CGPC - Interim / Quarterly Report 2018

China General Plastics Corporation and Subsidiaries

Consolidated Financial Statements for the Nine Months Ended September 30, 2018 and 2017 and Independent Auditors’ Review Report

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’ REVIEW REPORT

The Board of Directors and Shareholders China General Plastics Corporation

Introduction

We have reviewed the accompanying consolidated balance sheets of China General Plastics Corporation and its subsidiaries (the Group) as of September 30, 2018 and 2017, the related consolidated statements of comprehensive income for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017, the consolidated statements of changes in equity and cash flows for the nine months then ended, and the related notes to the consolidated financial statements, including a summary of the significant accounting policies (collectively referred to as the “consolidated financial statements”). Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting”. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the following paragraph, we conducted our reviews in accordance with the Statement of Auditing Standard No. 65 “Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As disclosed in Notes 16 and 17 to the consolidated financial statements, the financial statements of some non-significant subsidiaries and investments accounted for using the equity method included in the consolidated financial statements were not reviewed. As of September 30, 2018 and 2017, the combined total assets of these non-significant subsidiaries and investments accounted for using the equity method were NT$1,032,791 thousand and NT$1,062,220 thousand, respectively, collectively representing 8% and 9%, respectively, of the consolidated total assets as of both period-ends, and the combined total liabilities of these non-significant subsidiaries as of September 30, 2018 and 2017 were NT$33,937 thousand and NT$43,079 thousand, respectively, collectively representing 1% of the consolidated total liabilities as of both period-ends; for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017, the amounts of combined comprehensive income (loss) of these non-significant subsidiaries were NT$1,732 thousand, NT$2,784 thousand, NT$15,350 thousand and NT$(14,609) thousand, respectively, representing 1%, 1%, 1% and (2%), respectively, of the consolidated total comprehensive income for the same respective periods, and the Group’s share of profit (loss) of these investments accounted for using the equity method for the three months ended September 30,

2018 and 2017 and for the nine months ended September 30, 2018 and 2017 were NT$1,049 thousand, NT$7,903 thousand, NT$(34,409) thousand and NT$20,287 thousand, respectively, representing 0.4%, 3%, (3%) and 2%, respectively, of the consolidated total comprehensive income for the same respective periods. The additional disclosures of these non-significant subsidiaries and investments accounted for using the equity method were based on financial statements which were not reviewed by auditors.

Qualified Conclusion

Based on our reviews, except for the adjustments, if any, as might have been determined to be necessary had the financial statements of the non-significant subsidiaries and investments accounted for using the equity method as described in the preceding paragraph been reviewed, nothing has come to our attention that caused us to believe that the consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Group as at September 30, 2018 and 2017, its consolidated financial performance for the three months ended September 30, 2018 and 2017 and its consolidated financial performance and its consolidated cash flows for the nine months ended September 30, 2018 and 2017 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34 “Interim Financial Reporting”.

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

Deloitte & Touche Taipei, Taiwan Republic of China November 8, 2018

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 review such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ review 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’ review report and consolidated financial statements shall prevail.

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(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 3, 4, 9, 12 and 35) Debt investments with no active market - current (Notes 4, 12 and 35) Notes receivable (Notes 4 and 13) Trade receivables (Notes 4, 13 and 34) Other receivables (Notes 4 and 13) Other receivables from related parties (Notes 4, 13 and 34) Current tax assets (Note 4) Inventories (Note 14) Prepayments (Note 21) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (FVTOCI) - non-current (Notes 3, 4, 8, 10, 11 and 27) 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 5 and 17) Property, plant and equipment (Notes 18, 22, 34 and 35) Investment properties (Notes 19 and 31) Intangible assets (Note 20) Deferred tax assets (Note 4) Long-term prepayments for leases (Note 21) Other non-current assets Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Financial liabilities at fair value through profit or loss (FVTPL) - current (Notes 4 and 7) Notes payable (Note 23) Trade payables (Note 23) Trade payables to related parties (Notes 23 and 34) Other payables (Note 24) Other payables to related parties (Note 34) Current tax liabilities (Note 4) Provisions - current (Notes 4 and 25) Other current liabilities (Notes 4, 25 and 34) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 18, 22 and 35) Deferred tax liabilities (Note 4) Net defined benefit liabilities - non-current (Note 4) Other non-current liabilities (Note 34) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY (Notes 8, 10, 17 and 27) 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		September 30, 2018 (Reviewed) Amount % $ 933,131 7 1,442,554 11 268,903 2 - - 319,928 2 1,216,847 9 101,899 1 6,503 - - - 2,091,706 16 77,149 1 688 - 6,459,308 49 122,051 1 - - - - 265,863 2 5,747,530 44 136,523 1 4,004 - 266,714 2 95,216 1 24,822 - 6,662,723 51 $ 13,122,031 100 $ 1,402 - 91 - 969,824 7 171,556 1 720,884 6 13,485 - 163,610 1 - - 58,596 1 2,099,448 16 1,000,000 8 594,212 5 712,680 5 4,262 - 2,311,154 18 4,410,602 34 5,067,596 39 8,234 - 512,954 4 408,223 3 2,222,130 17 3,143,307 24 48,743 - 8,267,880 63 443,549 3 8,711,429 66 $ 13,122,031 100		December 31, 2017 (Audited) 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		September 30, 2017 (Reviewed)
						Amount % $ 702,879 6 1,197,133 10 - - 268,754 2 164,841 1 1,174,318 10 81,779 1 6,256 - 3,305 - 1,913,379 16 70,408 - 1,437 - 5,584,489 46 - - 2,171 - 94,050 1 290,385 3 5,618,515 46 141,506 1 12,631 - 265,701 2 101,289 1 40,024 - 6,566,272 54 $ 12,150,761 100 $ 1,920 - 444 - 779,020 6 59,357 1 661,224 6 13,637 - 59,109 1 17,901 - 46,804 - 1,639,416 14 1,050,000 9 594,512 5 1,041,947 8 3,694 - 2,690,153 22 4,329,569 36 4,919,996 40 8,218 - 385,973 3 408,223 4 1,704,984 14 2,499,180 21 21,699 - 7,449,093 61 372,099 3 7,821,192 64 $ 12,150,761 100

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

(With Deloitte & Touche auditors’ review report dated November 8, 2018)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

NET REVENUE (Notes 4 and 34) COST OF REVENUE (Notes 14, 28 and 34) GROSS PROFIT OPERATING EXPENSES (Notes 28 and 34) 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, 28 and 34) Other income Other gains and losses Interest expense Share of profit (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 29) NET PROFIT FROM CONTINUING OPERATIONS (Note 28) NET PROFIT (LOSS) FROM DISCONTINUED OPERATIONS (Note 15) NET PROFIT FOR THE PERIOD		For the Three Months Ended September 30	For the Three Months Ended September 30	For the Three Months Ended September 30		For the Nine Months	Ended September 30	Ended September 30
		2018		2017		2018		2017
		Amount % $ 3,475,990 100 2,940,664 85 535,326 15 181,855 5 66,884 2 13,363 - 262,102 7 273,224 8 20,879 1 15,609 - (2,499 ) - 3,734 - 37,723 1 310,947 9 65,715 2 245,232 7 2,298 - 247,530 7		Amount % $ 3,613,528 100 3,042,588 84 570,940 16 187,716 5 68,020 2 11,891 - 267,627 7 303,313 9 12,113 - (6,169 ) - (2,754 ) - 1,194 - 4,384 - 307,697 9 34,343 1 273,354 8 291 - 273,645 8		Amount % $ 11,298,548 100 8,993,440 80 2,305,108 20 593,759 5 217,504 2 41,204 - 852,467 7 1,452,641 13 65,719 1 40,982 - (7,733 ) - (24,312) - 74,656 1 1,527,297 14 284,178 3 1,243,119 11 6,355 - 1,249,474 11		Amount % $ 10,928,129 100 8,902,133 81 2,025,996 19 590,668 6 206,022 2 35,859 - 832,549 8 1,193,447 11 34,752 1 (86,252 ) (1 ) (10,252 ) - 12,194 - (49,558) - 1,143,889 11 191,530 2 952,359 9 (747) - 951,612 9 (Continued)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

OTHER COMPREHENSIVE INCOME (LOSS) (Notes 8, 10, 17 and 29) Items that will not be reclassified subsequently to profit or loss: Unrealized gain on investments in equity instruments at FVTOCI Share of the other comprehensive loss of associates accounted for using the equity method - unrealized loss on investments in equity instruments at FVTOCI Share of the other comprehensive income of associates accounted for using the equity method - remeasurement of defined benefit plans 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 (loss) on available-for-sale financial assets Share of the other comprehensive income (loss) of associates accounted for using the equity method - exchange differences on translating the financial statements of 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 period, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		For the Three Months Ended September 30	For the Three Months Ended September 30	For the Three Months Ended September 30		For the Nine Months	Ended September 30	Ended September 30
		2018		2017		2018		2017
		Amount % $ 18,955 - (2,417 ) - - - - - 16,538 - (9,400 ) - - - (783 ) - - - 1,880 - (8,303) - 8,235 - $ 255,765 7		Amount % $ - - - - - - - - - - 2,053 - (746 ) - 320 - 6,445 - (350) - 7,722 - 7,722 - $ 281,367 8		Amount % $ 19,757 - (8,030 ) - 16 - 8,520 - 20,263 - 2,798 - - - (555 ) - - - (2,580) - (337) - 19,926 - $ 1,269,400 11		Amount % $ - - - - - - - - - - (31,658 ) - 9 - (255 ) - 7,092 - 5,382 - (19,430) - (19,430) - $ 932,182 9 (Continued)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

For the Three Months Ended September 30	For the Three Months Ended September 30	For the Nine Months	Ended September 30
2018	2017	2018	2017
Amount % $ 238,826 7 8,704 - $ 247,530 7 $ 247,060 7 8,705 - $ 255,765 7 $ 0.47 $ 0.47 $ 0.47 $ 0.47	Amount % $ 274,934 8 (1,289) - $ 273,645 8 $ 282,638 8 (1,271) - $ 281,367 8 $ 0.54 $ 0.54 $ 0.54 $ 0.54	Amount % $ 1,163,028 10 86,446 1 $ 1,249,474 11 $ 1,182,978 10 86,422 1 $ 1,269,400 11 $ 2.30 $ 2.29 $ 2.29 $ 2.28	Amount % $ 905,087 8 46,525 1 $ 951,612 9 $ 885,648 8 46,534 1 $ 932,182 9 $ 1.79 $ 1.79 $ 1.79 $ 1.79
$	$		$
$	$		$
$	$		$

