are as follows:




Notes payable - -



Guarantee deposits received - 101,703


December 31, 2018 Less than 3 months

Between 3 months

and 1 year

Forward exchange contracts $ 548 $ -


December 31, 2017 Less than 3 months

Between 3 months

and 1 year

Forward exchange contracts $ 4,426 $ -

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(a) The related information of natures of the assets and liabilities is as follows:


Financial assets:

Financial assets at

fair value through

profit or loss

　Mutual funds 17,560$ -$ -$ 17,560$

　Derivative financial

assets - 48,553 - 48,553

Available-for-sale

financial assets


-current 322,355 - - 322,355


-non current - - 784,840 784,840

Total 339,915$ 48,553$ 784,840$ 1,173,308$

Financial liabilities:

Financial liabilities at

fair value through

profit or loss


liabilities -$ 548$ -$ 548$

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(b) The methods and assumptions the Company used to measure fair value are as follows:

i. The instruments the Company 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.

C. There was no transfer between Level 1 and Level 2 for the years ended December 31, 2018 and

2017.


Financial assets:

Financial assets at

fair value through

profit or loss

　Mutual funds 47,181$ -$ -$ 47,181$


assets - 497 - 497

Available-for-sale

financial assets

　Equity securities 406,401 - - 406,401

Total 453,582$ 497$ -$ 454,079$

Financial liabilities:

Financial liabilities at

fair value through

profit or loss


liabilities

-$ 4,426$ -$ 4,426$

Listed shares Open-end fund

Marked quated price Closing price Net asset value

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D. Movements on Level 3 for the year ended December 31, 2018 are as follows:

E. For the year ended December 31, 2018, there was no transfer into or out from Level 3.

F. Company finance segment is in charge of valuation procedures for fair value measurements

being categorized within Level 3, which is to verify independent fair value of financial

instruments. Such assessment is to ensure the valuation results are reasonable by applying

independent information to make results close to current market conditions, confirming the

resource of information is independent, reliable and in line with other resources and represented

as the exercisable price, and frequently calibrating valuation model, performing back-testing,

updating inputs used to the valuation model and making any other necessary adjustments to the

fair value. Investment property is valuated regularly by the Company’s Finance segment based

on the valuation methods and assumptions announced by the Financial Supervisory Commission,

Securities and Futures Bureau or through outsourced appraisal performed by the external valuer.

G. The following is the qualitative information of significant unobservable inputs and sensitivity

analysis of changes in significant unobservable inputs to valuation model used in Level 3 fair

value measurement:

2018

Equity securities

At January 1 736,181$

Gains and losses recognised in profit or loss

Additions 159,452

Recorded as unrealised gains (losses) on

valuation of investments in equity

instruments measured at fair value

through other comprehensive income 27,102)(

Sales in this year 83,691)(


Fair value at

December 31,

2018

Valuation

technique

Significant

unobservable

input

Range (weighted

average)

Relationship of

inputs to fair

value

Non-derivative

equity

instrument:

Unlisted shares 239,615$ Market

comparable

companies

Price to book

ratio multiple,

discount for

lack of

marketability

Median:1.86

Average:1.79

Liquidity discount:

17.5%

The higher the

multiple and

control

premium, the

higher the fair

value

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H. The Company 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 categorized within Level 3 if the inputs used to valuation

models have changed:

(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. They are financial assets held for trading. Financial assets are classified in this category

of held for trading if acquired principally for the purpose of selling in the short-term.

Derivatives are also categorized as financial assets held for trading unless they are

designated as hedges.

ii. On a regular way purchase or sale basis, financial assets at fair value through profit or loss

are recognised and derecognised using settlement date accounting.

iii. Financial liabilities at fair value through profit or loss are initially recognised at fair value.

Related transaction costs are expensed in profit or loss. These financial liabilities are


these financial liabilities are recognised in profit or loss.


i. They are non-derivatives that are either designated in this category or not classified in any

of the other categories.

ii. On a regular way purchase or sale basis, available-for-sale financial assets are recognised

and derecognised using settlement date accounting.

Input Change

Favourable

change

Unfavourable

change

Favourable

change

Unfavourable

change

Financial assets

Equity

instrument

Price to book

ratio multiple,

discount for

lack of

marketability

± 1% $ - $ - $ 24,521 ($ 24,521)

December 31, 2018

Recognised in profit or

loss

Recognised in other


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iii. They are initially recognised at fair value plus transaction costs. These financial assets are


these financial assets are recognised in other comprehensive income. Investments in

equity instruments that do not have a quoted market price in an active market and whose

fair value cannot be reliably measured or derivatives that are linked to and must be settled

by delivery of such unquoted equity instruments are presented in ‘financial assets

measured at cost’.

(c) Loans and receivables

Accounts receivable are loans and receivables originated by the entity. They are created by

the entity by selling goods or providing services to customers in the ordinary course of

business. They are initially 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 the effect of discounting is immaterial.

(d) Impairment of financial assets

i. The Company assesses at each balance sheet date whether there is objective evidence that

a financial asset or a group of financial assets is impaired as a result of one or more 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 Company 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 Company, for economic or legal reasons relating to the borrower’s financial

difficulty, granted the borrower a concession that a lender would not otherwise

consider;

(iv) It becomes probable that the borrower will enter bankruptcy or other financial

reorganisation;

(v) The disappearance of an active market for that financial asset because of financial

difficulties;

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(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 Company assesses that there has been objective evidence of impairment and an

impairment loss has occurred, accounting for impairment is made as follows according to

the category of financial assets:

(i) Financial assets at amortised cost



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 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.

(ii) Financial assets at cost



current market return rate of similar financial asset, and is recognised in profit or

loss. Impairment loss recognised for this category shall not be reversed subsequently.

Impairment loss is recognised by adjusting the carrying amount of the asset through

the use of an impairment allowance account.

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(iii) Available-for-sale financial assets


acquisition cost (less any principal repayment and amortisation) and current fair

value, less any impairment loss on that financial asset previously recognised in profit

or loss, and is reclassified from ‘other comprehensive income’ to ‘profit or loss’. If,

in a subsequent period, the fair value of an investment in a debt instrument increases,

and the increase can be related objectively to an event occurring after the impairment

loss was recognised, such impairment loss is reversed through profit or loss.

Impairment loss of an investment in an equity instrument recognised in profit or loss

shall not be reversed through profit or loss. Impairment loss is recognised and

reversed by adjusting the carrying amount of the asset through the use of an

impairment allowance account.

(e) Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered

into and are subsequently remeasured at their fair value. Any changes in the fair value are

recognised in profit or loss.

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B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017,

IAS 39, to January 1, IFRS 9, were as follows:

Available-

for-sale

-equity

Available-

for-sale

-liability

Measured at

fair value

through other

comprehensive

income-equity

Measured at

fair value

through other

comprehensive

income-liability Total

Retained

earnings

Other

equity


measured at fair

value through

profit or loss $ - $ - $ 96,980 $ 96,980 13,289)($ -$


measured at fair

value through other

comprehensive

income-equity 328,497 - 575,773 904,270 - -

Impairment loss

adjustment - - - - 180,418 ( 180,418)

Fair value adjustment - - - - - 76,718

Gain or loss of

changes in fair

value attributable

to non-controlling

interests - - - - 229)( 229


measured at fair

value through other

comprehensive

income-liability - 77,904 - 77,904 - -

$ 1,079,154 $ 166,900 ($ 103,471)

Measured

at cost

Effects

IAS 39

IFRS 9

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(a) Under IAS 39, because the cash flows of debt instruments, which were classified as:

available-for-sale financial assets amounting to $77,904, met the condition that it is intended

to settle the principal and interest on the outstanding principal balance, they were reclassified

as " financial assets at fair value through other comprehensive income (debt instruments)" on

initial application of IFRS 9.

(b) Under IAS 39, because the equity instruments, which were classified as: available-for-sale

financial assets, financial assets at cost, amounting to $328,497, $575,773, respectively, were

not held for the purpose of trading, they were reclassified as "financial assets at fair value

through other comprehensive income (equity instruments)" on initial application of IFRS 9.

(c) Under IAS 39, the equity instruments, which were classified as: financial assets at cost,

amounting to $96,980, were reclassified as "financial assets at fair value through profit or

loss (equity instruments)", under IFRS 9.

C. The significant accounts as of December 31, 2017, are as follows:

(a) Financial assets and liabilities at fair value through profit or loss

i. The Company recognized net loss amounting to $40,379 on financial assets held for trading


ii. The trading items and contracts information of derivatives are as follows:


Current items:

Financial assets held for trading


Non-hedging derivatives 497

44,413

Valuation adjustment of financial assets held for trading 3,265

47,678$

Non-current items:

Financial liabilities held for trading non-hedging derivatives 4,426$

Contract amount

(notional principal) Contract period

Non-delivery of forward

exchange contract-buy (10 item) USD 26,000 thousand 2017.12.19~2018.01.31

Foreign exchange contract-

buy (2 item) EUR 1,200 thousand 2017.12.20~2018.01.22

December 31, 2017

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i. The Company recognized $14,767 in other comprehensive income for fair value change


ii. Due to the global financial crisis in year 2008, listed (TSE and OTC) stocks amounting

to $56,044which were initially classified as “financial assets at fair value through profit

or loss” were reclassified to “available-for-sale financial assets” on July 1, 2008, in

accordance with paragraph 50 (c) of IAS 39. The relevant information is set forth below:

(i.) The above reclassified assets which have not yet been disposed of were as follows:

(ii.) The changes in fair value of the above listed stocks that were recognized in profit or

loss and other comprehensive income were $0 and $6,105, respectively, for the year

ended December 31, 2017.

(iii.) If the above listed stocks had not been reclassified to “available-for-sale financial

assets” on July 1, 2008, the (loss) gain from change in fair value of those assets

should have been recognized for the following periods:

iii. No financial assets at fair value through profits or loss held by the Company was pledged

to others.


Current items:

Listed stocks 254,939$

Corporate bonds 85,672

340,611


406,401$

December 31, 2017

Book value/Fair value


For the year ended

December 31, 2017


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(c) Financial assets at cost

i. Based on the Company’s intention, its investment in stocks should be classified as

available-for-sale financial assets. However, as these investments are not traded in active

markets, the fair value of the investment cannot be measured reliably. The Company

classified those stocks as ‘financial assets measured at cost’.

ii. In August 2016, the Board of Directors approved the Company’s investment of US

$13,181 in Ever Victory Global Limited for an ownership stake of 2.32%. The investment

will be made in several installments over several years. In 2017, the Company invested

$74,347 (US $2,309) and $58,426 (US $1,921) in March and September, respectively.

iii. As of December 31, 2017, no financial assets at cost held by the Company were pledged

to others.

