CGPC - Annual Report 2018 | FinancialReports.eu

China General Plastics Corporation and Subsidiaries

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

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

The entities that are required to be included in the combined financial statements of China General Plastics Corporation as of and for the year ended December 31, 2018, under the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises”, are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standard 10, “Consolidated Financial Statements”. In addition, the information required to be disclosed in the combined financial statements of affiliates is included in the consolidated financial statements of China General Plastics Corporation and Subsidiaries. Consequently, we do not prepared a separate set of combined financial statements of affiliates.

Very truly yours,

CHINA GENERAL PLASTICS CORPORATION

YI-GUI WU Chairman

March 6, 2019

勤業眾信聯合會計師事務所 11073 台北市信義區松仁路 100 號 20 樓

Deloitte & Touche 20F, Taipei Nan Shan Plaza No. 100, Songren Rd., Xinyi Dist., Taipei 11073, Taiwan Tel : + 886 (2) 2725 - 9988 Fax: + 886 (2) 4051 - 6888 www.deloitte.com.tw

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders China General Plastics Corporation

Opinion

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

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

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2018. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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

Validity of Specific Revenue

The amount of revenue derived from partial customers was NT$5,189,592 thousand, representing 34% of total revenue of the Group for the year ended December 31, 2018. Most of these customers were

distributors, and the amount of revenue derived from specific regions significantly increased compared to the figure as of December 31, 2017. Therefore, the validity of the revenue derived from these customers has been identified as a key audit matter.

For the accounting policy of the validity of the revenue derived from these customers, refer to Notes 4 and 28 to the accompanying consolidated financial statements.

Our main audit procedures performed to assess the validity of the revenue derived from the above-mentioned customers are as follows:

We obtained an understanding and tested the internal control design and operating effectiveness of the validity of revenue derived from the above-mentioned customers.
We sampled the transaction documents related to revenue derived from the above-mentioned customers, including sales order, shipping, customs and receipt documents, to verify that the revenue was recognized while completing the performance obligation.
We sampled sales returns, provisions and cash collections occurred subsequent to the balance sheet date to verify the reasonableness of revenue recognition.

Valuation of Inventory

As of December 31, 2018, the carrying amount of the Group’s inventory was NT$1,717,275 thousand (i.e. the gross amount of inventory of NT$1,796,474 thousand with a deduction of the allowance for inventory valuation of NT$79,199 thousand), representing 13% of the Group’s total assets. As the Group’s inventory was stated at the lower of cost or net realizable value in accordance with IAS 2 “Inventories”, which involved critical judgement and accounting estimates by the management, the valuation of inventory has been identified as a key audit matter.

Refer to Notes 4, 5 and 14 to the Group’s financial statements for the related accounting policies and disclosures on inventory valuation.

The main audit procedures we performed for valuation of inventory are as follows:

We obtained an understanding of the reasonableness of the Group’s policies and methods of the allowance for inventory valuation.
By performing a year-end inventory observation, we understood the inventory status and evaluated the reasonableness of the allowance for inventory valuation.
We tested the inventory aging and net realizable value report used in valuation, including verification of the completeness, net realizable value and recalculation of the accuracy of the reports. Besides, we also performed the retrospective test to verify the validity of the impairment items and value decline in subsequent period.

Other Matter

We have also audited the parent company only financial statements of China General Plastics Corporation as of and for the years ended December 31, 2018 and 2017 on which we have issued an unmodified opinion.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance (including the audit committee) are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Shih-Tsung Wu and Tzu-Jung Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

March 6, 2019

Notice to Readers

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

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss (FVTPL) - current (Notes 4 and 7) Financial assets at amortized cost - current (Notes 4, 9 and 36) Debt investments with no active market - current (Notes 4, 12 and 36) Notes receivable (Notes 4 and 13) Trade receivables (Notes 4, 13 and 35) Other receivables (Notes 4 and 13) Other receivables from related parties (Notes 4, 13 and 35) Current tax assets (Notes 4 and 30) Inventories (Notes 4 and 14) Prepayments (Notes 4 and 21) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (FVTOCI) - non-current (Notes 4, 8 and 34) Available-for-sale financial assets - non-current (Notes 4 and 10) Financial assets measured at cost - non-current (Notes 4 and 11) Investments accounted for using the equity method (Notes 4 and 17) Property, plant and equipment (Notes 4, 18, 32, 35 and 36) Investment properties (Notes 4, 19 and 32) Intangible assets (Notes 4 and 20) Deferred tax assets (Notes 4 and 30) Long-term prepayments for leases (Notes 4 and 21) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at FVTPL - current (Notes 4 and 7) Notes payable (Note 23) Trade payables (Note 23) Trade payables to related parties (Notes 23 and 35) Other payables (Note 24) Other payables to related parties (Note 35) Current tax liabilities (Notes 4 and 30) Provisions - current (Notes 4 and 25) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 18, 22 and 36) Deferred tax liabilities (Notes 4 and 30) Net defined benefit liabilities - non-current (Notes 4 and 26) Other non-current liabilities Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 4, 8, 17, 26, 27 and 30) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable to owners of the Company NON-CONTROLLING INTERESTS Total equity TOTAL		2018 Amount % $ 934,680 7 1,432,707 11 268,954 2 - - 195,847 2 1,608,142 12 84,601 1 11,165 - - - 1,717,275 13 59,343 - 1,513 - 6,314,227 48 122,640 1 - - - - 253,998 2 6,009,889 45 135,277 1 2,493 - 261,613 2 95,184 1 28,774 - 6,909,868 52 $ 13,224,095 100 $ 1,645 - 288 - 915,009 7 171,860 1 754,730 6 14,263 - 181,491 1 - - 68,412 1 2,107,698 16 1,000,000 8 593,964 4 707,679 5 3,650 - 2,305,293 17 4,412,991 33 5,067,596 39 8,929 - 512,954 4 408,223 3 2,334,921 18 3,256,098 25 42,017 - 8,374,640 64 436,464 3 8,811,104 67 $ 13,224,095 100		2017
				Amount % $ 663,145 5 1,395,898 11 - - 268,805 2 179,929 1 1,498,990 12 70,802 1 5,472 - 42 - 1,856,456 15 53,598 - 494 - 5,993,631 47 - - 2,194 - 91,000 1 298,744 3 5,729,861 45 140,260 1 10,238 - 270,525 2 100,318 1 36,450 - 6,679,590 53 $ 12,673,221 100 $ 1,701 - 183 - 620,443 5 232,011 2 681,231 5 22,605 - 141,996 1 25,127 - 60,650 1 1,785,947 14 1,050,000 8 594,162 5 1,039,875 8 2,389 - 2,686,426 21 4,472,373 35 4,919,996 39 8,236 - 385,973 3 408,223 3 2,063,146 17 2,857,342 23 20,767 - 7,806,341 62 394,507 3 8,200,848 65 $ 12,673,221 100

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

NET REVENUE (Notes 4, 28 and 35) COST OF REVENUE (Notes 4, 14, 26, 29 and 35) GROSS PROFIT OPERATING EXPENSES (Notes 4, 26, 29 and 35) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES (Notes 4, 7, 17, 29 and 35) Other income Other gains and losses Interests expense Share of profit or loss of associates accounted for using the equity method Total non-operating income and expenses PROFIT BEFORE INCOME TAX FROM CONTINUING OPERATIONS INCOME TAX EXPENSE (Notes 4 and 30) NET PROFIT FROM CONTINUING OPERATIONS (Note 29) NET PROFIT (LOSS) FROM DISCONTINUED OPERATIONS (Notes 4 and 15) NET PROFIT FOR THE YEAR		2018 Amount % $ 15,192,621 100 12,490,058 82 2,702,563 18 798,642 5 277,710 2 53,288 1 1,129,640 8 1,572,923 10 83,803 1 33,090 - (10,149) - (25,315) - 81,429 1 1,654,352 11 305,699 2 1,348,653 9 7,467 - 1,356,120 9		2017
				Amount % $ 14,701,741 100 11,924,810 81 2,776,931 19 803,107 6 274,619 2 48,417 - 1,126,143 8 1,650,788 11 47,402 - (84,917) - (13,028) - 15,898 - (34,645) - 1,616,143 11 274,672 2 1,341,471 9 (2,197) - 1,339,274 9

(Continued)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

OTHER COMPREHENSIVE INCOME (LOSS) (Notes 4, 8, 10, 17, 26, 27 and 30) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Unrealized gain on investments in equity instrument at FVTOCI Share of the other comprehensive income (loss) of associates accounted for using the equity method - remeasurement of defined benefit plans Share of the other comprehensive loss of associates accounted for using the equity method - unrealized loss on investments in equity instrument at FVTOCI Income tax relating to items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss: Exchange differences on translating the financial statements of foreign operations Unrealized gain on available-for-sale financial assets Share of the other comprehensive loss of associates accounted for using the equity method - exchange differences on translating foreign operations Share of the other comprehensive income of associates accounted for using the equity method - unrealized gain on available-for-sale financial assets Income tax relating to items that may be reclassified subsequently to profit or loss Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR		2018 Amount % $ (591) - 20,346 - 462 - (19,493) - 7,778 - 8,502 - 7,723 - - - (400) - - - (3,565) - 3,758 - 12,260 - $ 1,368,380 9		2017
				Amount % $ (7,496) - - - (161) - - - 561 - (7,096) - (38,607) - 33 - (151) - 11,804 - 6,563 - (20,358) - (27,454) - $ 1,311,820 9 (Continued)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

NET PROFIT ATTRIBUTABLE TO: Owners of the Company Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Company Non-controlling interests EARNINGS PER SHARE (Note 31) From continuing and discontinued operations Basic Diluted From continuing operations Basic Diluted		2018 Amount % $ 1,276,156 8 79,964 1 $ 1,356,120 9 $ 1,289,043 8 79,337 1 $ 1,368,380 9 $ 2.52 $ 2.51 $ 2.50 $ 2.50		2017
				Amount % $ 1,269,808 9 69,466 - $ 1,339,274 9 $ 1,242,878 8 68,942 1 $ 1,311,820 9 $ 2.51 $ 2.50 $ 2.51 $ 2.50
		$		$
		$		$
		$		$

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

(Concluded)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

				Equity Attributable to Owners of the Company (Notes 4, 8, 17, 26,	Equity Attributable to Owners of the Company (Notes 4, 8, 17, 26,	27and 30)
Share Capital Ordinary Shares $ 4,776,695 - - 143,301 - - - - - 4,919,996 - 4,919,996 - - 147,600 - - - - - $ 5,067,596	Capital Surplus		Total $ 8,220 - - - - 16 - - - 8,236 - 8,236 - - - - 693 - - - $ 8,929	Retained Earnings	Total $ 2,549,432 - (812,038 ) (143,301 ) - - 1,269,808 (6,559) 1,263,249 2,857,342 - 2,857,342 - (737,999 ) (147,600 ) - - 1,276,156 8,199 1,284,355 $ 3,256,098	Other Equity	Total $ 41,138 - - - - - - (20,371) (20,371) 20,767 16,562 37,329 - - - - - - 4,688 4,688 $ 42,017
						Unrealized Exchange Unrealized Gain (Loss) on Differences on Gain (Loss) on Investments in Translating Available-for- Equity Foreign sale Financial Instruments Operations Assets at FVTOCI $ 12,612 $ 28,526 $ - - - - - - - - - - - - - - - - - - - (32,195) 11,824 - (32,195) 11,824 - (19,583 ) 40,350 - - (40,350) 56,912 (19,583 ) - 56,912 - - - - - - - - - - - - - - - - - - 3,758 - 930 3,758 - 930 $ (15,825) $ - $ 57,842
	Unpaid Dividends $ 7,913 - - - - 16 - - - 7,929 - 7,929 - - - - 693 - - - $ 8,622	Others $ 307 - - - - - - - - 307 - 307 - - - - - - - - $ 307		Unappropriated Legal Reserve Special Reserve Earnings $ 241,661 $ 408,223 $ 1,899,548 144,312 - (144,312 ) - - (812,038 ) - - (143,301 ) - - - - - - - - 1,269,808 - - (6,559) - - 1,263,249 385,973 408,223 2,063,146 - - - 385,973 408,223 2,063,146 126,981 - (126,981 ) - - (737,999 ) - - (147,600 ) - - - - - - - - 1,276,156 - - 8,199 - - 1,284,355 $ 512,954 $ 408,223 $ 2,334,921

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

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CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax from continuing operations Income (loss) before income tax from discontinued operations Income before income tax Adjustments for: Depreciation expenses Amortization expenses Expected credit loss recognized on trade receivables Impairment reversed recognized on trade receivables Net (gain) loss on fair value change on financial assets carried at FVTPL Interest expense Interest income Dividend income Share of (profit) loss of associates Gain on disposal of property, plant and equipment Net loss on disposal of available-for-sale financial assets Impairment loss recognized on financial assets measured at cost Write-down of inventories Impairment loss (reversal) recognized on property, plant and equipment Amortization of long-term prepayments for leases Changes in operating assets and liabilities Financial assets held for trading Financial assets mandatorily classified as at FVTPL Notes receivable Trade receivables Other receivables Other receivables from related parties Inventories Prepayments Other current assets Notes payable Trade payables Trade payables to related parties Other payables Other payables to related parties Provisions Other current liabilities Net defined benefit liabilities Cash generated from operations Interest received Interest paid Income tax paid Net cash generated from operating activities	2018 $ 1,654,352 7,467 1,661,819 502,930 23,668 1,469 - (7,183) 10,149 (16,400) (1,672) 25,315 (6,484) - - 2,907 168 3,456 (34,887) 5,205 (15,918) (107,010) (12,230) (5,562) 142,065 (5,858) (1,019) 105 294,436 (60,151) 58,512 (8,394) - (40,694) (332,787) 2,075,955 15,083 (10,284) (253,118) 1,827,636	2017 $ 1,616,143 (2,197) 1,613,946 430,606 24,755 - (2,045) 33,565 13,028 (13,710) (79) (15,898) (2,906) (2,936) 3,035 4,490 (951) 3,413 656,210 - (27,588) (226,301) (5,888) 133,357 (153,044) 13,594 1,215 1,497 (168,239) (2,116) (15,875) (5,538) 9,088 (4,801) (388,261) 1,905,623 14,233 (12,801) (295,566) 1,611,489 (Continued)

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CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CASH FLOWS FROM INVESTING ACTIVITIES Proceed from capital reduction of financial assets at FVTOCI Purchase of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost Proceeds from sale of available-for-sale financial assets Purchase of debt investments with no active market Proceeds from sale of debt investments with no active market Refunds of financial assets measured at cost by capital reduction Payments for property, plant and equipment Proceeds from disposal of property, plant and equipment Increase in refundable deposits Decrease in refundable deposits Payments for intangible assets Dividends received Increase in long-term prepayments Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of short-term borrowings Repayment of short-term bills payable Repayments of long-term borrowings Proceeds from guarantee deposits received Refunds of guarantee deposits received Increase (decrease) in other non-current liabilities Dividends paid to owners of the Company Dividends paid to non-controlling interests Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2018 $ 7,462 (268,954) 268,805 - - - - (755,004) 17,398 (53) 398 (366) 1,672 (8,225) (736,867) - - (50,000) 2,924 (1,665) 2 (735,982) (37,380) (822,101) 2,867 271,535 663,145 $ 934,680	2017 $ - - - 5,948 (626,264) 626,115 9,000 (1,022,063) 6,857 (13,025) 12,606 (235) 79 (15,563) (1,016,545) (160,000) (300,000) - 733 (2,326) (2,243) (812,014) (54,770) (1,330,620) (10,133) (745,809) 1,408,954 $ 663,145

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

(Concluded)

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CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. GENERAL INFORMATION

China General Plastics Corporation (the “Company”) was incorporated and began operations on April 29, 1964. The Company mainly engages in the production and sale of PVC films, PVC leather, PVC pipes, PVC compounds, PVC resins, construction products, chlor-alkali products and other related products.

The Company’s ordinary shares have been listed on the Taiwan Stock Exchange since March 1973.

The consolidated financial statements of the Company and its subsidiaries (collectively referred to “the Group”) are presented in the Company’s functional currency, the New Taiwan dollar (NT$).

2. APPROVAL OF FINANCIAL STATEMENTS

The consolidated financial statements were approved by the Company’s board of directors on March 6, 2019.

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

a. Initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRS (IFRIC), and Interpretations of IAS (SIC) (collectively, the “IFRSs”) endorsed and issued into effect by the FSC

Except for the following, whenever applied, the initial application of the amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed and issued into effect by the FSC would not have any material impact on the Group’s accounting policies:

1) IFRS 9 “Financial Instruments” and related amendments

IFRS 9 supersedes IAS 39 “Financial Instruments: Recognition and Measurement”, with consequential amendments to IFRS 7 “Financial Instruments: Disclosures” and other standards. IFRS 9 sets out the requirements for classification, measurement and impairment of financial assets and for hedge accounting. Refer to Note 4 for information relating to the relevant accounting policies.

The requirements for classification, measurement and impairment of financial assets have been applied retrospectively starting from January 1, 2018. IFRS 9 is not applicable to items that have already been derecognized as of December 31, 2017.

Classification, measurement and impairment of financial assets

On the basis of the facts and circumstances that existed as of January 1, 2018, the Group has performed an assessment of the classification of recognized financial assets and has elected not to restate prior reporting periods.

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The following table shows the original measurement categories and carrying amount under IAS 39 and the new measurement categories and carrying amount under IFRS 9 for each class of the Group’s financial assets and financial liabilities as of January 1, 2018.