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

(With Deloitte & Touche auditors’ review report dated November 8, 2018)

(Concluded)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

				Equity Attributable to Owners of the Company (Notes 8, 10, 17	Equity Attributable to Owners of the Company (Notes 8, 10, 17	and 27)
Share Capital Ordinary Shares $ 4,776,695 - - 143,301 - - - - - $ 4,919,996 $ 4,919,996 - 4,919,996 - - 147,600 - - - - - $ 5,067,596	Capital Surplus		Total $ 8,220 - - - - (2 ) - - - $ 8,218 $ 8,236 - 8,236 - - - - (2 ) - - - $ 8,234	Retained Earnings	Total $ 2,549,432 - (812,038 ) (143,301 ) - - 905,087 - 905,087 $ 2,499,180 $ 2,857,342 - 2,857,342 - (737,999 ) (147,600 ) - - 1,163,028 8,536 1,171,564 $ 3,143,307	Other Equity	Total $ 41,138 - - - - - - (19,439) (19,439) $ 21,699 $ 20,767 16,562 37,329 - - - - - - 11,414 11,414 $ 48,743
						Exchange Differences on Unrealized Translating Unrealized Gain (Loss) on the Financial Gain (Loss) on Investments in Statements of Available-for- Equity Foreign sale Financial Instruments at Operations Assets FVTOCI $ 12,612 $ 28,526 $ - - - - - - - - - - - - - - - - - - - (26,531) 7,092 - (26,531) 7,092 - $ (13,919) $ 35,618 $ - $ (19,583 ) $ 40,350 $ - - (40,350) 56,912 (19,583 ) - 56,912 - - - - - - - - - - - - - - - - - - (337) - 11,751 (337) - 11,751 $ (19,920) $ - $ 68,663
	Unpaid Dividends $ 7,913 - - - - (2 ) - - - $ 7,911 $ 7,929 - 7,929 - - - - (2 ) - - - $ 7,927	Others $ 307 - - - - - - - - $ 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 ) - - - - - - - - 905,087 - - - - - 905,087 $ 385,973 $ 408,223 $ 1,704,984 $ 385,973 $ 408,223 $ 2,063,146 - - - 385,973 408,223 2,063,146 126,981 - (126,981 ) - - (737,999 ) - - (147,600 ) - - - - - - - - 1,163,028 - - 8,536 - - 1,171,564 $ 512,954 $ 408,223 $ 2,222,130

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

(With Deloitte & Touche auditors’ review report dated November 8, 2018)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

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 Net (gain) loss on fair value changes of financial assets at FVTPL Interest expense Interest income Dividend income Share of loss (profit) of associates Gain on disposal of property, plant and equipment Gain on disposal of investment Write-down of inventories 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		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 1,527,297 6,355 1,533,652 374,960 17,601 912 (9,492) 7,733 (11,385) (1,672) 24,312 (10,772) - 10,661 2,611 - (37,463) (139,999) 284,710 (30,553) (924) (241,271) (23,551) (194) (92) 349,276 (60,455) 63,029 (9,147) - (27,181) (327,195) 1,738,111 10,968 (7,717) (252,717) 1,488,645	2017 $ 1,143,889 (747) 1,143,142 317,991 18,357 - 41,344 10,252 (10,629) (79) (12,194) (2,960) (2,936) 3,873 2,550 847,415 - (12,500) 98,599 (16,258) 132,692 (206,513) (3,216) 272 1,758 (9,695) (174,770) (19,293) (14,554) 1,862 (18,647) (378,694) 1,737,169 10,850 (10,101) (295,324) 1,442,594 (Continued)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of available-for-sale financial assets Purchase of debt investments with no active market Proceeds from capital reduction of financial assets at fair value through other comprehensive income Purchase of financial assets at amortized cost Proceeds from sale of financial assets at amortized cost Proceeds from capital reduction of financial assets carried at cost 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 Decrease in other non-current assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayments of short-term borrowings Repayments 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 generated 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 PERIOD CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ - - 7,462 (268,903) 268,805 - (422,432) 14,430 (53) 398 - 1,672 - (398,621) - - (50,000) 2,859 (990) 4 (735,209) (37,380) (820,716) 678 269,986 663,145 $ 933,131	2017 $ 5,948 (98) - - - 9,000 (815,882) 5,529 (96) 116 (235) 79 (15,568) (811,207) (160,000) (300,000) - 717 (2,108) (1,341) (811,963) (54,770) (1,329,465) (7,997) (706,075) 1,408,954 $ 702,879

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

(With Deloitte & Touche auditors’ review report dated November 8, 2018)

(Concluded)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (In Thousands of New Taiwan Dollars, Unless Stated Otherwise) (Reviewed, Not Audited)

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 as 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 proposed to the Company’s board of directors on November 8, 2018.

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.

12 -

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.

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.

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)

13 -
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.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Statement of compliance

The interim consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and IAS 34 “Interim Financial Reporting” as endorsed and issued into effect by the FSC. Disclosure information included in these interim consolidated financial statements is less than the disclosure information required in a complete set of annual consolidated financial statements.

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. 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).

Income and expenses of subsidiaries acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the effective dates of acquisitions up to the effective dates of disposals, as appropriate.

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

14 -

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, Table 8 and Table 9 for detailed information on subsidiaries (including percentages of ownership and main businesses).

d. Other significant accounting policies

Except for the accounting policies of financial instruments and revenue recognition, the accounting policies applied in these interim consolidated financial statements are consistent with those applied in the consolidated financial statements for the year ended December 31, 2017, which can be referenced in the consolidated financial statements for the year ended December 31, 2017.

1) 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 fair value through profit or loss) 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 fair value through profit or loss are recognized immediately in profit or loss.

a) Financial assets

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

i. 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.

15 -

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 33.

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.

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.

16 -

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 33.

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.

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ii. Impairment of financial assets

2018

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

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.

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 fair value through profit or loss, 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.

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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.

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.

iii. 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.

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b) Financial liabilities

i. Subsequent measurement

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

ii. 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.

c) 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.

Derivatives are initially recognized at fair value at the date on which 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.

2) 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.

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.

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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 allowances. Allowances for sales returns and liabilities for returns 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.

a) Sale of goods

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

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

3) Defined benefit plan

Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant plan amendments, settlements or other significant one-off events.

4) Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax. Interim period income taxes are assessed on an annual basis and calculated by applying to an interim period's pre-tax income the tax rate that would be applicable to expected total annual earnings. The effect of a change in tax rate resulting from a change in tax law is recognized consistently with the accounting for the transaction itself which gives rise to the tax consequence and is recognized in profit or loss, other comprehensive income or directly in equity in full in the period in which the change in tax rate occurs.

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5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Except for the following paragraph, the same critical accounting judgments and key sources of estimation uncertainty as were applied in the preparation of the consolidated financial statements for the year ended December 31, 2017 have been followed in these consolidated financial statements.

Associate’s estimated damage compensation for Kaohsiung gas explosions

The Group’s associate, China General Terminal & Distribution Corporation (hereinafter “CGTD”), should recognize a provision once the amount of compensation for civil damages and loss caused by the Kaohsiung gas explosion can be measured reliably and once payment is probable.

6. CASH AND CASH EQUIVALENTS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Cash on hand and petty cash	$	473	$	439	$	501
Checking accounts and demand deposits		161,919		188,034		228,293
Cash equivalents
Time deposits		590,964		474,672		474,085
Reverse repurchase agreements collateralized
by bonds		179,775		-		-
	$	933,131	$	663,145	$	702,879

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

	September 30,	December 31,	September 30,
	2018	2017	2017
Cash in banks	0.001%-2.58%	0.001%-2.10%	0.001%-1.55%
Reverse repurchase agreements collateralized by
bonds	0.45%-0.50%	-	-

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL) - CURRENT

	September	30,	December 31,	December 31,	September 30,	September 30,
	2018			2017		2017
Financial assets held for trading
Derivative financial assets (not under hedge
accounting)
Foreign exchange forward contracts	$	-	$	2,297	$	1,804
Non-derivative financial assets
Open-end fund beneficiary certificates		-		1,203,395		1,007,538
Closed-end fund beneficiary certificates		-		190,206		187,791
		-		1,395,898		1,197,133
						(Continued)

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	September	September	30,	December	December	31,	September	September	30,
		2018			2017			2017
Financial assets mandatorily classified as at
FVTPL
Derivative financial assets (not under hedge
accounting)
Foreign exchange forward contracts	$	2,081		$		-	$		-
Non-derivative financial assets
Open-end fund beneficiary certificates		1,229,821				-			-
Closed-end fund beneficiary certificates		210,652				-			-
Overseas unlisted equity investments			-			-			-
		1,442,554				-			-
	$	1,442,554		$	1,395,898		$	1,197,133
Financial liabilities held for trading
Derivative financial liabilities (not under hedge
accounting)
Foreign exchange forward contracts	$	1,402		$	1,701		$	1,920
								(Concluded)

As of 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)
September	30,	2018
Buy			NTD/USD	2018.10.02-2018.10.22	NTD201,490/USD6,570
Sell			USD/NTD	2018.10.02-2018.12.21	USD18,830/NTD575,694
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
September	30,	2017
Buy			NTD/USD	2017.10.05-2017.11.02	NTD199,915/USD6,655
Sell			AUD/USD	2017.10.25-2017.11.27	AUD400/USD320
Sell			USD/NTD	2017.10.02-2017.12.15	USD15,570/NTD469,396

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.

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8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVTOCI) - 2018

Investments in Equity Instruments at FVTOCI

	September 30,	September 30,
		2018
Non-current
Domestic equity investments
Listed ordinary shares
Asia Polymer Corporation	$	2,007
Unlisted ordinary shares
KHL IB Venture Capital Co., Ltd.		120,044
	$	122,051

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

	September 30,
	2018
Current
Domestic investments
Pledged time deposits	$ 268,903

As of September 30, 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 35 for information related to financial assets at amortized cost pledged as security.

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10. AVAILABLE-FOR-SALE FINANCIAL ASSETS - 2017

	December	December	31,	September	September	30,
		2017			2017
Domestic listed equity investments	$	2,194		$	2,171
Non-current	$	2,194		$	2,171
FINANCIAL ASSETS MEASURED AT COST - 2017
	December		31,	September		30,
		2017			2017
Non-current
Overseas unlisted equity investments - ordinary shares
Teratech Corporation (“Teratech”)	$		-	$	3,050
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
	$	91,000		$	94,050

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% of the capital, in aggregation of 15,120 thousand shares (proportionately reducing 90 shares per 1,000 shares) and refunding $900 per 1,000 shares to shareholders. 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,	September 30,
	2017	2017
Current
Pledged time deposits	$ 268,805	$ 268,754
The market interest rate intervals of pledged time deposits were as follows:
	December 31,	September 30,
	2017	2017
Pledged time deposits	0.090%-1.015%	0.09%-1.02%

Refer to Note 35 for information related to debt investments with no active market pledged as security.