D. As of December 31, 2017, information of credit risk is as follows：

(a) Credit risk information for the year ended December 2017 are as follows :

Credit risk refers to the risk of financial loss to the Company arising from default by the

clients or counterparties of financial instruments on the contract obligations. According to the

Company’s credit policy, each local entity in the Company 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


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. Credit

risk arises from cash and cash equivalents, derivative financial instruments and deposits with

banks and financial institutions, as well as credit exposures to wholesale and retail customers,

including outstanding receivables. For banks and financial institutions, only independently

rated parties with a minimum rating of 'A' are accepted.

(b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting

periods, and management does not expect any significant losses from non-performance by

these counterparties.


Non-Current items:

CDIB & Partners Investment Holding Corp 250,000$

Core Pacific City Co., Ltd. 190,000

Ever Victory Global Limited. 132,773

Utech Solar Corp. 96,980

Metro-consultant Co., Ltd. 3,000

Heng Keng Corp. -

Total 672,753$

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(c) The credit quality information of financial assets that are neither past due nor impaired is as

follows:

Group 1：Government or State- owned Enterprises.

Group 2：Listed companies.

Group 3：The company does not belong to either Group 1 or Group 2.

(d) The analysis of the Company’s accounts receivable which have been impaired is as follows:

(i.) As of December 31, 2017, the Company’s notes and accounts receivable that were

impaired amounted to $ 3,417.

(ii.) Movements in the provision for impairment of accounts receivable are as follows:

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

(5) Effects of initial application of IFRS 15 and information on application of IAS11 and IAS 18 in 2017

A. The significant accounting policies applied on revenue recognition for the year ended December

31, 2017 are set out below:

(a) Construction contracts

i. IAS 11, ‘Construction Contracts’, defines a construction contract as a contract specifically

negotiated for the construction of an asset. If the outcome of a construction contract can

be estimated reliably and it is probable that this contract would make a profit, contract

revenue should be recognised by reference to the stage of completion of the contract

activity, using the percentage-of-completion method of accounting, over the contract term.

Contract costs are expensed as incurred. The stage of completion of a contract is measured

Group 1 Group 2 Group 3

Notes and accounts receivable 26,925$ 424,951$ 222,814$

December 31, 2017

2017

At Januay 1 959,995$

Provision of impairment 3,417

Reversal for impairment 959,995)(


December 31, 2017

Note and accounts receivable

Up to 30 days 66,371$

31 to 90 days 66,157

91 to 180 days 167,354

Over 181 days 2,125

302,007$

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by the proportion of contract costs incurred for work performed to date to the estimated

total costs for the contract. An expected loss where total contract costs will exceed total

contract revenue on a construction contract should be recognised as an expense as soon as

such loss is probable. If the outcome of a construction contract cannot be estimated reliably,

contract revenue should be recognised only to the extent of contract costs incurred that it

is probable will be recoverable.

ii. Contract revenue should include the revenue arising from variations from the original

contract work, claims and incentive payments that are agreed by the customer and can be

measured reliably.

iii.The excess of the cumulative costs incurred plus recognised profits (less recognised losses)

over the progress billings on each construction contract is presented as an asset within

‘Receivables from customers on construction contracts’. While, the excess of the progress

billings over the cumulative costs incurred plus recognised profits (less recognised losses)

on each construction contract is presented as a liability within ‘Payables to customers on

construction contracts’.

B. The construction contract receivable/payable recognised by using above construction contract

accounting policies as of December 31, 2017 are as follows:

As of December 31, 2017, there were no retentions relating to construction contracts; the

advances received before the related construction work is performed amounted to $591,298.

December 31, 2017

Aggregate costs incurred plus recognised profits (less recognised

losses)

305,319,806$

Less: Progress billings 293,277,916)(

Net balance sheet position for construction in progress 12,041,890$

Presented as:

Receivables from customers on construction contracts 18,262,745$

Payables to customers on construction contracts 6,220,855)(

12,041,890$

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13. SUPPLEMENTARY DISCLOSURES

(1)Significant transactions information

A. Loans to others: Please refer to table 1.

B. Provision of endorsements and guarantees to others: Please refer to table 2.

C. Holding of marketable securities at the end of the period (not including subsidiaries, associates

and joint ventures): Please refer to table 3.

D. Acquisition or sale of the same security with the accumulated cost exceeding NT$300 million or

20% of the Company’s paid-in capital: Please refer to table 4.

E. Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more: Please

refer to table 5.

F. Disposal of real estate reaching NT$300 million or 20% of paid-in capital or more: None.

G. Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-

in capital or more: Please refer to table 6.

H. Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more:

Please refer to table 7.

I. Derivative financial instruments undertaken during the reporting periods: Please refer to Notes

6(2) and 12(2).

J. Significant inter-company transactions during the reporting periods: Please refer to table 8.

(2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland

China)：Please refer to table 9.

(3) Information on investments in Mainland China

A. Basic information: Please refer to table 10.

B. Significant transactions, either directly or indirectly through a third area, with investee companies

in the Mainland Area: None.

415

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Item Value

0 CTCI Corp. CTCI

Engineering

& Construction

Sdn. Bhd.

Other

receivables

Yes 1,075,900$ 1,075,900$ -$ - 2 - For

operational

need

-$ - -$ 3,491,746$ 6,983,492$ -

0 CTCI Corp. CTCI

Singapore Pte.

Ltd.

Other

receivables

Yes 1,383,300 1,383,300 - - 2 - For

operational

need

- - - 3,491,746 6,983,492 -

0 CTCI Corp. CTCI Arabia

Ltd.

Other

receivables

Yes 1,444,780 1,444,780 - - 2 - For

operational

need

- - - 3,491,746 6,983,492 -

0 CTCI Corp. CTCI

Machinery

Corp.

Other

receivables

Yes 650,000 650,000 432,000 1.01% 2 - For

operational

need

- - - 3,491,746 6,983,492 -


Engineering

Corp.

Other

receivables

Yes 500,000 500,000 50,000 1.01% 2 - For

operational

need

- - - 3,491,746 6,983,492 -

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

CTCI Corporation

Loans to others




Table 1 Page 1416

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416

Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）


Co., Ltd.

Other

receivables-

related

parties

Yes 92,019$ -$ -$ - 2 - For

operational

need

-$ - -$ 3,491,746$ 6,983,492$ -

0 CTCI Corp. CTCI

(Thailand) Co.,

Ltd.

Other

receivables

Yes 500,000 500,000 397,044 1.01% 2 - For

operational

need

- - - 3,491,746 6,983,492 -

0 CTCI Corp. CIPEC

Construction Inc.

Other

receivables

Yes 614,800 614,800 - - 2 - For

operational

need

- - - 3,491,746 6,983,492 -

1 CTCI Advanced

Systems Inc.

CTCI Corp. Other

receivables

Yes 45,000 45,000 - - 2 - For

operational

need

- - - 54,452 217,807 -

2 CTCI Overseas

Co., Ltd.

Superiority

(Thailand) Co.,

Ltd.

Other

receivables

Yes 65,778 65,778 65,778 2.83% 2 - For

operational

need

- - - 688,802 688,802 -

2 CTCI Overseas

Co., Ltd.

CIPEC

Construction Inc.

Other

receivables

Yes 313,926 312,472 - - 2 - For

operational

need

- - - 688,802 688,802 -

2 CTCI Overseas

Co., Ltd.

CTCI CMCE

JV SDN. BHD.

Other

receivables

Yes 38,552 37,704 - - 2 - For

operational

need

- - - 688,802 688,802 -

Table 1 Page 2417

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417

Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

2 CTCI Overseas

Co., Ltd.

CTCI

Netherlands

B.V.

Other

receivables-

related

parties

Yes 36,497$ -$ -$ - 2 - For

operational

need

-$ - -$ 688,802$ 688,802$ -

3 CTCI Overseas

(BVI) Co., Ltd.

CIPEC

Construction Inc.

Other

receivables

Yes 20,949 20,811 20,802 2.22% 2 - For

operational

need

- - - 698,646 698,646 -

4 ECOVE

Enviroment

Corporation

ECOVE Solar

Energy

Corporation

Other

receivables-

related

parties

Yes 200,000 200,000 87,000 1.01% 2 - For

operational

need

- - - 487,824 1,951,295 -

5 ECOVE Waste

Management

Corporation

CTCI Corp. Other

receivables

Yes 14,000 7,000 - - 2 - For

operational

need

- - - 11,346 45,385 -

5 ECOVE Waste

Management

Corporation

CTCI

Machinery

Corp.

Other

receivables

Yes 14,000 7,000 - - 2 - For

operational

need

- - - 11,346 45,385 -

5 ECOVE Waste

Management

Corporation

CTCI Smart

Engineering

Corp.

Other

receivables

Yes 14,000 7,000 7,000 1.01% 2 - For

operational

need

- - - 11,346 45,385 -

6 ECOVE

Environmental

Services

Corporation

ECOVE Solvent

Recycling

Corporation

Other

receivables

Yes 70,000 70,000 50,000 1.57% 2 - For

operational

need

- - - 96,634 386,534 -

Table 1 Page 3418

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418

Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

6 ECOVE

Environmental

Services

Corporation

ECOVE

Miaoli Energy

Corporation

Other

receivables

Yes 70,000$ 70,000$ 39,500$ 1.01% 2 - For

operational

need

-$ - -$ 96,634$ 386,534$ -

6 ECOVE

Environmental

Services

Corporation

CTCI

Machinery

Corp.

Other

receivables

Yes 140,000 35,000 - - 2 - For

operational

need

- - - 96,634 386,534 -

6 ECOVE

Environmental

Services

Corporation

CTCI Resources

Engineering

Inc.

Other

receivables

Yes 140,000 35,000 - - 2 - For

operational

need

- - - 96,634 386,534 -

6 ECOVE

Environmental

Services

Corporation

CTCI Corp. Other

receivables

Yes 140,000 70,000 - - 2 - For

operational

need

- - - 96,634 386,534 -

6 ECOVE

Environmental

Services

Corporation

CTCI Smart

Engineering

Corp.

Other

receivables

Yes 140,000 70,000 - - 2 - For

operational

need

- - - 96,634 386,534 -

Table 1 Page 4419

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Item Value

Allowance

for

doubtful

accounts


granted to

a single party

（Note 7）

Ceiling on

total loans

granted


Reason

for short-term

financing

（Note 6）

No.


General

ledger

account

（Note 2）

Is a

related

party

Maximum

outstanding

balance during

year ended

December 31,

2018

(Note 3)

Balance at

December 31,

2018

（Note 8）

Actual amount

drawn down

Interest

rate

Nature of

loan

（Note 4）

Amount of

transactions

with the

borrower

（Note 5）

7 CTCI Shanghai

Co., Ltd.

CTCI Trading

Shanghai

Co., Ltd.