Financial Asset Cash and cash equivalents Derivatives Equity securities Fund beneficiary certificates Pledged time deposits Notes receivable, trade receivables and other receivables Refundable deposits Financial Asset FVTOCI Equity instruments Add: Reclassification from available-for-sale (IAS 39) Amortized cost Add: Reclassification from loans and receivables (IAS 39) Total	Measurement Category

a) Cash and cash equivalents, notes receivable, trade receivables, other receivables and refundable deposits previously classified as loans and receivables under IAS 39 were classified as at amortized cost with an assessment of expected credit losses under IFRS 9.
b) As equity securities previously classified as available-for-sale financial assets under IAS 39 were not held for trading, the Group elected to designate these securities as at FVTOCI and FVTPL under IFRS 9. As a result, the related other equity - unrealized gain (loss) on available-for-sale financial assets of $40,350 thousand was reclassified to other equity - unrealized gain (loss) on financial assets at FVTOCI.

Investments in unlisted shares, respectively, previously measured at cost under IAS 39 have been classified at FVTPL and designated as at FVTOCI under IFRS 9 and were remeasured at fair value. Consequently, an increase of $16,562 thousand was recognized in both financial assets at FVTOCI and other equity - unrealized gain (loss) on financial assets at FVTOCI on January 1, 2018.

c) Pledged time deposits previously classified as debt investments with no active market and measured at amortized cost under IAS 39 were classified as at amortized cost with an assessment of expected credit losses under IFRS 9, because as of January 1, 2018, the contractual cash flows were solely payments of principal and interest on the principal outstanding and these investments were held within a business model whose objective is to collect contractual cash flows.
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2) IFRS 15 “Revenue from Contracts with Customers” and related amendments

IFRS 15 establishes principles for recognizing revenue that apply to all contracts with customers and supersedes IAS 18 “Revenue”, IAS 11 “Construction Contracts” and a number of revenue-related interpretations. Refer to Note 4 for the related accounting policies.

In identifying performance obligations, IFRS 15 and the related amendments require that a good or service is distinct if it is capable of being distinct and the promise to transfer it is distinct within the context of the contract. The application of IFRS 15 is not expected to have a material impact on the Group.

The Group elected only to retrospectively apply IFRS 15 to contracts that were not complete as of January 1, 2018 and to reclassify the advances received of $39,953 thousand to contract liabilities and the provision for customer returns and rebates of $25,127 thousand to refund liabilities.

b. Amendments to the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRSs endorsed by the FSC for application starting from 2019

New, Amended or Revised Standards and Interpretations (the“New IFRSs”) Annual Improvements to IFRSs 2015-2017 Cycle Amendments to IFRS 9 “Prepayment Features with Negative Compensation” IFRS 16 “Leases” Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement” Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures” IFRIC 23 “Uncertainty over Income Tax Treatments”	Effective Date Announced by IASB (Note 1)
	January 1, 2019 January 1, 2019 (Note 2) January 1, 2019 January 1, 2019 (Note 3) January 1, 2019 January 1, 2019

New, Amended or Revised Standards and Interpretations
(the“New IFRSs”)
Annual Improvements to IFRSs 2015-2017 Cycle

Amendments to IFRS 9 “Prepayment Features with Negative
Compensation”

IFRS 16 “Leases”

Amendments to IAS 19 “Plan Amendment, Curtailment or
Settlement”

Amendments to IAS 28 “Long-term Interests in Associates and Joint
Ventures”

IFRIC 23 “Uncertainty over Income Tax Treatments”

Effective Date
Announced by IASB (Note 1)

January 1, 2019
January 1, 2019 (Note 2)
January 1, 2019
January 1, 2019 (Note 3)
January 1, 2019
January 1, 2019

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The FSC permits the election for early adoption of the amendments starting from January 1, 2018.
Note 3: The Group shall apply these amendments to plan amendments, curtailments or settlements occurring on or after January 1, 2019.
IFRS 16 “Leases”

IFRS 16 sets out the accounting standards for leases that will supersede IAS 17 “Leases” and a number of related interpretations.

Definition of a lease

Upon initial application of IFRS 16, the Group will elect to apply the guidance of IFRS 16 in determining whether contracts are, or contain, a lease only to contracts entered into (or changed) on or after January 1, 2019. Contracts identified as containing a lease under IAS 17 and IFRIC 4 will not be reassessed and will be accounted for in accordance with the transitional provisions under IFRS 16.

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The Group as lessee

Upon initial application of IFRS 16, the Group will recognize right-of-use assets and lease liabilities for all leases on the consolidated balance sheets except for those whose payments under low-value asset and short-term leases will be recognized as expenses on a straight-line basis. On the consolidated statements of comprehensive income, the Group will present the depreciation expense charged on right-of-use assets separately from the interest expense accrued on lease liabilities; interest is computed using the effective interest method. On the consolidated statements of cash flows, cash payments for the principal portion of lease liabilities will be classified within financing activities; cash payments for the interest portion will be classified within operating activities. Currently, payments under operating lease contracts are recognized as expenses on a straight-line basis. Prepaid lease payments for land use rights of land located in mainland China are recognized as prepayments for leases. Cash flows for operating leases are classified within operating activities on the consolidated statements of cash flows.

The Group anticipates applying IFRS 16 retrospectively with the cumulative effect of the initial application of this standard recognized on January 1, 2019. Comparative information will not be restated.

Lease liabilities will be recognized on January 1, 2019 for leases currently classified as operating leases under IAS 17. Lease liabilities will be measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate on January 1, 2019. Right-of-use assets will be measured at their carrying amounts as if IFRS 16 had been applied since the commencement date but discounted using the aforementioned incremental borrowing rate. The Group will apply IAS 36 to all right-of-use assets.

The Group expects to apply the following practical expedients:

a) The Group will apply a single discount rate to a portfolio of leases with reasonably similar characteristics to measure lease liabilities.
b) The Group will account for those leases for which the lease term ends on or before December 31, 2019 as short-term leases.
c) The Group will use hindsight, such as in determining lease terms, to measure lease liabilities.
d) The Group will exclude initial direct costs from the measurement of the right-of-use asset on January 1, 2019.

The Group as lessor

The Group will not make any adjustments for leases in which it is a lessor and will account for those leases with the application of IFRS 16 starting from January 1, 2019.

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Anticipated impact on assets, liabilities and equity

		Carrying	Adjustments	Adjustments
	Amount as of		Arising from			Carrying
	December 31,			Initial	Amount as of
		2018	Application		January 1, 2019
Prepayments	$	3,389	$	(3,389)	$	-
Long-term prepayments for lease		95,184		(95,184)		-
Right-of-use-assets		-		347,482		347,482
Total effect on assets	$	98,573	$	248,909	$	347,482
Lease liabilities - current	$	-	$	36,161	$	36,161
Lease liabilities - non-current		-		215,759		215,759
Total effect on liabilities	$	-	$	251,920	$	251,920
Retained earnings	$	3,256,098	$	(2,705)	$	3,253,393
Non-controlling interests		436,464		(306)		436,158
Total effect on equity	$	3,692,562	$	(3,011)	$	3,689,551

Except for the above impact, as of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s consolidated financial position and financial performance and will disclose the relevant impact when the assessment is completed.

c. New IFRSs in issue but not yet endorsed and issued into effect by the FSC

New IFRSs Amendments to IFRS 3 “Definition of a Business” Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets between An Investor and Its Associate or Joint Venture” IFRS 17 “Insurance Contracts” Amendments to IAS 1 and IAS 8 “Definition of Material”	Effective Date Announced by IASB (Note)
	January 1, 2020 (Note 2) To be determined by IASB January 1, 2021 January 1, 2020 (Note 3)

Note 1: Unless stated otherwise, the above New IFRSs are effective for annual periods beginning on or after their respective effective dates.
Note 2: The Group shall apply these amendments to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2020 and to asset acquisitions that occur on or after the beginning of that period.
Note 3: The Group shall apply these amendments prospectively for annual reporting periods beginning on or after January 1, 2020.

As of the date the consolidated financial statements were authorized for issue, the Group is continuously assessing the possible impact that the application of other standards and interpretations will have on the Group’s consolidated financial position and financial performance and will disclose the relevant impact when the assessment is completed.

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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs as endorsed and issued into effect by the FSC.

b. Basis of preparation

The consolidated financial statements have been prepared on the historical cost basis except for financial instruments which are measured at fair value and net defined benefit liabilities which are measured at the present value of the defined benefit obligation less the fair value of plan assets.

The fair value measurements, which are grouped into Levels 1 to 3 based on the degree to which the fair value measurement inputs are observable and based on the significance of the inputs to the fair value measurement in its entirety, are described as follows:

1) Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;
2) Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
3) Level 3 inputs are unobservable inputs for an asset or liability.
c. Classification of current and non-current assets and liabilities

Current assets include:

1) Assets held primarily for the purpose of trading;
2) Assets expected to be realized within 12 months after the reporting period; and
3) Cash and cash equivalents unless the asset is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period.

Current liabilities include:

1) Liabilities held primarily for the purpose of trading;
2) Liabilities due to be settled within 12 months after the reporting period; and
3) Liabilities for which the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period.

Assets and liabilities that are not classified as current are classified as non-current.

d. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and the entities controlled by the Company (i.e. its subsidiaries).

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Company.

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All intra-group transactions, balances, income and expenses are eliminated in full upon consolidation. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Changes in the Group’s ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the interests of the Group and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. 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 and attributed to the owners of the Company.

See Note 16 and Tables 8 and 9 for detailed information on subsidiaries (including the percentages of ownership and main businesses).

e. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (i.e. foreign currencies) are recognized at the rates of exchange prevailing at the dates of the transactions.

At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Exchange differences on monetary items arising from settlement or translation are recognized in profit or loss in the period.

Non-monetary items measured at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Exchange differences arising from the retranslation of non-monetary items are included in profit or loss for the period except for exchange differences arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

For the purpose of presenting consolidated financial statements, the functional currencies of the group entities (including subsidiaries and associates in other countries that use currencies which are different from the currency of the Company) are translated into the presentation currency, the New Taiwan dollar, as follows: Assets and liabilities are translated at the exchange rates prevailing at the end of the reporting period; and income and expense items are translated at the average exchange rates for the period. The resulting currency translation differences are recognized in other comprehensive income (attributed to the owners of the Company and non-controlling interests as appropriate).

On the disposal of a foreign operation (i.e. a disposal of the Company’s entire interest in a foreign operation, or a disposal involving the loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an associate that includes a foreign operation of which the retained interest becomes a financial asset), all of the exchange differences accumulated in equity in respect of that operation which are attributable to the owners of the Company are reclassified to profit or loss.

f. Inventories

Inventories consist of raw materials, finished goods and work in progress and are stated at the lower of cost or net realizable value. Inventory write-downs are made by item, except where it may be appropriate to group similar or related items. The net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs necessary to make the sale. Inventories are recorded at the weighted-average cost on the balance sheet date.

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g. Investments in associates

An associate is an entity over which the Group has significant influence and that is not a subsidiary.

The Group uses the equity method to account for its investments in associates.

Under the equity method, investments in an associate are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the profit or loss and other comprehensive income of the associate. The Group also recognizes the changes in the Group’s share of the equity of associates attributable to Group.

When the Company subscribes for additional new shares of an associate at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Group’s proportionate interest in the associate. The Group records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus - changes in capital surplus from investments in associates accounted for using the equity method. If the Group’s ownership interest is reduced due to its additional subscription of the new shares of the associate, the proportionate amount of the gains or losses previously recognized in other comprehensive income in relation to that associate is reclassified to profit or loss on the same basis as would be required if the investee had directly disposed of the related assets or liabilities. When the adjustment should be debited to capital surplus, but the capital surplus recognized from investments accounted for using the equity method is insufficient, the shortage is debited to retained earnings.

When the Group’s share of losses of an associate equals or exceeds its interest in that associate (which includes any carrying amount of the investment accounted for using the equity method and long-term interests that, in substance, form part of the Group’s net investment in the associate), the Group discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Group has incurred legal obligations, or constructive obligations, or made payments on behalf of that associate.

The entire carrying amount of an investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

The Group discontinues the use of the equity method from the date on which its investment ceases to be an associate. Any retained investment is measured at fair value at that date, and the fair value is regarded as the investment’s fair value on initial recognition as a financial asset. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. The Group accounts for all amounts previously recognized in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities.

When a group entity transacts with its associate, profits and losses resulting from the transactions with the associate are recognized in the Group’ consolidated financial statements only to the extent that interests in the associate are not related to the Group.

h. Property, plant and equipment

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment loss.

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Property, plant and equipment in the course of construction are carried at cost less any recognized impairment loss. Cost includes professional fees and borrowing costs eligible for capitalization. Such assets are depreciated and classified to the appropriate categories of property, plant and equipment when completed and ready for their intended use.

Depreciation on property, plant and equipment is recognized using the straight-line method and unit of production method. Each significant part is depreciated separately. If a lease term is shorter than the assets’ useful lives, such assets are depreciated over the lease term. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effects of any changes in the estimates accounted for on a prospective basis.

On derecognition of an item of property, plant and equipment, the difference between the sales proceeds and the carrying amount of the asset is recognized in profit or loss.

i. Investment properties

Investment properties are properties held to earn rentals and/or for capital appreciation.

Investment properties are initially measured at cost, including transaction cost. Subsequent to initial recognition, investment properties are measured at cost less accumulated depreciation and accumulated impairment loss. Depreciation is recognized using the straight-line method.

On derecognition of an investment property, the difference between the net disposal proceeds and the carrying amount of the asset is included in profit or loss.

j. Intangible assets
1) Intangible assets acquired separately

Intangible assets with finite useful lives that are acquired separately are initially measured at cost and subsequently measured at cost less accumulated amortization and accumulated impairment loss. Amortization is recognized on a straight-line basis. The estimated useful lives, residual values, and amortization methods are reviewed at the end of each year, with the effects of any changes in the estimates accounted for on a prospective basis.

2) Derecognition of intangible assets

On derecognition of an intangible asset, the difference between the net disposal proceeds and the carrying amount of the asset are recognized in profit or loss.

k. Impairment of tangible and intangible assets other than goodwill

At the end of each reporting period, the Group reviews the carrying amounts of its tangible and intangible assets, excluding goodwill, to determine whether there is any indication that those assets have suffered any impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Corporate assets are allocated to the smallest group of cash-generating units on a reasonable and consistent basis of allocation.

The recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount, with the resulting impairment loss recognized in profit or loss.

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When an impairment loss is subsequently reversed, the carrying amount of the corresponding asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but only to the extent of the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized in profit or loss.

l. Financial instruments

Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to an acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or loss.

1) Financial assets

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

a) Measurement categories

2018

Financial assets are classified into the following categories: Financial assets at FVTPL, financial assets at amortized cost and investments in equity instruments at FVTOCI.

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such a financial asset is mandatorily classified as at FVTPL. Financial assets mandatorily classified as at FVTPL include investments in equity instruments which are not designated as at FVTOCI and derivative instruments and fund beneficiary certificates that do not meet the amortized cost criteria or the FVTOCI criteria.

Financial assets at FVTPL are subsequently measured at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 34.

ii. Financial assets at amortized cost

Financial assets that meet the following conditions are subsequently measured at amortized cost:

The financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
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Subsequent to initial recognition, financial assets at amortized cost, including cash and cash equivalents, notes receivable at amortized cost, trade receivables, other receivables, pledged time deposits and refundable deposits, are measured at amortized cost, which equals the gross carrying amount determined using the effective interest method less any impairment loss. Exchange differences are recognized in profit or loss.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for:

Purchased or originated credit-impaired financial assets, for which interest income is calculated by applying the credit-adjusted effective interest rate to the amortized cost of such a financial asset; and
Financial assets that have subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of such a financial asset.

Cash equivalents include time deposits and reverse repurchase agreements collateralized by bonds which are highly liquid, readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These cash equivalents are held for the purpose of meeting short-term cash commitments.

iii. Investments in equity instruments at FVTOCI

On initial recognition, the Group may make an irrevocable election to designate investments in equity instruments as at FVTOCI. Designation as at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognized by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains and losses arising from changes in fair value recognized in other comprehensive income and accumulated in other equity. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments; instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment.

2017

Financial assets are classified into the following categories: Financial assets at FVTPL, available-for-sale financial assets and loans and receivables.

i. Financial assets at FVTPL

Financial assets are classified as at FVTPL when such financial assets are held for trading.

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognized in profit or loss. The net gain or loss recognized in profit or loss does not incorporate any dividends or interest earned on such a financial asset. Fair value is determined in the manner described in Note 34.

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ii. Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at FVTPL.

Available-for-sale financial assets are measured at fair value. Changes in the carrying amount of available-for-sale monetary financial assets (relating to changes in foreign currency exchange rates, interest income calculated using the effective interest method and dividends on available-for-sale equity investments) are recognized in profit or loss. Other changes in the carrying amount of available-for-sale financial assets are recognized in other comprehensive income and will be reclassified to profit or loss when such investments are disposed of or are determined to be impaired.

Dividends on available-for-sale equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established.

Available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity investments are measured at cost less any identified impairment loss at the end of each reporting period and are presented in a separate line item as financial assets measured at cost. If, in a subsequent period, the fair value of the financial assets can be reliably measured, the financial assets are remeasured at fair value. The difference between the carrying amount and the fair value is recognized in other comprehensive income on financial assets. Any impairment losses are recognized in profit and loss.

iii. Loans and receivables

Loans and receivables (including cash and cash equivalents, notes receivable, trade receivables, debt investment with no active market and other receivables) are measured using the effective interest method at amortized cost less any impairment, except for short-term receivables when the effect of discounting is immaterial.

b) Impairment of financial assets

2018

The Group recognizes a loss allowance for expected credit losses on financial assets at amortized cost (including trade receivables) and investments in debt instruments that are measured at FVTOCI.

