CMFC - Annual Report 2019 | FinancialReports.eu

China Man-Made Fiber Corporation and Subsidiaries

Consolidated Financial Statements for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report

For the convenience of readers and for information purpose only, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. In the event of any discrepancy between the English version and the original Chinese version or any differences in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

Independent Auditor’s Audit Report

To CHINA MAN-MADE FIBER CORPORATION:

Audit opinions

We have audited the accompanying consolidated balance sheet of China Man-Made Fiber Co., Ltd. and subsidiary as of December 31, 2019 and 2018, and the related consolidated statement of income, consolidated statement of changes in shareholders equity, consolidated statement of cash flows, and Note of the consolidated financial statements (including major accounting policy) for the years then ended.

In our opinion based on our audit results and the audit reports offered by other accountants (please refer to other sections), the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of China Man-Made Fiber and subsidiaries as of December 31, 2019 and 2018, and the results of their consolidated operations and their consolidated cash flows for the years then ended in conformity with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers, the International Financial Reporting Standards, International Accounting Standards, interpretation as well as related guidance translated by Accounting Research and Development Foundation endorsed by the Financial Supervisory Commission with the effective dates.

The basis for opinions

We conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial statements by Certified Public Accountants and generally accepted auditing standards. Our responsibilities under those standards are further described in the responsibilities of auditors for the audit of the consolidated financial statements. We are independent of Chinese Gamer International Corporation in accordance with the Code of Ethics for certified public accountants in the part relevant to the audit of the financial statements of China Man-Made Fiber Co., Ltd. and its subsidiaries, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believed that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matter

Key audit matters are those matter that, in our professional judgment, were of most significant in our audit of the consolidated statements of China Man-Made Fiber Co., Ltd. and its subsidiaries in 2019. These matters were addressed in the content of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on those matters.

Key audit issues for the consolidated financial statements of China Man-Made Fiber and its subsidiaries for the year ended December 31, 2019 are stated as follows: Authenticity of specific sales revenue Notes to key audit matters

In 2018, the sales revenue of specific products of the Chemical Fibers of China Man-Made Fiber and its subsidiaries is NT$2,261,053 thousand, revenue of the Chemical Department to specific customers is NT$1,807,228 thousand, accounting for 11.39% of the total revenue. The gross profit of the specific products and customers is relatively high. Therefore, the authenticity of sales revenue of specific products from the Chemical Fibers and Chemical Departments of the Company and the subsidiaries is one of the key audit items.

Please refer to Note 4 (18) of the consolidated financial statements for the accounting policies on sales revenue recognition.

Audit response

Understand and test the design and operating effectiveness of the internal control system of specified departments and sales revenue to customers of the Company and its subsidiaries.
Sampling inspection of the abovementioned sales revenue of specified departments and customers, including the shipping, custom and collection documents, in order to test the authenticity of sales.
Sampling inspection of the circumstances of sales returns and discounts and the collection after the periods to confirm the reasonableness of revenue recognition.

Assessment of the expected credit loss from discounting and advances.

Notes to key consolidated audit matters

As stated in Note 15 of the consolidated financial statements, the amounts of net value of discounting and advances of the Company in 2019 and its subsidiaries and the expected credit loss recognized in 2019 are NT$435,398,3342 thousand and NT$509,127 thousand, respectively, accounting for 61% of the total assets and 1.42% of the total revenue, respectively, which is significant to the consolidated financial statements. In addition, as stated in Note 5 of the Consolidated Financial Statement, China Man-Made Fiber Corporation and its subsidiaries consider major estimates and judgments of the management level including probability of default and loss given default when determining expected credit losses pursuant to decrees and ordinances of the competent authority. For these reasons, expected credit loss of discounts and loans to the customers are determined as key audit matters.

The disclosures of the accounting policies, accounting estimates, and uncertainty of assumption related to the

estimation of discount and loans to customers’ expected credit loss are specified in Note 4 (16) and Note 5 and Note 15.

Audit response

1.	Understand and test the internal control system adopted by the Company and its subsidiaries for assessing the
	expected credit loss from discounting and advances.
2.	Sampling inspection of each individual recognition of major expected credit loss from discounting and advances
	of the Company and its subsidiaries, in order to evaluate the reasonableness of collateral value used for expected
	credit loss.
3.	For the comprehensive evaluation of the expected credit loss adopted by the Company and its subsidiaries,
	understand and test key parameters used in the impairment model (probability of default and loss given default)
	in order to evaluate the reasonableness of the expected credit loss meeting the current experience and economic
	situation.
4.	Review of conformity of appropriated amounts with relevant decrees and ordinances of the competent authority
Other information

The financial statements of investees included in the consolidated financial statements of the Company and its subsidiaries adopting the equity method have not been audited by us. They are audited by other accountants. Therefore, we refer to the audited reports of other accountants in expressing our opinions in the consolidated statement regarding the investments by equity method and subsidiaries, affiliates, joint ventures and other comprehensive gains and losses. The investments adopting the equity method in the other auditors’ reports for years ended December 31, 2019 and 2018 are NT$1,170,017 thousand and NT$1,228,959 thousand, respectively. The gains and losses from subsidiaries, affiliates and joint ventures and other sources adopting the equity method in the other auditors’ reports for 2019 and 2018 are NT$17,337 thousand and NT$88,436 thousand, respectively. The information on investees in Note 47 of the consolidated financial statements is disclosed based on the reports from other accounting auditors.

China Man-Made Fiber Corporation has already prepared the 2019 and 2018 individual financial statements. The CPA has issued audit reports with expressed unqualified opinion with other matter paragraph and unqualified opinion with emphasis of matter paragraph and other matter paragraph for further reference. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

The 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, Regulations Governing the Preparation of Financial Reports by Public Banks, and applicable IFRS, IAS,SIC, and IFRIC as recognized by the Financial Supervisory Commission, and for such internal control as the management determines is necessary to enable the preparation of the consolidated financial statements to be free from material misstatement whether due to fraud or error.

In preparing the consolidated financial statements, the management is responsible for assessing the ability of China Man-Made Fiber Co., Ltd. and its subsidiaries as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate China Man-Made Fiber Co., Ltd. and its subsidiaries or to create operations, or has no realistic alternative but to do so.