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13. NOTES RECEIVABLE, TRADE RECEIVABLES AND OTHER RECEIVABLES

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Notes receivable
Notes receivable - operating	$	319,928	$	179,929	$	164,841
Trade receivables
At amortized cost
Gross carrying amount	$	1,230,012	$	1,511,309	$	1,189,136
Less: Allowance for impairment loss		(13,165)		(12,319)		(14,818)
	$	1,216,847	$	1,498,990	$	1,174,318
Other receivables
Tax refund receivables	$	92,987	$	64,525	$	74,834
Interest receivables		980		561		863
Compensation receivables		-		-		4,274
Others		8,184		5,974		6,340
Less: Allowance for impairment loss		(252)		(258)		(4,532)
	$	101,899	$	70,802	$	81,779
Other receivables from related parties (Note 34)	$	6,503	$	5,472	$	6,256

a. Trade receivables

For the nine months ended September 30, 2018

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. Where recoveries are made, these are recognized in profit or loss.

26 -

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

September 30, 2018

Credit Rating A Credit Rating B Credit Rating C Gross carrying amount $ 109,161 $ 456,554 $ 243,440 Loss allowance (lifetime ECLs) - (6,027) (2,292) Amortized cost $ 109,161 $ 450,527 $ 241,148	Others $ 420,857 (4,846) $ 416,011	Total $ 1,230,012 (13,165) $ 1,216,847

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

	September 30,
	2018
Not past due	$ 1,487,173
Less than and including 60 days	59,536
Over 60 days	3,231
	$ 1,549,940

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 Nine
	Months Ended
	September 30,
	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	912
Less: Amounts written off	(106)
Foreign exchange gains and losses	40
Balance at September 30, 2018	$ 13,165
For the nine months ended September 30, 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.

27 -

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

	December 31,	September 30,
	2017	2017
Not past due	$ 1,655,860	$ 1,318,260
Less than and including 60 days	28,488	31,813
Over 60 days	6,890	3,904
	$ 1,691,238	$ 1,353,977

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,	September 30,
		2017	2017
Less	than and including 60 days	$ 28,488	$ 30,567
Over	60 days	6,673	984
		$ 35,161	$ 31,551

The above aging schedule was based on the number of days past due 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: Amounts written off during the period (1,488) - Foreign exchange translation gains or losses (368) - Balance at September 30, 2017 $ 4,166 $ 10,652	Total $ 16,674 (1,488) (368) $ 14,818

b. Other receivables

As of September 30, 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 and September 30, 2017.

14. INVENTORIES

	September 30,	December 31,	September 30,
	2018	2017	2017
Finished goods	$ 1,256,433	$ 1,118,114	$ 1,120,827
Work in progress	43,271	39,207	47,013
Raw materials	792,002	699,135	745,539
	$ 2,091,706	$ 1,856,456	$ 1,913,379

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The cost of inventories recognized as cost of goods sold for the three months ended September 30, 2018 and 2017 was $2,940,664 thousand and $3,042,588 thousand, respectively, and for the nine months ended September 30, 2018 and 2017 was $8,993,440 thousand and $8,902,133 thousand respectively.

The cost of goods sold included inventory write-downs of $7,216 thousand and $2,520 thousand for the three months ended September 30, 2018 and 2017, respectively, and $10,661 thousand and $3,873 thousand for the nine months ended September 30, 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 Three Months Ended September 30 2018 2017 $ (8,534) $ (6,519) (8,534) (6,519) 10,832 6,810 $ 2,298 $ 291	For the Three Months Ended September 30 2018 2017 $ (8,534) $ (6,519) (8,534) (6,519) 10,832 6,810 $ 2,298 $ 291	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ (8,534) (8,534) 10,832 $ 2,298		2018 $ (24,618) (24,618) 30,973 $ 6,355	2017 $ (21,632) (21,632) 20,885 $ (747)

For the nine months ended September 30, 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 Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 11,688 998 (2,048) $ 10,638	2017 $ 22,463 2,994 (210) $ 25,247

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 and marketing of PVC film
and consumer products
CGPC Consumer Products Corporation
(“CGPC (CP)”)
Manufacturing and marketing of PVC
consumer products

Percentage of Ownership (%)
September 30,
2018
December 31,
2017
September 30,
2017
Note
100.00
100.00
100.00
Subsidiary, a
87.22
87.22
87.22
Subsidiary, b
100.00
100.00
100.00
Subsidiary
100.00
100.00
100.00
Subsidiary
100.00
100.00
100.00
Subsidiary
100.00
100.00
100.00
Subsidiary of
CGPC(BVI), c
100.00
100.00
100.00
Subsidiary of
CGPC(BVI), c

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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 September 30, 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

September 30, 2018 December 31, 2017 September 30, 2017 Listed companies Acme Electronics Corporation (“ACME”) $ 25,258 $ 23,731 $ 24,460 Unlisted companies China General Terminal & Distribution Corporation (“CGTD”) 239,146 272,509 263,307 Thintec Materials Corporation (“TMC”) 1,459 2,504 2,618 $ 265,863 $ 298,744 $ 290,385 Aggregate information of associates that are not individually material For the Three Months Ended September 30 For the Nine Months Ended September 30 2018 2017 2018 2017 The Group’s share of: Gain (loss) from continuing operations $ 3,734 $ 1,194 $ (24,312) $ 12,194 Other comprehensive income (loss) (3,200) 6,765 (8,569) 6,837 Total comprehensive income (loss) for the period $ 534 $ 7,959 $ (32,881) $ 19,031	September 30, 2018 December 31, 2017 September 30, 2017 Listed companies Acme Electronics Corporation (“ACME”) $ 25,258 $ 23,731 $ 24,460 Unlisted companies China General Terminal & Distribution Corporation (“CGTD”) 239,146 272,509 263,307 Thintec Materials Corporation (“TMC”) 1,459 2,504 2,618 $ 265,863 $ 298,744 $ 290,385 Aggregate information of associates that are not individually material For the Three Months Ended September 30 For the Nine Months Ended September 30 2018 2017 2018 2017 The Group’s share of: Gain (loss) from continuing operations $ 3,734 $ 1,194 $ (24,312) $ 12,194 Other comprehensive income (loss) (3,200) 6,765 (8,569) 6,837 Total comprehensive income (loss) for the period $ 534 $ 7,959 $ (32,881) $ 19,031	September 30, 2018 December 31, 2017 September 30, 2017 Listed companies Acme Electronics Corporation (“ACME”) $ 25,258 $ 23,731 $ 24,460 Unlisted companies China General Terminal & Distribution Corporation (“CGTD”) 239,146 272,509 263,307 Thintec Materials Corporation (“TMC”) 1,459 2,504 2,618 $ 265,863 $ 298,744 $ 290,385 Aggregate information of associates that are not individually material For the Three Months Ended September 30 For the Nine Months Ended September 30 2018 2017 2018 2017 The Group’s share of: Gain (loss) from continuing operations $ 3,734 $ 1,194 $ (24,312) $ 12,194 Other comprehensive income (loss) (3,200) 6,765 (8,569) 6,837 Total comprehensive income (loss) for the period $ 534 $ 7,959 $ (32,881) $ 19,031	September 30, 2018 December 31, 2017 September 30, 2017 Listed companies Acme Electronics Corporation (“ACME”) $ 25,258 $ 23,731 $ 24,460 Unlisted companies China General Terminal & Distribution Corporation (“CGTD”) 239,146 272,509 263,307 Thintec Materials Corporation (“TMC”) 1,459 2,504 2,618 $ 265,863 $ 298,744 $ 290,385 Aggregate information of associates that are not individually material For the Three Months Ended September 30 For the Nine Months Ended September 30 2018 2017 2018 2017 The Group’s share of: Gain (loss) from continuing operations $ 3,734 $ 1,194 $ (24,312) $ 12,194 Other comprehensive income (loss) (3,200) 6,765 (8,569) 6,837 Total comprehensive income (loss) for the period $ 534 $ 7,959 $ (32,881) $ 19,031	September 30, 2018 December 31, 2017 September 30, 2017 Listed companies Acme Electronics Corporation (“ACME”) $ 25,258 $ 23,731 $ 24,460 Unlisted companies China General Terminal & Distribution Corporation (“CGTD”) 239,146 272,509 263,307 Thintec Materials Corporation (“TMC”) 1,459 2,504 2,618 $ 265,863 $ 298,744 $ 290,385 Aggregate information of associates that are not individually material For the Three Months Ended September 30 For the Nine Months Ended September 30 2018 2017 2018 2017 The Group’s share of: Gain (loss) from continuing operations $ 3,734 $ 1,194 $ (24,312) $ 12,194 Other comprehensive income (loss) (3,200) 6,765 (8,569) 6,837 Total comprehensive income (loss) for the period $ 534 $ 7,959 $ (32,881) $ 19,031
			2018 $ (24,312) (8,569) $ (32,881)	2017 $ 12,194 6,837 $ 19,031

b. Aggregate information of associates that are not individually material
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At the end of the reporting periods, the percentage of ownership and voting rights held by the Group in the associates were as follows:

	September 30,	December 31,	September 30,
Name of Associates	2018	2017	2017
ACME	1.74%	1.74%	1.74%
CGTD	33.33%	33.33%	33.33%
TMC	10.00%	10.00%	10.00%

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:

	September 30,	December 31,	September 30,
Name of Associate	2018	2017	2017
ACME	$ 58,280	$ 58,439	$ 77,177

All associates are accounted for using the equity method.

Except for those of ACME, the Group’s investments accounted for using the equity method and its share of profit or loss and other comprehensive income or loss as of and for the nine months ended September 30, 2018 and 2017 were not reviewed by auditors for the same periods.