The Group always recognizes lifetime expected credit losses (i.e. ECLs) for trade receivables. For all other financial instruments, the Group recognizes lifetime ECLs when there has been a significant increase in credit risk since initial recognition. If, on the other hand, the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECLs.

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Expected credit losses reflect the weighted average of credit losses with the respective risks of a default occurring as the weights. Lifetime ECLs represent the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECLs represent the portion of lifetime ECLs that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account, except for investments in debt instruments that are measured at FVTOCI, for which the loss allowance is recognized in other comprehensive income and does not reduce the carrying amount of the respective financial asset.

2017

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence, as a result of one or more events that occurred after the initial recognition of the financial assets, that the estimated future cash flows of the investment have been affected.

For financial assets at amortized cost, such as notes receivable, trade receivables and other receivables, such assets are assessed for impairment on a collective basis even if they were assessed not to be impaired individually. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience with collecting payments, as well as observable changes in national or local economic conditions that correlate with defaults on receivables.

For financial assets at amortized cost, the amount of the impairment loss recognized is the difference between such an asset’s carrying amount and the present value of its estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets at amortized cost, 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 was recognized, the previously recognized impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment (at the date on which the impairment is reversed) does not exceed what the amortized cost would have been had the impairment not been recognized.

For available-for-sale equity investments, a significant or prolonged decline in the fair value of a security below its cost is considered to be objective evidence of impairment.

For all other financial assets, objective evidence of impairment could include significant financial difficulty of the issuer or counterparty, breach of contract such as a default or delinquency in interest or principal payments, it became probable that the borrower will enter bankruptcy or financial re-organization, or the disappearance of an active market for those financial assets because of financial difficulties.

When an available-for-sale financial asset is considered to be impaired, cumulative losses previously recognized in other comprehensive income are reclassified to profit or loss in the period.

In respect of available-for-sale equity securities, impairment loss previously recognized in profit or loss is not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognized in other comprehensive income.

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For financial assets measured at cost, the amount of the impairment loss is measured as the difference between such an asset’s carrying amount and the present value of its estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of a financial asset is reduced by the impairment loss directly for all financial assets, with the exception of notes receivable, trade receivables and other receivables, where the carrying amount is reduced through the use of an allowance account. When notes receivable, trade receivables and other receivables are considered uncollectable, they are written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss except for uncollectable notes receivable, trade receivables and other receivables that are written off against the allowance account.

c) Derecognition of financial assets

The Group derecognizes a financial asset only when the contractual rights to the cash flows from the asset expire or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

Before 2018, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. Starting from 2018, on derecognition of a financial asset at amortized cost in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss. On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognized in other comprehensive income is recognized in profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognized in profit or loss, and the cumulative gain or loss that had been recognized in other comprehensive income is transferred directly to retained earnings, without recycling through profit or loss.

2) Financial liabilities

a) Subsequent measurement

Except the derivative instruments, all financial liabilities are measured at amortized cost using the effective interest method.

b) Derecognition of financial liabilities

The difference between the carrying amount of a financial liability derecognized and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognized in profit or loss.

3) Derivative financial instruments

The Group enters into a variety of derivative financial instruments to manage its exposure to foreign exchange rate risks, including foreign exchange forward contracts.

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Derivatives are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognized in profit or loss immediately. When the fair value of a derivative financial instrument is positive, the derivative is recognized as a financial asset; when the fair value of a derivative financial instrument is negative, the derivative is recognized as a financial liability.

Before 2018, derivatives embedded in non-derivative host contracts were treated as separate derivatives when they met the definition of a derivative; their risks and characteristics were not closely related to those of the host contracts; and the contracts were not measured at FVTPL. Starting from 2018, derivatives embedded in hybrid contracts, which contain financial asset hosts within the scope of IFRS 9, are not separated; instead, the classification is determined in accordance with the entire hybrid contract. Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of IFRS 9 (e.g. financial liabilities) are treated as separate derivatives when they meet the definition of a derivative, their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at FVTPL.

m. Provisions

Provisions are measured at the best estimate of the discounted cash flows of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

n. Revenue recognition

2018

The Group identifies contracts with customers, allocates the transaction price to the performance obligations and recognizes revenue when performance obligations are satisfied. The refund liabilities are recognized at the time of sale based on the seller’s reliable estimate of future returns and based on past experience and other relevant factors.

Revenue from the sale of goods

Revenue from the sale of goods comes from the sale of chlor-alkali products, PVC resins, PVC compounds and other related products. The sale of goods above is recognized as revenue when the goods are delivered to a customer because it is the time when the customer has full discretion over the manner of distribution and the price to sell the goods, has the primary responsibility for sales to future customers and bears the risks of obsolescence. Trade receivables are recognized concurrently.

2017

Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for estimated customer returns, rebates and other similar provisions. Provisions for sales returns and liabilities for returns are recognized at the time of sale based on past experience and other relevant factors.

1) Sale of goods

Revenue from the sale of goods is recognized when all the following conditions are satisfied:

a) The Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
b) The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
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c) The amount of revenue can be measured reliably;
d) It is probable that the economic benefits associated with the transaction will flow to the Group; and
e) The costs incurred or to be incurred in respect of the transaction can be measured reliably.
2) Dividend and interest income

Dividend income from investments is recognized when a shareholder’s right to receive payment has been established and provided that it is probable that the economic benefits will flow to the Group and that the amount of income can be measured reliably.

Interest income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably. Interest income is accrued on a time basis by reference to the principal outstanding and at the applicable effective interest rate.

o. Discontinued operations

A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale. A component of an entity which is for operational and financial reporting purposes has cash flows which can be clearly distinguished from the rest of the entity.

p. Leasing

Leases are classified as finance leases whenever the terms of a lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

1) The Group as lessor

Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease.

2) The Group as lessee

Operating lease payments are recognized as expenses on a straight-line basis over the lease term.

q. Borrowing costs

Borrowing costs directly attributable to an acquisition, construction or production of qualifying assets are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other than that which is stated above, all other borrowing costs are recognized in profit or loss in the period in which they are incurred.

r. Employee benefits
1) Short-term employee benefits

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related services.

28 -

2) Retirement benefits

Payments to defined contribution retirement benefit plans are recognized as expenses when employees have rendered service entitling them to the contributions.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit retirement benefit plans are determined using the projected unit credit method. Service cost (including current service cost) and net interest on the net defined benefit liabilities (assets) are recognized as employee benefits expenses in the period in which they occur. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding interest), is recognized in other comprehensive income in the period in which it occurs. Remeasurement recognized in other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss.

Net defined benefit liabilities (assets) represent the actual deficit (surplus) in the Group’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any refunds from the plans or reductions in future contributions to the plans.

s. Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

1) Current tax

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain earnings.

Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.

2) Deferred tax

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities and the corresponding tax bases used in the computation of taxable profit.

Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are generally recognized for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be sufficient taxable profit against which to utilize the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the assets to be recovered. A previously unrecognized deferred tax asset is also reviewed at the end of each reporting period and recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

29 -

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liabilities are settled or the assets are realized, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

3) Current and deferred taxes for the year

Current and deferred taxes are recognized in profit or loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised if the revisions affect only that period or in the period of the revisions and future periods if the revisions affect both current and future periods.

Write-down of Inventories

The net realizable value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. The estimation of net realizable value is based on current market conditions and historical experience with product sales of a similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value.

Associate’s Estimated Damage Compensation for Kaohsiung Gas Explosions

The Group’s associate, China General Terminal & Distribution Corporation (“CGTD”), recognized a provision caused by the Kaohsiung gas explosions. The management estimated the provision based on the progress of civil/criminal judgement, settlement, and the legal advice. However, the difference between the estimated compensation and the actual amount may exist.

6. CASH AND CASH EQUIVALENTS

Cash on hand and petty cash Checking accounts and demand deposits Cash equivalents Time deposits Reverse repurchase agreements collateralized by bonds		December 31	December 31
		2018 $ 484 207,907 518,469 207,820 $ 934,680	2017 $ 439 188,034 474,672 - $ 663,145

30 -

The market rate intervals of cash in banks and repurchase agreements collateralized by bonds at the end of the reporting period were as follows:

Cash in banks Repurchase agreements collateralized by bonds	December 31
	2018 2017 0.001%-3.00% 0.001%-2.10% 0.53%-0.55% -

7. FINANCIAL INSTRUMENTS AT FVTPL - CURRENT

Financial assets held for trading Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts Non-derivative financial assets Open-end fund beneficiary certificates Closed-end fund beneficiary certificates Financial assets mandatorily classified as at FVTPL Derivative financial assets (not under hedge accounting) Foreign exchange forward contracts Non-derivative financial assets Open-end fund beneficiary certificates Closed-end fund beneficiary certificates Overseas unlisted equity investments Financial liabilities held for trading Derivative financial liabilities (not under hedge accounting) Foreign exchange forward contracts		December 31	December 31
		2018 $ - - - - 839 1,222,661 209,207 - 1,432,707 $ 1,432,707 $ 1,645	2017 $ 2,297 1,203,395 190,206 1,395,898 - - - - - $ 1,395,898 $ 1,701

At the end of the reporting period, outstanding foreign exchange forward contracts not under hedge accounting were as follows:

Contract Amount Currency Maturity Date (In Thousands) December 31, 2018 Buy NTD/USD 2019.01.07-2019.03.04 NTD521,446/USD16,965 Sell USD/NTD 2019.01.03-2019.03.21 USD19,860/NTD609,577 December 31, 2017 Buy NTD/USD 2018.01.02-2018.01.26 NTD233,877/USD7,810 Sell USD/NTD 2018.01.03-2018.03.30 USD18,110/NTD540,848 Sell JPY/USD 2018.01.19-2018.01.26 JPY40,000/USD354 Sell EUR/USD 2018.01.26-2018.02.26 EUR340/USD405 Sell AUD/USD 2018.01.26-2018.03.23 AUD600/USD461

31 -

The Group entered into foreign exchange forward contracts to manage exposures to exchange rate fluctuations of foreign currency denominated assets and liabilities. These contracts did not meet the criteria for hedge accounting. Therefore, the Group did not apply a hedge accounting treatment for these contracts.

8. FINANCIAL ASSETS AT FVTOCI - 2018

Investments in Equity Instruments at FVTOCI

	December 31,	December 31,
		2018
Non-current
Domestic equity investments
Listed ordinary shares
Asia Polymer Corporation	$	1,593
Unlisted ordinary shares
KHL IB Venture Capital Co., Ltd.		121,047
	$	122,640

In order to adjust its capital structure, KHL returned part of its capital to shareholders pursuant to the resolution made in the shareholders meeting in June 2018. The return was made by reducing 8.2% of the capital, in aggregation of 12,536 thousand shares (proportionately reducing 82 shares per 1,000 shares) and refunding $820 per 1,000 shares to shareholders. The capital reduction was officially registered on August 16, 2018, and the Company received the capital refund of $7,462 thousand in August 2018.

These investments in equity instruments are held for medium to long-term strategic purposes. Accordingly, the management elected to designate these investments in equity instruments as at FVTOCI as it believes that recognizing short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for long-term purposes. These investments in equity instruments were classified as available-for-sale financial assets and financial assets measured at cost under IAS 39. Refer to Notes 3, 10 and 11 for information relating to their reclassification and comparative information for 2017.

9. FINANCIAL ASSETS AT AMORTIZED COST - 2018

	December 31,
	2018
Current
Domestic investments
Pledged time deposits	$ 268,954

As of December 31, 2018, the interest rates for pledged time deposits ranged from 0.090% to 1.015%. Pledged time deposits were classified as debt investments with no active market under IAS 39. Refer to Notes 3 and 12 for information relating to their reclassification and comparative information for 2017.

Refer to Note 36 for information related to financial assets at amortized cost pledged as security.

32 -

10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

	December	December	31,
		2017
Domestic listed shares	$	2,194
Non-current	$	2,194
FINANCIAL ASSETS MEASURED AT COST - 2017
	December		31,
		2017
Non-current
Overseas unlisted equity investments - ordinary shares
Teratech Corporation (“Teratech”)	$		-
Overseas unlisted equity investments - preference shares
SOHOware, Inc. (“SOHOware”)			-
Domestic unlisted equity investments - ordinary shares
KHL IB Venture Capital Co., Ltd. (“KHL”)		91,000
	$	91,000

11. FINANCIAL ASSETS MEASURED AT COST - 2017

In order to adjust its capital structure, KHL returned part of its capital to shareholders pursuant to the resolution made in the shareholders meeting in June 2017. The return was made by reducing 9% capital, in aggregation to 15,120 thousand shares (proportionately reducing 90 shares per 1,000 shares) and refunding to shareholders at $900 per 1,000 shares. The capital reduction was officially registered on August 15, 2017, and the Company received the capital refund of $9,000 thousand in September 2017.

The Group has assessed the impairment on its investments in SOHOware’s preference shares and Teratech’s ordinary shares and has recognized a full impairment loss on these investments over the years.

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET - 2017

	December 31,
	2017
Current
Pledged time deposits	$ 268,805
The market interest rate intervals of pledged time deposits were as follows:
	December 31,
	2017
Pledged time deposits	0.09%-1.015%

Refer to Note 36 for information related to debt investments with no active market pledged as security.

33 -

13. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

Notes receivable Notes receivable - operating Trade receivables At amortized cost Gross carrying amount Less: Allowance for impairment loss Other receivables Tax refund receivables Interest receivables Others Less: Allowance for impairment loss Other receivables from related parties (Note 35)		December 31	December 31
		2018 $ 195,847 $ 1,621,877 (13,735) $ 1,608,142 $ 74,916 939 9,000 (254) $ 84,601 $ 11,165	2017 $ 179,929 $ 1,511,309 (12,319) $ 1,498,990 $ 64,525 561 5,974 (258) $ 70,802 $ 5,472

a. Trade receivables

The Group’s credit period for the sale of goods ranges from 10 days to 60 days. In order to minimize credit risk, the management of the Group has delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. Before accepting a new customer, the Group surveys the customers’ credit history and measures the potential customer’s credit quality to set a credit limit. A customer’s credit limit and rating are reviewed annually. In addition, the Group reviews the recoverable amount of trade debt at the end of the reporting period to ensure that adequate allowance is made for possible irrecoverable amounts. In this regard, the management believes the Group’s credit risk was significantly reduced.

The Group applies the simplified approach to the recognition of allowances for expected credit losses during the reporting as prescribed by IFRS 9, which permits the use of a lifetime expected losses allowance for all trade receivables. The expected credit losses on trade receivables are estimated using an allowance matrix by reference to past default experience with the respective debtors and an analysis of the debtors’ current financial positions, adjusted for general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecasted direction of economic conditions at the reporting date.

The Group writes off a trade receivable when there is information indicating that the debtor is experiencing severe financial difficulty and there is no realistic prospect of recovery. For trade receivables that have been written off, the Group continues to engage in enforcement activity to attempt to recover the receivables which are due.

34 -

The following table details the loss allowance of trade receivable based on the Group’s allowance matrix.

December 31, 2018

Credit Rating A Credit Rating B Credit Rating C Gross carrying amount $ 199,761 $ 417,265 $ 221,341 Loss allowance (lifetime ECLs) - (3,888) (5,571) Amortized cost $ 199,761 $ 413,377 $ 215,770	Others $ 783,510 (4,276) $ 779,234	Total $ 1,621,877 (13,735)
		$ 1,608,142

The aging of notes receivable and trade receivables was as follows:

	December 31,
	2018
Not past due	$ 1,750,493
Less than and including 60 days	64,638
Over 60 days	2,593
	$ 1,817,724

The above aging schedule was based on the number of days past due from the end of credit term.

The movements of the loss allowance of trade receivables were as follows:

	For the Year
	Ended
	December 31,
	2018
Balance at January 1, 2018 per IAS 39	$ 12,319
Adjustment on initial application of IFRS 9	-
Balance at January 1, 2018 per IFRS 9	12,319
Add: Net remeasurement of loss allowance	1,469
Less: Amounts written off	(106)
Foreign exchange gains and losses	53
Balance at December 31, 2018	$ 13,735

For the year ended December 31, 2017

The Group applied the same credit policy in 2018 and 2017.

For the balance of trade receivables that were past due at the end of the reporting period, the Group did not recognize an allowance for impairment loss, because there was no significant change in credit quality and the Group’s management still considered such receivables to be recoverable. For part of the trade receivables, the Group entered into credit insurance contracts to enhance its guarantee. Therefore, the Group considered the recoverable amount of the insurance contracts when determining the amount of allowance for impairment loss. In addition, the Group did not have the legal right to offset any amounts owed by the Group against those payables to the respective counterparties.

35 -

The aging of notes receivable and trade receivables was as follows:

	December 31,
	2017
Not past due	$ 1,655,860
Less than and including 60 days	28,488
Over 60 days	6,890
	$ 1,691,238

The above aging schedule was based on the number of days past due from the end of credit term.

The aging of trade receivables that were past due but not impaired was as follows:

		December 31,
		2017
Less	than and including 60 days	$ 28,488
Over	60 days	6,673
		$ 35,161

The above aging schedule was based on the number of past due days from the end of credit term.

The movements of the allowance for doubtful notes receivable and trade receivables were as follows:

Individually Assessed for Impairment Collectively Assessed for Impairment Balance at January 1, 2017 $ 6,022 $ 10,652 Less: Impairment losses reversed (3,512) 1,467 Amounts written off during the year (1,903) - Foreign exchange translation gains or losses (390) (17) Balance at December 31, 2017 $ 217 $ 12,102	Total $ 16,674 (2,045) (1,903) (407) $ 12,319

b. Other receivables

As of December 31, 2018, the Group assessed the impairment loss of other receivables using expected credit losses. There were no other receivables which were past due and for which there was an unrecognized allowance for the respective doubtful accounts as of December 31, 2017.