Those in charge of governance (including the Auditing Committee) are responsible for overseeing the reporting process of China Man-Made Fiber Co., Ltd. and its subsidiaries.

Auditor’s responsibilities for the audit of the consolidated financial statements

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

As part of an audit in accordance with the accounting principles generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also perform the following works:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design, and perform audit procedures responsive risks, and obtain evidence that is sufficient and appropriate to provide a basis of our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
3 -

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control effective in China Man-Made Fiber Co., Ltd. and its subsidiaries.

Evaluate the appropriateness of accounting policies used and the reasonability of accounting estimates and related disclosures made by the management.
Conclude the appropriateness of the use of the going concern basis of accounting by the management, and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on China Man-Made Fiber Co., Ltd. and its subsidiaries and its ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosure are inappropriate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause China Man-Made Fiber Co., Ltd. and its subsidiaries to cease to continue as a going concern.
Evaluate the overall presentation, structure, and content of the consolidated statements, including related notes, whether the consolidated statements represent the underlying transactions and events in a matter that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information or the entities or business activities with China Man-Made Fiber Co., Ltd. and its subsidiaries to express an opinion on the consolidated financial statements. The independent auditor is responsible for guiding, supervising, and implementing the audit of the China Man-Made Fiber Co., Ltd.; also, is responsible for forming an opinion on the audit of the China Man-Made Fiber Co., Ltd. and its subsidiaries.

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

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

From the matters communicated with those in charge of governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of China Man-Made Fiber Co., Ltd. and its subsidiaries of 2019 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communications.

Deloitte & Touche

CPA: Hsu Wen-Ya CPA: Oscar Shih

Securities and Futures Commission Approval No. Tai-Tsai-Cheng (VI) No. 0920123784

Securities and Futures Commission Approval No. Tai-Cai-Zheng (6) No. 0930128050

March 16, 2020

China Man-Made Fiber Corporation and subsidiary Consolidated Balance Sheet December 31, 2019 and 2018

Unit: NTD thousand

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December 31, 2019 December 31, 2018
Code Assets Amount $ Amount $
Current assets
1100 Cash and cash equivalents (Note 4, 6 and 36) $ 14,544,223 2 $ 18,846,662 3
1110 Due from Central Bank and lend to Banks (Note 7 and 37) 33,876,974 5 31,768,897 4
1120 Financial assets through profit and/or loss with measuring for the faire values-
current (Note 4 and 8) 25,105,212 4 27,408,915 4
1180 Bonds and securities sold under repurchase agreements (Note 4 and 9) 10,256,716 2 9,294,168 1
1201 Notes receivable (Note 4, 10 and 37) 4,431,796 1 3,808,900 1
1202 Accounts receivable (Note 4 and 10) 8,417,137 1 8,714,558 1
1203 Other receivable (Note 4 and 10) 2,384,377 - 3,570,369 1
1260 Current income tax asset (Note 4 and 34) 14,469 - 5,293 -
1270 Inventory (Note 4 and 11) 1,541,484 - 2,689,034 -
1280 Prepaid (Note 12) 958,391 - 1,031,737 -
1290 Non-current Assets Held for Sale - net (Note 4, 13 and 37) 769,610 - 769,610 -
1320 Other current assets (Note 14 and 37) 563,131 - 617,749 -
1330 Notes discounted and loans – net (Note 4, 15 and 36) 435,398,334 61 452,594,552 63
11XX Total current assets 538,261,854 76 561,120,444 78
Non-Current assets
1415 Financial assets at fair value through other comprehensive income- non-current
(Note 4, 16 and 37) 34,696,587 5 31,014,090 5
1435 Financial assets on the basis of cost after amortization- non-current (Note 4, 17 and
37) 108,124,373 15 100,462,761 14
1470 Investment by equity method (Note 4, 19 and 37) 1,180,884 - 1,241,811 -
1500 Real estates, plant and equipment - net (Notes 4, 20 and 37) 23,585,296 4 22,428,871 3
1595 Right-of-use assets (Note 3, 4 and 21) 1,128,396 - - -
1600 Real estate investments - net (Note 4, 22 and 37) 1,464,708 - 1,435,382 -
1700 Intangible assets – net (Note 4 and 23) 181,823 - 192,246 -
1800 Deferred income tax assets – net (Note 4 and 34) 1,469,409 - 1,073,938 -
1900 Other assets (Note 3, 24 and 37) 1,810,906 - 1,937,399 -
14XX Total non-current assets 173,642,382 24 159,786,498 22
1XXX Total assets $ 711,904,236 100 $ 720,906,942 100
Code Liabilities and equity
Current liabilities
2110 Short-term loans (Note 25 and 37) $ 14,115,769 2 $ 14,567,189 2
2120 Short-term bills payable (Note 25) 3,041,803 - 2,357,704 -
2130 Bills and bonds sold under repurchase agreements (Note 4 and 26) 10,369,025 2 9,904,467 1
2140 Financial liabilities through profit and/or loss with measuring for the faire values-
- -
current (Note 4 and 8) 233,803 165,360
2190 Due to Central Bank and other banks (Note 27) 6,527,060 1 3,378,752 1
2201 Payable notes 25,343 - 44,392 -
2202 Accounts payable (Note 36) 1,363,938 - 2,163,033 -
2204 Other accounts payable (Note 28) 6,757,265 1 12,768,486 2
2310 Current income tax liability (Notes 4 and 34) 398,167 - 386,857 -
2330 Long-term liability due in one year or one business cycle (Note 25, 30 and 37) 5,342,955 1 7,245,188 1
2335 Lease liabilities – current (Note 3, 4 and 21) 241,038 - - -
2350 Other current liabilities 416,595 - 438,932 -
2360 Customer deposits and remittances (Note 29 and 36) 583,035,255 82 587,720,906 82
21XX Total of current liabilities 631,868,016 89 641,141,266 89
Non-current liabilities
2540 Bonds payable (Note 30 and 36) 9,990,000 1 12,490,000 2
2550 Long-term loans (Note 25 and 37) 5,450,168 1 5,713,623 1
2600 Liability reserve (Note 4 and 31) 1,610,808 - 1,667,347 -
2620 Deposits received 600,998 - 585,515 -
2625 Lease liabilities – non-current (Note 3, 4 and 21) 754,957 - - -
2630 Deferred tax liabilities (Note 4 and 34) 1,021,567 - 1,021,567 -
2660 Other liabilities 5,316 - 6,836 -
25XX Total non-current liability 19,433,814 2 21,484,888 3
2XXX Total liabilities 651,301,830 91 662,626,154 92
Equity of the parent company (Note 32)
3110 Common stock capital 16,213,672 2 15,224,105 2
3210 Capital surplus 1,710,808 - 1,694,875 -
Retained earnings
3310 Legal reserve 855,476 - 718,272 -
3320 Special reserve 1,936,126 - 1,956,409 -
3330 Undistributed earnings 2,220,569 1 4,231,450 1
Other equity
3410 Exchange differences from the translation of financial statements of foreign
- -
operations ( 86,995 ) ( 54,591 )
3425 Unrealized gain (loss) on financial assets at fair value through other
- -
comprehensive profit or loss 382,016 ( 129,103 )
3500 Treasury stock (Note 4) ( 1,227,909 ) - ( 1,227,909 ) -
31XX Total equity of the parent company 22,003,763 3 22,413,508 3
32XX Non-controlling interest (Note 32) 38,598,643 6 35,867,280 5
3XXX Total equity 60,602,406 9 58,280,788 8
4XXX Total Liabilities and Equity $ 711,904,236 100 $ 720,906,942 100
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The notes attached shall constitute an integral part of this consolidated financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 16, 2020)