18. PROPERTY, PLANT AND EQUIPMENT

Cost Balance at January 1, 2017 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance at September 30, 2017 Accumulated depreciation and impairment Balance at January 1, 2017 Depreciation expenses Disposals Effect of foreign currency exchange differences Balance at September 30, 2017 Carrying amounts at September 30, 2017 Cost Balance at January 1, 2018 Additions Disposals Reclassification Effect of foreign currency exchange differences Balance at September 30, 2018	Freehold Land $ 2,090,707 - - 14,512 - $ 2,105,219 $ - - - - $ - $ 2,105,219 $ 2,105,218 - - - - $ 2,105,218	Buildings and Improvements Machinery and Equipment Transportation Equipment $ 1,843,265 $ 9,062,229 $ 57,049 - 41 - (2,203 ) (125,734 ) (2,680 ) 213,704 321,957 4,322 (6,048) (1,715) (99) $ 2,048,718 $ 9,256,778 $ 58,592 $ 1,021,881 $ 7,270,789 $ 41,505 48,754 253,022 3,690 (2,103 ) (123,920 ) (2,356 ) (3,600) (1,581) (79) $ 1,064,932 $ 7,398,310 $ 42,760 $ 983,786 $ 1,858,468 $ 15,832 $ 2,052,583 $ 9,508,535 $ 60,655 - 31 - (7,500 ) (107,900 ) (2,280 ) 20,918 355,770 1,622 (8,438) (742) (47) $ 2,057,563 $ 9,755,694 $ 59,950	Miscellaneous Equipment $ 319,960 881 (6,664 ) 13,305 (317) $ 327,165 $ 264,565 11,279 (6,531 ) (256) $ 269,057 $ 58,108 $ 330,882 453 (4,298 ) 7,159 144 $ 334,340	Construction in Progress and Machinery in Transit Total $ 461,272 $ 13,834,482 827,923 828,845 (198 ) (137,479 ) (683,328 ) (115,528 ) (148) (8,327) $ 605,521 $ 14,401,993 $ 8,585 $ 8,607,325 - 316,745 - (134,910 ) (166) (5,682) $ 8,419 $ 8,783,478 $ 597,102 $ 5,618,515 $ 495,804 $ 14,553,677 394,979 395,463 - (121,978 ) (385,469 ) - (216) (9,299) $ 505,098 $ 14,817,863 (Continued)

31 -

Accumulated depreciation and impairment Balance at January 1, 2018 Depreciation expenses Disposals Reclassification Effect of foreign currency exchange differences Balance at September 30, 2018 Carrying amounts at January 1, 2018 Carrying amounts at September 30, 2018	Freehold Land $ - - - - - $ - $ 2,105,218 $ 2,105,218	Buildings and Improvements Machinery and Equipment Transportation Equipment $ 1,082,032 $ 7,417,915 $ 43,723 53,011 302,763 3,975 (7,121 ) (104,657 ) (2,280 ) - - - (5,476) (780) (47) $ 1,122,446 $ 7,615,241 $ 45,371 $ 970,551 $ 2,090,620 $ 16,932 $ 935,117 $ 2,140,453 $ 14,579	Miscellaneous Equipment $ 271,735 11,474 (4,262 ) 538 125 $ 279,610 $ 59,147 $ 54,730	Construction in Progress and Machinery in Transit Total $ 8,411 $ 8,823,816 - 371,223 - (118,320 ) (538 ) - (208) (6,386) $ 7,665 $ 9,070,333 $ 487,393 $ 5,729,861 $ 497,433 $ 5,747,530 (Concluded)

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 Notes 35.

19. INVESTMENT PROPERTIES

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Freehold land	$	13,203	$	13,203	$	13,203
Buildings and improvements		123,320		127,057		128,303
	$	136,523	$	140,260	$	141,506

32 -

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 properties in proportion to the acres leased.

Regarding the lease on the land in Toufen Industrial District between the Group and USIO, refer to Note 31 for the related disclosures.

20. INTANGIBLE ASSETS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Computer software	$	2,311	$	4,737	$	5,861
Technical authorization		1,693		5,501		6,770
	$	4,004	$	10,238	$	12,631

Except for the recognition of the amortization expense, there were no material additions, disposals and impairments happening for the Group's intangible assets for the nine months ended September 30, 2018 and 2017.

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

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Current (included in prepayments)	$	3,361	$	3,449	$	3,454
Non-current		95,216		100,318		101,289
	$	98,577	$	103,767	$	104,743

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

22. LONG-TERM BORROWINGS

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Line of credit borrowings	$	500,000	$	500,000	$	500,000
Secured loans		500,000		550,000		550,000
	$	1,000,000	$	1,050,000	$	1,050,000
The range of interest rate		0.99%		1.04%		0.99%

33 -

In order to enrich medium-term working capital, CGPCPOL entered into a 3-year credit contract with KGI Bank (formerly China Development Industrial Bank) in September 2016 with a revolving credit limit of $500,000 thousand. The credit limit has been fully utilized. Before September 30, 2018, CGPCPOL already got a credit limit approval for extending the existing contract from KGI Bank. CGPCPOL will formally sign the contract with the same credit limit and terms as the previous contract before ending the year 2018. The previous credit contract would be cancelled upon CGPCPOL using the loan facilities under the new contract. In addition, CGPCPOL entered into another 5-year credit contract with KGI Bank in November 2016 with a revolving credit limit of $1,000,000 thousand. Upon the second anniversary of the first drawdown on the credit contract, the credit limit would be reduced by 5% every 6 months and would be totally cancelled after 36 months. As of September 30, 2018, the utilized credit amounted to $500,000 thousand. The group set out the assets as pledged collateral for bank borrowings in Note 35.

23. NOTES PAYABLE AND TRADE PAYABLES

	September	September	30,	December 31,	December 31,	September 30,	September 30,
		2018			2017		2017
Notes payable
Operating	$		91	$	183	$	444
Trade payables (including from related parties)
Operating	$	1,141,380		$	852,454	$	838,377

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

	September 30,	December 31,	December 31,	September 30,
	2018		2017	2017
Payables for salaries or bonuses	$ 329,934	$	299,736	$ 277,192
Payables for utilities	58,893		57,518	64,002
Payables for freight	51,938		78,922	59,963
Payables for purchases of equipment	37,520		64,489	47,328
Payables for fuel fees	11,527		19,192	15,266
Payables for dividends	6,884		4,092	4,143
Others	224,188		157,282	193,330
	$ 720,884	$	681,231	$ 661,224
PROVISIONS - CURRENT
	December 31,	2017	September 30, 2017
Provision for customer returns and rebates	$ 25,127			$ 17,901

25. PROVISIONS - CURRENT

34 -

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 Group applied IFRS 15 and recognized estimated sales returns and rebates as refund liabilities (presented in other current liabilities).

26. RETIREMENT BENEFIT PLANS

Employee benefits expense in respect of the Group’s defined benefit retirement plans was calculated using the actuarially determined pension cost rate at the end of the prior financial year which was stated in the respective 2017 and 2016 actuarial report; the employee benefits expense for the three months ended September 30, 2018 and 2017 was $6,445 thousand and $8,578 thousand, respectively, and for the nine months ended September 30, 2018 and 2017 was $19,560 thousand and $25,734 thousand, respectively. Under the defined benefit plans adopted by the Company and its subsidiary, TVCM, the Company and TVCM contribute amounts equal to 9% (the percentage increased to 10% starting from February and March 2017, respectively) of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee.

The Group contributed $346,754 thousand and $404,428 thousand for the nine months ended September 30, 2018 and 2017, respectively, to the pension fund which was designated by the Supervisory Committee of Workers’ Pension Preparation Fund.

27. EQUITY

a. Ordinary shares

	September 30,	December 31,	September 30,
	2018	2017	2017
Number of shares authorized (in thousands)	650,000	500,000	500,000
Shares authorized	$ 6,500,000	$ 5,000,000	$ 5,000,000
Number of shares issued and fully paid (in
thousands)	506,760	492,000	492,000
Shares issued	$ 5,067,596	$ 4,919,996	$ 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.

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

35 -

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 before and after amendment, refer to “Employees’ compensation and remuneration of directors” in Note 28-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 as approved in the shareholders’ meeting 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

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 September 30, 2018, there was no change.

e. Other equity items
1) Exchange differences on translating the financial statements of foreign operations

Balance at January 1 Effect of change in tax rate Recognized during the period Exchange differences on translating the financial statements of foreign operations Related income tax Share of exchange differences of associates accounted for using the equity method Balance at September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ (19,583) (2,020) 2,798 (560) (555) $ (19,920)	2017 $ 12,612 - (31,658) 5,382 (255) $ (13,919)

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

Balance at January 1, 2017

Recognized during the period
Unrealized gain on revaluation of available-for-sale financial assets
Share of profit of associates accounted for using the equity method
Reclassification adjustments
Net (gain)/loss on disposal of available-for-sale financial assets

Balance at September 30, 2017

Balance at January 1 per IAS 39

Adjustment on initial application of IFRS 9

Balance at January 1 per IFRS 9

$ 28,526
892
7,092

(892)
$ 35,618
$ 40,350
(40,350)
$ -

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

	For	the Nine
	Months Ended
	September 30,
		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		19,781
Share of loss of associates accounted for using the equity method		(8,030)
Balance at September 30	$	68,663

28. NET PROFIT FROM CONTINUING OPERATIONS

Net profit from continuing operations was attributable to:

Owners of the Company Non-controlling interests	For the Three Months Ended September 30 2018 2017 $ 236,528 $ 274,643 8,704 (1,289) $ 245,232 $ 273,354	For the Three Months Ended September 30 2018 2017 $ 236,528 $ 274,643 8,704 (1,289) $ 245,232 $ 273,354	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 236,528 8,704 $ 245,232		2018 $1,156,673 86,446 $1,243,119	2017 $ 905,834 46,525 $ 952,359

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a. Other income

For the Three Months Ended September 30 2018 2017 $ 2,342 $ 1,410 - - 123 - 301 - 2,766 1,410 3,120 3,368 14,993 7,335 $ 20,879 $ 12,113 For the Three Months Ended September 30 2018 2017 $ 12,819 $ (1,481) 30,094 13,774 (26,451) (8,327) - (12,030) (4,751) 295 12,327 - (8,429) 1,600 $ 15,609 $ (6,169) For the Three Months Ended September 30 2018 2017 $ 2,581 $ 2,775 (82) (21) $ 2,499 $ 2,754	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
	2018 2017 $ 5,720 $ 5,668 4,501 4,889 365 - 665 - 11,251 10,557 9,407 7,319 45,061 16,876 $ 65,719 $ 34,752 For the Nine Months Ended September 30
	2018 2017 $ 10,772 $ (525) 114,241 74,051 (82,440) (112,891) - (9,670) (30,182) (24,141) 44,473 - (15,882) (13,076) $ 40,982 $ (86,252) For the Nine Months Ended September 30
2018 $ 2,581 (82) $ 2,499		2018 $ 7,949 (216) $ 7,733	2017 $ 10,286 (34) $ 10,252

38 -

Information about capitalized interest was as follows:

Capitalized interest Capitalization rate d. Depreciation and amortization Property, plant and equipment Investment properties Intangible assets Others An analysis of depreciation by function Operating costs Operating expenses Non-operating expenses An analysis of amortization by function Operating costs General and administrative expenses	For the Three Months Ended September 30 2018 2017 $ 82 $ 21 0.82% 0.91% For the Three Months Ended September 30 2018 2017 $ 123,219 $ 105,477 1,246 1,246 1,817 2,409 3,357 3,409 $ 129,639 $ 112,541 $ 121,191 $ 104,882 2,028 1,841 1,246 - $ 124,465 $ 106,723 $ 4,626 $ 4,678 548 1,140 $ 5,174 $ 5,818	For the Three Months Ended September 30 2018 2017 $ 82 $ 21 0.82% 0.91% For the Three Months Ended September 30 2018 2017 $ 123,219 $ 105,477 1,246 1,246 1,817 2,409 3,357 3,409 $ 129,639 $ 112,541 $ 121,191 $ 104,882 2,028 1,841 1,246 - $ 124,465 $ 106,723 $ 4,626 $ 4,678 548 1,140 $ 5,174 $ 5,818	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
			2018 2017 $ 216 $ 34 0.85% 0.94% For the Nine Months Ended September 30
		2018 $ 123,219 1,246 1,817 3,357 $ 129,639 $ 121,191 2,028 1,246 $ 124,465 $ 4,626 548 $ 5,174		2018 $ 362,210 3,737 6,234 11,367 $ 383,548 $ 356,395 5,815 3,737 $ 365,947 $ 15,175 2,426 $ 17,601	2017 $ 307,990 1,246 7,193 11,164 $ 327,593 $ 302,458 6,778 - $ 309,236 $ 14,972 3,385 $ 18,357

e. Employee benefits expense

Post-employment benefits Defined contribution plans Defined benefit plans (see Note 26) Other employee benefits Total employee benefits expense		For the Three Months Ended September 30 2018 2017 $ 6,567 $ 6,455 6,445 8,578 13,012 15,033 298,914 299,180 $ 311,926 $ 314,213		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 6,567 6,445 13,012 298,914 $ 311,926		2018 $ 19,284 19,560 38,844 963,642 $ 1,002,486	2017 $ 19,089 25,734 44,823 902,869 $ 947,692 (Continued)

39 -

An analysis of employee benefits expense by function Operating costs Operating expenses		For the Three Months Ended September 30 2018 2017 $ 245,614 $ 247,045 66,312 67,168 $ 311,926 $ 314,213		For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 245,614 66,312 $ 311,926		2018 $ 788,136 214,350 $ 1,002,486	2017 $ 750,961 196,731 $ 947,692 (Concluded)

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. For the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017, the employees’ compensation and the remuneration of directors were as follows:

Accrual rate

Employees’ compensation Remuneration of directors Accrual amount	For the Three Months Ended September 30 2018 2017 1% 1% - -	For the Nine Months Ended September 30
		2018 2017 1% 1% - -

Employees’ compensation Remuneration of directors	For the Three Months Ended September 30 2018 2017 $ 2,811 $ 3,144 $ - $ -	For the Three Months Ended September 30 2018 2017 $ 2,811 $ 3,144 $ - $ -	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 2,811 $ -		2018 $ 12,607 $ -	2017 $ 10,317 $ -

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.

The employees’ compensation and remuneration of directors for 2017 and 2016, which have been approved by the Company’s board of directors on March 12, 2018 and March 14, 2017, respectively, were as follows:

Amount

Employees’ compensation	2017 $ 14,300	2016 $ 15,795

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 year ended 2017 and 2016.

40 -

Information on the employees’ compensation and remuneration of directors resolved by the Company’s board of directors in 2018 and 2017 is available at the Market Observation Post System website of the Taiwan Stock Exchange.

29. 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 period Income tax on unappropriated earnings Adjustments for prior periods Deferred tax In respect of the current period Adjustments for prior periods Adjustments to deferred tax attributable to changes in tax rates and laws Income tax expense recognized in profit or loss	For the Three Months Ended September 30 2018 2017 $ 49,498 $ 29,459 - - - 119 49,498 29,578 15,167 4,765 892 - 158 - 16,217 4,765 $ 65,715 $ 34,343	For the Three Months Ended September 30 2018 2017 $ 49,498 $ 29,459 - - - 119 49,498 29,578 15,167 4,765 892 - 158 - 16,217 4,765 $ 65,715 $ 34,343	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 49,498 - - 49,498 15,167 892 158 16,217 $ 65,715		2018 $ 229,594 25,067 20,708 275,369 48,061 1,463 (40,715) 8,809 $ 284,178	2017 $ 107,823 28,159 1,055 137,037 54,493 - - 54,493 $ 191,530

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. The effect of the change in the tax rate on deferred tax income (to be recognized in profit or loss) is recognized in full in the period in which the change in tax rate occurs. In addition, the rate of the corporate surtax applicable to the 2018 unappropriated earnings will be reduced from 10% to 5%.

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 period Translation of foreign operations	For the Three Months Ended September 30 2018 2017 $ - $ - 1,880 (350) $ 1,880 $ (350)	For the Three Months Ended September 30 2018 2017 $ - $ - 1,880 (350) $ 1,880 $ (350)	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ - 1,880 $ 1,880		2018 $ 6,500 (560) $ 5,940	2017 $ - 5,382 $ 5,382

41 -

c. Income tax assessments

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

d. Income tax related to subsidiaries

CGPC (BVI) and Krystal Star had no income tax expense for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 due to relevant tax exemptions in compliance with the regulations of the locations where the entities were established.

30. EARNINGS 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 Three Months Ended September 30 2018 2017 $ 0.47 $ 0.54 - - $ 0.47 $ 0.54 $ 0.47 $ 0.54 - - $ 0.47 $ 0.54	For the Three Months Ended September 30 2018 2017 $ 0.47 $ 0.54 - - $ 0.47 $ 0.54 $ 0.47 $ 0.54 - - $ 0.47 $ 0.54	Unit: NT$ Per Share For the Nine Months Ended September 30	Unit: NT$ Per Share For the Nine Months Ended September 30	Unit: NT$ Per Share For the Nine Months Ended September 30
		2018 $ 0.47 - $ 0.47 $ 0.47 - $ 0.47		2018 $ 2.30 (0.01) $ 2.29 $ 2.29 (0.01) $ 2.28	2017 $ 1.79 - $ 1.79 $ 1.79 - $ 1.79

The weighted average number of shares outstanding used in the earnings per share computation was adjusted retroactively for the issuance of bonus shares on August 3, 2018. The basic and diluted earnings per share adjusted retrospectively for the three months and the nine months ended September 30, 2017 were as follows:

Basic and diluted earnings per share From continuing and discontinued operations From discontinued operations From continuing operations	Before Retrospective Adjustment For the Three Months Ended September 30, 2017 For the Nine Months Ended September 30, 2017 $ 0.56 $ 1.84 - - $ 0.56 $ 1.84	Unit: NT$ Per Share After Retrospective Adjustment
		For the Three Months Ended September 30, 2017 For the Nine Months Ended September 30, 2017 $ 0.54 $ 1.79 - - $ 0.54 $ 1.79

42 -

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

Net Profit (Loss) for the Period

For the Three Months Ended September 30 2018 2017 Profit for the period attributable to owners of the Company (earnings used in computation of basic and diluted earnings per share) $ 238,826 $ 274,934 Add: (Profit) loss for the period from discontinued operations (2,298) (291) Earnings used in the computation of basic and diluted earnings per share from continuing operations$ 236,528 $ 274,643 Ordinary Shares Outstanding (In Thousands of Shares) For the Three Months Ended September 30 2018 2017 Weighted average number of ordinary shares used the in computation of basic earnings per share 506,760 506,760 Effect of potentially dilutive ordinary shares: Employees’ compensation 494 337 Weighted average number of ordinary shares used in the computation of diluted earnings per share 507,254 507,097		For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 2017 $ 1,163,028 $ 905,087 (6,355) 747 $ 1,156,673 $ 905,834 For the Nine Months Ended September 30
			2018 506,760 613 507,373	2017 506,760 507 507,267

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.

43 -

31. 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 for borrowings of USIO 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 Company 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 contract 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 re-signed 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.

32. 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.

33. 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.

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

September 30, 2018

Financial assets at FVTPL Derivative financial assets Fund beneficiary certificates Investments in equity instruments Overseas unlisted equity investments	Level 1 $ - 1,440,473 - $ 1,440,473	Level 2 $ 2,081 - - $ 2,081	Level 3 $ - - - $ -	Total $ 2,081 1,440,473 - $ 1,442,554 (Continued)

44 -

Financial assets at FVTOCI Investments in equity instruments Domestic listed equity investments Domestic unlisted equity investments Financial liabilities at FVTPL Derivative financial liabilities December 31, 2017 Financial assets at FVTPL Derivative financial assets Fund beneficiary certificates Available-for-sale financial assets Investments in equity instruments Domestic listed equity investments Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ 2,007 - $ 2,007 $ - Level 1 $ - 1,393,601 $ 1,393,601 $ 2,194 $ -	Level 2 $ - - $ - $ 1,402 Level 2 $ 2,297 - $ 2,297 $ - $ 1,701	Level 3 $ - 120,044 $ 120,044 $ - Level 3 $ - - $ - $ - $ -	Total $ 2,007 120,044 $ 122,051 $ 1,402 (Concluded) Total $ 2,297 1,393,601 $ 1,395,898 $ 2,194 $ 1,701

45 -

September 30, 2017

Financial assets at FVTPL Derivative financial assets Fund beneficiary certificates Available-for-sale financial assets Investments in equity instruments Domestic listed equity investments Financial liabilities at FVTPL Derivative financial liabilities	Level 1 $ - 1,195,329 $ 1,195,329 $ 2,171 $ -	Level 2 $ 1,804 - $ 1,804 $ - $ 1,920	Level 3 $ - - $ - $ - $ -	Total $ 1,804 1,195,329 $ 1,197,133 $ 2,171 $ 1,920

There were no transfers between Levels 1 and 2 for the nine months ended September 30, 2018 and 2017.

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

For the nine months ended September 30, 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)	19,944
Return of capital	(7,462)
Balance at September 30, 2018	$ 120,044

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.