14. INVENTORIES

Finished goods Work in progress Raw materials		December 31	December 31
		2018 $ 1,131,291 45,025 540,959 $ 1,717,275	2017 $ 1,118,114 39,207 699,135 $ 1,856.456

36 -

The cost of inventories recognized as cost of goods sold for the years ended December 31, 2018 and 2017 was $12,490,058 thousand and $11,924,810 thousand, respectively.

The cost of goods sold included inventory write-downs of $2,907 thousand and $4,490 thousand for the years ended December 31, 2018 and 2017, respectively.

15. DISCONTINUED OPERATIONS

On October 24, 2011, the Company’s board of directors approved to dispose of Continental General Plastics (Zhong Shan) Co., Ltd. and CGPC Consumer Products Corporation. The details of profit (loss) from discontinued operations and the related cash flows information were as follows:

The operating performance of the discontinued operations included in the consolidated comprehensive income statement were as follows:

Administrative expenses Loss from operations Non-operating income Net profit (loss) from discontinued operations	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ (33,267) (33,267) 40,734 $ 7,467	2017 $ (29,543) (29,543) 27,346 $ (2,197)

For the years ended December 31, 2018 and 2017, the cash flows from the discontinued operations were as follows:

Net cash generated from operating activities Net cash generated from investing activities Effect of exchange rate changes Net cash inflow	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 17,640 378 (334) $ 17,684	2017 $ 28,308 3,005 (301) $ 31,012

16. SUBSIDIARIES

Subsidiaries included in the consolidated financial statements:

Investor
Subsidiary
Nature of Activities
The Company CGPC Polymer Corporation
(“CGPCPOL”)
Manufacturing and marketing of PVC
resins
Taiwan VCM Corporation
(“TVCM”)
Manufacturing and marketing of VCM
CGPC (BVI) Holding Co., Ltd.
(“CGPC (BVI)”)
Reinvestment
CGPC America Corporation
(“CGPC America”)
Marketing of PVC film and leather
products
Krystal Star International
Corporation (“Krystal Star”)
Marketing of PVC film and consumer
products
CGPC (BVI)
Continental General Plastics (Zhong
Shan) Co., Ltd. (“CGPC (ZS)”)
Manufacturing & marketing of PVC
film and consumer products
CGPC Consumer Products
Corporation (“CGPC (CP)”)
Manufacturing & marketing of PVC
consumer products

Proportion of
Ownership (%)
December 31
2018
2017
Note
100.00
100.00
Subsidiary, a

87.22
87.22
Subsidiary, b
100.00
100.00
Subsidiary
100.00
100.00
Subsidiary
100.00
100.00
Subsidiary
100.00
100.00
Subsidiary of
CGPC (BVI), c
100.00
100.00
Subsidiary of
CGPC (BVI), c

37 -
a. On May 23, 2018 and May 22, 2017, the board of directors of CGPCPOL, on behalf of the shareholders, resolved to increase its capital by declaring a share dividend of $223,810 thousand and $243,465 thousand, representing 22,381 thousand shares and 24,347 thousand shares, respectively. The record date of the capital increase was July 6, 2018 and July 7, 2017, respectively.
b. On April 23, 2018 and May 4, 2017, the TVCM shareholders in their meeting passed a resolution to increase TVCM’s capital by declaring a share dividend of $112,476 thousand and $107,120 thousand, representing 11,248 thousand shares and 10,712 thousand shares, respectively. The record date of the capital increase was July 6, 2018 and July 7, 2017, respectively.
c. In October 2011, the board of directors of the Company resolved to dissolve CGPC (ZS) and CGPC (CP). As of December 31, 2018, the dissolution procedures have not yet been completed.

Except for the financial statements of TVCM and CGPCPOL, the financial statements of other non-significant subsidiaries included in the consolidated financial statements were not reviewed by the auditors.

17. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

a. Associates that are not individually material

Listed company Acme Electronics Corporation (“ACME”) Unlisted company China General Terminal & Distribution Corporation (“CGTD”) Thintec Materials Corporation (“TMC”)		December 31	December 31
		2018 $ 24,926 228,250 1,452 $ 253,998	2017 $ 23,731 272,509 2,504 $ 298,744

b. Aggregate information of associates that are not individually material

The Group’s share of: Gain (loss) from continuing operations Other comprehensive income (loss) Total comprehensive income (loss) for the year	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ (25,315) (19,431) $ (44,746)	2017 $ 15,898 11,492 $ 27,390

At the end of the reporting periods, the percentage of ownership and voting rights held by the Group in the associates were as follows:

Name of Associates ACME CGTD TMC	December 31
	2018 2017 1.74% 1.74% 33.33% 33.33% 10.00% 10.00%

38 -

The Group in conjunction with its affiliates jointly held more than 20% of each of the shareholdings of ACME and TMC and had significant influence over each entity. Therefore, the Group adopted the equity method to evaluate the above investments.

Fair values (Level 1) of investments in associates with available published price quotations are summarized as follows:

Name of Associate ACME		December	31
		2018 $ 42,241	2017 $ 58,439

All associates are accounted for using the equity method.

The investments accounted for using the equity method and the share of profit or loss and other comprehensive income of those investments for the years ended December 31, 2018 and 2017 were based on the associates’ financial statements which have been audited for the same years.

18. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2017 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance at December 31, 2017 Accumulated depreciation and impairment Balance at January 1, 2017 Depreciation expenses Disposals Impairment losses reversed Effect of foreign currency exchange differences Balance at December 31, 2017 Carrying amounts at December 31, 2017 Cost Balance at January 1, 2018 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance at December 31, 2018 Accumulated depreciation and impairment Balance at January 1, 2018 Depreciation expenses Disposals Impairment losses reversed Effect of foreign currency exchange differences Balance at December 31, 2018 Carrying amounts at December 31, 2018	Freehold Land $ 2,090,707 - - 14,511 - $ 2,105,218 $ - - - - - $ - $ 2,105,218 $ 2,105,218 - - - - $ 2,105,218 $ - - - - - $ - $ 2,105,218	Buildings and Improvements $ 1,843,265 - (2,203 ) 217,927 (6,406) $ 2,052,583 $ 1,021,881 66.069 (2,103 ) - (3,815) $ 1,082,032 $ 970,551 $ 2,052,583 - (7,572 ) 63,042 (5,695 ) $ 2,102,358 $ 1,082,032 71,056 (7,190 ) - (3,715 ) $ 1,142,183 $ 960,175	Machinery and Equipment Transportation Equipment $ 9,062,229 $ 57,049 41 - (195,454 ) (3,045 ) 643,542 6,752 (1,823) (101) $ 9,508,535 $ 60,655 $ 7,270,789 $ 41,505 341,997 5,020 (192,258 ) (2,721 ) (951 ) - (1,662) (81) $ 7,417,915 $ 43,723 $ 2,090,620 $ 16,932 $ 9,508,535 $ 60,655 459 1,539 (237,879 ) (2,281 ) 479,383 4,602 (439) (37) $ 9,750,059 $ 64,478 $ 7,417,915 $ 43,723 406,005 5,356 (227,530 ) (2,280 ) - - (485 ) (32) $ 7,595,905 $ 46,767 $ 2,154,154 $ 17,711	Miscellaneous Equipment $ 319,960 891 (7,665 ) 18,108 (412) $ 330,882 $ 264,565 15,029 (7,532 ) - (327) $ 271,735 $ 59,147 $ 330,882 1,000 (6,931 ) 16,680 126 $ 341,757 $ 271,735 15,530 (6,749 ) 362 99 $ 280,977 $ 60,780	Construction in Progress and Machinery in Transit $ 461,272 1,051,255 (198 ) (1,016,368 ) (157) $ 495,804 $ 8,585 - - - (174) $ 8,411 $ 487,393 $ 495,804 788,141 - (563,877 ) (148) $ 719,920 $ 8,411 - - (194 ) (148) $ 8,069 $ 711,851	Total $ 13,834,482 1,052,187 (208,565 ) (115,528 ) (8,899) $ 14,553,677 $ 8,607,325 428,115 (204,614 ) (951 ) (6,059) $ 8,823,816 $ 5,729,861 $ 14,553,677 791,139 (254,663 ) (170 ) (6,193) $ 15,083,790 $ 8,823,816 497,947 (243,749 ) 168 (4,281) $ 9,073,901 $ 6,009,889

39 -

In order to expand storage capacity, the board of directors of the Company passed a resolution on February 22, 2017 to acquire the plant and electricity equipment attached to the plant located in Toufen at $290,000 thousand from its land lessee, USI Optronics Corporation (“USIO”). The title of the plant purchased by the Company was transferred in June 2017. Some of the facilities were then leased to USIO, with the rest used as storage.

The above items of property, plant and equipment were depreciated on a straight-line basis over their estimated useful lives as follows:

Buildings and improvements
Dormitories, restaurants and office buildings	26 to 60 years
Cell room and improvements	5 to 21 years
General plants and improvements	3 to 45 years
Machinery and equipment
Chemical industry equipment	5 to 8 years
Machinery manufacturing equipment	5 to 8 years
Electrical equipment and tanks	10 to 26 years
Other equipment	2 to 15 years
Transportation equipment
Cars	2 to 7 years
Forklifts	5 to 8 years
Other vehicles	2 to 15 years
Other equipment	2 to 10 years
Miscellaneous equipment
General office computers	2 to 5 years
Industrial computers	3 to 15 years
Other miscellaneous equipment	3 to 21 years

The Group set out the property, plant and equipment pledged as collateral for bank borrowings in Note 36.

19. INVESTMENT PROPERTIES

Cost Balance at January 1, 2017 Reclassification from properties, plant and equipment Reclassification to properties, plant and equipment Balance at December 31,2017 Accumulated depreciation Balance at January 1, 2017 Depreciation expense Balance at December 31,2017 Carrying amount at December 31, 2017	Land Building and improvements $ 27,715 $ - - 142,751 (14,511) (13,204) $ 13,204 $ 129,547 $ - $ - - 2,491 $ - $ 2,491 $ 13,204 $ 127,056	Total $ 27,715 142,751 (27,715) $ 142,751 $ - 2,491 $ 2,491 $ 140,260 (Continued)

40 -

Cost Balance at January 1 and December 31, 2018 Accumulated depreciation Balance at January 1, 2018 Depreciation expense Balance at December 31,2018 Carrying amount at December 31, 2018	Land Building and improvements $ 13,204 $ 129,547 $ - $ 2,491 - 4,983 $ - $ 7,474 $ 13,204 $ 122,073	Total $ 142,751 $ 2,491 4,983 $ 7,474 $ 135,277 (Concluded)

The Group’s investment properties are located in Toufen Industrial District. Due to the characteristics of the district, the market for comparable properties is inactive and alternative reliable measurements of fair value were not available. Therefore, the Group determined that the fair value of its investment properties is not reliably measurable. The Group entered into a mutual lease agreement with USIO after the Group acquired the plant located at Toufen and its attached equipment in June 2017.

As the Company leased portion of the facilities acquired from USIO, the leased facilities were reclassified as investment property in proportion to the acres leased.

Regarding the lease on the land in Toufen Industrial District between the Group and USIO, refer to Note 32 for the related disclosures.

20. INTANGIBLE ASSETS

Computer
Software
Technical
Authorization
Cost

Balance at January 1, 2017
$ 21,409
$ 35,544
Additions

235

-
Balance at December 31, 2017

21,644

35,544
Accumulated amortization

Balance at January 1, 2017
12,399
24,965
Amortization expenses

4,508
5,078
Balance at December 31, 2017

16,907

30,043
Carrying amounts at December 31, 2017
$ 4,737
$ 5,501

Cost

Balance at January 1, 2018
$ 21,644
$ 35,544
Additions
366
-
Disposals

(5,488)

-
Balance at December 31, 2018

16,522

35,544

Total
$ 56,953

235

57,188
37,364

9,586

46,950
$ 10,238
$ 57,188
366

(5,488)

52,066
(Continued)

41 -

Computer Software Technical Authorization Accumulated amortization Balance at January 1, 2018 $ 16,907 $ 30,043 Amortization expenses 3,033 5,078 Disposals (5,488) - Balance at December 31, 2018 14,452 35,121 Carrying amounts at December 31, 2018 $ 2.070 $ 423	Total $ 46,950 8,111 (5,488) 49,573 $ 2,493

(Concluded)

Intangible assets were amortized on a straight-line basis over their estimated useful lives as follows:

Computer software 3 years Technical authorization 7 years

21. PREPAYMENTS FOR LEASES

Current (included in prepayments) Non-current		December 31	December 31
		2018 $ 3,389 95,184 $ 98,573	2017 $ 3,449 100,318 $ 103,767

Prepaid lease payments are land use rights located in mainland China.

22. LONG-TERM BORROWINGS

Line of credit borrowings Secured loans The range of interest rate		December 31
		2018 2017 $ 500,000 $ 500,000 500,000 550,000 $ 1,000,000 $ 1,050,000 0.99%-1.04% 1.04%

In order to increase medium-term working capital, CGPCPOL entered into a 3-year credit contract with KGI Bank (formerly China Development Industrial Bank) with a revolving credit limit of $500,000 thousand. The credit limit has been fully utilized. In addition, CGPCPOL entered into another 5-year credit contract with KGI Bank with a revolving credit limit of $1,000,000 thousand, and the credit limit has been reduced to $950,000 thousand on November 30, 2018. As of December 31, 2018, the utilized credit amounted to $500,000 thousand. The Group set out the assets as pledged collateral for bank borrowings in Note 36.

42 -

23. NOTES PAYABLE AND TRADE PAYABLES

Notes payable Operating Trade payables (including related parties) Operating		December 31	December 31
		2018 $ 288 $ 1,086,869	2017 $ 183 $ 852,454

The average payment period of trade payables was 2 months. The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms.

24. OTHER PAYABLES - CURRENT

Payables for salaries or bonuses Payables for purchases of equipment Payables for freight Payables for utilities Payables for fuel fees Others		December 31	December 31
		2018 $ 305,678 100,624 73,585 60,241 19,830 194,772 $ 754,730	2017 $ 299,736 64,489 78,922 57,518 19,192 161,374 $ 681,231

25. PROVISIONS - CURRENT

Customer returns and rebates		December	31
		2018 $ -	2017 $ 25,127

For contracts with customers in 2017, the provision for customer returns and rebates was based on historical experience, management’s judgments and other known reasons for which estimated product returns and rebates may occur in the year. The provision was recognized as a reduction of operating income in the periods of the sales of the related goods. Starting from January 1, 2018, the Company applied IFRS 15 and recognized estimated sales returns and rebates as refund liabilities (presented in other current liabilities).

26. RETIREMENT BENEFIT PLANS

a. Defined contribution plans

The Company and its subsidiaries, CGPCPOL and TVCM, adopted a pension plan under the Labor Pension Act (the “LPA”), which is a state-managed defined contribution plan. Under the LPA, an entity makes monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages.

43 -

The employees of CGPC America is the member of a state-managed retirement benefit plan operated by the local government. The subsidiaries are required to contribute a specified percentage of payroll costs to the retirement benefit scheme to fund the benefits. The only obligation of these entities with respect to the retirement benefit plan is to make the specified contributions.

b. Defined benefit plans

The defined benefit plans adopted by the Company and its subsidiary, TVCM, in accordance with the Labor Standards Law is operated by the government of the ROC. Pension benefits are calculated on the basis of the length of service and average monthly salaries of a specific period before retirement. The Company and TVCM contribute amounts equal to 9% (the percentage increased to 10% since February and March 2017, respectively) of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. Pension contributions are deposited in the Bank of Taiwan in the committee’s name. The pension fund is managed by the Bureau of Labor Funds, Ministry of Labor (“the Bureau”); the Group has no right to influence the investment policy and strategy.

The amounts included in the consolidated balance sheets in respect of the Group’s defined benefit plans were as follows:

Present value of defined benefit obligation Fair value of plan assets Net defined benefit liabilities		December 31	December 31
		2018 $ 1,640,307 (932,628) $ 707,679	2017 $ 1,643,363 (603,488) $ 1,039,875

Movements in net defined benefit liabilities (assets) were as follows:

Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Balance at January 1, 2017
$ 1,669,540
$ (248,899)

Service cost
Current service cost
18,699
-
Net interest expense (income)

18,508

(2,895)

Recognized in profit or loss

37,207

(2,895)

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
-
(985)
Actuarial loss - changes in demographic
assumptions
1,195
-
Actuarial loss - changes in financial
assumptions
35,315
-
Actuarial gain - experience adjustments

(28,029)

-

Recognized in other comprehensive income

8,481

(985)

Contributions from the employer
-
(422,574)
Benefits paid

(71,865)

71,865

Balance at December 31, 2017
$ 1,643,363
$ (603,488)

Net Defined
Benefit
Liabilities
(Assets)
$ 1,420,641
18,699

15,613

34,312

(985)
1,195
35,315

(28,029)

7,496

(422,574)

-
$ 1,039,875

(Continued)

44 -

Present Value
of the Defined
Benefit
Obligation
Fair Value of
the Plan Assets
Service cost
Current service cost
$ 16,301
$ -

Net interest expense (income)

18,218

(8,514)

Recognized in profit or loss

34,519

(8,514)

Remeasurement
Return on plan assets (excluding amounts
included in net interest)
-
(13,297)
Actuarial loss - changes in demographic
assumptions
97
-
Actuarial loss - changes in financial
assumptions
30,632
-
Actuarial gain - experience adjustments

(16,841)

-

Recognized in other comprehensive income

13,888

(13,297)

Contributions from the employer
-
(358,792)
Benefits paid

(51,463)

51,463

Balance at December 31, 2018
$ 1,640,307
$ (932,628)

Net Defined
Benefit
Liabilities
(Assets)
$ 16,301

9,704

26,005

(13,297)
97
30,632

(16,841)

591

(358,792)

-
$ 707,679
(Concluded)

An analysis by function of the amounts recognized in profit or loss in respect of the defined benefit plans is as follows:

Operating costs Selling and marketing expenses General and administrative expenses Research and development expenses	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 21,351 2,017 1,844 793 $ 26,005	2017 $ 28,106 2,694 2,511 1,001 $ 34,312

The Group accumulated net losses after taxes of the remeasurement of the defined benefit plans in other comprehensive loss, which were $153,056 thousand and $160,243 thousand as of December 31, 2018 and 2017, respectively.