Chairman: Kuei-Hsien Wang

Manager: Ming-Shang Chuang

Accounting Supervisor: Kuo Hua Lin

China Man-Made Fiber Corporation and subsidiary Consolidated Income Statement

January 1 to December 31, 2019 and 2018

Code Revenue (Note 4) 4010 Interest revenues (Note 33 and 36) 4050 Income from handling fees (Note 33) 4060 Shareholding in the affiliated companies and joint ventures under the equity method (Note 19) 4090 Gain (loss) on financial assets and liabilities at fair value through profit and loss (Note 33) 4105 Realized gain on financial assets at fair value through other comprehensive profit or loss 4160 Net sales revenue (Note 36) 4210 Gain in disposal of real estate, plant buildings, equipment & facilities 4230 Investment property gains 4255 Expected credit reversal benefit (Note 10, 16, 17 and 33) 4260 Exchange gain 4270 Other income (Note 33) 4XXX Total revenue Expenses 5010 Financial cost (Note 33 and 36) 5060 Service charges (Note 33) 5090 Bad debt expense and guaranty reserve (Note 10, 15 and 31) 5190 Cost of goods sold (Note 11 and 36) 5230 Operating expenses (Note 31 and 33) 5280 Impairment (Note 20 and 33) 5285 Anticipated credit impairment loss (Note 16, 17 and 33) 5320 Other expenses 5XXX Total expenses 6100 Net profit before taxation 6200 Income tax expenses (Note 4 and 34) 6500 Net income Other comprehensive profit or loss The items that are not re-classified as profit or loss 6611 Determined Benefit Plan Reevaluation (Note 4 and 31) 6617 Evaluation of the capital gain from equity instrument at fair value through comprehensive income statement as other comprehensive income 6649 Income tax related to titles without reclassification (Notes 4 and 34) 6610 Items that may be re-classified subsequently under profit or loss 6651 Exchange differences from the translation of financial statements of foreign operations 6659 Capital gain (loss) of debts instrument at fair value through comprehensive income statement as other comprehensive income 6689 Income tax related to items possibly be reclassified 6650 6600 Other comprehensive income (post-tax profit or loss) 6700 Total amount of comprehensive income of the current year Profit (loss) attributable to: 6810 Owners of parent 6820 Non-controlling interest 6800 The total comprehensive income belongs to 6910 Owners of parent 6920 Non-controlling interest 6900 Earnings (losses) per share (Note 35) 7000 Basic earnings per share (losses) 7100 Diluted earnings per share (losses)	Unit: NTD Thousand, except for earnings (losses) per share 2019 2018 Amount $ Amount $ 13,455,005 38 $ 13,082,832 3,152,070 9 3,276,220 13,998 - 87,046 717,379 2 209,626 7,606 - 26,752 17,936,719 50 24,213,521 447 - - - - 14,025 10,863 - - 200,438 - 387,106 237,497 1 252,059 35,732,022 100 41,549,187 5,284,900 15 4,797,670 238,755 - 430,046 615,474 2 472,772 18,600,578 52 22,612,538 7,851,471 22 8,033,384 - - 325 - - 16,188 24,762 - 41,502 32,615,940 91 36,404,425 3,116,082 9 5,144,762 535,258 2 735,127 2,580,824 7 4,409,635 ( 155,059 ) - ( 99,372 ) 794,494 2 83,359 11,773 - 37,634 651,208 2 21,621 ( 105,314 ) - ( 3,462 ) $ 50,117 - ( $ 13,948 ) ( 3,150) - - ( 58,347) - ( 17,410 ) 592,861 2 4,211 $ 3,173,685 9 $ 4,413,846 ( $ 729,764) ( 2) $ 1,372,035 3,310,588 9 3,037,600 $ 2,580,824 7 $ 4,409,635 ( $ 273,437) ( 1) $ 1,365,286 3,447,122 10 3,048,560 $ 3,173,685 9 $ 4,413,846 ( $ 0.57) $ 1.06 ( $ 0.57) $ 1.06	Unit: NTD Thousand, except for earnings (losses) per share 2019 2018 Amount $ Amount $ 13,455,005 38 $ 13,082,832 3,152,070 9 3,276,220 13,998 - 87,046 717,379 2 209,626 7,606 - 26,752 17,936,719 50 24,213,521 447 - - - - 14,025 10,863 - - 200,438 - 387,106 237,497 1 252,059 35,732,022 100 41,549,187 5,284,900 15 4,797,670 238,755 - 430,046 615,474 2 472,772 18,600,578 52 22,612,538 7,851,471 22 8,033,384 - - 325 - - 16,188 24,762 - 41,502 32,615,940 91 36,404,425 3,116,082 9 5,144,762 535,258 2 735,127 2,580,824 7 4,409,635 ( 155,059 ) - ( 99,372 ) 794,494 2 83,359 11,773 - 37,634 651,208 2 21,621 ( 105,314 ) - ( 3,462 ) $ 50,117 - ( $ 13,948 ) ( 3,150) - - ( 58,347) - ( 17,410 ) 592,861 2 4,211 $ 3,173,685 9 $ 4,413,846 ( $ 729,764) ( 2) $ 1,372,035 3,310,588 9 3,037,600 $ 2,580,824 7 $ 4,409,635 ( $ 273,437) ( 1) $ 1,365,286 3,447,122 10 3,048,560 $ 3,173,685 9 $ 4,413,846 ( $ 0.57) $ 1.06 ( $ 0.57) $ 1.06	Unit: NTD Thousand, except for earnings (losses) per share 2019 2018 Amount $ Amount $ 13,455,005 38 $ 13,082,832 3,152,070 9 3,276,220 13,998 - 87,046 717,379 2 209,626 7,606 - 26,752 17,936,719 50 24,213,521 447 - - - - 14,025 10,863 - - 200,438 - 387,106 237,497 1 252,059 35,732,022 100 41,549,187 5,284,900 15 4,797,670 238,755 - 430,046 615,474 2 472,772 18,600,578 52 22,612,538 7,851,471 22 8,033,384 - - 325 - - 16,188 24,762 - 41,502 32,615,940 91 36,404,425 3,116,082 9 5,144,762 535,258 2 735,127 2,580,824 7 4,409,635 ( 155,059 ) - ( 99,372 ) 794,494 2 83,359 11,773 - 37,634 651,208 2 21,621 ( 105,314 ) - ( 3,462 ) $ 50,117 - ( $ 13,948 ) ( 3,150) - - ( 58,347) - ( 17,410 ) 592,861 2 4,211 $ 3,173,685 9 $ 4,413,846 ( $ 729,764) ( 2) $ 1,372,035 3,310,588 9 3,037,600 $ 2,580,824 7 $ 4,409,635 ( $ 273,437) ( 1) $ 1,365,286 3,447,122 10 3,048,560 $ 3,173,685 9 $ 4,413,846 ( $ 0.57) $ 1.06 ( $ 0.57) $ 1.06	Unit: NTD Thousand, except for earnings (losses) per share 2019 2018 Amount $ Amount $ 13,455,005 38 $ 13,082,832 3,152,070 9 3,276,220 13,998 - 87,046 717,379 2 209,626 7,606 - 26,752 17,936,719 50 24,213,521 447 - - - - 14,025 10,863 - - 200,438 - 387,106 237,497 1 252,059 35,732,022 100 41,549,187 5,284,900 15 4,797,670 238,755 - 430,046 615,474 2 472,772 18,600,578 52 22,612,538 7,851,471 22 8,033,384 - - 325 - - 16,188 24,762 - 41,502 32,615,940 91 36,404,425 3,116,082 9 5,144,762 535,258 2 735,127 2,580,824 7 4,409,635 ( 155,059 ) - ( 99,372 ) 794,494 2 83,359 11,773 - 37,634 651,208 2 21,621 ( 105,314 ) - ( 3,462 ) $ 50,117 - ( $ 13,948 ) ( 3,150) - - ( 58,347) - ( 17,410 ) 592,861 2 4,211 $ 3,173,685 9 $ 4,413,846 ( $ 729,764) ( 2) $ 1,372,035 3,310,588 9 3,037,600 $ 2,580,824 7 $ 4,409,635 ( $ 273,437) ( 1) $ 1,365,286 3,447,122 10 3,048,560 $ 3,173,685 9 $ 4,413,846 ( $ 0.57) $ 1.06 ( $ 0.57) $ 1.06	Unit: NTD Thousand, except for earnings (losses) per share 2019 2018 Amount $ Amount $ 13,455,005 38 $ 13,082,832 3,152,070 9 3,276,220 13,998 - 87,046 717,379 2 209,626 7,606 - 26,752 17,936,719 50 24,213,521 447 - - - - 14,025 10,863 - - 200,438 - 387,106 237,497 1 252,059 35,732,022 100 41,549,187 5,284,900 15 4,797,670 238,755 - 430,046 615,474 2 472,772 18,600,578 52 22,612,538 7,851,471 22 8,033,384 - - 325 - - 16,188 24,762 - 41,502 32,615,940 91 36,404,425 3,116,082 9 5,144,762 535,258 2 735,127 2,580,824 7 4,409,635 ( 155,059 ) - ( 99,372 ) 794,494 2 83,359 11,773 - 37,634 651,208 2 21,621 ( 105,314 ) - ( 3,462 ) $ 50,117 - ( $ 13,948 ) ( 3,150) - - ( 58,347) - ( 17,410 ) 592,861 2 4,211 $ 3,173,685 9 $ 4,413,846 ( $ 729,764) ( 2) $ 1,372,035 3,310,588 9 3,037,600 $ 2,580,824 7 $ 4,409,635 ( $ 273,437) ( 1) $ 1,365,286 3,447,122 10 3,048,560 $ 3,173,685 9 $ 4,413,846 ( $ 0.57) $ 1.06 ( $ 0.57) $ 1.06	in NTD
		Amount $ 13,455,005 3,152,070 13,998 717,379 7,606 17,936,719 447 - 10,863 200,438 237,497 35,732,022 5,284,900 238,755 615,474 18,600,578 7,851,471 - - 24,762 32,615,940 3,116,082 535,258 2,580,824 155,059 ) 794,494 11,773 651,208 105,314 ) $ 50,117 3,150) 58,347) 592,861 $ 3,173,685 $ 729,764) ( 3,310,588 $ 2,580,824 $ 273,437) ( 3,447,122 $ 3,173,685 $ 0.57) $ 0.57)	$ 38 9 - 2 - 50 - - - - 1 100 15 - 2 52 22 - - - 91 9 2 7 - 2 - 2 - - - - 2 9 2) 9 7 1) 10 9	Amount $ 13,082,832 3,276,220 87,046 209,626 26,752 24,213,521 - 14,025 - 387,106 252,059 41,549,187 4,797,670 430,046 472,772 22,612,538 8,033,384 325 16,188 41,502 36,404,425 5,144,762 735,127 4,409,635 99,372 ) 83,359 37,634 21,621 3,462 ) $ 13,948 ) - 17,410 ) 4,211 $ 4,413,846 $ 1,372,035 3,037,600 $ 4,409,635 $ 1,365,286 3,048,560 $ 4,413,846 $ 1.06 $ 1.06		$
	( ( ( ( ( ( ( (					31 8 - 1 - 58 - - - 1 1 100 12 1 1 54 19 - - - 87 13 2 11 - - - - - - - - - 11 3 8 11 3 8 11