Other

receivables-

related

parties

Yes 92,334$ -$ -$ - 2 - For

operational

need

-$ - -$ 196,870$ 196,870$ -

8 ECOVE Solar

Energy Corporation

ECOVE South

Corporation Ltd.

Other

receivables

Yes 14,000 14,000 - - 2 - For

operational

need

- - - 292,439 292,439 -

8 ECOVE Solar

Energy Corporation

ECOVE Solar

Power

Corporation

Other

receivables

Yes 200,000 200,000 - - 2 - For

operational

need

- - - 292,439 292,439 -

8 ECOVE Solar

Energy Corporation

ECOVE Central

Corporation Ltd.

Other

receivables

Yes 17,000 17,000 1,000 1.71% 2 - For

operational

need

- - - 292,439 292,439 -

9 CTCI Beijing Co.,

Ltd.

CTCI Shanghai

Co., Ltd.

Other

receivables

Yes 269,502 268,452 - - 2 - For

operational

need

- - - 712,899 712,899 -

Table 1 Page 5420

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Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:



Note 2: Fill in the name of account in which the loans are recognised, such as receivables-related parties, current account with stockholders, prepayments, temporary payments, etc.

Note 3: Fill in the maximum outstanding balance of loans to others during the year ended December 31, 2018

Note 4:.The numbers filled in for the nature of loans are as follows:

　　　(1) Business association is labeled as “1”

　　　(2) Short-term financing is labeled as “2”.

Note 5: Fill in the amount of business transactions when nature of the loan is related to business transactions, which is the amount of business transactions occurred between the creditor and borrower in the current year.

Note 6: Fill in purpose of loan when nature of loan belongs to short-term financing, for example, repayment of loan, acquisition of equipment, working capital, etc.

Note 7: The calculation and amount on ceiling of loans are as follows:

　　　[The company]

　　　(1) The limit on loans granted to a single party shall not exceed 20% of the Company's net assets value.


　　　[Domestic subsidiaries and overseas subsidiaries]

　　　(1) The limit on loans granted to a single party by domestic subsidiaries and overseas subsidiaries shall not exceed 10% and 40% of the Company's net value, respectively.


Note 8: The amounts of funds to be loaned to others which have been approved by the board of directors of a public company in accordance with Article 14, Item 1 of the “Regulations Govering Loaning of Funds and Making

of Endorsements/Guarantees by public Companies” should be included in its published balance of loans to others at the end of the reporting period to reveal the risk of loaning the public company bears, even though they

have not yet been appropriated. However, this balance should excluded the loans repaid when repayments are done subsequently to reflect the risk adjustment. In addition, if the board of directors of a public company has

authorised the chairman to loan funds in instalments or in revolving within certain lines and within one year in accordance with Article 14, Item 2,of the “Regulations Governing Loaning of Funds and Making of Endorsements/

Guarantees by Public Companies”, the published balance of loans to others at the end of the reporting period should also include these lines of loaning approved by the board of directors, and these lines of loaning should not be

excluded from this balance even though the loans are repaid subsequently, for taking into consideration they could be loaned again thereafter.

Table 1 Page 6421

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Company name

Relationship

with the

endorser/

guarantor

（Note 2）

0 CTCI Corp. Universal Engineering

(BVI) Corporation

2 52,376,187$ 30,944$ 30,740$ -$ -$ 0.18% 104,752,374$ Y N N -

0 CTCI Corp. CTCI Development

Corporation

2 52,376,187 500,000 500,000 130,000 - 2.86% 104,752,374 Y N N -

0 CTCI Corp. CTCI Americas, Inc. 2 52,376,187 1,412,068 1,402,759 85,567 - 8.03% 104,752,374 Y N N -

0 CTCI Corp. CTCI Engineering &

Construction Sdn.

Bhd.

2 52,376,187 1,896,077 1,820,025 1,389,665 - 10.42% 104,752,374 Y N N -

0 CTCI Corp. CTCI Machinery

Corp.

2 52,376,187 2,074,388 2,074,115 2,033,001 - 11.88% 104,752,374 Y N N -

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

CTCI Corporation

Provision of endorsements and guarantees to others




Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

Table 2 Page 1422

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422

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

0 CTCI Corp. CTCI Singapore Pte.

Ltd.

2 52,376,187$ 2,464,164$ 2,452,437$ 1,449,722$ -$ 14.05% 104,752,374$ Y N N -

0 CTCI Corp. CINDA Engineering

& Construction Pvt.

Ltd.

2 52,376,187 2,896,201 2,851,682 1,666,208 - 16.33% 104,752,374 Y N N -

0 CTCI Corp. CTCI Arabia Ltd. 2 52,376,187 3,988,604 3,778,442 3,408,411 - 21.64% 104,752,374 Y N N -

0 CTCI Corp. CTCI Overseas

Co., Ltd.

2 52,376,187 7,029,248 4,823,865 1,465,674 - 27.63% 104,752,374 Y N N -

0 CTCI Corp. CTCI Trading

Shanghai Co., Ltd.

2 52,376,187 162,734 161,239 - - 0.92% 104,752,374 Y N Y -


Co., Ltd.

2 52,376,187 899,291 865,925 482,960 - 4.96% 104,752,374 Y N Y -

0 CTCI Corp. CTCI Beijing

Co., Ltd.

2 52,376,187 1,068,175 1,068,175 49,412 - 6.12% 104,752,374 Y N Y -

Table 2 Page 2423

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423

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

0 CTCI Corp. CCJV P1 E&C Sdn.

Bhd.

2 52,376,187$ 1,222,288$ 1,214,230$ -$ -$ 6.95% 104,752,374$ Y N N -


Engineering Corp.

2 52,376,187 29,010 28,819 - - 0.17% 104,752,374 Y N N -

0 CTCI Corp. CTCI (Thailand)

Co., Ltd.

2 52,376,187 2,439,869 1,152,996 496,564 - 6.60% 104,752,374 Y N N -

0 CTCI Corp. CTCI Chemical

Corp.

2 52,376,187 19,727 19,597 12,101 - 0.11% 104,752,374 Y N N -

0 CTCI Corp. CTCI CMCE JV

Sdn. Bhd.

6 52,376,187 471,076 467,970 - - 2.68% 104,752,374 N N N -

0 CTCI Corp. CTCI & HEC Water

Business Co., Ltd.

6 52,376,187 102,000 102,000 102,000 - 0.58% 104,752,374 Y N N -

0 CTCI Corp. CB&I-CTCI B.V. 6 52,376,187 6,556,996 6,513,769 6,513,769 - 37.31% 104,752,374 N N N -

Table 2 Page 3424

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424

Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

0 CTCI Corp. Blue Whale Water

Technology Co.,

Ltd.

6 52,376,187$ 769,300$ 769,300$ 722,260$ -$ 4.41% 104,752,374$ N N N -

0 CTCI Corp. HDEC-CTCI (Linhai)

Corporation

6 52,376,187 1,215,000 1,215,000 180,000 - 6.96% 104,752,374 N N N -

0 CTCI Corp. CIPEC Construction

Inc.

2 52,376,187 525,193 524,599 206,599 - 3.00% 104,752,374 Y N N -

0 CTCI Corp. CTCI Malaysia Sdn.

Bhd.

2 52,376,187 863,840 829,980 15,527 - 4.95% 104,752,374 Y N N -

1 CTCI Advanced

Systems Inc.

Century Ahead Ltd. 2 544,517 18,566 18,444 - - 0.54% 1,089,034 N N N -

2 CTCI Smart

Engineering

Corp

CTCI Shanghai

Co., Ltd.

5 462,218 253,413 - - - - 924,435 N N Y -

2 CTCI Smart

Engineering

Corp.

CTCI Machinery

Corp.

5 462,218 1,698,800 - - - - 924,435 N N N -

Table 2 Page 4425

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Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

3 CTCI Machinery

Corp.

CTCI Smart

Engineering Corp.

5 1,438,350$ 560,000$ 560,000$ 560,000$ - 116.80% 2,876,700$ N N N -

4 CTCI Chemical

Corp.

CTCI Machinery

Corp.

5 716,009 245,000 - - - - 1,432,018 N N N -

4 CTCI Chemical

Corp.

CTCI Corp. 3 716,009 18,817 18,817 18,817 - 7.88% 1,432,018 N Y N -

5 CTCI Shanghai

Co., Ltd.

CTCI Trading

Shanghai Co., Ltd.

2 1,476,525 169,071 67,113 67,113 - 13.64% 2,953,050 N N Y -

6 CTCI Resources

Engineering

Inc.

CTCI Smart

Engineering Corp.

5 867,505 267,102 267,102 267,102 - 92.37% 1,735,011 N N N -

7 CTCI Overseas

Co., Ltd.

CTCI Americas, Inc. 3 5,166,013 5,936 - - - - 10,322,026 N N N -

8 ECOVE

Environment

Corp.

ECOVE Solar Energy

Corporation

2 9,756,476 1,143,589 1,143,589 968,043 - 23.44% 14,634,714 N N N -

Table 2 Page 5426

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Company name

Relationship

with the

endorser/

guarantor

（Note 2）

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）

Outstanding

endorsement/

guarantees

amount at

December 31,

2018

（Note 5）

Number

（Note 1）

Endorser/

guarantor

Party being


endorsements/

guarantees

provided for a

single party

（Note 3）

Maximum

outstanding

endorsement/

guarantee

amount as of

December 31,

2018

（Note 4）

Provision of

endorsements/

guarantees to

the party in

Mainland

China


Actual amount

drawn down

（Note 6）

9 ECOVE Solar

Energy

Corporation

ECOVE South

Corporation Ltd.

2 1,462,194$ 14,000$ 14,000$ 14,000$ - 1.91% 2,193,291$ N N N -

9 ECOVE Solar

Energy

Corporation

ECOVE Central

Corporation Ltd.

2 1,462,194 19,790 16,790 16,790 - 2.71% 2,193,291 N N N -

9 ECOVE Solar

Energy

Corporation

ECOVE Solar Power

Corporation

2 1,462,194 694,248 694,248 600,355 - 94.96% 2,193,291 N N N -

10 ECOVE Solar

Power

Corporation

ECOVE Solar

Energy Corporation

5 408,122 12,420 12,420 12,420 - 6.09% 612,183 N N N -

Table 2 Page 6427

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Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:



Note 2: Relationship between the endorser/guarantor and the party being endorsed/guaranteed is classified into the following six categories; fill in the number of category each case belongs to:

(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 90% 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.

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.

　　[The company]

　　　(1)The limit on endorsements and guarantees granted to a single party shall not exceed 300% of the Company’s net assets value in last financial statements which was audited by accountant.

　　　(2)The ceiling on total endorsements and guarantees shall not exceed 600% of the Company’s net assets value in last financial statements which was audited by accountant.

　　[Domestic subsidiaries and overseas subsidiaries]

　　　(1)The limit on endorsements and guarantees granted to a single party shall not exceed 100% to 300% of the Company's net assets value in last financial statements which was audited by accountant.