46 -
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 September 30, 2018. When other inputs remain unchanged, the fair value will decrease by $1,412 thousand if the discount for lack of marketability increases by 1%.

c. Categories of financial instruments

	September	30,	December 31,	December 31,	September 30,	September 30,
	2018			2017		2017
Financial assets
Financial assets at FVTPL
Mandatorily classified at FVTPL	$ 1,442,554		$	-	$	-
Held for trading		-		1,395,898		1,197,133
Loans and receivables
Cash and cash equivalents		-		663,145		702,879
Debt investments with no active market		-		268,805		268,754
Notes receivable		-		179,929		164,841
Trade receivables (including related
parties)		-		1,498,990		1,174,318
Other receivables (including related parties
and excluding tax refund receivable)		-		11,749		13,201
Refundable deposits		-		16,440		16,309
Available-for-sale financial assets (including
financial assets measured at cost)		-		93,194		96,221
Financial assets at amortized cost
Cash and cash equivalents	933,131			-		-
Pledge time deposits	268,903			-		-
Notes receivable	319,928			-		-
Trade receivables (including related
parties)	1,216,847			-		-
Other receivables (including related parties
and excluding tax refund receivable)	15,415			-		-
Refundable deposits	16,281			-		-
Financial assets at FVTOCI
Equity instruments	122,051			-		-
Financial liabilities
Financial liabilities at FVTPL
Held for trading	1,402			1,701		1,920
Financial liabilities measured at amortized
cost
Notes payable		91		183		444
Trade payables (including related parties)	1,141,380			852,454		838,377
Other payables (including related parties)	734,369			703,836		674,861
Long-term borrowings	1,000,000			1,050,000		1,050,000
Long-term payables to related parties		-		-		1,103
Guarantee deposits	3,910			2,041		2,243

47 -
d. Financial risk management objectives and policies

The Group’s conduct of risk control 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 as of 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 nine months ended September 30, 2018 and 2017 would have decreased/increased by $21,003 thousand and $23,109 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; 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.

48 -

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

	September 30,	December 31,	December 31,	September 30,	September 30,
	2018		2017		2017
Fair value interest rate risk
Financial assets	$ 1,052,563	$	756,397	$	755,630
Cash flow interest rate risk
Financial assets	127,407		148,864		206,496
Financial liabilities	1,000,000		1,050,000		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-basis 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 nine months ended September 30, 2018 and 2017 would have decreased/increased by $3,272 thousand and $3,163 thousand, respectively.

c) Other price risk

The Group was exposed to equity price risk through its investments in domestic listed shares, domestic unlisted 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 securities price risk at the end of the reporting period.

If marketable equity securities prices had fluctuated by 5%, the pre-tax profit for the nine months ended September 30, 2018 would have increased/decreased by $72,024 thousand as a result of the changes in fair value of financial assets at FVTPL, and the pre-tax other comprehensive income for the nine months ended September 30, 2018 would have increased/decreased by $6,103 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 nine months ended September 30, 2017 would have increased/decreased by $59,766 thousand as a result of the changes in fair value of held-for-trading investments, and the pre-tax other comprehensive income for the nine months ended September 30, 2017 would have increased/decreased by $109 thousand as a result of the changes in fair value of available-for-sale financial assets.

49 -

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 of 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 maximum amount the entity would have to pay if the financial guarantee is called upon, irrespective of the likelihood of the guarantee being exercised.

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 receivables 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. As of the end of the reporting period, the Group’s largest exposure to credit risk is approximately that of 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.

September 30, 2018

Weighted Average Interest Rate Non-derivative financial liabilities Non-interest bearing liabilities Floating interest rate liabilities 0.99%	On Demand or Less than 1 Year $ 1,547,988 - $ 1,547,988	1-5 Years $ 12,329 1,000,000 $ 1,012,329	5+ Years $ - - $ -

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December 31, 2017

Weighted Average Interest Rate Non-derivative financial liabilities Non-interest bearing liabilities Floating interest rate liabilities 1.04% September 30, 2017 Weighted Average Interest Rate Non-derivative financial liabilities Non-interest bearing liabilities Floating interest rate liabilities 0.99%	On Demand or Less than 1 Year $ 1,267,618 - $ 1,267,618 On Demand or Less than 1 Year $ 1,237,307 - $ 1,237,307	1-5 Years $ 22,281 1,050,000 $ 1,072,281 1-5 Years $ 24,886 1,050,000 $ 1,074,886	5+ Years $ - -
			$ -
			5+ Years $ - -
			$ -

b) Financing facilities

The Group relies on bank loans as a significant source of liquidity. As of September 30, 2018, December 31, 2017 and September 30, 2017, the unused amounts of bank loan facilities were as follows:

	September 30,	December 31,	September 30,
	2018	2017	2017
Bank loan facilities
Amount unused	$ 7,018,598	$ 6,718,178	$ 6,649,135

34. TRANSACTIONS WITH RELATED PARTIES

As of September 30, 2018, December 31, 2017 and September 30, 2017, USI Corporation held, through its subsidiary Union Polymer Int’l Investment Corporation, 24.97% of the Company’s outstanding ordinary shares.

51 -

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
USI Corporation (“USI”)

Taita Chemical Company, Limited (“TTC”)

Asia Polymer Corporation (“APC”)

China General Terminal & Distribution Corporation (“CGTD”)
Acme Electronics Corporation

Thintec Materials Corporation

USI Optronics Corporation (“USIO”)

USI Management Consulting Corporation (“UM”)

Swanson Plastics Corporation (“SPC”)

Taiwan United Venture Management Corporation

Chong Loong Trading Co., Ltd.

Dynamic Ever Investments Limited

USIFE Investment Co., Ltd.

INOMA Corporation (“INOMA”)

Taita Chemical (Zhong Shan) Co., Ltd. (“TTC (ZS)”)

APC Investment Corporation

Related Party Category

Parent company
Investor with significant influence
Investor with significant influence
Associate
Associate
Associate
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Fellow subsidiary
Subsidiary of investor with significant
influence
Subsidiary of investor with significant
influence

b. Sales of goods

Related Party Category Investor with significant influence Fellow subsidiary Parent company USI	For the Three Months Ended September 30 2018 2017 $ 310 $ 2,681 73 90 - 2,134 $ 383 $ 4,905	For the Three Months Ended September 30 2018 2017 $ 310 $ 2,681 73 90 - 2,134 $ 383 $ 4,905	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 310 73 - $ 383		2018 $ 1,558 222 - $ 1,780	2017 $ 4,229 332 2,134 $ 6,695

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

52 -

c. Purchases of goods

Related Party Category/Name Fellow subsidiary Parent company USI Investor with significant influence	For the Three Months Ended September 30 2018 2017 $ 1,775 $ 1,460 56 - 260 - $ 2,091 $ 1,460	For the Three Months Ended September 30 2018 2017 $ 1,775 $ 1,460 56 - 260 - $ 2,091 $ 1,460	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 1,775 56 260 $ 2,091		2018 $ 4,718 2,176 273 $ 7,167	2017 $ 3,994 - - $ 3,994

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

d. Trade receivables from related parties

	September 30,	September 30,	December 31,	December 31,	September	September	30,
Related Party Category/Name		2018		2017		2017
Fellow subsidiary
SPC	$	76	$	101	$		-
Investor with significant influence
TTC		-		493		316
	$	76	$	594	$	316

The outstanding trade receivables from related parties were unsecured. For the nine months ended September 30, 2018 and 2017, no impairment loss was recognized for trade receivables from related parties.

e. Trade payables to related parties

	September 30,	December 31,	September 30,	September 30,
Related Party Category/Name	2018	2017		2017
Parent company
USI	$ 170,168	$ 231,305	$	58,480
Fellow subsidiary	1,115	706		877
Investor with significant influence	273	-		-
	$ 171,556	$ 232,011	$	59,357

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.

53 -

f. Other receivables from related parties

		September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
	Related Party Category/Name		2018		2017		2017
	Subsidiary of investor with significant
	influence
	TTC (ZS)	$	4,279	$	4,180	$	4,185
	Others		1		1		1
			4,280		4,181		4,186
	Parent company
	USI		1,071		560		712
	Investor with significant influence
	TTC		742		490		903
	Others		291		172		255
			1,033		662		1,158
	Fellow subsidiary		99		51		95
	Associate		20		18		105
		$	6,503	$	5,472	$	6,256
g.	Other payables to related parties
		September 30,		December 31,		September 30,
	Related Party Category/Name		2018		2017		2017
	Associate
	CGTD	$	9,400	$	13,171	$	7,380
	Parent company
	USI		1,596		1,991		2,704
	Investor with significant influence
	APC		473		3,389		378
	Others		825		834		826
			1,298		4,223		1,204
	Subsidiary of investor with significant
	influence
	TTC (ZS)		1,081		2,381		2,041
	Fellow subsidiary		110		839		308
		$	13,485	$	22,605	$	13,637
h.	Long-term payables to related parties (presented	in other non-current		liabilities)
		September 30,		December 31,		September 30,
	Related Party Category/Name		2018		2017		2017
	Investor with significant influence
	APC	$	-	$	-	$	1,103

54 -
i. Acquisitions of property, plant and equipment

Related Party Category/Name Fellow subsidiary INOMA USIO		Purchase Price	Purchase Price
		For the Nine Months Ended September 30
		2018 $ 657 - $ 657	2017 $ - 290,000 $ 290,000

j. Storage tank operating expenses

Related Party Category/Name Associate CGTD	For the Three Months Ended September 30 2018 2017 $ 24,013 $ 15,450	For the Three Months Ended September 30 2018 2017 $ 24,013 $ 15,450	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 24,013		2018 $ 66,627	2017 $ 67,646

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 following such services.

k. Rental expenses

Related Party Category/Name Investor with significant influence APC TTC Associate CGTD Parent company USI	For the Three Months Ended September 30 2018 2017 $ 4,464 $ 4,337 2,408 2,340 6,872 6,677 1,972 1,831 1,890 1,744 $ 10,734 $ 10,252	For the Three Months Ended September 30 2018 2017 $ 4,464 $ 4,337 2,408 2,340 6,872 6,677 1,972 1,831 1,890 1,744 $ 10,734 $ 10,252	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 4,464 2,408 6,872 1,972 1,890 $ 10,734		2018 $ 13,629 7,238 20,867 5,916 5,671 $ 32,454	2017 $ 13,329 7,020 20,349 5,492 5,342 $ 31,183

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 protested, the lease term would automatically extend for another year.

The Company’s subsidiaries leased storage tanks for vinyl chloride monomer from TTC. The original lease term expired in December 2010 and was 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.