The notes attached shall constitute an integral part of this consolidated financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 16, 2020)

Chairman: Kuei-Hsien Wang

Manager: Ming-Shang Chuang

Accounting Supervisor: Kuo Hua Lin

Unit: NTD thousand

China Man-Made Fiber Corporation and subsidiary Consolidated Statements of Changes in Shareholders’ Equity January 1 to December 31, 2019 and 2018

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Equity of the company
Other equity
Exchange Unrealized gain or
differences from loss on financial
Capital stock Retained earnings the translation of assets at fair value Unrealized gain
financial through other (loss) on available-
Undistributed statements of comprehensive for-sale financial Non-controlling
Code Common stock Capital surplus Legal reserve Special reserve earnings foreign operations profit or loss assets Treasury stock Total interest Total equity
A1 Balance as of January 1, 2018 $ 14,294,934 $ 1,677,818 $ 638,873 $ 2,481,347 $ 3,274,719 ( $ 41,611 ) $ - ( $ 169,191 ) ( $ 1,227,909 ) $ 20,928,980 $ 32,470,411 $ 53,399,391
A3 Effect of retroactive applicability and
recompilation - - - - 286,131 - ( 203,678 ) 169,191 - 251,644 297,263 548,907
A5 Balance on January, 1 2018 after adjustment 14,294,934 1,677,818 638,873 2,481,347 3,560,850 ( 41,611 ) ( 203,678 ) - ( 1,227,909 ) 21,180,624 32,767,674 53,948,298
The 2017 appropriation and distribution of
earnings
B1 Legal reserve appropriated - - 79,399 - ( 79,399 ) - - - - - - -
B5 Cash dividends - - - - ( 142,949 ) - - - - ( 142,949 ) - ( 142,949 )
B9 Stock dividends 929,171 - - - ( 929,171 ) - - - - - - -
B17 Reversal of special reserve - - - ( 524,938 ) 524,938 - - - - - - -
C7 Changes of the associates and joint ventures
recognized under the Equity Method - 5,532 - - ( 6,483 ) - ( 226 ) - - ( 1,177 ) - ( 1,177 )
D1 2018 Profit - - - - 1,372,035 - - - - 1,372,035 3,037,600 4,409,635
D3 Other comprehensive net income in 2018 (after
tax) - - - - ( 25,235 ) ( 12,980 ) 31,466 - - ( 6,749 ) 10,960 4,211
D5 Total amount of comprehensive income of 2018 - - - - 1,346,800 ( 12,980 ) 31,466 - - 1,365,286 3,048,560 4,413,846
O1 Increase/ decrease in Non-controlling interest
(Note 32) - - - - - - - - - - 36,818 36,818
M1 Dividends distributed to the subsidiaries
adjusted to the additional paid-in capital - 14,954 - - - - - - - 14,954 14,228 29,182
M7 Changes in the ownership equity on a subsidiary - ( 3,429 ) - - 199 - - - - ( 3,230 ) - ( 3,230 )
Q1 Equity instrument at fair value through other
comprehensive income statement - - - - ( 43,335 ) - 43,335 - - - - -
Z1 Balance at December 31, 2018 15,224,105 1,694,875 718,272 1,956,409 4,231,450 ( 54,591 ) ( 129,103 ) - ( 1,227,909 ) 22,413,508 35,867,280 58,280,788
The 2018 appropriation and distribution of
earnings
B1 Legal reserve appropriated - - 137,204 - ( 137,204 ) - - - - - - -
B5 Cash dividends - - - - ( 152,241 ) - - - - ( 152,241 ) - ( 152,241 )
B9 Stock dividends 989,567 - - - ( 989,567 ) - - - - - - -
B17 Reversal of special reserve - - - ( 20,283 ) 20,283 - - - - - - -
D1 Net income (loss) in 2019 - - - - ( 729,764 ) - - - - ( 729,764 ) 3,310,588 2,580,824
D3 Other comprehensive net income in 2019 - - - - ( 33,250 ) ( 32,404 ) 521,981 - - 456,327 136,534 592,861
D5 Total amount of comprehensive income of 2019 - - - - ( 763,014 ) ( 32,404 ) 521,981 - - ( 273,437 ) 3,447,122 3,173,685
M1 Dividends distributed to the subsidiaries
adjusted to the additional paid-in capital - 15,933 - - - - - - - 15,933 15,146 31,079
Q1 Equity instrument at fair value through other
comprehensive income statement - - - - 10,862 - ( 10,862 ) - - - - -
O1 Increase/ decrease in Non-controlling interest
(Note 32) - - - - - - - - - - ( 730,905)) ( 730,905 )
Z1 Balance as of December 31, 2019 $ 16,213,672 $ 1,710,808 $ 855,476 $ 1,936,126 $ 2,220,569 ( $ 86,995 ) $ 382,016 $ - ( $ 1,227,909 ) $ 22,003,763 $ 38,598,643 $ 60,602,406
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The notes attached shall constitute an integral part of this consolidated financial statement.

(Refer to Auditor’s Report presented by Deloitte & Touche dated March 16, 2020)

Chairman: Kuei-Hsien Wang

Manager: Ming-Shang Chuang Accounting Supervisor: Kuo Hua Lin

China Man-Made Fiber Corporation and subsidiary Consolidated Statements of Cash Flow January 1 to December 31, 2019 and 2018

==> picture [471 x 27] intentionally omitted <==

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Unit: NTD thousand
Code 2019 2018
Cash flow from operating activities
----- End of picture text -----