　　　(2)The ceiling on total endorsements and guarantees shall not exceed 200% to 600% of the Company's net assets value in last financial statements which was audited by accountant.

Note 4: Fill in the year-to-date maximum outstanding balance of endorsements/guarantees provided as of the reporting period.

Note 5: Once endorsement/guarantee contracts or promissory notes are signed/issued by the endorser/guarantor company to the banks, the endorser/guarantor company bears endorsement/guarantee liabilities. And all other

events involve endorsements and guarantees should be included in the balance of outstanding endorsements and guarantees.

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.

Table 2 Page 7428

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Type of marketable


Number of shares/

denominations

Book value


CTCI Corp. Fund Fuh Hwa China New Economy

Balance



loss-current

500,000 5,000$ - 4,610$ -

CTCI Corp. Fund BlackRock Global Fund - European

Value Fund A2 USD Hedged



loss-current

12,438 4,602 - 3,835 -

CTCI Corp. Fund Fubon US Preferred Stock ETF N/A Financial assets at fair


loss-current

500,000 10,000 - 9,115 -

19,602$ 17,560$

Adjustment 2,042)(

17,560$

CTCI Corp. Common Stock China Steel Chemical Corp. The Company is the

supervisor

Financial asset at fair value


income-current

1,776,916 100,615$ - 239,883$ -

CTCI Corp. Common Stock United Renewable Energy Co., Ltd. N/A Financial asset at fair value


income-current

1,717,015 17,342 - 12,380 -

CTCI Corp. Common Stock Taiwan Cement Corp. N/A Financial asset at fair value


income-current

1,980,000 68,447 - 70,092 -

186,404$ 322,355$

Adjustment 135,951

322,355$

Footnote

（Note 4）

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

For the year ended December 31, 2018Table 3 Expressed in thousands of NTD


Securities held by

(Note 1)


securities issuer

(Note 2)

General

ledger account


Table 3 Page 1429

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


CTCI Corp. Common Stock Core Pacific City Co., Ltd. N/A Financial assets at fair value


income-non-current

22,428,000 360,000$ 2.26 239,615$ -

CTCI Corp. Common Stock CDIB & Partners

Investment Holding

Corp.

The Company is the

supervisor



income-non-current

27,000,000 250,000 2.48 250,000 -

CTCI Corp. Common Stock Metro-consultant Co.,

Ltd.

The Company is the

Board of director



income-non-current

300,000 3,000 6.00 3,000 -

CTCI Corp. Common Stock Ever Victory Global Limited. N/A Financial assets at fair value


income-non-current

4,230,000 292,225 2.32 292,225 -

CTCI Corp. Common Stock Heng Keng Corp. N/A Financial assets at fair value


income-non-current

20,000 3,000 5.12 - -

908,225 784,840$

Less: Accumulated impairment 123,385)(

784,840$

CTCI Investment Corp. Fund Franklin Templeton Sinoam Money

Market Fund



671,211 6,927$ - 6,927$ -

CTCI Investment Corp. Common Stock United Renewable Energy Co., Ltd. N/A Financial assets at fair value


income-current

265,030 1,911 - 1,911 -

CTCI Investment Corp. Common Stock CTCI Corp. The Company Financial assets at fair value


income-non-current

344,436 15,155 0.05 15,155 -

CTCI Investment Corp. Common Stock Global Strategic Investment Inc. N/A Financial assets at fair value


income non-current

283,500 962 0.65 962 -

Table 3 Page 2430

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


CTCI Development Corp. Common Stock CTCI Corp. The Company Financial assets at fair value


income-non-current

912,170 40,135$ 0.12 40,135$ -

CTCI Development Corp. Common Stock CTCI Advanced

System Inc.

Subsidiary Financial assets at fair value


income-non-current

324,417 13,463 1.38 13,463 -

CTCI Development Corp. Common Stock United Renewable Energy Co., Ltd. N/A Financial assets at fair value


income-current

675,010 4,867 - 4,867 -

CTCI Development Corp. Fund FSITC Taiwan Money Market N/A Financial assets at fair value


100,539 1,536 - 1,536 -

CTCI Development Corp. Fund Taishin 1699 Money Market Fund N/A Financial assets at fair value


8,143,624 109,997 - 109,997 -

CTCI Resources

Engineering Inc.



income-current

726,080 5,235 - 5,235 -

CTCI Resources

Engineering Inc.

Common Stock Global Strategic Investment Inc. N/A Financial assets at fair value


income-non-current

567,000 1,924 1.29 1,924 -

CTCI Resources

Engineering Inc.

Fund Yuanta De-Li Money Market Fund N/A Financial assets at fair value


3,685,390 59,999 - 59,999 -

CTCI Resources

Engineering Inc.



1,850,906 25,000 - 25,000 -

ECOVE Waste


Fund Prudential Financial Money Market N/A Financial assets at fair value


207,498 3,277 - 3,277 -

Table 3 Page 3431

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


ECOVE Waste




1,311,441 20,033$ - 20,033$ -

ECOVE Waste




1,333,007 18,005 - 18,005 -

ECOVE Waste



Market Fund



891,706 9,202 - 9,202 -

ECOVE Waste




income-current

478,841 16,951 - 16,951 -

ECOVE Wujih Energy

Corporation



65,511 1,001 - 1,001 -

ECOVE Wujih Energy

Corporation



148,083 2,000 - 2,000 -

ECOVE Wujih Energy

Corporation


Market Fund



4,616,996 47,650 - 47,650 -

ECOVE Wujih Energy

Corporation



income-current

475,508 16,833 - 16,833 -

ECOVE Environment

Corp.



income-current

472,758 16,735 - 16,735 -

ECOVE Environment

Corp.


Market Fund



198,085 2,044 - 2,044 -

Table 3 Page 4432

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


ECOVE Environment

Corp.



income-current

455,157 3,282$ - 3,282$ -

ECOVE Environment

Corp.

Common Stock TeamWIN Opto-Electronics

Co., Ltd.



income-non-current

150,000 475 2.46 475 -

ECOVE Environment

Corp.

Common Stock Eastern Pacific Energy Sdn. Bhd. ECOVE Environment

Corp.'s President is the

director



income-non-current

10,000 68 10.00 68 -

ECOVE Environmental




income-current

1,028 45 - 45 -

ECOVE Environmental




income-current

1,251,971 44,320 - 44,320 -

ECOVE Environmental




income-current

559,567 4,034 - 4,034 -

ECOVE Environmental


Fund Schroder 2022 Emerging Market

Sovereign Bond Fund



35,000 10,596 - 10,596 -

ECOVE Environmental




3,366,412 45,470 - 45,470 -

ECOVE Environmental


Fund Capital Money Market Fund N/A Financial assets at fair value


620,717 10,000 - 10,000 -

ECOVE Mioali Energy

Corporation



518,246 7,000 - 7,000 -

Table 3 Page 5433

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Type of marketable


Number of shares/

denominations

Book value


Footnote


(Note 1)


securities issuer

(Note 2)

General

ledger account


ECOVE Mioali Energy

Corporation



65,579 1,001$ - 1,001$ -

ECOVE Mioali Energy

Corporation


Market Fund



581,852 6,005 - 6,005 -


Ltd.

Common Stock CHIYODA(Thailand) Co. Ltd. N/A Financial assets at fair value


income-non-current

3,600 342 9.00 342 -

Crown Asia-2

Investment Limited



income-current

500 22 - 22 -


Inc.



6,547,236 100,016 - 100,016 -


Inc.



income-current

908,578 32,164 - 32,164 -


Inc.



income-current

674,430 4,862 - 4,862 -


Inc.

Bonds BANK OF CHINA LTD PARIS N/A Financial assets at fair value


income-current

6,000,000 26,778 - 26,778 Note 5

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities in accordance with IAS 39, ‘Financial instruments: recognition and measurement’.

Note 2: Leave the column blank if the issuer of marketable securities is non-related party.

Note 3: Fill in the book value without deduction of allowance for valuation loss of the marketable securities.

Note 4: The number of shares of securities and their amounts pledged as security or pledged for loans and their restrictions on use under some agreements should be stated in the footnote if the securities presented herein have such conditions.

Note 5: The book value of bonds denominated in CNY.

Table 3 Page 6434

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Number of

shares

(thousands) Amount

Number of

shares

(thousands) Amount

Number of

shares

(thousands) Selling price Book value

Gain (loss) on

disposal

Number of

shares

(thousands) Amount

CTCI Advanced

Systems Inc.

FSITC Taiwan Money Market Financial assets at fair


loss-current

- - 3,946 $ 60,000 34,645 $ 528,000 32,043 $ 488,294 $ 488,000 $ 294 6,547 $ 100,000

ECOVE

Environment

Corp.

ECOVE Solar Energy Corporation Equity investments

accounted for under the

equity method

Gintech Energy

Corporation.

Other related

party

28,270 311,114 34,976 532,213

(Note 5)

- - - - 63,246 854,787

ECOVE

Environmental

Services

Corporation

Franklin Templeton Sinoam Money

Market Fund

Financial assets at fair

value through profit or loss

- - 18,013 185,030 13,614 140,000 31,627 325,408 325,030 378 - -

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more.



Note 5: The company additionally invest in ECOVE Solar Energy Corporation on September, 2018 at total amount of $482,884. Included total amount of remeasured original holding shares, investment income of this period, and net value adjustment $49,329.




2018

CTCI Corporation

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital


Addition

（Note 3）

Disposal

（Note 3）

Investor

Marketable

securities

（Note 1）

General

ledger account

Counterparty

（Note 2）

Relationship

with

the investor

（Note 2）

Balance as at

January 1, 2018

Table 4 Page 1435

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Reason for

Relationship Basis or acquisition of

Relationship Original owner who between the

originalDate of the reference used real estate and

Real estate Real estate Date of the Transaction Status of with the sold the real estate owner and the original in setting the status of the Other

acquired by acquired event amount payment Counterparty counterparty to the counterparty acquirer transaction Amount price real estate commitments

CTCI

Development

Corp.

Land 2018/1/23 1,984,400$ 198,440$

Xintianmu

Development

Co., Ltd.

None - - - -$ Appraisal

report

To build second

office buildingNone

Note 1: The appraisal result should be presented in the ‘Basis or reference used in setting the price’ column if the real estate acquired should be appraised pursuant to the regulations.



Note 3: Date of the event referred to herein is the date of contract signing date, date of payment, date of execution of a trading order, date of title transfer, date of board resolution, or other date that can confirm the counterparty and the

monetary amount of the transaction, whichever is earlier.