Through the defined benefit plans under the Labor Standards Law, the Group is exposed to the following risks:

1) Investment risk: The plan assets are invested in domestic or foreign equity and debt securities, bank deposits, etc. The investment is conducted at the discretion of the Bureau or under the mandated management. However, in accordance with relevant regulations, the return generated by plan assets should not be below the interest rate of a 2-year time deposit with local banks.
2) Interest risk: A decrease in government and corporate bond interest rates will increase the present value of the defined benefit obligation; however, this will be partially offset by an increase in the return on the plans’ debt investments.
45 -
3) Salary risk: The present value of the defined benefit obligation is calculated with reference to the future salaries of plan participants. As such, an increase in the salaries of the plan participants will increase the present value of the defined benefit obligation.

The actuarial valuations of the present value of the defined benefit obligation were carried out by qualified actuaries. The significant assumptions used for the purposes of the actuarial valuations were as follows:

Discount rates Expected rates of salary increase	December 31
	2018 2017 0.875%-1.000% 1.125% 2.500% 2.500%

If possible reasonable changes in each of the significant actuarial assumptions were to occur and all other assumptions were to remain constant, the present value of the defined benefit obligation would increase (decrease) as follows:

Discount rates 0.25% increase 0.25% decrease Expected rates of salary increase 0.25% increase 0.25% decrease		December	31
		2018 $ (34,070) $ 35,204 $ 34,039 $ (33,121)	2017 $ (36,261) $ 37,508 $ 36,342 $ (35,322)

The sensitivity analysis presented above may not be representative of the actual change in the present value of the defined benefit obligation as it is unlikely that changes in the assumptions would occur in isolation of one another as some of the assumptions may be correlated.

The Group expects to make contributions of $85,567 thousand to the defined benefit plans in the next year starting from January 1, 2019. The weighted average duration of defined benefit obligation is 8.4-9.5 years.

27. EQUITY

a. Ordinary shares

Number of shares authorized (in thousands) Shares authorized Number of shares issued and fully paid (in thousands) Shares issued		December 31	December 31
		2018 650,000 $ 6,500,000 506,760 $ 5,067,596	2017 500,000 $ 5,000,000 492,000 $ 4,919,996

The holders of issued ordinary shares with a par value of $10 are entitled to the right to vote and to receive dividends.

46 -

b. Capital surplus

The capital surplus generated from donations and the excess of the issuance price over the par value of share capital (including the shares issued from new capital) may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or share dividends up to a certain percentage of the Company’s paid-in capital.

The capital surplus arising from investments accounted for using the equity method may not be used for any purpose.

c. Retained earnings and dividends policy

Under the dividends policy as set forth in the Company’s Articles of Incorporation, where the Company made a net income in a fiscal year, the profit shall be used first for offsetting losses of previous years, setting aside as legal reserve 10% of the remaining profit, setting aside or reversing a special reserve in accordance with the laws and regulations, and then any remaining profit together with any undistributed retained earnings shall be used by the Company’s board of directors as the basis for proposing a distribution plan, which should be resolved in the shareholders’ meeting for the distribution of dividends and bonuses to shareholders. The industry that the Company operates in is in the maturity stage. Consequently, in order to take R&D needs and diversification into consideration, shareholders’ dividends shall not be less than 10% of the distributable earnings in the current year, of which the cash dividends shall not be less than 10% of the total dividends. However, if the distributable earnings of the year is less than $0.1 per share, it shall not be distributed. For the policies on the distribution of employees’ compensation and remuneration of directors after amendment, refer to “Employees’ compensation and remuneration of directors” in Note 29-f.

The appropriation of earnings to the legal reserve shall be made until the legal reserve equals the Company’s paid-in capital. The legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

Items referred to under Rule No. 1010012865, Rule No. 1010047490 and Rule No. 1030006415 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs” should be appropriated to or reversed from a special reserve by the Company.

The appropriations of earnings for 2017 and 2016 approved in the shareholders’ meetings on June 22, 2018 and June 8, 2017, respectively, were as follows:

Legal reserve Cash dividends Share dividends	Appropriation of Earnings For the Year Ended December 31 2017 2016 $ 126,981 $ 144,312 737,999 812,038 147,600 143,301	Dividends Per Share (NT$)
		For the Year Ended December 31
		2017 2016 $ 1.5 $ 1.7 0.3 0.3

47 -

The appropriation of earnings for 2018 was proposed by the Company’s board of directors on March 6, 2019. The appropriation and dividends per share were as follows:

	Appropriation	Dividends Per
	of Earnings	Share (NT$)
Legal reserve	$ 127,616
Cash dividends	760,139	$1.5
Share dividends	202,704	0.4

The appropriation of earnings for 2018 are subject to resolution in the shareholders’ meeting to be held on June 21, 2019.

d. Special reserve

The Company appropriated a special reserve in the amount of $408,223 thousand after offsetting a deficit of $428,727 thousand, which was from the net increase of retained earnings arising from the initial adoption of IFRSs. As of December 31, 2018, there was no change.

e. Other equity items

1) Exchange differences on translating the financial statements of foreign operations

	For the Year	For the Year	Ended December 31	Ended December 31
		2018		2017
Balance at January 1	$ (19,583)		$	12,612
Effect of change in tax rate		(2,020)		-
Recognized for the year
Exchange differences on translating the financial
statements of foreign operations		7,723		(38,607)
Related income tax		(1,545)		6,563
Share of exchange differences of associates accounted for
using the equity method		(400)		(151)
Balance at December 31	$ (15,825)		$	(19,583)
Unrealized gain (loss) on available-for-sale financial assets
			For	the Year
			Ended 2017
Balance at January 1, 2017			$	28,526
Recognized during the period
Unrealized gain on revaluation of available-for-sale financial assets				912
Share of profit of associates accounted for using the equity method				11,804
Reclassification adjustments
Net loss on disposal of available-for-sale financial assets				(892)
Balance at December 31, 2017			$	40,350
Balance at January 1, 2018 per IAS 39			$	40,350
Adjustment on initial application of IFRS 9				(40,350)
Balance at January 1, 2018 per IFRS 9			$	-

2) Unrealized gain (loss) on available-for-sale financial assets
48 -

3) Unrealized gain (loss) on financial assets at FVTOCI

	For the Year	For the Year
		Ended
	December 31,
		2018
Balance at January 1 per IAS 39	$	-
Adjustment on initial application of IFRS 9		56,912
Balance at January 1 per IFRS 9		56,912
Recognized during the period
Unrealized gain on equity instruments		20,423
Share of loss of associates accounted for using the equity method		(19,493)
Other comprehensive income for the year		930
Balance at December 31	$	57,842

f. Non-controlling interests

Balance at January 1 Net profit attributable to non-controlling interests Comprehensive income attributable to non-controlling interests: Unrealized gains on available-for-sale financial assets Unrealized loss on investments in equity instruments at FVTOCI Remeasurement on defined benefit plans Distributions of cash dividends Balance at December 31	For the Year Ended	For the Year Ended	December 31
		2018 $ 394,507 79,964 - (77) (550) (37,380) $ 436,464	2017 $ 380,335 69,466 13 - (537) (54,770) $ 394,507

28. REVENUE

Revenue from sale of goods PVC products VCM products	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 14,091,352 1,101,269 $ 15,192,621	2017 $ 13,696,146 1,005,595 $ 14,701,741

Revenue from the sale of goods comes from the sale of VCM, chlor-alkali products, PVC resins, PVC compounds and other related products.

49 -

29. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations was attributable to:

Owners of the Company Non-controlling interests	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 1,268,689 79,964 $ 1,348,653	2017 $ 1,272,005 69,466 $ 1,341,471

a. Other income

Interest income Bank deposits Financial assets at FVTPL Financial assets at amortized cost Others Rental income Others	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 8,794 5,981 488 955 16,218 12.526 55,059 $ 83,803	2017 $ 7,223 5,941 - 436 13,600 10,489 23,313 $ 47,402

b. Other gains and losses

Gain (loss) on disposal of property, plant and equipment Gross foreign exchange gains Gross foreign exchange losses Gain on financial assets held for trading (see Note 7) Loss on financial liabilities held for trading (see Note 7) Gain on financial assets mandatorily classified as at FVTPL (see Note 7) Others	For the Year Ended	For the Year Ended	December 31
		2018 $ 5,557 112,172 (75,451) - (35,062) 47,876 (22,002) $ 33,090	2017 $ (579) 78,931 (131,633) 183 (25,489) - (6,330) $ (84,917)

c. Interest expense

Interest on bank loans Less: Capitalized interest (included construction in progress)	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 10,446 (297) $ 10,149	2017 $ 13,101 (73) $ 13,028

50 -

Information about capitalized interest was as follows:

For the Year Ended	For the Year Ended	For the Year Ended	December 31
2018 $ 297 0.82% For the Year Ended			2017 $ 73 0.95% December 31
2018 $ 485,991 4,983 8,111 15,557 $ 514,642 $ 477,584 8,407 4,983 $ 490,974 $ 20,634 3,034 $ 23,668 For the Year Ended			2017 $ 416,383 2,491 9,586 15,169 $ 443,629 $ 407,782 8,601 2,491 $ 418,874 $ 20,247 4,508 $ 24,755 December 31
	2018 $ 26,053 26,005 52,058 1,239,623 $ 1,291,681 $ 1,019,146 272,535 $ 1,291,681	2017 $ 25,610 34,312 59,922 1,211,510 $ 1,271,432 $ 997,961 273,471 $ 1,271,432

51 -
f. Employees’ compensation and remuneration of directors

The Company accrued employees’ compensation and remuneration of directors at rates of no less than 1% and no higher than 1%, respectively, of net profit before income tax, employees’ compensation, and remuneration of directors. The employees’ compensation and remuneration of directors for the years ended December 31, 2018 and 2017, which have been approved by the Company’s board of directors on March 6, 2019 and March 12, 2018, respectively, were as follows:

Accrual rate

Employees’ compensation Remuneration of directors Amount Employees’ compensation	For the Year Ended December 31
	2018 2017 1% 1% - - For the Year Ended December 31
	2018 2017 $ 13,975 $ 14,300

If there is a change in the amounts after the annual consolidated financial statements are authorized for issue, the differences are recorded as a change in the accounting estimate.

There was no difference between the actual amounts of employees’ compensation and remuneration of directors paid and the amounts recognized in the consolidated financial statements for the years ended December 31, 2017 and 2016.

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2019 and 2018 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

30. INCOME TAX RELATING TO CONTINUING OPERATIONS

a. Major components of income tax expense recognized in profit or loss

Current tax In respect of the current year Income tax on unappropriated earnings Adjustments for prior years	For the Year Ended	For the Year Ended	December 31
		2018 $ 238,997 33,067 20,708 292,772	2017 $ 179,090 43,437 1,084 223,611

(Continued)

52 -

Deferred tax In respect of the current year Adjustments for prior years Adjustments to deferred tax attributable to changes in tax rates and laws Others Income tax expense recognized in profit or loss	For the Year Ended	For the Year Ended	December 31
		2018 $ 49,185 1,722 (40,873) 2,893 12,927 $ 305,699	2017 $ 52,205 (825) - (319) 51,061 $ 274,672 (Concluded)

A reconciliation of accounting profit and income tax expense is as follows:

Profit before tax from continuing operations Income tax expense calculated at the statutory rate Domestic investment gains accounted for using the equity method Others Additional income tax under the Alternative Minimum Tax Act Income tax on unappropriated earnings Unrecognized deductible temporary differences Adjustments to deferred tax attributable to changes in tax rates and laws Effect of different tax rates Adjustments for prior years’ tax Income tax expense recognized in profit or loss	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 1,654,352 $ 493,579 (153,666) (54,923) 37,973 33,067 (35,452) (40,873 ) 3,564 22,430 $ 305,699	2017 $ 1,616,143 $ 397,786 (126,094) (11,176) 10,389 43,437 (40,837) - 910 257 $ 274,672

In 2017, the applicable corporate income tax rate used by the Company, TVCM and CGPCPOL in the ROC is 17%. However, the Income Tax Act in the ROC was amended in 2018, and the corporate income tax rate was adjusted from 17% to 20%, effective in 2018. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%. The applicable corporate income tax rate used by the CGPC (ZS) and CGPC (CP) in China is 25%, while the applicable tax rate used by CGPC America is a state tax rate of 9% and a federal tax rate is 30%. However, the federal tax rate in America was amended in 2017, and was adjusted from 30% to 21%, effective in 2018.

As the status of the 2019 appropriation of earnings is uncertain, the potential income tax consequences of the 2018 unappropriated earnings are not reliably determinable.

53 -

b. Income tax recognized in other comprehensive income

Deferred tax Adjustments to deferred tax attributable to changes in tax rates and law In respect of the current year Translation of foreign operations Remeasurement on defined benefit plans Income tax recognized in other comprehensive income	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 $ 6,500 (1,545) (742) (2,287) $ 4,213	2017 $ - 6,563 561 7,124 $ 7,124

c. Current tax assets and liabilities

Current tax assets Tax refund receivable Current tax liabilities Income tax payable		December 31	December 31
		2018 $ - $ 181,491	2017 $ 42 $ 141,996

d. Deferred tax assets and liabilities

The movements of deferred tax assets and deferred tax liabilities were as follows:

For the year ended December 31, 2018

					Recognized in	Recognized in
						Other
	Opening		Recognized in		Comprehensiv			Closing
	Balance		Profit or Loss		e	Income	Balance
Deferred tax assets
Temporary differences
Allowance for inventory
valuation	$	14,293	$	2,475	$	-	$	16,768
Share of profit of subsidiaries
and associates accounted
for using the equity
method		78,351		16,644		(3,565)		91,430
Unrealized losses on
property, plant and
equipment		188		(157)		-		31
Deferred revenue		1,578		(2,444)		-		13,134
FVTPL financial assets		188		99		-		287
Provisions		5,013		(5,013)		-		-
Refund liabilities		-		4,750		-		4,750
Defined benefit plans		145,157		(29,300)		7,778		123,635
Payables for annual leave		5,932		1,241		-		7,173
								(Continued)

54 -

Deferred tax assets Differences on depreciation period between finance and tax Others Deferred tax liabilities Temporary differences FVTPL financial assets Unrealized foreign exchange gains Differences on depreciation period between finance and tax Revaluation increments of land	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensiv e Income $ 947 $ 167 $ - 4,878 (1,587) - $ 270,525 $ 13,125 $ 4,213 $ 289 $ (164) $ - 272 155 - 1,517 (189) - 592,084 - - $ 594,162 $ (198) $ -	Closing Balance $ 1,114 3,291 $ 261,613 $ 125 427 1,328 592,084 $ 593,964 (Concluded)

For the year ended December 31, 2017

					Recognized in	Recognized in
						Other
	Opening		Recognized in		Comprehensiv			Closing
	Balance		Profit or Loss		e	Income	Balance
Deferred tax assets
Temporary differences
Allowance for inventory
valuation	$	11,767	$	2,526	$	-	$	14,293
Share of profit of subsidiaries
and associates accounted
for using the equity
method		71,480		308		6,563		78,351
Unrealized losses on
property, plant and
equipment		510		(332)		-		188
Deferred revenue		17,679		(2,101)		-		15,578
FVTPL financial assets		453		(265)		-		188
Provisions		2,990		2,023		-		5,013
Defined benefit plans		205,208		(60,612)		561		145,157
Payables for annual leave		4,616		1,316		-		5,932
								(Continued)

55 -

Deferred tax assets Differences on depreciation period between finance and tax Others Deferred tax liabilities Temporary differences FVTPL financial assets Unrealized foreign exchange gains Differences on depreciation period between finance and tax Revaluation increments of land	Opening Balance Recognized in Profit or Loss Recognized in Other Comprehensiv e Income $ 1,199 $ (252) $ - 565 4,313 - $ 316,467 $ (53,066) $ 7,124 $ 545 $ (256) $ - 1,230 (958) - 2,308 (791) - 592,084 - - $ 596,167 $ (2,005) $ -	Closing Balance $ 947 4,878 $ 270,525 $ 289 272 1,517 592,084 $ 594,162 (Concluded)

e. Deductible temporary differences, unused loss carryforwards and unused investment credits for which no deferred tax assets have been recognized in the consolidated balance sheets

Loss carryforwards Deductible temporary differences Share of loss of subsidiaries and associates accounted for using the equity method Defined benefit plans Allowance for inventory valuation Differences on depreciation period between finance and tax Others		December 31	December 31
		2018 $ 599,774 $ 215,580 33,113 2,734 22,455 15,813 $ 289,695	2017 $ 418,982 $ 218,931 133,918 2,768 27,724 13,157 $ 396,498

As of December 31, 2018, the Group’s unused loss carryforwards are $599,774 thousand which will expire in succession before 2028.

56 -

f. Income tax assessments

The income tax returns of the Company, CGPCPOL and TVCM through 2016 have been assessed by the tax authorities.

g. Income tax related to subsidiaries

CGPC (BVI) and Krystal Star had no income tax expense for the years ended December 31, 2018 and 2017 due to relevant tax exemptions in compliance with the regulations of the location where the entities were established.