A00010 Income before tax from continuing operations Profits and loss A20100 Depreciation expenses A20200 Amortization expenses A20300 Expected credit impairment loss A20400 Gain (loss) on financial assets and liabilities at fair value through profit and loss ( A20900 Interest expenses A21200 Interest revenue ( A21300 Dividend income ( A21800 Net change in other provisions for liabilities ( A22300 Loss of affiliated companies and joint ventures under the equity method ( A22500 Loss (gain) on disposal and scrapping of property, plant and equipment ( A22700 Capital gain from disposition of investment property A23100 Gain on disposal of investments ( A23700 Loss in impairment of non-financial assets A24100 Unrealized foreign currency exchange loss (gain) A29900 Termination of lease profits ( A29900 Release of prepaid lease payments. Net change in operating assets and liabilities A91110 Due from Central Bank and lend to Banks A91120 Financial assets at fair value through profit and loss A91190 Accounts receivable A91250 Inventory A91260 Prepayments A91280 Other current assets ( A91290 Discounts and loans A91320 Other financial assets A92110 Bills and bonds sold under repurchase agreements A92120 Financial liabilities at fair value through profit and loss ( A92150 Due to Central Bank and other banks A92160 Payables ( A92280 Other current liabilities ( A92290 Customer deposits and remittances ( A92330 Other financial liabilities ( A92310 Employee benefit liabilities reserve ( A33000 Cash inflow from operating activities A33100 Interest received A33200 Dividends received A33300 Interest payment ( A33500 Income tax payment ( AAAA Net cash inflow from operating activities Cash flow from investing activities B00010 Acquisition of financial assets at fair value through other comprehensive profit or loss ( B00020 Disposal of financial assets at fair value through other comprehensive profit or loss B00040 Financial assets acquired on the basis of cost after amortization ( B00050 Financial assets on the basis of cost after amortization B00060 Held-to-maturity financial assets based on cost after amortization B01800 Acquisition of investment under the equity method ( B02700 Acquisition of property, plant and equipment ( B02800 Disposal of property, plant and equipment B03700 Increase in refundable deposits ( B03800 Decrease in Refundable deposits B04500 Acquisition of Intangible assets ( B05400 Acquisition of investment property ( B05500 Disposition of investment property B06800 Decrease in other assets B09900 Decrease (increase) in restricted assets BBBB Net cash outflow from investing activities ( Cash flow from financing activities C00100 Increase (decrease) in short-term loans ( C00500 Increase in short-term notes payable (Continued on next page)	$ 3,116,082 1,237,905 52,488 604,611 717,379 ) ( 5,284,900 13,455,005 ) ( 133,539 ) ( 12,000 ) ( 13,998 ) ( 447 ) - ( 7,606 ) ( - 524,497 ( 1,130 ) - 132,740 ( 3,868,985 683,555 1,147,550 ( 72,736 7,804 ) 16,703,241 ( 837 464,558 779,460 ) ( 3,148,308 ( 6,740,475 ) ( 21,730 ) 4,685,651 ) 2,127 ) ( 154,206 ) ( 10,310,436 13,813,182 212,971 5,373,790 ) ( 949,472 ) ( 18,013,327 7,773,132 ) ( 4,856,999 753,231,971 ) ( - 744,915,247 1,386 ) ( 2,170,807 ) ( 32,572 26,854 ) - 41,520 ) ( 136,785 ) ( - 15,788 62,422 ( 13,499,427 ) ( 451,420 ) 684,099	$ 5,144,762 849,721 54,854 488,960 209,626 ) 4,797,670 13,082,832 ) 116,117 ) 2,437 ) 87,046 ) 9,768 14,025 ) 26,752 ) 325 438,123 ) - 3,736 746,918 ) 6,728,283 486,630 632,492 ) 108,174 24,563 22,250,976 ) 38,030 5,596,657 889,768 ) 6,140,120 ) 990,471 ) 36,773 21,866,677 41,307 ) 11,625 ) 554,948 13,143,072 191,884 4,683,191 ) 748,891 ) 8,457,822 553,576 ) 4,301,998 761,952,805 ) 45,650 746,586,250 9,843 ) 903,176 ) 5,789 - 100,716 56,595 ) 144,447 ) 14,025 25,228 209,359 ) 12,750,145 ) 2,837,741 324,630

(Continued from previous page)

Code C01400 Issuance of financial bonds C01500 Repayment of financial bonds C01600 Proceeds from long-term loan C01700 Re-payments of long-term borrowings C03000 Increase in deposits received C04020 Payment of principal element of lease liabilities C04500 Cash dividend released C05800 Change in non-controlling interest CCCC Net cash inflow (outflow) from financing activities DDDD Impact of changes in exchange rate on cash and cash equivalents EEEE Current cash and cash equivalents decrease E00100 Balance of cash and cash equivalents, beginning of period E00200 Balance of cash and cash equivalent, end of period Ending cash and cash equivalents adjustment Code E00210 Cash and cash equivalents on the balance sheet E00220 The “Due from Central Bank and Banks” in compliance with the definition of cash and cash equivalents under IAS 7 E00230 The “bonds and securities sold under repurchase agreements” that meet the definitions of cash and cash equivalents under IAS 7 E00200 Balance of cash and cash equivalent, end of period		2019 $ - 6,000,000 ) 6,390,000 5,055,688 ) 15,483 238,099 ) 121,162 ) 730,905 ) 5,507,692 ) 105,282 ) 1,099,074 ) 42,625,095 $ 41,526,021 December 31, 2019 $ 14,544,223 16,725,082 10,256,716 $ 41,526,021		2018
	( ( ( ( ( ( ( (		( ( ( (	$ 2,130,000 - 3,716,000 5,455,250 ) 164,707 - 113,767 ) 32,637 3,636,698 3,462 ) 659,087 ) 43,284,182 $ 42,625,095 December 31, 2018
				$ 18,846,662 14,484,265 9,294,168 $ 42,625,095

The notes attached shall constitute an integral part of this consolidated financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 16, 2020)

Chairman: Kuei-Hsien Wang

Manager: Ming-Shang Chuang

Accounting Supervisor: Kuo Hua Lin

Notes to consolidated financial statement

January 1 to December 31, 2019 and 2018 (In Thousands of New Taiwan Dollars, Unless Otherwise Noted)