Acquisition of real estate reaching NT$300 million or 20% of paid-in capital or more


the real estate is disclosed below:

If the counterparty is a related party, information as to the last transaction of

CTCI Corporation

Table 5, Page 1436

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Purchases

(sales) Amount

Percentage of total


Percentage of


receivable (payable)

ECOVE Environmental



Corporation

Second-tier

subsidiary(Sales) 572,562)($ 0.89% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference100,417$ 1.00% -

ECOVE Environmental


ECOVE Wujih Energy

Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


ECOVE Environmental


ECOVE Mioali Energy

Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


ECOVE Environmental



Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


ECOVE Wujih Energy

Corporation


Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Corp.Blue Whale Water

Technology Co., Ltd.Associate (Sales) 369,767)( 0.58% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference539 0.01% -

CTCI Corp. Powertec Energy Corp. Associate (Sales) 423,310)( 0.66% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference- - -

CTCI Corporation

Purchases or sales of goods from or to related parties reaching NT$100 million or 20% of paid-in capital or more




FootnotePurchaser/seller Counterparty

Relationship

with the

counterparty

Transaction




Tabl e 6 Page 1437

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Purchases

(sales) Amount

Percentage of total


Percentage of



Relationship

with the

counterparty

Transaction




CTCI Corp. CTCI Overseas Co., Ltd Subsidiary (Sales) 565,150)($ 0.88% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference86,164$ 0.86% -

CTCI Overseas Co., Ltd. CTCI Corp. The Company (Sales) 316,188)( 0.49% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Engineering &



Construction Sdn. Bhd.Subsidiary (Sales) 400,143)( 0.62% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Advanced Systems

Inc.CTCI Corp. The Company (Sales) 293,102)( 0.46% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Development Corp. CTCI Corp. The Company (Sales) 302,282)( 0.47% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Machinery Corp. CTCI Corp. The Company (Sales) 347,699)( 0.54% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI (Thailand) Co., Ltd. CTCI Corp. The Company (Sales) 360,643)( 0.56% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant



Corp.

ECOVE Solar Energy

Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant


CTCI Beijing Co., Ltd. CTCI Corp. The Company (Sales) 211,770)( 0.33% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant


CIMAS Engineering

CompanyCTCI Corp. The Company (Sales) 123,762)( 0.19% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant


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Purchases

(sales) Amount

Percentage of total


Percentage of



Relationship

with the

counterparty

Transaction




CTCI Engineering &


MIE INDUSTRIAL SDN.

BHD.Associate (Sales) 463,873)($ 0.72% )(

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference565,408$ 5.63% -

CTCI Corp. EVER ECOVE Corp. Associate (Sales) 44,447)( 0.07% )( 30 days after

seasonally billings

Negotiated by

both parties

No significant



Corporation

ECOVE Environmental


Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference100,417)( 0.89% )( -


Corporation

ECOVE Wujih Energy

Corporation

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference69,964)( 0.62% )( -

ECOVE Wujih Energy

Corporation

ECOVE Environmental


Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference83,809)( 0.74% )( -

ECOVE Mioali Energy

Corporation

ECOVE Environmental


Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference23,224)( 0.21% )( -


Corporation

ECOVE Environmental


Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference38,491)( 0.34% )( -

CTCI Corp. Pan Asia Corp. Associate Purchases 145,731 0.23% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference91,867)( 0.81% )( -

CTCI Corp.CTCI Advanced Systems

Inc.Subsidiary Purchases 293,102 0.46%

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference35,490)( 0.31% )( -

CTCI Corp. CTCI Machinery Corp. Subsidiary Purchases 347,699 0.54% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference5,120)( 0.05% )( -

Tabl e 6 Page 3439

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Purchases

(sales) Amount

Percentage of total


Percentage of



Relationship

with the

counterparty

Transaction




CTCI Corp. CTCI Development Corp. Subsidiary Purchases 302,282$ 0.47% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference1,457)($ 0.01% )( -

CTCI Corp. CTCI (Thailand ) Co., Ltd. Subsidiary Purchases 360,643 0.56% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference8,299)( 0.07% )( -

CTCI Corp. CTCI Overseas Co., Ltd. Subsidiary Purchases 316,188 0.49% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference91,955)( 0.81% )( -

CTCI Engineering

& Construction Sdn. Bhd.

MIE INDUSTRIAL SDN.


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference205,489)( 1.82% )( -



MIE INDUSTRIAL SDN.


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference1,060,653)( 9.39% )( -



CTCI Engineering &

Construction Sdn. Bhd.Subsidiary Purchases 400,143 0.62%

30 days after

seasonally billings

Negotiated by

both parties

No significant

difference68,015)( 0.60% )( -

CTCI Overseas Co., Ltd. CTCI Corp. The Company Purchases 565,150 0.88% 30 days after

seasonally billings

Negotiated by

both parties

No significant

difference86,164)( 0.76% )( -

CTCI Corp. CTCI Beijing Co., Ltd.Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference2,741)( 0.02% )( -

CTCI Corp.CIMAS Engineering

Company

Second-tier


30 days after

seasonally billings

Negotiated by

both parties

No significant

difference4,312)( 0.04% )( -

Note: ECOVE Solvent Recycling Corporation are accuunted in property, plant, and equipment.

Tabl e 6 0

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Table 7

Amount Action taken

CTCI Corp.CTCI Machinery Corp.

Subsidiary 432,000$ Note 1 -$ - -$ -

CTCI Corp. EVER ECOVE Corp. Associate 374,425 0.24 - - - -

CTCI Corp. CTCI Development Corp. Subsidiary 121,054 Note 2 - - - -

CTCI Engineering & Construction Sdn.

Bhd.MIE INDUSTRIAL SDN. BHD. Associate 565,408 1.64 - - - -

CTCI Corp. CTCI (Thailand ) Co., Ltd. Subsidiary 397,044 Note 1 - - - -

ECOVE Environmental Services

Corporation.


Corporation.Second-tier subsidiary 100,417 3.83 - - - -

Note 1：Other accounts receivable arise from lending capital.

Note 2：Cash dividends

CTCI Corporation

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more




Amount collected

subsequent to the

balance sheet date

Allowance for

doubtful accounts Creditor Counterparty

Relationship

with the counterparty


2018 Turnover rate

Overdue receivables

Table 7 Page 1441

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Percentage of consolidated total operating revenues or

total assets (Note 3)

0 CTCI Corp. CTCI Overseas Co., Ltd. 1 Sales revenue 565,150)($ Negotiated by both parties 0.88% )(


Corporation


Corporation

3 〃 572,562)( 〃 0.89% )(

1 〃 ECOVE Mioali Energy

Corporation

3 〃 149,943)( 〃 0.23% )(

1 〃 ECOVE Wujih Energy

Corporation

3 〃 236,890)( 〃 0.37% )(

1 〃 ECOVE Solvent Recycling

Corporation

3 〃 108,464)( 〃 0.17% )(

2 CTCI Machinery Corp. CTCI Corp. 2 〃 347,699)( 〃 0.54% )(

3 CTCI (Thailand ) Co., Ltd. 〃 2 〃 360,643)( 〃 0.56% )(

4 CTCI Advanced Systems Inc. 〃 2 〃 293,102)( 〃 0.46% )(

5 CTCI Development Corp. 〃 2 〃 302,282)( 〃 0.47% )(

6 CTCI Engineering & Construction Sdn.

Bhd.



3 〃 400,143)( 〃 0.62% )(

7 ECOVE Wujih Energy Corporation ECOVE Waste Management

Corporation

3 〃 382,669)( 〃 0.60% )(

8 CTCI Overseas Co., Ltd. CTCI Corp. 2 〃 316,188)( 〃 0.49% )(

9 CTCI Smart Engineering Corp ECOVE Solar Energy

Corporation

3 〃 211,230)( 〃 0.33% )(

10 CTCI Beijing Co., Ltd. CTCI Corp. 2 〃 211,770)( 〃 0.33% )(

11 CIMAS Engineering Company 〃 2 〃 123,762)( 〃 0.19% )(

CTCI Corporation

Significant inter-company transactions during the reporting years




Number


Relationship

(Note 2)

Transaction

Table 8 Page 1442

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Number


Relationship

(Note 2)

Transaction


Corporation


Corporation

3 Accounts receivable 100,417$ Negotiated by both parties 0.16%

3 CTCI (Thailand ) Co., Ltd. CTCI Corp. 2 Other receivables 392,251 〃 0.61%

0 CTCI Corp. CTCI Machinery Corp. 1 〃 432,000 〃 0.67%

0 〃 CTCI (Thailand ) Co., Ltd. 1 〃 397,044 〃 0.62%

0 〃 CTCI Overseas (BVI) Co.

and its subsidiaries.

1 Advance construction

receipt

5,795,050 〃 9.04%

0 〃 CTCI Machinery Corp. 1 〃 132,269 〃 0.21%

2 CTCI Machinery Corp. CTCI Corp. 2 〃 2,497,560 〃 3.90%

12 CTCI Resources Engineering Inc. 〃 2 〃 252,390 〃 0.39%

3 CTCI (Thailand ) Co., Ltd. 〃 2 〃 720,506 〃 1.12%

0 CTCI Corp. CTCI Development Corp. 1 Refundable deposits 128,300 〃 0.20%

0 〃 CTCI (Thailand ) Co., Ltd. 1 Guarantee 1,152,996 Not applicable Not applicable

0 〃 CCJV P1 E&C SDN. BHD. 1 〃 1,214,230 〃〃

0 〃 CTCI Overseas Co., Ltd. 1 〃 4,823,865 〃〃

0 〃 CINDA Engineering &

Construction Private Limited

1 〃 2,851,682 〃〃

0 〃 CTCI Arabia Ltd. 1 〃 3,778,442 〃〃

0 〃 CTCI Engineering &


1 〃 1,820,025 〃〃

0 〃 CTCI Americas, Inc. 1 〃 1,402,759 〃〃

0 〃 CTCI Beijing Co., Ltd. 1 〃 1,068,175 〃〃

0 〃 CTCI Shanghai Co., Ltd. 1 〃 865,925 〃〃

Table 8 Page 2443

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Number


Relationship

(Note 2)

Transaction

0 CTCI Corp. CTCI Trading Shanghai Co.,

Ltd.

1 Guarantee 161,239$ Not applicable Not applicable

0 〃 CTCI Singapore Pte. Ltd. 1 〃 2,452,437 〃〃

0 〃 CTCI Machinery Corp. 1 〃 2,074,115 〃〃

0 〃 CTCI & HEC Water Business

Co., Ltd.

1 〃 102,000 〃〃

0 〃 CTCI Malaysia Sdn. Bhd. 1 〃 829,980 〃〃

0 〃 CTCI Development Corp. 1 〃 500,000 〃〃

0 〃 CTCI CMCE JV Sdn. Bhd. 1 〃 467,970 〃〃

0 〃 CIPEC Construction Inc. 1 〃 524,599 〃〃

2 CTCI Machinery Corp. CTCI Smart Engineering

Corp.