31. EARNINGS PER SHARE

Unit: NT$ Per Share

Basic earnings per share From continuing operations and discontinued operations From discontinued operations From continuing operations Diluted earnings per share From continuing operations and discontinued operations From discontinued operations From continuing operations	For	the Year Ended December 31	the Year Ended December 31
		2018 $ 2.52 (0.02) $ 2.50 $ 2.51 (0.01) $ 2.50	2017 $ 2.51 - $ 2.51 $ 2.50 - $ 2.50

The weighted average number of shares outstanding used for the earnings (losses) per share computation was adjusted retroactively for the issuance of bonus shares on August 3, 2018. The basic and diluted earnings (losses) per share adjusted retrospectively for the year ended December 31, 2017 were as follows:

Unit: NT$ Per Share

	Before	Before		After
	Retrospective		Retrospective
	Adjustment		Adjustment
Basic earnings per share
From continuing and discontinued operations	$	2.58	$	2.51
From discontinued operations		0.01		-
From continuing operations	$	2.59	$	2.51
Diluted earnings per share
From continuing and discontinued operations	$	2.58	$	2.50
From discontinued operations		-		-
From continuing operations	$	2.58	$	2.50

57 -

The earnings and weighted average number of ordinary shares outstanding in the computation of earnings per share were as follows:

Net Profit for the Year

	For the Year Ended December 31	For the Year Ended December 31
	2018	2017
Profit for the period attributable to owners of the Company (earnings
used in computation of basic and diluted earnings per share)	$ 1,276,156	$ 1,269,808
Add: (Profit) loss for the period from discontinued operations	(7,467)	2,197
Earnings used in the computation of basic and diluted earnings per
share from continuing operations	$ 1,268,689	$ 1,272,005
Weighted average number of ordinary shares outstanding (In Thousands of Shares)

Weighted average number of ordinary shares used in computation of basic earnings per share Effect of potentially dilutive ordinary shares: Employees’ compensation Weighted average number of ordinary shares used in the computation of diluted earnings per share	For the Year Ended December 31	For the Year Ended December 31	For the Year Ended December 31
		2018 506,760 724 507.484	2017 506,760 568 507,328

If the Group offered to settle compensation paid to employees in cash or shares, the Group assumed the entire amount of the compensation would be settled in shares, and the resulting potential shares were included in the weighted average number of shares outstanding used in the computation of diluted earnings per share, as the effect is dilutive. Such dilutive effect of the potential shares is included in the computation of diluted earnings per share until the number of shares to be distributed to employees is resolved in the following year.

32. OPERATING LEASE AGREEMENTS

The Company’s board of directors passed a resolution to pledge the right of superficies for the land leased to USIO as collateral in order to assist USIO to make borrowings from Chang Hwa Commercial Bank, Nankang Science Industrial Park Branch (“CHCB”) in March 2012. The Company also promised CHCB that the Company shall not transfer or concede the land nor set the land as a trust asset to others. Additionally, the Company shall not provide a creation of mortgage, a lien or other rights of securities to other creditors, and the Company shall not terminate the lease contract. The Company leased the land in Toufen to USIO with a lease term from October 1, 2010 to June 30, 2027. USIO does not have a bargain purchase option to acquire the leased land at the expiry of the lease period.

The Group acquired the plant and some electricity equipment located on the leased land from USIO in June 2017, and also agreed to terminate the lease contract. In the meantime, USIO canceled the right of superficies and the creation of mortgage mentioned above. The two parties entered into a new lease wherein the Company leased part of the plant to USIO with a lease term from June 16, 2017 to June 15, 2018. After the lease contract expired, it was resigned with a new lease term from June 16, 2018 to June 15, 2020. USIO does not have a bargain purchase option to acquire the leased factory at the expiry of the lease period.

58 -

33. CAPITAL MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximizing the return to shareholders through the optimization of the debt and equity balance.

34. FINANCIAL INSTRUMENTS

a. Fair value of financial instruments not measured at fair value

The management of the Group believes the carrying amounts of financial assets and financial liabilities recognized in the consolidated financial statements approximate their fair value or their fair value cannot be reliably measured.

b. Fair value of financial instruments measured at fair value on a recurring basis
1) Fair value hierarchy

December 31, 2018

Financial assets at FVTPL Derivative financial assets Fund beneficiary certificates Financial assets at FVTOCI Investments in equity instruments Domestic listed equity investments Domestic unlisted equity investments Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - 1,431,868 $ 1,431,868 $ 1,593 - $ 1,593 $ -	Level 2 $ 839 - $ 839 $ - - $ - $ 1,645	Level 3 $ - - $ - $ - 121,047 $ 121,047 $ -	Total $ 839 1,431,868 $ 1,432,707 $ 1,593 121,047 $ 122,640 $ 1,645

59 -

December 31, 2017

Financial assets at FVTPL Derivative financial assets Non-derivative financial assets held for trading Available-for-sale financial assets Securities listed in the ROC Financial liabilities at FVTPL Derivatives financial liabilities	Level 1 $ - 1,393,601 $ 1,393,601 $ 2,194 $ -	Level 2 $ 2,297 - $ 2,297 $ - $ 1,701	Level 3 $ - - $ - $ - $ -	Total $ 2,297 1,393,601 $ 1,395,898 $ 2,194 $ 1,701

There were no transfers between Levels 1 and 2 for the years ended December 31, 2018 and 2017.

2) Reconciliation of Level 3 fair value measurements of financial instruments

For the years ended December 31, 2018

	Financial Assets
Financial Assets	at FVTOCI
Balance at January 1, 2018	$ 107,562
Recognized in other comprehensive income (included in unrealized gain on
financial assets at FVTOCI)	20,947
Return of capital	(7,462)
Balance at December 31, 2018	$ 121,047

3) Valuation techniques and inputs applied for Level 2 fair value measurement

Financial Instruments Derivatives - foreign exchange forward contracts	Valuation Techniques and Inputs
	Discounted cash flow:

Future cash flows are estimated based on observable forward exchange rates at the end of the reporting period and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.

60 -
4) Valuation techniques and inputs applied for Level 3 fair value measurement

To determine the fair value for Level 3 financial instruments, the Group’s financial department conducts independent fair value verification using independent resources so as to better reflect the market conditions, as well as periodically reviewing the valuation results in order to guarantee the rationality of the measurement. For unlisted domestic equity investments, the Group utilizes the asset approach and takes into account the most recent net asset value, observable financial status as well as the financing activities of investees in order to determine their net asset value. The unobservable input used was a discount for the lack of marketability of 15% on December 31, 2018. When other inputs remain unchanged, the fair value will decrease by $1,424 thousand if the discount for lack of marketability increases by 1%.

c. Categories of financial instruments

Financial assets
Financial assets at FVTPL
Mandatorily classified at FVTPL

Held for trading
Loans and receivables
Cash and cash equivalents
Debt investments with no active market
Notes receivable
Trade receivables (including related parties)
Other receivables (including related parties and excluded tax
refund receivable)
Refundable deposits
Available-for-sale financial assets (including financial assets
measured at cost)
Financial assets at amortized cost
Cash and cash equivalents
Pledge time deposits
Notes receivable
Trade receivables (including related parties)
Other receivables (including related parties and excluding tax
refund receivable)
Refundable deposits
Financial assets at FVTOCI
Equity instruments
Financial liabilities
Financial liabilities at FVTPL - held for trading
Financial liabilities measured at amortized cost
Notes payable
Trade payables (including related parties)
Other payables (including related parties)
Long-term borrowings
Guarantee deposits

December 31

2018
2017
$ 1,432,707
$ -
-
1,395,898
-
663,145
-
268,805
-
179,929
-
1,498,990
-
11,749
-
16,440
-
93,194
934,680
-
268,954
-
195,847
-
1,608,142
-
20,850
-
16,281
-
122,640
1,645
1,701
288
183
1,086,869
852,454
768,993
703,836
1,000,000
1,050,000
3,300
2,041

61 -
d. Financial risk management objectives and policies

The Group’s conduct of risk controlling and hedging strategy is influenced by the operational environment. The Group monitors and manages the financial risk by business nature and risk dispersion.

These risks include market risk (including foreign currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

1) Market risk

The Group’s operating activities exposed itself primarily to the market risks of changes in foreign currency exchange rates and interest rates.

There has been no change to the Group’s exposure to market risks or the manner in which these risks were managed and measured.

a) Foreign currency risk

The Group conducted foreign currency sales and purchases, which exposed the Group to foreign currency risk. In order to avoid the impact of foreign currency exchange rate changes, which lead to deductions in foreign currency denominated assets and fluctuations in their future cash flows, the Group maintains a balance of hedged net foreign currency denominated assets and liabilities. The Group also utilizes foreign exchange forward contracts to hedge the currency exposure. The use of foreign exchange forward contracts is regulated by the policies passed by the Group’s board of directors. Internal auditors focus on reviewing the observance of the policies and the quota of risk exposures. The foreign exchange forward contracts that the Group engaged in were not for speculation purposes.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are set out in Note 37.

Sensitivity analysis

The Group’s sensitivity analysis mainly focuses on the foreign currency risk of U.S. dollars at the end of the reporting period. Assuming a 3% strengthening/weakening of the functional currency against U.S. dollars, the net income before tax for the years ended December 31, 2018 and 2017 would have decreased/increased by $30,688 thousand and $29,107 thousand, respectively.

In management’s opinion, the sensitivity analysis was unrepresentative of the inherent foreign currency risk because the exposure at the end of the reporting period did not reflect the exposure during the period.

b) Interest rate risk

The Group was exposed to the fair value risk of interest rate fluctuations for the fixed interest rate bearing financial assets and financial liabilities; the Group was exposed to the cash flow risk of interest rate fluctuations for the floating interest rate bearing financial assets and financial liabilities. The Group’s management regularly monitors the fluctuations on market rates and then adjusted its balance of floating rate bearing financial liabilities to make the Group’s interest rates more closely approach market rates in response to the interest rate risk.

62 -

The carrying amount of the Group’s financial assets and financial liabilities with exposure to interest rates at the end of the reporting period were as follows:

Fair value interest rate risk Financial assets Cash flow interest rate risk Financial assets Financial liabilities	December 31
	2018 2017 $ 1,008,163 $ 756,397 184,491 148,864 1,000,000 1,050,000

Sensitivity analysis

The fixed-rate financial assets and liabilities held by the Group are not included in the analysis as they are all measured at amortized cost. For floating rate assets and liabilities, the analysis was prepared assuming that the amount of the assets and liabilities outstanding at the end of the reporting period was outstanding for the whole year. A 50 point fluctuation in interest rate was used when reporting interest rate risk internally to key management personnel and represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 points higher/lower and all other variables were held constant, the Group’s pre-tax profit for the years ended December 31, 2018 and 2017 would have increased/decreased by $4,078 thousand and $4,506 thousand, respectively.

c) Other price risk

The Group was exposed to equity price risk through its investments in domestic listed shares, mutual fund beneficiary certificates and other equity securities investments. The Group manages this exposure by maintaining a portfolio of investments with different risks. In addition, the Group has appointed a special team to monitor price risk.

Sensitivity analysis

The sensitivity analysis below was determined based on the exposure to equity price risk at the end of the reporting period.

If marketable equity securities prices had fluctuated by 5%, the pre-tax profit for the years ended December 31, 2018 would have increased/decreased by $71,593 thousand as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the years ended December 31, 2018 would have increased/decreased by $6,132 thousand as a result of the changes in fair value of financial assets at FVTOCI.

If equity prices had fluctuated by 5%, the pre-tax profit for the years ended December 31, 2017 would have increased/decreased by $69,680 thousand as a result of the changes in fair value of held-for-trading investments, and the pre-tax other comprehensive income for the years ended December 31, 2017 would have increased/decreased by $110 thousand as a result of the changes in fair value of available-for-sale financial assets.

63 -

2) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. As at the end of the reporting period, the Group’s maximum exposure to credit risk, which would cause a financial loss to the Group due to the failure of counterparties to discharge an obligation and financial guarantees provided by the Group, could arise from:

a) The carrying amount of the respective recognized financial assets as stated in the consolidated balance sheets; and
b) The amount of contingent liabilities in relation to financial guarantees issued by the Group.

The Group adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored.

The counterparties of the Group’s trade receivable included numerous clients distributed over a variety of areas, and were not centered on a single client or location. Furthermore, the Group continuously assesses the financial condition of its clients, and then the Group’s credit risk was limited. At the end of the reporting period, the Group’s largest exposure on credit risk approximates to the carrying amounts of its financial assets.

3) Liquidity risk

The Group managers mitigate liquidity risk by maintaining a level of cash and cash equivalents and financing facilities deemed adequate.

a) Liquidity and interest rate risk tables

The following table details the Group’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The table was drawn up based on the undiscounted cash flows of financial liabilities from the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

December 31, 2018

Weighted Average Interest Rate Non-derivative financial liabilities Non-interest bearing liabilities Floating interest rate liabilities 1.01%	On Demand or Less than 1 Year $ 1,583,936 - $ 1,583,936	1-5 Years $ 10,392 1,000,000 $ 1,010,392	5+ Years $ - - $ -

64 -

December 31, 2017

Weighted Average Interest Rate Non-derivative financial liabilities Non-interest bearing liabilities Floating interest rate liabilities 1.04%	On Demand or Less than 1 Year $ 1,267,618 - $ 1,267,618	1-5 Years $ 22,281 1,050,000 $ 1,072,281	5+ Years $ - - $ -

b) Financing facilities

The Group relies on bank loans as a significant source of liquidity. As of December 31, 2018 and 2017, the unused amounts of bank loan facilities were as follows:

Bank loan facilities Amount unused		December 31	December 31
		2018 $ 6,230,457	2017 $ 6,718,178

35. TRANSACTIONS WITH RELATED PARTIES

As of December 31, 2018 and 2017, USI Corporation held through its subsidiary, Union Polymer Int’l Investment Corporation 24.97% of the Company’s outstanding ordinary shares.

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Besides information disclosed elsewhere in other notes, details of transactions between the Group and other related parties are disclosed below.

a. Related party names and categories

Related Party Name Related Party Category

USI Corporation (“USI”) Parent company Taita Chemical Company, Limited (“TTC”) Investor with significant influence Asia Polymer Corporation (“APC”) Investor with significant influence China General Terminal & Distribution Corporation (“CGTD”) Associate Acme Electronics Corporation Associate Thintec Materials Corporation Associate USI Optronics Corporation (“USIO”) Fellow subsidiary USI Management Consulting Corporation (“UM”) Fellow subsidiary Swanson Plastics Corporation (“SPC”) Fellow subsidiary Taiwan United Venture Management Corporation Fellow subsidiary Chong Loong Trading Co., Ltd. Fellow subsidiary Dynamic Ever Investments Limited Fellow subsidiary

(Continued)

65 -

Related Party Name Related Party Category USIFE Investment Co., Ltd. Fellow subsidiary INOMA Corporation (“INOMA”) Fellow subsidiary Taita Chemical (Zhong Shan) Co., Ltd. (“TTC (ZS)”) Subsidiary of investor with significant influence APC Investment Corporation Subsidiary of investor with significant influence USI Educational Foundation(”USIF”) Related party in substance

(Concluded)

b. Sales of goods

Related Party Category/Name Investor with significant influence Fellow subsidiary Parent company USI	For the Year Ended	For the Year Ended	December 31
		2018 $ 2,341 222 - $ 2,563	2017 $ 5,168 501 2,134 $ 7,803

Sales of goods to related parties had no material differences from those of general sales transactions.

c. Purchases of goods

Related Party Category/Name Fellow subsidiary Parent company USI Investor with significant influence	For the Year Ended	For the Year Ended	December 31
		2018 $ 6,309 2,176 273 $ 8,758	2017 $ 5,310 - - $ 5,310

Purchases from related parties had no material differences from those of general purchase transactions.

d. Trade receivables from related parties

Related Party Category/Name Investor with significant influence TTC Fellow subsidiary SPC		December 31	December 31
		2018 $ 325 - $ 325	2017 $ 493 101 $ 594

The outstanding trade receivables from related parties were unsecured. For the years ended December 31, 2018 and 2017, no impairment loss was recognized for trade receivables from related parties.

66 -
e. Trade payables to related parties

Related Party Category/Name Parent company USI Fellow subsidiary		December 31	December 31
		2018 $ 171,224 636 $ 171,860	2017 $ 231,305 706 $ 232,011

TVCM appointed USI to import ethylene, and the trade payables to USI are to be paid off when USI makes a payment.

The outstanding trade payables to related parties were unsecured.

f. Other receivables from related parties

Related Party Category/Name Parent company USI Subsidiary of investor with significant influence TTC (ZS) Others Investor with significant influence Fellow subsidiary Associate Other payables to related parties Related Party Category/Name Associate CGTD Parent company USI Subsidiary of investor with significant influence TTC (ZS) Investor with significant influence APC Others Fellow subsidiary		December 31	December 31
		2018 2017 $ 6,133 $ 560 4,108 4,180 1 1 850 662 71 51 2 18 $ 11,165 $ 5,472 December 31
		2018 $ 10,072 2,559 1,202 309 6 115 $ 14,263	2017 $ 13,171 1,991 2,381 3,389 834 839 $ 22,605

g. Other payables to related parties

67 -
h. Acquisitions of property, plant and equipment

Purchase Price	Purchase Price	Purchase Price
For the Year Ended		December 31
2018 $ 1,914 - $ 1,914 For the Year Ended		2017 $ 600 290,000 $ 290,600 December 31
	2018 $ 88,185	2017 $ 93,186

i. Storage tank operating expenses

The Company’s subsidiaries appointed CGTD to handle the storage tank used to transport, store and load vinyl chloride monomer, ethylene and dichloromethane. The storage tank operating expenses are due by the end of next month.

j. Rental expenses

Related Party Category/Name Investor with significant influence APC TTC Associate CGTD Parent company USI	For the Year Ended	For the Year Ended	December 31
		2018 $ 18,136 9,647 7,888 7,537 $ 43,208	2017 $ 18,987 9,426 8,453 7,083 $ 43,949

The Company leases offices in Neihu from USI and APC. The leases will expire in April 2019 and December 2018, respectively, and the rentals are paid on a monthly basis.