Company Profile
(1) China Man-made Fiber Corporation (hereinafter referred to as the Company or CMFC) was founded on May 11, 1955 in accordance with the Company Act and other related regulations. The Company was approved to be traded on the TWSE on December 2, 1963. Over the years after several rounds of increase and decrease in cash capital, the paid-in capital as of December 31, 2019 is NT$16,213,672 thousand.
(2) CMFC's main businesses are:
1. Manufacturing, processing and buying and selling of man-made fiber, cellophane, polyamine fiber, polyester fiber, chemicals and the raw materials.
2. Development, manufacturing and buying and selling of machinery used for the above products.
3. Manufacturing and buying and selling of ethylene glycol, ethylene oxide, nonylphenol, ethylene, liquefied petroleum gas and the related petrochemical industry products.
4. Lease and sale of national housing and commercial buildings constructed by commissioned contractors;
5. Distribution, sorting and storage of various products.
6. Management of supermarkets, trading of fresh foods, vegetables, fish, dried merchandise and various seasonings;
7. Manufacturing and sales of steam and industrial and commercial electricity by cogeneration (electricity shall not be sold to energy users).
8. Agency, distribution and contract bidding for installation of cogeneration and pollution control equipment.
9. Manufacturing and sales of oxygen, liquid oxygen, nitrogen, liquid nitrogen, air argon, liquid argon, carbon dioxide and compressed air.
10. Gas station.
(3) The consolidated financial statements are presented in the Company’s functional currency – New Taiwan Dollar.
Financial reporting date and procedures
The Board of Directors approved the consolidated financial statements for publication on March 16,
Application of new and revised standards and interpretation
(1) The Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Regulations Governing the Preparation of Financial Reports by Public Banks, the Regulations Governing the Preparation of Financial Reports by Securities Firms and IFRS, IAS, IFRIC and SIC (referred to as IFRSs) recognized by and declared effective by the Financial Supervisory Commission (FSC) applicable to the Company.

Except the following description, major changes that will not impact the accounting policies of the consolidated company after the adoption of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Regulations Governing the Preparation of Financial Reports by Public Banks, the Regulations Governing the Preparation of Financial Reports by Securities Firms and IFRSs recognized by and declared effective by the FSC: IFRS 16 “Leases”

The standards that IFRS 16 set out for accounting treatments for lease contracts identification of lessees and lessors will supersede IAS 17 “Leases”, IFRIC 4 “Determining Whether an Arrangement Contains a Lease” and other interpretations. Refer to Note 4 for further information on accounting principles.

Definition of lease

The consolidated company only assesses the contracts signed (or changed) beyond January 1, 2019, to determine if they are (or included) lease on the basis of IFR S16, and does not reassess contracts determined as lease under IAS 17 and IFRIC 4, and treated these contracts in accordance with the transitional requirement of IFRS 16.

The consolidated company is the lessee

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All leases were recognized as tenancy right assets and leasehold liability except low value target of leases and short-term leases of which the expenses incurred were recognized under the straightline method. The consolidated comprehensive income statement shall present the interest expenses incurred from the depreciations of the utilization of equity assets and leasehold liability under effective interest method. In the consolidated cash flow statement, the principal amount of the lease liability payment is classified as a financing activity and the interest payment is classified as an operating activity. Contracts classified as operation lease before the application of IFRS 16 was based on the straight-line method for recognition of expenses. Cash flows from operation lease were presented as operating activities in the consolidated statement of cash flows. Contracts classified as financing lease were recognized as leasehold assets and payable lease payment in the consolidated balance sheet.

The merged company has selected to retroactively apply the cumulative effects of IFRS 16 adjusted as of January 1, 2018 without reediting of comparative information.

As for the operating lease agreement handled pursuant to IAS 17, lease liabilities as of January 1, 2019 were measured based on residual lease payments discounted at the Lessee’s incremental borrowing rate of interest on said date. The whole right-of-use asset was measured based on the lease liability amount on said date. The recognized right-of-use assets shall be subject to impairment assessment of IAS 36.

The following expedients shall also apply:

Apply a single discount rate for the measurement of specific leasehold combinations with reasonable similarity.
Lease to expire on or before December 31, 2019 will be treated as short-term lease.
The initial cost will not be included in the measurement of tenancy right assets on January 1, 2019.
Measuring leasehold liability, such as the determination of the term of leases, will be treated from hindsight.

Leases previously categorized as finance leases pursuant to IAS 17 were listed as right-of-use assets and lease liabilities in the carrying amounts for January 1, 2019 based on the lease asset and lease liability carrying amounts on December 31, 2018.

An incremental borrowing rate collar of 1.01%–5.96% applies to lease liabilities recognized on January 1, 2019 by the merged company. The difference between said lease liability amounts and future minimum lease payment amounts of non-cancellable operating leases as of December 31, 2018 are explained as follows:

Future minimum lease payment amounts of non-
cancellable operating leases as of December 31,
2018
Less: Applicable short-term lease exemption
(
Less: Low-value asset leases applying to exemption
(
Non-discounted total value on January 1, 2019
Based on the present value upon discounting at
incremental borrowing rate of interest on January
1, 2019

Addition: Adjustment due to differences in handling of
the lease extension and lease termination options
Lease liability balance on January 1, 2019

$ 523,578
40,446 )
7,930 )
$ 475,202
$ 446,048
716,882
$ 1,162,930

The consolidated company is the lessor

In the transitional period, no adjustment of the lease of the Lessors while under IFRS 16 will be applicable from January 1, 2019.

Upon first-time adoption of IFRS 16, the adjustments to assets, liabilities and equities on January 1, 2019 are listed below:

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Other assets – prepaid lease payments – land use rights Right-of-use assets Lease liabilities – current Lease liabilities – noncurrent	Balance on January, 1 2019 before adjustment $ 157,406 - $ 157,406 $ - - $ -	Adjustments arising from initial application ( $ 157,406 ) 1,320,336 $ 1,162,930 $ 199,895 963,035 $ 1,162,930	Balance on January, 1 2019 after adjustment	Balance on January, 1 2019 after adjustment
		(		$ - 1,320,336 $ 1,320,336 $ 199,895 963,035 $ 1,162,930

(2) The Applicable IFRS endorsed by the Financial Supervisory Commission (hereinafter referred to as the “FSC”) in 109

The new / amended / revised standards or

interpretation Effective Date per IASB Amendment to “Definition of a business” in IFRS 01.01.20 (Note 1) 3 Interest Rate Benchmark Reform amendments in 01.01.20 (Note 2) IFRS9, IAS39, and IFRS7 Amendments to IAS 1 and IAS 8 “Definition of 01.01.20 (Note 3) Materiality”

Note 1: The amendment should be applied to the acquisition day in the reporting period for corporate mergers after January 1, 2020 and the acquisition of assets beyond that date.
Note 2: The amendments are applied, retrospectively, from January 1, 2020.
Note 3: This amendment is with prospective application for the annual reporting period starting after January 1, 2020.