3 〃 560,000 〃〃

12 CTCI Resources Engineering Inc. CTCI Smart Engineering

Corp.

3 〃 267,102 〃〃

13 ECOVE Environment Corp. ECOVE Solar Energy

Corporation

3 〃 1,143,589 〃〃

14 ECOVE Solar Energy Corporation ECOVE Solar Power

Corporation

3 〃 694,248 〃〃

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1)Parent company is ‘0’.


Note 2: Relationship between transaction company and counterparty is classified into the following three categories; fill in the number of category each case belongs to (If transactions between parent company and subsidiaries or between

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.

Table 8 Page 3444

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Balance as at

December 31, 2018

Balance as at


CTCI Corp. CTCI Smart Engineering

Corp.




fire pumped storage


others related to

engineering.

$ 456,251 $ 456,251 59,098,624 97.09 $ 150,695 ($ 325,492) ($ 316,020) A subsidiary

CTCI Corp. CTCI Resources

Engineering Inc.


and gas, marbal and




mechanical and


263,455 263,455 24,762,252 99.05 284,047 33,446 30,724 A subsidiary


Systems Inc.

Taiwan Systems planning, design,

integration, and

engineering for various

IT systems, etc.

44,409 44,409 11,444,842 48.72 265,289 76,235 37,141 A subsidiary


Corp.

Taiwan Real estate and leasing business. 1,870,000 1,690,000 187,000,000 100.00 2,527,615 126,065 126,065 A subsidiary


Corporation

Taiwan General investment. 2,072,000 2,072,000 207,200,000 100.00 1,730,250 ( 192,980) ( 192,980) A subsidiary

CTCI Corp. ECOVE Environment

Corp.

Taiwan General investment. 938,889 938,889 38,457,105 57.31 2,795,718 806,912 462,434 A subsidiary

CTCI Corp. CTCI (Thailand)

Co., Ltd.



116,894 116,894 1,249,500 49.00 58,735 111,154 54,465 A subsidiary


Corp.

Taiwan Secondary processing

of steel, piping, heat

treatment, manufacture

of pollution control

equipment and non-

destructive testing, etc.

293,800 293,800 20,000,000 100.00 480,434 67,207 67,207 A subsidiary

Net profit (loss)



(Note 2(2))





Investee



CTCI Corporation





Table 9 Page 1445

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Corp. CTCI Arabia Ltd. Arabia Construction and


tanks and

chemical plant.

$ 23,312 $ 23,312 500 50.00 ($ 562,811) $ 164,510 $ 82,255 A subsidiary

CTCI Corp. Sinogal-Waste

Services Corp.

Macao Management of waste recycling

site and


mechanical and

equipment, etc.

4,958 4,958 - 30.00 57,921 167,023 50,107 A subsidiary


Ltd.

Singapore Investment and planning


152,254 152,254 5,100,000 100.00 ( 652,532) ( 79,338) ( 79,338) A subsidiary


(BVI) Corp.



308,554 308,554 6,740,000 100.00 1,833,752 170,375 170,375 A subsidiary

CTCI Corp. CTCI Engineering &




4,118 4,118 450,000 60.00 ( 3,066) ( 124,226) ( 74,535) A subsidiary

CTCI Corp. CTCI CMCE JV SDN.

BHD.

Malaysia Construction planning. 2,759 2,759 382,500 51.00 9,041 9,945 8,739 A subsidiary

CTCI Corp. CTCI Americas, Inc. USA To extend foreign business, the

Group strengthen the collaborative

relationship with local business

owner and supplier, developing

adequate potential supplier, and

help them to operate projects,

purchase and other related

businesses.

3,217 3,217 100,000 100.00 3,954 ( 3,974) ( 3,974) A subsidiary

CTCI Corp. CCJV P1

Engineering &

Construction Sdn.

Bhd.

Malaysia Construction planning. 2,259 2,259 247,500 99.00 ( 79,510) ( 705,433) ( 698,379) A subsidiary


Business Co., Ltd.

Taiwan Sewerage System BOT Project. 255,000 255,000 25,500,000 51.00 244,516 ( 10,045) ( 5,123) A subsidiary

CTCI Corp. Blue Whale Water

Technology Co., Ltd.

Taiwan Wastewater Reclamation Unit

BTO Project.


equity method

Table 9 Page 2446

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Corp. Pan Asia Corp. Taiwan Input of foreign labor

and technologies,

technical cooperation

with foreign construction

business, and construction of

engineering construction, etc.

$ 71,543 $ 71,543 39,219,509 34.27 $ 526,590 $ 19,375 $ 6,640 An investee under

equity method

CTCI Corp. EVER ECOVE Corp. Taiwan Waste service, waste clear and


250,000 - 25,000,000 25.00 246,635 ( 13,460) ( 3,365) An investee under

equity method

CTCI Corp. HDEC-CTCI (Linhai)

Corporation

Taiwan Reclaimed water operators. 202,500 - 20,250,000 45.00 201,389 ( 2,469) ( 1,111) An investee under

equity method

$ 10,553,599 ($ 208,134)

CTCI Development

Corp.

CTCI Chemical

Corp.



chemicals.

13,522 13,522 480,661 6.77 16,158 58,813 3,982 A second-tier

subsidiary

CTCI Development

Corp.

ECOVE Environment

Corp.

Taiwan General investment. 11,270 11,270 243,918 0.36 17,762 806,912 3,084 A subsidiary

CTCI Development

Corp.

CTCI Resources

Engineering Inc.


and gas, marbal and




mechanical and


23 23 1,388 0.01 16 33,446 2 A subsidiary

CTCI Development

Corp.

Crown Asia-2

Investment Limited

Taiwan General investment. 2,531 2,531 25,000 100.00 1,111 504 504 A second-tier

subsidiary

CTCI Investment

Corporation

CTCI Chemical

Corp.



chemicals.

32,153 32,153 1,657,207 23.34 55,708 58,813 13,728 A second-tier

subsidiary

Table 9 Page 3447

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Investment

Corporation

ECOVE Environment

Corp.

Taiwan General investment. $ 1,374 $ 1,374 32,132 0.05 $ 2,339 $ 806,912 $ 406 A subsidiary

CTCI Investment

Corporation


Corp.




fire pumped storage


others related to

engineering.

11 11 1,000 0.002 3 ( 325,492) ( 2) A subsidiary

CTCI Investment

Corporation

Powertec Energy

Corp.

Taiwan Basically chemical industry

power generation, rotation

electric, machinery

manufacturing of electric

power and services of

energy technologies.

1,832,107 1,832,107 211,291,668 16.03 1,227,090 ( 1,565,744) ( 257,825) An investee under

equity method

CTCI Investment

Corporation

MIE INDUSTRIAL

SDN. BHD.


Procurement & Contruction &

Panel.


equity method

CTCI Machinery

Corp.

Boretech

Resource

Recovery

Engineering

Co., Ltd.

(Cayman)

Cayman

Island

Share holding and

investment.


equity method

ECOVE Environment

Corp.

ECOVE Waste

Management

Corporation

Taiwan International trade and

environmental service of waste

disposal, equipment installation

and mechanical installation, etc.

20,000 20,000 2,000,000 100.00 113,462 58,674 58,674 A second-tier

subsidiary

ECOVE Environment

Corp.

ECOVE Wujih Energy

Corporation




cogeneration, etc.

425,085 425,085 29,400,000 98.00 1,242,060 275,512 270,002 A second-tier

subsidiary

ECOVE Environment

Corp.

ECOVE Environmental




related

mechanical and

equipment, etc.

339,921 339,921 14,065,936 93.15 894,799 367,025 341,905 A second-tier

subsidiary

Table 9 Page 4448

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



ECOVE Environment

Corp.

ECOVE Mioali

Energy Corporation




cogeneration, etc.

$ 1,012,483 $ 1,012,483 56,249,000 75.00 $ 1,003,951 $ 129,055 $ 96,790 A second-tier

subsidiary

ECOVE Environment

Corp.

ECOVE Solar Energy

Corporation

Taiwan Energy technology service. 762,349 279,465 63,245,452 100.00 854,787 43,423 27,700 A second-tier

subsidiary

ECOVE Environment

Corp.

Yuan Ding

Resources

Management Corp.




etc.

27,000 27,000 2,700,000 60.00 23,543 78 47 A second-tier

subsidiary

ECOVE Environment

Corp.

Boretech

Resource

Recovery

Engineering

Co., Ltd.

(Cayman)

Cayman

Island

Share holding and

investment.


equity method

ECOVE Environment

Corp.


Corporation



products.

86,480 - 8,099,000 90.00 80,168 ( 7,015) ( 6,312) A second-tier

subsidiary

ECOVE Environment

Corp.

EVER ECOVE Corp. Taiwan Waste service, waste clear and


50,000 - 5,000,000 5.00 49,336 ( 13,460) ( 664) An investee under

equity method

ECOVE

Environmental


ECOVE Wujih Energy

Corporation




cogeneration, etc.

6,000 6,000 600,000 2.00 25,348 275,512 5,510 A second-tier

subsidiary

ECOVE

Environmental


CTCI Chemical

Corp.

Taiwan Manufacture, wholesale,


chemicals.

24,851 24,851 1,910,241 26.90 64,214 58,813 15,824 A second-tier

subsidiary

ECOVE

Environmental


Sinogal-Waste

Services Corp.

Macao Management of waste

recycling site and


mechanical and

equipment, etc.

4,964 4,964 - 30.00 57,921 167,023 50,107 A second-tier

subsidiary

Table 9 Page 5449

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



ECOVE

Environmental


ECOVE Mioali

Energy Corporation




cogeneration, etc.

$ 13 $ 13 1,000 0.001 $ 18 $ 129,055 $ 2 A second-tier

subsidiary

ECOVE

Environmental



Corporation



products.

10 - 1,000 0.01 8 ( 7,015) 2 A second-tier

subsidiary

ECOVE Waste

Management

Corporation

ECOVE Environmental




related

mechanical and

equipment, etc.

53 53 1,000 0.01 64 367,025 23 A second-tier

subsidiary

ECOVE Waste

Management

Corporation

Yuan Ding

Resources

Management Corp.




etc.

18,000 18,000 1,800,000 40.00 15,695 78 31 A second-tier

subsidiary

ECOVE Solar Energy

Corporation

ECOVE Solar Power

Corporation

Taiwan Energy technology service. 180,000 180,000 18,000,000 100.00 204,061 18,678 18,678 A second-tier

subsidiary

ECOVE Solar Energy

Corporation

ECOVE Central

Corporation

Ltd.

Taiwan Energy technology service. 7,500 7,500 750,000 100.00 8,737 719 719 A second-tier

subsidiary

ECOVE Solar Energy

Corporation


Ltd.