The factory belonging to the Company’s subsidiaries located on the land in Linyuan was rented from APC. The original lease term expired in December 2011. However, if neither counterparties argued, the lease term would automatically extend one more year.

The Company’s subsidiaries leased storage tanks for vinyl chloride monomer from TTC. The original lease term expired in December 2010 and renewed at both parties’ discretion.

The Company’s subsidiary leased land for their warehouses from APC. The lease term will expire in May 2026. The lease contract is renewable, and the rental is paid on a monthly basis.

68 -
k. Management service expenses

Related Party Category/Name Fellow subsidiary UM Others Parent company USI	For the Year Ended	For the Year Ended	December 31
		2018 $ 70,340 114 4,555 $ 75,009	2017 $ 61,599 114 6,204 $ 67,917

Contracts stating that UM and USI should provide labor support, equipment and other related services to the Company were effective starting from July 1, 2001 and July 1, 2002, respectively. Contracts stating that the fellow subsidiaries should provide labor support, equipment and other related services to the subsidiaries of the Company were effective starting from July 1, 2009. The service expenses were based on the actual quarterly expenses which should be paid in the subsequent quarter.

l. Donations (classified as general and administrative expenses)

Related Party Category/Name Related party in substance USIF	For the Year Ended	For the Year Ended	December 31
		2018 $ 2,000	2017 $ 1,500

m. Rental income

Related Party Category/Name Fellow subsidiary USIO Others Investor with significant influence Parent company USI	For the Year Ended	For the Year Ended	December 31
		2018 $ 12,011 39 89 7 $ 12,146	2017 $ 9,841 78 116 78 $ 10,113

USIO leased the land and facility located in Toufen from the Company, the detailed lease term can be referred to Note 32.

n. Compensation of key management personnel

The compensation of directors and key executives for the years ended December 31, 2018 and 2017 were as follows:

Salaries and others Post-employment benefits	For the Year Ended	For the Year Ended	December 31
		2018 $ 25,607 327 $ 25,934	2017 $ 24,704 301 $ 25,005

69 -

The compensation of directors and key executives of the Company was determined by the remuneration committee based on the performance of individuals and market trends.

36. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

The following assets were provided as collateral for bank borrowings, endorsement guarantees and the tariffs of imported raw materials:

Pledge deposits (classified as debt investments with no active market or other non-current assets) Property, plant and equipment Land Buildings and improvements Machinery and equipment		December 31	December 31
		2018 $ 281,874 1,650,957 517,612 610,005 $ 3,060,448	2017 $ 281,725 1,650,957 547,692 710,245 $ 3,190,619

The Company signed a long-term secured loan contract with a revolving credit limit of $1,000,000 thousand for 5 years with Chang Hwa Commercial Bank to enrich working capital. The Company set the land and plants, which are owned by the Company, as collateral. As of December 31, 2018 and 2017, the Company has not yet used its revolving credit.

The Company pledged its land and plant to Taishin International Bank as collateral for its revolving credit limit. The financing contract with Taishin International Bank expired, and the land and plant, which were pledged as collateral were released in July 2017.

The Company’s subsidiary, CGPCPOL, pledged its land, plants, machinery and equipment as collateral for a 5-year credit contract with KGI Bank.

37. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS

In addition to those disclosed in other notes, significant commitments and contingencies of the Group as of the end of the reporting period were as follows:

a. As of December 31, 2018 and 2017, the Group’s unused letters of credit amounted to $1,372,433 thousand and $538,554 thousand, respectively.
b. Description of Kaohsiung explosions:

Regarding the associate, China General Terminal & Distribution Corporation (hereinafter “CGTD”), who was commissioned to operate the LCY Chemical Corp.’s propene pipeline resulting in a gas explosion on July 31, 2014, and the first instance judgment of the criminal procedures, which was reached on May 11, 2018, whereby three employees of CGTD were each sentenced to four years and six months of imprisonment, and CGTD assisted the employees in appealing against the judgment.

70 -

CGTD arrived at an agreement with the Kaohsiung City Government on February 12, 2015, pledging certificates of bank deposits of $227,167 thousand, interests included, to the Kaohsiung City Government as collateral for the loss caused by the gas explosion. The Kaohsiung City Government also filed civil procedure requests in succession against LCY Chemical Corp., CGTD and CPC Corporation, Taiwan (“CPC”). Taiwan Power Company applied for provisional attachment against CGTD’s property on August 27 and November 26, 2015. Taiwan Water Corporation also applied for provisional attachment against CGTD’s property on February 3 and March 2, 2017. At the end of February 2019, the provisionally attached property was worth $141,255 thousand.

As for the victims, CGTD, LCY Chemical Corp. and the Kaohsiung City Government signed a tripartite agreement for the compensation of the 32 victims’ families on July 17, 2015. Each victim’s family received $12,000 thousand, and the compensation was $384,000 thousand in total, which was paid in four annual payments by LCY Chemical Corp. LCY Chemical Corp. was in charge of negotiating the compensation with the victims’ families and signing the settlement agreement on behalf of the three parties.

As for the seriously injured, CGTD, LCY Chemical Corp. and the Kaohsiung City Government signed a tripartite agreement for the compensation of the 65 seriously injured victims’ families on October 25, 2017. Compensation was paid by CGTD and the Kaohsiung City Government, and CGTD was in charge of negotiating the compensation with the seriously injured victims’ families and signing the settlement agreement on behalf of the three parties with the 64 seriously injured victims’ families.

As of February 28, 2019, victims and their families have filed civil (including supplementary civil action) lawsuits against LCY Chemical Corp., CGTD and CPC for compensation. To reduce the lawsuit costs, CGTD had reached a settlement on the original claim of $23,919 thousand, and the amount of the settlement was $3,899 thousand. Along with the case still under litigation and the above-mentioned compensation, the accumulated amount of compensation is $3,881,291 thousand. The first-instance judgments of some of the above-mentioned civil cases (with a total amount of compensation of approximately $1,177,192 thousand) have been gradually announced, starting from June 22, 2018. The proportion of fault liability of the Kaohsiung City Government, LCY Chemical Corp. and CGTD is 4:3:3 in most judgments. The total amount of compensation that CGTD, LCY Chemical Corp. and the other defendants should pay is around $383,831 thousand. In particular, CGTD was exempted to pay $6,194 thousand according to the court’s judgement. $188,818 thousand is estimated to be the portion of compensation that CGTD should afford according to the first-instance judgment for the moment. CGTD has appealed some civil cases which were announced but were not yet settled and gradually entered into the second-instance trials. In addition, with regard to the above-mentioned compensation, CGTD estimated and recognized the amount of $136,375 thousand based on its fault liability proportion announced in the first-instance judgment. The actual payment of CGTD still depends on the judgments of the remaining civil cases in the future.

c. TVCM signed a dichloromethane purchase contract with CPC Corporation, Formosa Plastics Corporation and Mitsui Corp. The purchase price was negotiated by both parties according to a pricing formula.
71 -

38. SIGNIFICANT ASSETS AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES

The group entities’ significant financial assets and liabilities denominated in foreign currencies and aggregated by foreign currencies other than functional currencies and the related exchange rates between foreign currencies and respective functional currencies were as follows:

Unit: Foreign and Functional Currencies in Thousands

December 31, 2018
		Foreign	Exchange Rate (In	Functional
	Currencies		Single Dollars)	Currencies	NT$
Financial assets
Monetary items
USD	$	50,210	30.715 (USD:NTD)	$ 1,542,209	$ 1,542,209
AUD		687	21.665 (AUD:NTD)	14,885	14,885
EUR		312	35.200 (EUR:NTD)	10,991	10,991
USD		296	6.863 (USD:CNY)	2,034	9,101
GBP		35	38.880 (GBP:NTD)	1,358	1,358
Financial liabilities
Monetary items
USD		17,203	30.715 (USD:NTD)	528,379	528,379
JPY		9,500	0.2782 (JPY:NTD)	2,643	2,643
December 31, 2017
		Foreign	Exchange Rate (In	Functional
	Currencies		Single Dollars)	Currencies	NT$
Financial assets
Monetary items
USD	$	45,956	29.760 (USD:NTD)	$ 1,367,651	$ 1,367,651
EUR		663	35.570 (EUR:NTD)	23,583	23,583
JPY		86,195	0.2642 (JPY:NTD)	22,755	22,755
AUD		754	23.185 (AUD:NTD)	17,481	17,481
USD		296	6.534 (USD:CNY)	1,934	8,809
GBP		41	40.110 (GBP:NTD)	1,645	1,645
Financial liabilities
Monetary items
USD		13,649	29.760 (USD:NTD)	406,194	406,194
EUR		58	35.570 (EUR:NTD)	2,063	2,063
JPY		7,270	0.2642 (JPY:NTD)	1,919	1,919

For the years ended December 31, 2018 and 2017, net foreign exchange gains (losses) were $36,721 thousand and $(52,702) thousand, respectively. It is impractical to disclose net foreign exchange gains (losses) by each significant foreign currency due to the variety of the foreign currency transactions and functional currencies of the group entities.

72 -

39. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees
1) Financing provided to others: See Table 1 attached;
2) Endorsements/guarantees provided: Table 2 attached;
3) Marketable securities held: See Table 3 attached;
4) Marketable securities acquired and disposed of at costs or prices of at least NT$300 million or 20% of the paid-in capital: See Table 4 attached;
5) Acquisitions of individual real estate at costs of at least NT$300 million or 20% of the paid-in
- capital: None;
6) Disposals of individual real estate at prices of at least NT$300 million or 20% of the paid-in capital: None;
7) Total purchases from or sales to related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 5 attached;
8) Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital: See Table 6 attached;
9) Trading in derivative instruments: See Note 7;
10) Intercompany relationships and significant intercompany transactions: See Table 7 attached; and
11) Information on investees: See Table 8 attached.
b. Information on investments in mainland China
1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, ownership percentage, net income of investees, investment income or loss, carrying amount of the investment at the end of the period, repatriations of investment income, and limit on the amount of investment in the mainland China area: See Table 9 attached; and
2) The following information on any of the significant transactions with investee companies in mainland China, either directly or indirectly through a third party, and their prices, payment terms, and unrealized gains or losses: See Table 1 attached.
- a) The amount and percentage of purchases and the balance and percentage of the related payables at the end of the period.
- b) The amount and percentage of sales and the balance and percentage of the related receivables at the end of the period.
- c) The amount of property transactions and the amount of the resultant gains or losses.
- d) The balance of negotiable instrument endorsements or guarantees or pledges of collateral at the end of the period and the purposes.
- e) The highest balance during the period, the end of period balance, the interest rate range, and total current period interest with respect to financing of funds.
73 -
f) Other transactions that have a material effect on the profit or loss for the period or on the financial position, such as the rendering or receipt of services.

40. SEGMENT INFORMATION

Information reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance focuses on the types of goods or services delivered or provided. Specifically, the Group’s reportable segments, including departments of VCM products and PVC products, under IFRS 8 “Operating Segments” were as follows:

a. Segment revenue and results

The following was an analysis of the Group’s revenue and results from continuing operations by reportable segments.

For the year ended December 31, 2018

VCM Products PVC Products
Revenue from external customers
$ 1,101,269 $ 14,091,352
Inter-segment revenue

8,640,090

393,546

Segment revenue
$ 9,741,359
$ 14,484,898
Eliminations

Consolidated revenue

Segment income
$ 79,696
$ 1,493,227

Share of loss of associates accounted for
using the equity method
Interest income
Rental income
Gain on disposal of property, plant and
equipment
Foreign exchange gains
Loss on financial instruments held for trading
Gain on financial assets mandatorily
classified as at FVTPL
Interest expense
Others

Profit before tax from continuing operations

Total
$ 15,192,621

9,033,636
24,226,257

(9,033,636)
$ 15,192,621
$ 1,572,923
(25,315)
16,218
12,526
5,557
36,721
(35,062)
47,876
(10,149)

33,057
$ 1,654,352

For the year ended December 31, 2017

VCM Products PVC Products Revenue from external customers $ 1,005,595 $ 13,696,146 Inter-segment revenue 8,250,397 439,771 Segment revenue $ 9,255,992 $ 14,135,917 Eliminations Consolidated revenue	Total $ 14,701,741 8,690,168 23,391,909 (8,690,168) $ 14,701,741

(Continued)

74 -

VCM Products PVC Products Segment income $ 69,046 $ 1,581,742 Share of profit of associates accounted for using the equity method Interest income Rental income Loss on disposal of property, plant and equipment Foreign exchange losses Loss on financial instruments held for trading Interest expense Others Profit before tax from continuing operations	Total $ 1,650,788 15,898 13,600 10,489 (579) (52,702) (25,306) (13,028) 16,983 $ 1,616,143 (Concluded)

Segment profit represented the profit before tax earned by each segment without the share of profit (loss) of associates, interest income, rental income, loss on disposal of property, plant and equipment, foreign exchange losses, loss arising on financial instruments held for trading, and interest expense. This was the measure reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. However, the measure of segment assets and liabilities was not provided to the chief operating decision maker.

b. Product information

The Company and its subsidiaries are mainly engaged in the manufacturing and marketing of petrochemical products, which is a single product category. As a result, there is no need to disclosure product information.

c. Geographical information

The amounts of the Group's revenue from continuing operations from external customers and non-current assets by location are detailed below.

Asia America Oceania Europe Middle East Africa	Revenue from External Customers For the Year Ended December 31 2018 2017 $ 12,687,936 $ 11,283,238 1,477,713 1,720,058 277,585 320,664 155,831 145,870 483,531 1,076,708 110,025 155,203 $ 15,192,621 $ 14,701,741	Revenue from External Customers For the Year Ended December 31 2018 2017 $ 12,687,936 $ 11,283,238 1,477,713 1,720,058 277,585 320,664 155,831 145,870 483,531 1,076,708 110,025 155,203 $ 15,192,621 $ 14,701,741		Non-current Assets	Non-current Assets
				December 31
		2018 $ 12,687,936 1,477,713 277,585 155,831 483,531 110,025 $ 15,192,621		2018 $ 6,249,901 4,825 - - - - $ 6,254,726	2017 $ 5,996,781 3,112 - - - - $ 5,999,893

Non-current assets exclude those which were classified as financial instruments, deferred tax assets, and guarantee deposits.

75 -
d. Information about major customers

Included in revenue arising from direct sales of VCM products of $1,101,269 thousand and $1,005,595 thousand in the years ended December 31, 2018 and 2017, respectively, is revenue of approximately $966,719 thousand and $936,489 thousand arising from sales to the Group’s largest customer.

76 -

TABLE 1

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance for the Period (Note 4)	Ending Balance (Notes 4)	Actual Borrowing Amount	Interest Rate	Nature of Financing (Note 3)	Business Transaction Amounts	Reasons for Short-term Financing	Allowance for Impairment Loss	Collateral	Collateral	Financing Limit for Each Borrower (Notes 2 and 4)	Aggregate Financing Limits (Notes 2 and 4)
													Item	Value
1	CGPC (BVI) Holding Co., Ltd. (“CGPC (BVI)”)	Continental General Plastics (Zhong Shan) Co., Ltd.	Other receivables from related parties	Yes	$ 122,860 (US$ 4,000 thousand)	$ -	$ -	-	b	$ -	Operating capital needed	$ -	-	-	$ 353,757	$ 353,757

Note 1: The total amount of financing by the Company to others shall not exceed 40% of the net worth of the Company. The Company has no financing provided to others as of December 31, 2018.

Note 2: The total amount of financing provided by the CGPC (BVI) to others collectively and to any individual entity shall not exceed 40% of its net worth. However, the total amount of financing provided to any subsidiary which is not located in Republic of China wholly-owned by the Company shall not exceed 100% of the net worth of the CGPC (BVI) according to the most recent audit.

Note 3: The alphabetic indications for the nature of financing are described as follows:
a. Existing transactions.
b. Needed short-term operating capital.

Note 4: The amount is calculated using the spot exchange rate as on December 31, 2018.

77 -

TABLE 2

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

No.	Endorser/Guarantor	Endorsee/Guarantee	Endorsee/Guarantee	Limits on Endorsement/ Guarantee Given on Behalf of Each Party (Note 2)	Maximum Amount Endorsed/ Guaranteed During the Period	Outstanding Endorsement/ Guarantee at the End of the Period (Note 3)	Actual Borrowing Amount (Note 3)	Amount Endorsed/ Guaranteed by Collateral	Ratio of Accumulated Endorsement/ Guarantee to Net Equity in Latest Financial Statements (%) (Note 1)	Aggregate Endorsement/ Guarantee Limit (Note 2)	Endorsement/ Guarantee Given by Parent on Behalf of Subsidiaries	Endorsement/ Guarantee Given by Subsidiaries on Behalf of Parent	Endorsement/ Guarantee Given on Behalf of Companies in Mainland China
		Name	Relationship
0	China General Plastics Corporation	CGPC Polymer Corporation	Subsidiary	$ 8,374,640	$ 3,307,150	$ 2,907,150	$ 515,358	None	34.71	$ 8,374,640	Yes	No	No

Note 1: The ratio is calculated using the ending balance of equity of the Company as of December 31, 2018.

Note 2: In June 2018, a revision to the regulations governing endorsements/guarantees provided by the Company was approved in the shareholders’ meeting, and the total amount of guarantee that may be provided by the Company to any individual entity and in aggregate shall not exceed 100% of the Company’s net worth.

Note 3: The amount is calculated using the spot exchange rate as on December 31, 2018.