55 -

l. Management service expenses

Related Party Category/Name Fellow subsidiary UM Others Parent company USI	For the Three Months Ended September 30 2018 2017 $ 16,944 $ 14,439 29 29 16,973 14,468 958 1,277 $ 17,931 $ 15,745	For the Three Months Ended September 30 2018 2017 $ 16,944 $ 14,439 29 29 16,973 14,468 958 1,277 $ 17,931 $ 15,745	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 16,944 29 16,973 958 $ 17,931		2018 $ 53,828 86 53,914 2,836 $ 56,750	2017 $ 45,786 86 45,872 4,787 $ 50,659

Contracts stating that UM and USI should provide labor support, equipment and other related services to the Company and its subsidiary were effective starting from July 1, 2001 and July 1, 2002, respectively. Contracts stating that the UM 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 following the related services.

m. Rental income

Related Party Category/Name Fellow subsidiary USIO Others Investor with significant influence Parent company USI	For the Three Months Ended September 30 2018 2017 $ 3,002 $ 3,205 - 19 3,002 3,224 22 29 - 20 $ 3,024 $ 3,273	For the Three Months Ended September 30 2018 2017 $ 3,002 $ 3,205 - 19 3,002 3,224 22 29 - 20 $ 3,024 $ 3,273	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 3,002 - 3,002 22 - $ 3,024		2018 $ 9,009 39 9,048 66 7 $ 9,121	2017 $ 6,835 58 6,893 85 59 $ 7,037

USIO leased the plant and facility located in Toufen from the Company, and the detailed lease term can be referenced in Note 31.

n. Compensation of key management personnel

The compensation of directors and key executives for the three months ended September 30, 2018 and 2017 and for the nine months ended September 30, 2018 and 2017 were as follows:

Salaries and others Post-employment benefits	For the Three Months Ended September 30 2018 2017 $ 3,802 $ 3,460 102 73 $ 3,904 $ 3,533	For the Three Months Ended September 30 2018 2017 $ 3,802 $ 3,460 102 73 $ 3,904 $ 3,533	For the Nine Months Ended September 30	For the Nine Months Ended September 30	For the Nine Months Ended September 30
		2018 $ 3,802 102 $ 3,904		2018 $ 11,362 262 $ 11,624	2017 $ 10,688 215 $ 10,903

56 -

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.

35. ASSETS PLEDGED AS COLLATERAL OR FOR SECURITY

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

	September 30,	September 30,	December 31,	December 31,	September 30,	September 30,
		2018		2017		2017
Pledge deposits (classified as financial assets at
amortized cost or other non-current assets)	$	281,824	$	-	$	-
Pledge deposits (classified as debt investments
with no active market or other non-current
assets)		-		281,725		281,545
Property, plant and equipment
Land		1,650,957		1,650,957		1,650,957
Buildings and improvements, net		525,061		547,692		555,282
Machinery and equipment, net		635,065		710,245		735,305
	$	3,092,907	$	3,190,619	$	3,223,089

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 on March 6, 2012 to enrich its working capital. The Company extended the contract expiration date to July 31, 2022. The Company set the land and plants located at the north side of its Toufen factory, which is owned by the Company, as collateral. As of September 30, 2018, December 31, 2017 and September 30, 2017, the Company has not used its revolving credit.

The Company pledged its land and plant located at the south side of its Toufen factory 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 in Kaohsiung Linyuan Petrochemical District as collateral for 5-year credit contract with KGI Bank in November 2016.

36. 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 September 30, 2018, December 31, 2017 and September 30, 2017, the Group’s unused letters of credit amounted to $1,149,412 thousand, $538,554 thousand and $559,784 thousand, respectively.
b. Description of Kaohsiung gas explosion:

Regarding the associate, China General Terminal & Distribution Corporation (hereinafter “CGTD”), who was commissioned to operate LCY Chemical Corp.’s propene pipeline resulting in a gas explosion on July 31, 2014, the first instance of the criminal procedures reached a first instance judgment 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 to appeal against the judgment.

57 -

CGTD arrived at an agreement with the Kaohsiung City Government on February 12, 2015, pledging certificates of bank deposits of $227,074 thousand, interest 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. As of October 31, 2018, the provisionally attached property was worth $138,263 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 victims, 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 victim’s families.

As of October 31, 2018, the families of the victims and seriously injured victims had written letters or filed civil (and criminal) procedures against LCY Chemical Corp., CGTD and CPC Corporation, Taiwan for compensation. Along with the above-mentioned compensation, the accumulated amount of compensation is $3,948,890 thousand. Some related civil cases with a total amount of compensation of $1,188,976 thousand were granted their first instance judgment as of June 22, 2018, and the proportion of fault liability of the Kaohsiung City Government, LCY Chemical Corp. and CGTD is 4:3:3. The total amount of compensation that LCY Chemical Corp., CGTD and the other defendants should pay is about $391,408 thousand, among which $4,711 thousand was not deducted by the portion which the Kaohsiung City Government should afford, among which $6,194 thousand CGTD was exempted from and among which $191,665 thousand was estimated to be the portion of compensation that CGTD should afford according to the judgment of the first instance. To minimize the lawsuit costs, LYC Chemical Corp. and CGTD proposed to settle in small claim or simple case with the plaintiffs and compensated them according to the amount of the first instance judgment. Among the already settled and completed cases, CGTD settled the amount of $1,946 thousand. A portion of small claims and simple cases are still under negotiation. CGTD has appealed in other civil cases and entered into the second instance. With regard to the above-mentioned compensation, CGTD estimated and recognized an amount of $136,375 thousand based on its fault liability in the first instance judgment. The actual payment of CGTD depends on the judgment of the civil procedures of the remaining civil cases.

c. TVCM signed dichloromethane purchase contracts with Formosa Plastics Corporation, Sabic Asia Pacific Pte. Ltd., Mitsubishi Corp., Mitsui Corp., Tricon Energy Ltd. and Marubeni Corp. The respective purchase prices were negotiated by the respective parties according to a pricing formula.
58 -

37. 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

September 30, 2018
		Foreign	Exchange Rate	Functional
		Currency	(In Single Dollars)	Currency	NT$
Financial assets
Monetary items
USD	$	41,412	30.525 (USD:NTD)	$ 1,264,098	$ 1,264,098
AUD		893	22.035 (AUD:NTD)	19,683	19,683
EUR		505	35.480 (EUR:NTD)	17,916	17,916
USD		296	6.8792 (USD:CNY)	2,038	9,044
GBP		35	39.900 (GBP:NTD)	1,404	1,404
Financial liabilities
Monetary items
USD		18,773	30.525 (USD:NTD)	573,041	573,041
December 31, 2017
		Foreign	Exchange Rate	Functional
		Currency	(In Single Dollars)	Currency	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	0.264 (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	0.264 (JPY:NTD)	1,919	1,919

59 -

September 30, 2017

		Foreign	Exchange Rate (In	Functional
		Currency	Single Dollars)	Currency	NT$
Financial assets
Monetary items
USD	$	33,895	30.260 (USD:NTD)	$ 1,025,657	$ 1,025,657
AUD		819	23.705 (AUD:NTD)	19,419	19,419
EUR		288	35.750 (EUR:NTD)	10,313	10,313
USD		304	6.637 (USD:CNY)	2,018	9,200
JPY		12,084	0.269 (JPY:NTD)	3,252	3,252
Non-monetary items
USD		101	30.260 (USD:NTD)	3,050	3,050
Financial liabilities
Monetary items
USD		8,743	30.260 (USD:NTD)	264,561	264,561

Net foreign exchange gains (losses) for the three months ended September 30, 2018 and 2017 were $3,643 thousand and $5,447 thousand, respectively, and for the nine months ended September 30, 2018 and 2017 were $31,801 thousand and $(38,840) 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.

38. SEPARATELY DISCLOSED ITEMS

a. Information about significant transactions and investees
1) Financing provided to others: See Table 1 attached;
2) Endorsements/guarantees provided: See 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
60 -
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 following 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 their 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.
- 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.
61 -

39. 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:

Segment Revenue and Results

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

For the nine months ended September 30, 2018

VCM Products PVC Products
Revenue from external customers
$ 858,619 $ 10,439,929
Inter-segment revenue

6,482,948

305,055

Segment revenue
$ 7,341,567
$ 10,744,984
Eliminations

Consolidated revenue

Segment income
$ 90,124
$ 1,362,517

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
$ 11,298,548

6,788,003
18,086,551

(6,788,003)
$ 11,298,548
$ 1,452,641
(24,312)
11,251
9,407
10,772
31,801
(30,182)
44,473
(7,733)

29,179
$ 1,527,297

62 -

For the nine months ended September 30, 2017

VCM Products PVC Products
Revenue from external customers
$ 772,736 $ 10,155,393
Inter-segment revenue

6,170,507

340,391

Segment revenue
$ 6,943,243
$ 10,495,784
Eliminations

Consolidated revenues

Segment income
$ 46,233
$ 1,147,214

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
$ 10,928,129

6,510,898
17,439,027

(6,510,898)
$ 10,928,129
$ 1,193,447
12,194
10,557
7,319
(525)
(38,840)
(33,811)
(10,252)

3,800
$ 1,143,889

Segment profit represented the profit before tax earned by each segment without the share of profit (loss) of associates, interest income, rental income, gain (loss) on disposal of property, plant and equipment, foreign exchange losses, gain (loss) arising on financial instruments 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.

63 -

TABLE 1

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

FINANCING PROVIDED TO OTHERS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 (Note 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	$ 122,100 (US$ 4,000 thousand)	$ -	$ -	-	b	$ -	Operating capital needed	$ -	-	-	$ 356,510	$ 356,510

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 September 30, 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 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 of September 30, 2018.

64 -

TABLE 2

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

ENDORSEMENTS/GUARANTEES PROVIDED FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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	$ 8,267,880	$ 3,305,250	$ 3,205,250	$ 515,263	None	38.77	$ 8,267,880	Yes	No	No

Note 1: The ratio is calculated using the ending balance of equity of the Company as of September 30, 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 of September 30, 2018.