Taiwan Energy technology service. 16,500 16,500 1,650,000 100.00 17,969 918 918 A second-tier

subsidiary

ECOVE Solar Energy

Corporation

G.D. International, LLC. USA Energy technology service. 189,197 189,197 - 100.00 368,589 27,685 27,927 A second-tier

subsidiary

G.D International,

LLC.

Lumberton Solar W2-090,

LLC.

USA Energy technology service. 189,197 189,197 - 100.00 367,710 27,685 27,685 A second-tier

subsidiary

CTCI Overseas

(BVI) Corp.

CTCI Overseas

Co., Ltd.

Hong Kong Investment and planning


276,815 276,815 6,740,000 100.00 1,723,118 170,493 170,493 A second-tier

subsidiary

Table 9 Page 6450

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



CTCI Overseas

Co., Ltd.

CTCI Arabia Ltd. Arabia Construction and


tanks and

chemical plant.

$ 22,610 $ 22,610 500 50.00 ($ 562,811) $ 164,510 $ 82,255 A subsidiary

CTCI Overseas

Co., Ltd.


(BVI) Corp.



1,694 1,694 50,000 100.00 32,618 57,182 57,182 A second-tier

subsidiary

CTCI Overseas

Co., Ltd.

CIPEC

Construction Inc.

Philippines Construction and


tanks and

chemical plant.

663 663 9,973 39.89 ( 10,282) ( 26,131) ( 10,432) A second-tier

subsidiary

CTCI Overseas

Co., Ltd.

CIMAS

Engineering Corp.

Vietnam Chemical, petrochemical,

feasibility study &




construction &

commissioning.

26,330 26,330 - 50.00 45,776 349 174 A second-tier

subsidiary

CTCI Overseas

Co., Ltd.

CTCI Engineering &




2,879 2,879 300,000 40.00 ( 2,044) ( 124,226) ( 49,691) A subsidiary

CTCI Overseas

Co., Ltd.

CINDA

Engineering &

Construction

Private Limited

India Chemical, petrochemical,

feasibility study &




construction &

commissioning.

31,022 31,022 8,000,000 100.00 ( 33,345) ( 190,178) ( 190,178) A second-tier

subsidiary

CTCI Overseas

Co., Ltd.

SUMBER MAMPU SDN.

BHD.

Malaysia Building of related engineering. 95 95 12,040 10.00 167,588 62,121 62,121 A second-tier

subsidiary

Table 9 Page 7451

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Balance as at

December 31, 2018

Balance as at


Net profit (loss)



(Note 2(2))





Investee



Universal

Engineering

(BVI) Corp.

Superiority

(Thailand) Co., Ltd.

Thailand Investment and planning


$ 151 $ 151 2,156 49.00 ($ 83,961) $ 55,884 $ 55,884 A second-tier

subsidiary

Superiority

(Thailand) Co.,

Ltd.

CTCI (Thailand)

Co., Ltd.



12,628 12,628 1,300,500 51.00 ( 75,577) 111,154 56,689 A subsidiary

CTCI Advanced

Systems Inc.

Century Ahead Ltd. Samoa Professional investment company. 25,097 25,097 750,000 100.00 32,800 7,609 7,609 A second-tier

subsidiary

CTCI Smart

Engineering

Corp.

CTCI Chemical

Corp.



chemicals.

7,354 7,354 656,360 9.24 21,090 58,813 5,434 A second-tier

subsidiary

CTCI Resources

Engineering Inc.

CTCI Chemical

Corp.



chemicals.

7,354 7,354 656,360 9.24 21,331 58,813 5,437 A second-tier

subsidiary

CTCI Singapore

Pte. Ltd.

CTCI Netherlands B.V. Netherlands Engineers and other technical

design and consultancy.

11,274 11,274 300,000 100.00 48,904 5,738 5,738 A second-tier

subsidiary

CTCI Engineering &

Construction Sdn.

Bhd.

CTCI Malaysia SDN.

BHD.



1,357 1,357 150,000 20.00 60,115 77,840 15,568 A second-tier

subsidiary

CTCI Malaysia

SDN. BHD.

MIE INDUSTRIAL

SDN. BHD.


Procurement & Construction,

Panel.


equity method

SUMBER MAMPU

SDN. BHD.

CTCI Malaysia SDN.

BHD.



5,428 5,428 600,000 80.00 240,458 77,840 62,272 A second-tier

subsidiary

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.

Table 9 Page 8452

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452

Remitted to

Mainland China

Remitted back

to Taiwan

CTCI Beijing

Co., Ltd.

Design, survey, construction

and inspection of various

engineering and construction

projects, plants, machinery

and equipment, and

environmental protection

projects.

$ 433,473 2 $ 313,998 $ - $ - 313,998$ $ 266,564 100.00 $ 266,564 $ 1,782,248 $ 295,938 Note 3

CTCI Shanghai

Co., Ltd.

Design, survey, construction and

inspection of various engineering

and construction projects.

592,787 2 534,974 - 46,265 488,709 80,530 100.00 80,530 496,930 23,530 -

CTCI Advanced

Systems

Shanghai Inc.

Computer technology services. 23,055 2 23,055 - - 23,055 7,594 48.72 3,700 31,552 - Note 4

ECOVE

Environment

Consulting Corp.

Technical development, advisory

and service in environmental field;

environmental pollution control

equipment and related parts

wholesale, import and export, etc.

4,147 1 4,147 - - 4,147 6,720 53.39 3,588 12,355 - -

FuJian Gulie

Petrochemical Co.,

Ltd.

Operating in manufacturing and selling

of ethylene and othres.

10,277,948 2 132,773 159,452 - 292,225 - 1.31 - 292,225 - Note 5

CTCI Trading

Shanghai Co., Ltd.

General trade. 23,748 2 - - - - 20,281 100.00 20,281 64,678 - Note 6

CTCI Corporation




Investee in

Mainland China


Book value of

investments in

Mainland China

as of December

31, 2018

Accumulated

amount

of investment

income

remitted back to

Taiwan as of

December 31,

2018

Table 10

Footnote Main business activities Paid-in capital

Investment method

（Note 1）

Accumulated

amount of

remittance from

Taiwan to

Mainland China

as of January 1,

2018

Accumulated

amount

of remittance

from Taiwan to

Mainland China

as of 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(2)B）

Net income of

investee as of

December 31,

2018

Amount remitted from Taiwan to

Mainland China/

Amount remitted back

to Taiwan for the year ended

December 31, 2018

Table 10 Page 1453

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453

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

CTCI Corp. $ 1,122,134 $ 1,183,170 $ 10,475,237

Note 1: Investment methods are classified into the following three categories; fill in the number of category each case belongs to:

(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: In the Investment income (loss) recognised by the Company for the year ended December 31, 2018 column:

(1)FuJian Galie Petrochemical Co., Ltd did not accrue investment income or loss since it was still in preparation.

(2)Indicate the basis for investment income (loss) recognition in the number of one of the following three categories:

A.The financial statements that are audited and attested by R.O.C. parent company’s CPA.

B.It is an insignificant subsidiary, and its financial report was not audited by the independent accountant.

C.Others.

Note 3: Invested by CTCI Overseas Co., Ltd.

Note 4: Invested by Century Ahead Ltd.

Note 5: Invested in Dynamic Ever Investments Limited through Ever Victory Global Limited.

Note 6: Invested by CTCI Shanghai Co., Ltd.

Table 10 Page 2454

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454

CTCI CORPORATION

DETAILS OF CASH AND CASH EQUIVALENTS

DECEMBER 31, 2018

(EXPRESSED IN THOUSAND OF NEW TAIWAN DOLLARS)

Sheet 1

Sheet1 page 1

Items Summary Amount

Cash on hand and petty cash 16,420$

Bank deposits:

Checking accounts 1,128

Demand deposits

－USD USD $ 96,955 rate 30.74 2,980,382

－EUR EUR $ 7,850 rate 35.2327 276,594

－JPY JPY $ 548,410 rate 0.2779 152,403

－SGD SGD $ 4,271 rate 22.4552 95,898

－NTD 2,216,580

－Others 8,739

5,730,596

Time depostis

－USD USD $ 74,123 rate 30.74 2,278,549

－NTD 201,900

2,480,449

8,228,593$

455

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CTCI CORPORATION

DETAILS OF FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS - CURRENT

DECEMBER 31, 2018


Sheet 2

Sheet2 page1

Financial Commodities

Number of

Shares/Units

Par value

(in dollars) Amount Costs

Price

(in dollars) Amount Notes

Mutual funds

Fuh Hwa China New Economy Balance 500,000 10.00$ 5,000$ 5,000$ 9.22$ 4,610$

BlackRock Global Fund - European Value

Fund A2 USD Hedged 12,438 370.00 4,602 4,602 308.32 3,835

Fubon US Preferred Stock ETF 500,000 20.00 10,000 10,000 18.23 9,115

Subtotal 19,602 17,560

Valuation adjustment 2,042)( -

Derivatives 48,553 48,553

Total 66,113$ 66,113$

Fair value

456

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CTCI CORPORATION

DETAILS OF ACCOUNTS RECEIVABLE

DECEMBER 31, 2018


Sheet 3

Sheet3 page1

Client Name Amount Notes

Client:

SPCC Joint Venture 1,503,401$

Taiwan Power Company Nuclear & Thermal

Power Engineering Office 1,231,871

CPC Corporation LNG 931,541

GCGV A.H LLC 316,071

HDEC Corporation 244,026

Others 277,241

Each individual customer balance did not

exceed 5% of the account balance

4,504,151

Less:Allowance for bad debts 210)(

4,503,941$

457

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CTCI CORPORATION

DETAILS OF CONSTRUCTION IN PROGRESS

FOR THE YEAR ENDED DECEMBER 31, 2018


Sheet 4

Sheet4 page1

Project No.