78 -

TABLE 3

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2018	December 31, 2018		Maximum Shares/Units Held During the Year	Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
China General Plastics Corporation Taiwan VCM Corporation	Closed-end fund beneficiary certificates Cathay No. 1 Real Estate Investment Trust Fubon No. 2 Real Estate Investment Trust Shin Kong No. 1 Real Estate Investment Trust Cathay No. 2 Real Estate Investment Trust Open-end fund beneficiary certificates Taishin 1699 Money Market Fund Jih Sun Money Market Fund Hua Nan Phoenix Money Market Fund FSITC Taiwan Money Market Fund Yuanta Wan Tai Money Market Fund Ordinary shares KHL IB Venture Capital Co., Ltd. Open-end fund beneficiary certificates Jih Sun Money Market Fund FSITC Taiwan Money Market Fund Yuanta De-Li Money Market Fund	- - - - - - - - - - - -	Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTOCI - non-current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current	4,268,000 5,000,000 3,000,000 2,500,000 3,702,173 3,143,272 2,466,700 2,226,387 1,653,002 8,353,800 12,193,440 8,534,572 3,081,056	$ 63,422 63,000 45,210 37,575 50,007 46,500 40,041 34,011 25,003 121,047 180,384 130,378 50,162	- - - - - - - - - 5.95 - - -	$ 63,422 63,000 45,210 37,575 50,007 46,500 40,041 34,011 25,003 121,047 180,384 130,378 50,162	4,268,000 5,000,000 3,000,000 2,500,000 7,418,233 9,368,793 3,092,509 9,518,158 3,881,805 9,100,000 12,193,440 8,534,572 3,085,429	1 1 1 1 1 1 1 1 1 1 1 1 1

(Continued)

79 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		December 31, 2018	December 31, 2018		Maximum Shares/Units Held During the Year	Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
Taiwan VCM Corporation CGPC Polymer Corporation CGPC (BVI) Holding Co., Ltd.	Open-end fund beneficiary certificates Prudential Financial Money Market Fund Taishin 1699 Money Market Fund Yuanta Wan Tai Money Market Fund Hua Nan Kirin Money Market Fund Hua Nan Phoenix Money Market Fund UPAMC James Bond Money Market Fund Ordinary shares Asia Polymer Corporation Open-end fund beneficiary certificates Taishin 1699 Money Market Fund FSITC Taiwan Money Market Fund Yuanta Wan Tai Money Market Fund Jih Sun Money Market Fund Capital Money Market Fund Hua Nan Phoenix Money Market Fund Nomura Taiwan Market Fund Ordinary shares Teratech Corporation SOHOware, Inc. - preference shares	- - - - - - The major shareholders are the same as the those of the Company - - - - - - - - -	Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTOCI - non-current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - non-current Financial assets at FVTPL - non-current	3,174,885 3,705,515 3,306,310 4,182,735 2,529,381 2,397,737 121,611 5,670,905 4,755,891 4,561,990 3,355,891 2,793,539 2,523,727 1,903,908 112,000 100,000	$ 50,144 50,052 50,010 50,009 41,058 40,008 1,593 76,600 72,653 69,003 49,645 45,006 40,967 31,020 - -	- - - - - - 0.02 - - - - - - - 0.67 -	$ 50,144 50,052 50,010 50,009 41,058 40,008 1,593 76,600 72,653 69,003 49,645 45,006 40,967 31,020 - -	3,180,641 5,201,566 6,629,475 8,386,307 3,085,963 3,008,695 121,611 5,670,905 4,755,891 4,561,990 15,404,760 2,793,539 2,523,727 1,903,908 112,000 100,000	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 and 3 1, 2 and 3

Note 1: The marketable securities were not pledged as guarantees or collateral for borrowings and are not subject to restrictions.

Note 2: The preference shares are not used in the calculation of the shareholding ratio and net worth.

Note 3: As of December 31, 2018, the Group evaluates the fair value of the equity instrument as $0.

(Concluded)

80 -

TABLE 4

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

(In Thousands of New Taiwan Dollars)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counter-party	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending	Balance
					Number of Shares	Amount (Note)	Number of Shares	Amount	Number of Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Number of Shares	Amount (Note)
China General Plastics Corporation Taiwan VCM Corporation CGPC Polymer Corporation	Beneficiary certificates Taishin 1699 Money Market Fund Jih Sun Money Market Fund FSITC Taiwan Money Market Fund Capital Money Market Fund Fubon Chi-Hsiang Money Market Fund Beneficiary certificates Jih Sun Money Market Fund Hua Nan Kirin Money Market Fund Yuanta Wan Tai Money Market Fund UPAMC James Bond Money Market Fund Yuanta De-Bao Money Market Fund Shin Kong Chi-Hsin Money Market Fund Beneficiary certificates Jih Sun Money Market Fund	Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current Financial assets at FVTPL - current	- - - - - - - - - - - -	- - - - - - - - - - - -	6,249,509 - 9,518,158 2,431,581 1,378,417 - 4,200,022 - 1,805,815 - - -	$ 84,000 - 144,000 39,000 21,500 - 50,000 - 30,000 - - -	31,986,466 27,217,007 21,470,093 16,355,138 31,756,270 23,728,131 45,256,139 29,154,730 27,027,086 25,052,723 19,429,019 28,460,472	$ 431,300 401,500 327,500 263,000 496,000 350,000 540,000 440,000 450,000 300,000 300,000 419,500	34,533,802 24,073,735 28,761,864 18,786,719 33,134,687 11,534,691 45,273,426 25,848,420 26,435,164 25,052,723 19,429,019 25,104581	$ 465,565 355,114 438,447 302,200 517,628 170,049 540,105 390,104 440,112 300,131 300,066 370,263	$ 465,300 355,000 437,500 302,000 517,500 170,000 540,000 390,000 440,000 300,000 300,000 370,000	$ 265 114 947 200 128 49 105 104 112 131 66 263	3,702,173 3,143,272 2,226,387 - - 12,193,440 4,182,735 3,306,310 2,397,737 - - 3,355,891	$ 50,000 46,500 34,000 - - 180,000 50,000 50,000 40,000 - - 49,500

Note: The amount as of December 31, 2018 was accounted for as the original cost.

81 -

TABLE 5

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Buyer/Seller	Related Party	Relationship		Transaction Details	Transaction Details		Abnormal Transaction	Abnormal Transaction	Notes/Trade Receivables (Payables)
			Purchase/ Sale	Amount (Note)	% of Total	Payment Terms	Unit Price	Payment Terms	Financial Statement Account and Ending Balance (Note)	% of Total
China General Plastics Corporation Taiwan VCM Corporation CGPC Polymer Corporation CGPC America Corporation	Taiwan VCM Corporation CGPC America Corporation China General Plastics Corporation CGPC Polymer Corporation Taiwan VCM Corporation China General Plastics Corporation	Subsidiary Subsidiary Parent company Fellow subsidiary Fellow subsidiary Parent company	Purchase Sale Sale Sale Purchase Purchase	$ 4,230,003 (374,307) (4,230,003) (4,410,087) 4,410,087 374,307	72 (5) (43) (45) 96 83	45 days 90 days 45 days 45 days 45 days 90 days	No major difference No major difference No major difference No major difference No major difference No major difference	No major difference No major difference No major difference No major difference No major difference No major difference	Trade payables to related parties $ (774,140) Trade receivables from related parties 101,245 Trade receivables from related parties 774,140 Trade receivables from related parties 778,034 Trade payables to related parties (778,034) Trade payables to related parties (101,245)	(77) 9 45 45 (97) (97)

Note: All the transactions were written off when preparing the consolidated financial statements.

82 -

TABLE 6

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

Company Name	Related Party	Relationship	Financial Statement Account and Ending Balance (Note 3)	Financial Statement Account and Ending Balance (Note 3)	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period (Note 2)	Allowance for Impairment Loss
						Amount	Actions Taken
China General Plastics Corporation Taiwan VCM Corporation	CGPC America Corporation China General Plastics Corporation CGPC Polymer Corporation	Subsidiary Parent company Fellow subsidiary	Trade receivables from related parties Trade receivables from related parties Trade receivables from related parties	$ 101,245 $ 774,140 $ 778,034	3.41 5.70 5.87	$ - - -	- - -	$ 63,311 774,140 778,034	Note 1 Note 1 Note 1

Note 1: There is no allowance of impairment loss after an impairment assessment.

Note 2: The subsequent period is between January 1 and February 27, 2019.

Note 3: All the transactions were written off when preparing the consolidated financial statements.

83 -

TABLE 7

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2018

(In Thousands of New Taiwan Dollars)

No. (Note 1)	Investee Company	Counterparty	Relationship (Note 2)		Transactions	Details
				Financial Statement Accounts	Amount	Transaction Terms	% of Total Sales or Assets (Note 3)
0 1	China General Plastics Corporation CGPC Polymer Corporation	Taiwan VCM Corporation CGPC America Corporation CGPC Polymer Corporation Taiwan VCM Corporation	1 1 1 1 1 1 1 1 1 3 3 3	Trade payables to related parties Other payables to related parties Other expense Purchases Trade receivables from related parties Sales revenue Other receivables from related parties Purchases Trade payables to related parties Trade payables to related parties Other payables to related parties Purchases	$ 774,140 1,681 1,729 4,230,003 101,245 374,307 1,691 19,239 3,247 778,034 24,902 4,410,087	No major difference No major difference No major difference No major difference No major difference No major difference No major difference No major difference No major difference No major difference No major difference No major difference	6 - - 28 1 2 - - - 6 - 29

Note 1: The information correlation between the numeral and the entity are stated as follows:

a. The parent company: 0.
b. The subsidiaries: 1 onward.

Note 2: The direction of the investment is as follows:

a. The parent company to its subsidiary: 1.
b. The subsidiary to the parent company: 2.
c. Between subsidiaries: 3.

Note 3: The ratio of transactions related to total sales revenue or assets is calculated as follows:

a. Assets or liabilities: The ratio was calculated based on the ending balance of total consolidated assets; and
b. Income or loss: The ratio was calculated based on the midterm accumulated amount of total consolidated sales revenue.
84 -

TABLE 8

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investor Company	Investee Company	Location	Business Content	Original Investment Amount	Original Investment Amount	As of December 31, 2018	As of December 31, 2018	As of December 31, 2018	Net Income (Loss) of Investee	Share of Profit (Loss)	Note
				December 31, 2018	December 31, 2017	Number of Shares	%	Carrying Amount
China General Plastics Corporation	Taiwan VCM Corporation CGPC Polymer Corporation CGPC (BVI) Holding Co., Ltd. China General Terminal & Distribution Corporation CGPC America Corporation Krystal Star International Corporation Acme Electronics Corporation Thintec Materials Corporation	No. 1, Gongye 1st Rd., Linyuan Dist., Kaohsiung City 832, Taiwan (R.O.C.) 12F., No. 37, Jihu Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.) Citco Building, Wickhams Cay, P.O. Box 662, Road Town, Tortola, British Virgin Islands No. 1, Jianji St., Qianzhen Dist., Kaohsiung City 806, Taiwan (R.O.C.) 1181 California Ave., Suite 235 Corona, CA 92881 U.S.A. Citco Building, Wickhams Cay, P.O. Box 662, Road Town, Tortola, British Virgin Islands 8F., No. 39, Jihu Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.) 12F., No. 37, Jihu Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.)	Manufacturing & marketing of VCM Manufacturing & marketing of PVC resins Reinvestment Warehouse & transportation of petrochemical raw materials Marketing of PVC film and leather products Marketing of PVC film and consumer products Manufacturing & marketing of Mn-Zn ferrite cores, Ni-Zn ferrite cores. Manufacturing & marketing of reinforced plastic products	$ 2,930,995 800,000 1,073,906 41,106 648,931 283,502 33,995 15,000	$ 2,930,994 800,000 1,073,906 41,106 648,931 283,502 33,995 15,000	206,008,832 78,859,281 16,308,258 18,667,465 100 5,780,000 3,176,019 600,000	87.22 100.00 100.00 33.33 100.00 100.00 1.74 10.00	$ 2,919,181 1,103,222 353,757 228,250 203,543 76,490 24,296 1,452	$ 625,587 257,674 8,843 (75,720) (11,119) 1,646 56,187 (10,525)	$ 535,972 257,674 8,843 (25,241) (11,119) 1,646 978 (1,052)	Subsidiary Subsidiary Subsidiary Associate accounted for using the equity method Subsidiary Subsidiary Associate accounted for using the equity method Associate accounted for using the equity method

Note: All the transactions were written off when preparing the consolidated financial statements.

85 -

TABLE 9

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE YEAR ENDED DECEMBER 31, 2018 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

Investee Company	Business Content	Paid-in Capital (Note 1)	Method of Investment	Accumulated Outward Remittance for Investment from Taiwan as of January 1, 2018 (Note 1)	Investment Flows	Investment Flows	Accumulated Outward Remittance for Investment from Taiwan as of December 31, 2018 (Note 1)	Net Income (Loss) of Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Notes 5 and 6)	Carrying Amount as of December 31, 2018 (Notes 1 and 6)	Accumulated Repatriation of Investment Income as of December 31, 2018
					Outflow	Inflow
Continental General Plastics (Zhong Shan) Co., Ltd. (“CGPC (ZS)”) (Note 4) CGPC Consumer Products Corporation (“CGPC (CP)”) (Note 4)	Manufacturing & marketing of PVC film and consumer products Manufacturing & marketing of PVC consumer products	$ 614,300 (US$ 20,000 thousand) 46,073 (US$ 1,500 thousand)	Investment through CGPC (BVI) Holding Co., Ltd. (“CGPC (BVI)”) Investment through CGPC (BVI) Holding Co., Ltd. (“CGPC (BVI)”)	$ 614,300 (US$ 20,000 thousand) 46,073 (US$ 1,500 thousand)	$ - -	$ - -	$ 614,300 (US$ 20,000 thousand) 46,073 (US$ 1,500 thousand)	$ 7,455 (US$ 247 thousand) 12 (US$ - thousand)	100.00 100.00	$ 7,455 (US$ 247 thousand) 12 (US$ - thousand)	$ 264,486 (US$ 8,611 thousand) 13,932 (US$ 454 thousand)	$ - -

Accumulated Outward Remittance for Investment in Mainland China as of December 31, 2018 (Notes 1 and 3)	Investment Amounts Authorized by Investment Commission, MOEA (Note 1)	Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$831,824 (US$27,082 thousand)	$1,053,371 (US$34,295 thousand)	(Note 2)

Note 1: The calculation was based on the spot exchange rate as on December 31, 2018.

Note 2: As the Company has obtained the certificate of qualification for operating headquarters issued by the Industrial Development Bureau, MOEA No. 10620424930 on September 22, 2017, the upper limit on investment in mainland China pursuant to the “Principle of Investment or Technical Cooperation in Mainland China” is not applicable.
Note 3: QuanZhou Continental General Plastics Co., Ltd. (“CGPC (QZ)”) and Union (Zhong Shan) Co., Ltd. (“Union (ZS)”) completed dissolution procedures, and CGPC (BVI) retrieved the residual assets. The shares of Continental General Plastics (San He) Co., Ltd. (“CGPC (SH)”) were fully sold, and CGPC (BVI) retrieved the residual assets. However, the amount of capital has not been wired back to Taiwan. The accumulated amount includes the investment amount of CGPC (QZ) of $21,009 thousand (US$684 thousand), the investment amount of Union (ZS) of $27,582 thousand (US$898 thousand) and the investment amount of CGPC (SH) of $122,860 thousand (US$4,000 thousand).

Note 4: The board of directors of the Company passed a resolution to dissolve CGPC (ZS) and CGPC (CP) on October 24, 2011. As of December 31, 2018, the dissolution procedures have not yet been completed.

Note 5: The investment income (loss) recognition in 2018 is based on the financial statements audited by the parent company’s CPA.
Note 6: All the transactions were written off when preparing the consolidated financial statements.
86 -

AI assistant

CGPC — Annual Report 2018

51765_rns_2018-12-24_c86eb89a-de61-45eb-bee2-132bb87cb16d.pdf

China General Plastics Corporation and Subsidiaries

DECLARATION OF CONSOLIDATION OF FINANCIAL STATEMENTS OF AFFILIATES

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Validity of Specific Revenue

Valuation of Inventory

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notice to Readers

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

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

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

3. APPLICATION OF NEW, AMENDED AND REVISED STANDARDS AND INTERPRETATIONS

Classification, measurement and impairment of financial assets

Definition of a lease

The Group as lessee

The Group as lessor

Anticipated impact on assets, liabilities and equity

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

e. Foreign currencies

f. Inventories

h. Property, plant and equipment

l. Financial instruments

1) Financial assets

2018

iii. Investments in equity instruments at FVTOCI

2017

ii. Available-for-sale financial assets

iii. Loans and receivables

2018

2017

2) Financial liabilities

b) Derecognition of financial liabilities

2018

2017

p. Leasing

2) Retirement benefits

1) Current tax

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Write-down of Inventories

Associate’s Estimated Damage Compensation for Kaohsiung Gas Explosions

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FVTPL - CURRENT

8. FINANCIAL ASSETS AT FVTOCI - 2018

Investments in Equity Instruments at FVTOCI

9. FINANCIAL ASSETS AT AMORTIZED COST - 2018

10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

11. FINANCIAL ASSETS MEASURED AT COST - 2017

12. DEBT INVESTMENTS WITH NO ACTIVE MARKET - 2017

13. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

December 31, 2018

b. Other receivables

14. INVENTORIES

15. DISCONTINUED OPERATIONS

16. SUBSIDIARIES

17. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in Associates

18. PROPERTY, PLANT AND EQUIPMENT

19. INVESTMENT PROPERTIES

20. INTANGIBLE ASSETS

CGPC Annual Report 2018