65 -

TABLE 3

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

MARKETABLE SECURITIES HELD SEPTEMBER 30, 2018 (In Thousands of New Taiwan Dollars)

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		September 30, 2018	September 30, 2018		Note
				Number of Shares	Carrying Amount	Percentage of Ownership (%)	Fair Value
China General Plastics Corporation Taiwan VCM Corporation	Closed-end fund beneficiary certificates Fubon No. 2 Real Estate Investment Trust Cathay No. 1 Real Estate Investment Trust Shin Kong No. 1 Real Estate Investment Trust Cathay No. 2 Real Estate Investment Trust Open-end fund beneficiary certificates FSITC Taiwan Money Market Fund Hua Nan Phoenix Money Market Fund Taishin Ta-Chong Money Market Fund Ordinary shares KHL IB Venture Capital Co., Ltd. Open-end fund beneficiary certificates FSITC Taiwan Money Market Fund Jih Sun Money Market Fund Yuanta De-Li Money Market Fund Prudential Financial Money Market Fund Nomura Taiwan Money Market Fund Hua Nan Kirin Money Market Fund Yuanta De-Bao Money Market Fund	- - - - - - - - - - - - - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	5,000,000 4,268,000 3,000,000 2,500,000 4,293,217 1,943,749 1,623,801 8,353,800 8,534,572 8,811,611 3,081,056 3,174,885 3,073,764 4,187,429 4,171,777	$ 64,500 63,977 44,550 37,625 65,505 31,512 23,005 120,044 130,220 130,197 50,099 50,083 50,022 50,007 50,007	- - - - - - - 5.95 - - - - - - -	$ 64,500 63,977 44,550 37,625 65,505 31,512 23,005 120,044 130,220 130,197 50,099 50,083 50,022 50,007 50,007	1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

(Continued)

66 -

Holding Company Name	Type and Name of Marketable Securities	Relationship with the Holding Company	Financial Statement Account		September 30, 2018	September 30, 2018		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 Taishin Ta-Chong Money Market Fund Capital Money Market Fund UPAMC James Bond Money Market Fund Cathay Taiwan Money Market Fund Shin Kong Chi-Shin Money-Market Fund Hua Nan Phoenix Money Market Fund RSIT Enhanced Money Market Fund Ordinary shares Asia Polymer Corporation Open-end fund beneficiary certificates Jih Sun Money Market Fund Hua Nan Phoenix Money Market Fund Taishin 1699 Money Market Fund Nomura Taiwan Money Market Fund FSITC Taiwan Money Market Fund Yuanta De-Li Money Market Fund Capital Money Market Fund Shares Teratech Corporation - ordinary shares SOHOware, Inc. - preference shares	- - - - - - The major shareholders are the same as the those of the Company - - - - - - - - -	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through other comprehensive income - non-current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - non-current Financial assets at fair value through profit or loss - non-current	3,529,777 3,107,694 3,000,462 4,027,581 3,236,707 2,529,381 754,009 121,611 9,660,933 2,523,727 2,965,995 1,721,647 1,482,847 1,230,323 298,487 112,000 100,000	$ 50,007 50,007 50,007 50,006 50,006 41,006 9,001 2,007 142,746 40,914 40,012 28,018 22,625 20,006 4,803 - -	- - - - - - 0.02 - - - - - - - 0.67 -	$ 50,007 50,007 50,007 50,006 50,006 41,006 9,001 2,007 142,746 40,914 40,012 28,018 22,625 20,006 4,803 - -	1 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 September 30, 2018, the Group evaluates the fair value of the equity instrument as $0.

(Concluded)

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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 NINE MONTHS ENDED SEPTEMBER 30, 2018

(In Thousands of New Taiwan Dollars)

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counter-party	Relationship	Beginning Balance (Note)	Beginning Balance (Note)	Acquisition	Acquisition		Disposal	Disposal		Ending Balance (Note)	Ending Balance (Note)
					Number of Shares	Amount	Number of Shares	Amount	Number of Shares	Amount	Carrying Amount	Gain (Loss) on Disposal	Number of Shares	Amount
China General Plastics Corporation Taiwan VCM Corporation CGPC Polymer Corporation	Beneficiary certificates Fubon Chi-Hsiang Money Market Fund Jih Sun Money Market Fund Taishin 1699 Money Market Fund FSITC Taiwan Money Market Fund Beneficiary certificates Hua Nan Kirin Money Market Fund Jih Sun Money Market Fund Yuanta Wan Tai Money Market Fund UPAMC James Bond Money Market Fund Beneficiary certificates Jih Sun Money Market Fund	Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss – current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current Financial assets at fair value through profit or loss - current	- - - - - - - - -	- - - - - - - - -	1,378,417 - 6,249,509 9,518,158 4,200,022 - - 1,805,815 -	$ 21,500 - 84,000 144,000 50,000 - - 30,000 -	31,756,270 21,368,931 20,650,757 16,033,454 31,865,952 20,346,302 19,892,678 21,031,612 28,460,472	$ 496,000 315,000 278,300 244,500 380,000 300,000 300,000 350,000 419,500	33,134,687 21,368,931 26,900,266 21,258,395 31,878,545 11,534,691 19,892,678 19,836,965 18,799,539	$ 517,628 315,106 362,515 323,894 380,057 170,049 300,069 330,094 277,082	$ 517,500 315,000 362,300 323,000 380,000 170,000 300,000 330,000 277,000	$ 128 106 215 894 57 49 69 94 82	- - - 4,293,217 4,187,429 8,811,611 - 3,000,462 9,660,933	$ - - - 65,500 50,000 130,000 - 50,000 142,500

Note: The amount as of September 30, 2018 was calculated at the original investment cost.

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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 NINE MONTHS ENDED SEPTEMBER 30, 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	$ 3,168,347 (290,932) (3,168,347) (3,314,601) 3,314,601 290,932	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 $ (637,643) Trade receivables from related parties 123,791 Trade receivables from related parties 637,643 Trade receivables from related parties 808,481 Trade payables to related parties (808,481) Trade payables to related parties (123,791)	(74) 13 39 50 (97) (98)

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

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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 SEPTEMBER 30, 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	$ 123,791 $ 637,643 $ 808,481	3.21 6.27 5.77	$ - - -	- - -	$ 27,761 381,898 438,182	Note 1 Note 1 Note 1

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

Note 2: The subsequent period is from October 1, 2018 to October 29, 2018.

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

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TABLE 7

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 3 3 3	Trade payables to related parties Purchases Trade receivables from related parties Sales revenue Other receivables from related parties Trade payables to related parties Purchases Trade payables to related parties Other payables to related parties Purchases	$ 637,643 3,168,347 123,791 290,932 2,102 4,218 14,123 808,481 25,996 3,314,601	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	5 28 1 3 - - - 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.
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TABLE 8

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTEES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 September 30, 2018	As of September 30, 2018	As of September 30, 2018	Net Income (Loss) of Investee	Share of Profit (Loss)	Note
				September 30, 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 and marketing of VCM Manufacturing and marketing of PVC resins Reinvestment Warehousing and transportation of petrochemical raw materials Marketing of PVC film and leather products Marketing of PVC film and consumer products Manufacturing and marketing of Mn-Zn and Ni-Zn ferrite cores Manufacturing and 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	$ 2,926,366 1,068,716 349,462 239,146 209,374 75,622 25,258 1,459	$ 676,301 223,169 7,370 (75,999) (1,286) 1,246 118,729 (10,447)	$ 539,042 223,169 7,370 (25,334) (1,286) 1,246 2,067 (1,045 )	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 subsidiaries’ transactions were written off when preparing the consolidated financial statements.

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TABLE 9

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

INFORMATION ON INVESTMENTS IN MAINLAND CHINA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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 September 30, 2018 (Note 1)	Net Income (Loss) of Investee	% Ownership of Direct or Indirect Investment	Investment Gain (Loss) (Note 5)	Carrying Amount as of September 30, 2018 (Notes 1 and 5)	Accumulated Repatriation of Investment Income as of September 30, 2018
					Outflow	Inflow
Continental General Plastics (Zhong Shan) Co., Ltd. (“CGPC (ZS)”) (Note 4) CGPC Consumer Products Corporation (“CGPC (CP)”) (Note 4)	Manufacturing and marketing of PVC film and consumer products Manufacturing and marketing of PVC consumer products	$ 610,500 (US$ 20,000 thousand) 45,788 (US$ 1,500 thousand)	Investment through CGPC (BVI) Holding Co., Ltd. (“CGPC (BVI)”) Investment through CGPC (BVI) Holding Co., Ltd. (“CGPC (BVI)”)	$ 610,500 (US$ 20,000 thousand) 45,788 (US$ 1,500 thousand)	$ - -	$ - -	$ 610,500 (US$ 20,000 thousand) 45,788 (US$ 1,500 thousand)	$ 6,353 (US$ 211 thousand) 2 (US$ - thousand)	100.00 100.00	$ 6,353 (US$ 211 thousand) 2 (US$ - thousand)	$ 261,142 (US$ 8,555 thousand) 13,803 (US$ 452 thousand)	$ - -

Accumulated Outward Remittance for Investment in Mainland China as of September 30, 2018 (Notes 1and 3)	Investment Amounts Authorized by Investment Commission, MOEA (Note 1)	Upper Limit on the Amount of Investment Stipulated by Investment Commission, MOEA
$826,678 (US$27,082 thousand)	$1,046,855 (US$34,295 thousand)	(Note 2)

Note 1: The calculation was based on the spot exchange rate of September 30, 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 $20,879 thousand (US$684 thousand), the investment amount of Union (ZS) of $27,411 thousand (US$898 thousand) and the investment amount of CGPC (SH) of $122,100 thousand (US$4,000 thousand).

Note 4: The board of directors of the Company passed a resolution to dissolve CGPC (ZS) and CGPC (CP) in October 24, 2011. As of September 30, 2018, the dissolution procedures have not yet been completed.

Note 5: All the transactions were written off when preparing the consolidated financial statements. The investment gain (loss) was recognized based on financial statements which were not reviewed by auditors. See Note 16.

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AI assistant

CGPC — Interim / Quarterly Report 2018

51765_rns_2018-12-24_2c2a635d-ad20-4b5c-8a38-483615c4a67d.pdf

China General Plastics Corporation and Subsidiaries

INDEPENDENT AUDITORS’ REVIEW REPORT

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

Notice to Readers

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands of New Taiwan Dollars) (Reviewed, Not Audited)

CHINA GENERAL PLASTICS CORPORATION AND SUBSIDIARIES

1. GENERAL INFORMATION

2. APPROVAL OF FINANCIAL STATEMENTS

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

1) IFRS 9 “Financial Instruments” and related amendments

Classification, measurement and impairment of financial assets

Definition of a lease

The Group as lessee

The Group as lessor

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

d. Other significant accounting policies

1) Financial instruments

a) Financial assets

i. Measurement categories

i) Financial assets at FVTPL

ii) Available-for-sale financial assets

iii) Loans and receivables

ii. Impairment of financial assets

2018

2017

iii. Derecognition of financial assets

b) Financial liabilities

i. Subsequent measurement

2) Revenue recognition

2018

3) Defined benefit plan

5. CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

6. CASH AND CASH EQUIVALENTS

7. FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL) - CURRENT

8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (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

a. Trade receivables

September 30, 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

21. PREPAYMENTS FOR LEASES

22. LONG-TERM BORROWINGS

23. NOTES PAYABLE AND TRADE PAYABLES

24. OTHER PAYABLES - CURRENT

25. PROVISIONS - CURRENT

26. RETIREMENT BENEFIT PLANS

27. EQUITY

a. Ordinary shares

b. Capital surplus

d. Special reserve

28. NET PROFIT FROM CONTINUING OPERATIONS

a. Other income

Accrual rate

CGPC Interim / Quarterly Report 2018