Balance at

January 1,

2018 Cost

Project

(loss) gain

Completed

and roll-out

Balance at

December 31,

2018

11 0789A 37,082,180$ 3,942,021$ 737,517)($ $ - 40,286,684$

08 1305 26,079,300 141,757 54,747)( - 26,166,310

12 1000A 23,977,836 1,488,634 265,765)( - 25,200,705

09 0001A 23,189,731 862 8,527 - 23,199,120

15 2200C 18,385,979 11,520,435 1,407,088 - 31,313,502

13 1500A 17,864,443 1,989,397 92,754 - 19,946,594

14 1758E 13,661,435 2,401,831 1,069,030 - 17,132,296

14 1717A 10,267,783 224,906 173,297)( - 10,319,392

11 0570A 10,020,839 1,201)( 62,943 - 10,082,581

04VKX0088A 5,554,387 - - - 5,554,387

10 0347A 5,175,683 408)( 8,676 - 5,183,951

00 2902 5,029,899 6,071 21,033 - 5,057,003

10 0541A 4,218,827 190,141 106,819)( 4,302,149)( -

13 1336C 4,206,275 14,952)( 233,555 - 4,424,878

09 0171A 4,176,582 - 7,093 4,183,675)( -

13 1515A 4,145,360 3,192 3,665)( - 4,144,887

11 0845A 3,919,885 24,386)( 3,736)( - 3,891,763

12 0888A 3,892,845 1,224 127)( - 3,893,942

02 3288 3,334,746 9,281 12,398 3,356,425)( -

10 0523B 3,333,412 32)( 1,580 - 3,334,960

97 2262 3,196,097 2 2)( - 3,196,097

10 0542A 3,022,023 124,930 340,389)( - 2,806,564

06 1165 3,399,449 14,560)( 32,811 - 3,417,700

14 1788S 2,955,930 47,275 42,524)( - 2,960,681

12 0977A 2,938,919 58 14,053 - 2,953,030

15 1988A 2,536,950 73,758 59,455 - 2,670,163

14 1787A 2,033,894 100,095 104,031)( - 2,029,958

11 0625A 1,973,936 60,011 255,257 - 2,289,204

16 2727A 1,913,806 166,716 110,790 - 2,191,312

Other 53,831,375 10,044,163 1,639,035 31,067,385)( 34,447,188

305,319,806$ 32,481,221$ 3,203,459$ 42,909,634)($ 298,094,852$

Shown as contract assets 180,899,970$

Shown as a deduction item to contract liabilities 117,194,882$

Current change

458

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CTCI CORPORATION

DETAILS OF INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD



Sheet 5

Sheet5 Page1

Name

Number of

Shares Amounts

Number of

Shares Amounts

Investment

income

(loss) gain

Number of

Shares Ownership Amounts Fair value Collateral

CTCI Smart Engineering Corporation 59,098,624 261,339$ - 205,376$ 316,020)($ 59,098,624 97.09 150,695$ 150,695$ None

CTCI Resources Engineering Inc. 24,762,252 248,464 - 4,859 30,724 24,762,252 99.05 284,047 284,047 "

CTCI Advanced Systems Inc. 11,444,842 263,086 - 34,938)( 37,141 11,444,842 48.72 265,289 474,961 "

CTCI Development Corporation 169,000,000 2,530,655 - 129,105)( 126,065 169,000,000 100.00 2,527,615 2,527,615 "

CTCI Investment Corporation 207,200,000 1,922,352 - 878 192,980)( 207,200,000 100.00 1,730,250 1,730,250 "

ECOVE Environment Corp. 38,457,105 2,696,371 - 363,087)( 462,434 38,457,105 57.31 2,795,718 6,633,851 "

CTCI (Thailand) Co., Ltd. 1,249,500 3,212 - 1,058 54,465 1,249,500 49.00 58,735 58,735 "

CTCI Machinery Corp. 20,000,000 494,480 - 81,253)( 67,207 20,000,000 100.00 480,434 480,434 "

Sinogal-Waste Service Corp. - 63,667 - 55,853)( 50,107 - 30.00 57,921 57,921 "

CTCI Singapore Pte. Ltd. 5,100,000 570,290)( - 2,904)( 79,338)( 5,100,000 100.00 652,532)( 652,532)( "

CTCI Overseas (BVI) Corp. 6,740,000 1,923,648 - 260,271)( 170,375 6,740,000 100.00 1,833,752 1,833,752 "

CTCI Engineering & Construction Sdn. Bhd. 450,000 70,382 - 1,087 74,535)( 450,000 60.00 3,066)( 3,066)( "

CTCI CMCE JV SDN. BHD. 382,500 392 - 90)( 8,739 382,500 51.00 9,041 9,041 "

CTCI Americas, Inc. 100,000 7,774 - 154 3,974)( 100,000 100.00 3,954 3,954 "

CCJV P1 Engineering & Construction Sdn.Bhd. 247,500 608,915 - 9,954 698,379)( 247,500 99.00 79,510)( 79,510)( "

Pan Asia Corp. 39,219,509 537,527 - 17,577)( 6,640 39,219,509 34.27 526,590 526,590 "

CTCI Arabia Ltd. 500 627,735)( - 17,331)( 82,255 500 50.00 562,811)( 562,811)( "

CTCI & HEC Water Business Co., Ltd. 25,500,000 249,639 - - 5,123)( 25,500,000 51.00 244,516 244,516 "

Blue Whale Water Technology Co., Ltd. 34,790,000 364,397 - 1 70,539 34,790,000 49.00 434,937 434,937 "

EVER ECOVE Corp. - - 25,000,000 250,000 3,365)( 25,000,000 25.00 246,635 246,635 "

HDEC-CTCI (Linhai) Corporation - - 20,250,000 202,500 1,111)( 20,250,000 45.00 201,389 201,389 "

11,048,275$ 286,542)($ 208,134)($ 10,553,599$ 14,601,404$

Balance at January 1, 2018 Additions (Deductions) Balance at December 31, 2018

459

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CTCI CORPORATION

DETAILS OF ACCOUNTS PAYABLE

DECEMBER 31, 2018


Sheet 6

Sheet6 page1

Client name Amounts Notes

Client:

China Steel Machinery Corporation 228,238$

CHIA CHENG CONSTRUCTION CO., LTD. 169,343

Tenaga Switchgear Sdn. 125,289

Pandrol UK Limited 120,344

LIANG-JI CONSTRUCTION CO., LTD. 115,999

Rujin Construction Co., Ltd. 115,747

TAICHENG MACHINERY CO., LTD. 114,400

WANCHI STEEL INDUSTRIAL CO., LTD. 109,615

Others 3,804,894

Each individual customer balance

did not exceed 2% of the account

balance

4,903,869$

460

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CTCI CORPORATION

DETAILS OF PARTIAL CONSTRUCTION BILLINGS



Sheet 7

Sheet7 page1

Project No.

Balance at

January 1,

2018

Additions

(Deductions)

Completed and

roll-out

Balance at

December 31,

2018

11 0789A 33,414,260$ 3,480,040$ -$ 36,894,300$

08 1305 26,083,106 86,581 - 26,169,687

12 1000A 19,853,249 2,369,791 - 22,223,040

09 0001A 23,199,120 - - 23,199,120

15 2200C 15,690,449 10,664,789 - 26,355,238

13 1500A 13,512,709 2,762,346 - 16,275,055

14 1758E 15,288,144 - - 15,288,144

14 1717A 9,920,970 321,000 - 10,241,970

11 0570A 10,290,851 - - 10,290,851

04VKX0088A 5,239,853 - - 5,239,853

10 0347A 5,183,951 - - 5,183,951

00 2902 5,057,038 - - 5,057,038

10 0541A 4,302,149 - 4,302,149)( -

13 1336C 3,960,081 526,039 - 4,486,120

09 0171A 4,183,675 - 4,183,675)( -

13 1515A 4,158,837 - - 4,158,837

11 0845A 3,923,182 - - 3,923,182

12 0888A 3,905,310 - - 3,905,310

02 3288 3,356,425 - 3,356,425)( -

10 0523B 3,319,326 - - 3,319,326

97 2262 3,208,286 - - 3,208,286

10 0542A 3,064,049 - - 3,064,049

06 1165C 3,012,074 - - 3,012,074

14 1788S 2,858,403 83,320 - 2,941,723

12 0977A 2,953,338 - - 2,953,338

15 1988A 2,572,968 87,454 - 2,660,422

14 1787A 1,784,539 167,883 - 1,952,422

11 0625A 1,811,609 77,851 - 1,889,460

16 2727A 2,054,506 152,496 - 2,207,002

Other 56,115,459 16,703,906 31,067,385)( 41,751,980

293,277,916$ 37,483,496$ 42,909,634)($ 287,851,778$

Shown as contract assets 126,655,675$

Shown as a deduction item to contract liabilities 161,186,103$

461

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CTCI CORPORATION

DETAILS OF OPERATING REVENUE



Sheet 8

Sheet8 page1

Items Summary Amount Notes

Refining and petrochemical

project 22,868,343$

Basic construction 2,687,721

Resources environmental 10,082,387

Others 46,229

35,684,680$

462

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CTCI CORPORATION

DETAILS OF OPERATING COSTS



Sheet 9

Sheet9 page1


Balance at January 1, 2018 -$

Add : Purchasing 16,475,790

Less : transferred to indirect materials 6,031)(

Balance at December 31, 2018 -

Consumption materials 16,469,759

Consumption indirect materials 6,031

Direct labor 2,649,861

Manufacturing expenses 3,201,125

Subcontract costs 10,059,980

Input costs 32,386,756

Estimated project loss at January 1, 2018 144,824)(

Estimated project loss at December 31, 2018 240,163

Operating costs 32,482,095$

463

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CTCI CORPORATION

DETAILS OF MANUFACTURING EXPENSES



Sheet 10

Sheet10 page1


Indirect labor 893,287$

Temporary equipment 78,493

Rental expenses 407,915

Travelling expenses 219,828

Delivery expenses 1,627

Finance costs 103,175

Pension 126,410

Various amortizations 122,794

Taxes 157,624

Meals expenses 66,801

Employee benefits 56,281

Depreciation charges on property,

plant and equipment 30,421

Utilities expenses 52,309

Repairs and maintenance expenses 24,535

Fuel consumption 12,473

Postage expenses 27,172

Apportion of office 23,170

Photocopier expenses 14,782

Entertainment expenses 9,174

Other expenses 772,854

3,201,125$

464

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CTCI CORPORATION

DETAILS OF OPERATING EXPENSES



Sheet 11

Sheet11 page1

Items

General and

administrative

expenses

Research and

development

expenses Total

Payroll expenses 636,880$ 74,623$ 711,503$

Pension 25,912 3,517 29,429

Rental expenses 34,920 8,391 43,311

Office supplies expenses 944 14 958

Travelling expenses 31,328 493 31,821

Utilities expenses 1,951 529 2,480

Entertainment expenses 5,436 61 5,497

Donation expenses (Note) 18,050 - 18,050

Depreciation charges on

property, plant and equipment 6,237 2,428 8,665

Various amortizations 8,703 4,062 12,765

Employee benefits 4,882 1,427 6,309

Professional service fees 16,277 - 16,277

Office miscellaneous expenses 2,938 832 3,770

Meals expenses 5,409 1,789 7,198

Miscellaneous expenses 127,837 22,683 150,520

927,704$ 120,849$ 1,048,553$

Note: As of December 31, 2018 the Company contributed $15,000 cash to CTCI Education Foundation.

465

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89, Sec. 6, Zhongshan N. Rd., Taipei 11155, Taiwan, R.O.C.

TEL:(02)2833-9999 FAX:(02)2835-8223

WEB SITE : www.ctci.com

Stock Code: 9933 Taiwan Stock Exchange Market Observation ... · Cooperation Council (GCC)...

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