Amendments to IAS 1 and IAS 8 “Definition of Materiality”

No key definitions were revised in the context of these amendments which only provide more comprehensible explanations. Additional explanations provided for key definitions could possibly lead to the blurring of material information by material information. In addition, the materiality threshold “could influence users” in IAS1 has been changed to “could reasonably be expected to influence users” in the amended provisions.

Further to the aforementioned influence, the companies in the consolidated financial statements will continue to evaluate the effect of the amendment to other IFRSs on the financial positions and performance of the companies in the consolidated financial statements to the date this parent company only financial statement approved and released, and will make appropriate disclosure after the evaluation.

(3) The IFRSs released by the IASB but not yet approved and announcement effective by the Financial Supervisory Commission

IASB publication effective The new / amended / revised standards or interpretation date (Note 1) Amendment to IFRS 10 and IAS 28, “Sale or Contribution Undefined of Assets between an Investor and its Associate or Joint Venture and Investment in Associates”. IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 “Classification of Liabilities as 01.01.22 Current or Non-current”

Note 1: Unless otherwise stated, the aforementioned new / revised / amended standards or interpretations become effective in the year after the respective date stated.

Further to the above effects, as of the release date of the consolidated financial report, the consolidated company continues to evaluate the impact on the financial position and performance

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from the abovementioned standards and interpretations, and the relevant impacts will be disclosed when the evaluation is completed.

Summary of important accounting policies
(1) Statement of Compliance

This consolidated financial report is prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, the Regulations Governing the Preparation of Financial Reports by Public Banks, the Regulations Governing the Preparation of Financial Reports by Securities Firms and the IFRSs recognized by and declared effective by the FSC.

(2) Basis of Preparation

Except for the financial instruments on the basis of fair value and the recognition of net defined benefit liabilities on the basis of the present value of net defined benefit obligation net of the fair value of planned assets, this consolidated financial statement was compiled on the basis of historical cost.

The evaluation of fair value could be classified into Level 1 to Level 3 by the observable intensity and importance of related input value:

Level 1 input value: refers to the quotation of the same asset or liability in an active market as of the evaluation (before adjustment).
Level 2 input value: refers to the direct (the price) or indirect (inference of price) observable input value of asset or liability further to the quotation of Level 1.
Level 3 input value: the unobservable input value of asset or liability.
(3) Current and non-current assets and liabilities Current assets including:
Assets held mainly for trading purpose;
Assets expected to be realized within 12 months after the balance sheet date; and
Cash and cash equivalents (not including those that are limited to exchange or repay liabilities exceeding 12 months after the balance sheet date). Current liabilities include:
Liabilities held for trading purposes;
The liabilities to be liquidated upon due within 12 months after the balance sheet date (those with long-term refinancing or payment term rearrangement completed from the balance sheet date to the financial reports approved and published date are also classified as current liabilities), and
Liabilities with the repayment deadline that cannot be unconditionally deferred to at least 12 months after the balance sheet date. Where the liabilities might be paid off at the discretion of the other party through the tools of the issuance equity, the classification would remain unaffected.

However, CMFC is engaged in construction projects through Taichung Commercial Bank and Taichung Bank Leasing, and the business cycle is longer than one year. Therefore, the assets and liabilities related to the business adopt the business cycle as the standard to be classified as current or non-current.

(4) Basis of consolidation

This consolidated financial statement contains the information of the financial statements of the Company and its controlled entities (subsidiaries).

The consolidated income statement includes the results of a subsidiary up to the date of disposal. The subsidiaries’ financial statements have been properly adjusted to make the accounting policies consistent with the accounting policies of the consolidated company.

The transactions, account balances, income, expenses and losses among subsidiaries are written-off at the time of consolidation.

The non-controlling interests of the subsidiaries are expressed separately from the interests of the owners of the Company.

The comprehensive income was proportioned to the non-controlling interest.

The total comprehensive incomes of the subsidiaries were non-controlling interest attributed to the Company’s owners and the non-controlling interest, to become the balance of loss even as the non-controlling interest.

Changes in the ownership equity on a subsidiary

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When the changes of interest of the subsidiaries’ ownership by the Consolidated Company do not lead to the loss of control, it is disposed of as interest transactions. The book value of the Consolidated Company and non-controlling interest has been adjusted to reflect the changes of the relative interest of subsidiaries. The differential between the adjustment amount of non-controlling interest and the fair value of consideration received is directly recognized as interest and belongs to the owner of the Company.

When the consolidated company loses its control of the subsidiary, the profit or loss from the disposal is the difference between the following two items: (1) The fair value of the consideration received and the total remaining investment at fair value of the former subsidiary at the date of control loss, and (2) The assets (including goodwill) and liabilities and the total carrying amount of the non-controlling interest at the date of control loss of the former subsidiary. With respect to all amounts related to the subsidiary recognized by the consolidated company in other comprehensive profit loss, the accounting treatment is the same basis on which the consolidated company directly disposes of assets or liabilities.

The fair value of the remaining investment to a former subsidiary at the date of control loss is the amount of investment in an associate company and joint venture on initial recognition.

Please refer to Note 18 for the details, shareholding ratio, and business operation of the subsidiaries.

(5) Foreign currencies

When preparing the financial statements of each business entity of the consolidated company, the transactions in currencies other than the functional currency (the currency of the primary economic environment in which the entity operates) of the respective business entity (foreign currency) should be translated into the functional currency in accordance with the exchange rate on the transaction day.

Foreign currency monetary items are translated at the closing rate on each balance sheet date. Non-monetary items carried at fair value should be reported at the rate that existed when the fair values were determined. The foreign non-currency items measured at historical cost are translated in accordance with the exchange rate on the transaction date without the need for a translation again.

Exchange differences arising when monetary items are settled or when monetary items are translated at different rates are reported in profit or loss in the period, with the following exceptions.

With respect to the monetary items receivable or payable of foreign operations, the settlement is currently neither planned for foreseeable in the future (thus forming part of the reporting entity's net investment in a foreign operation). The exchange differences originally are recognized as other comprehensive income, and the disposal of net investment is re-classified from equity to income.

The exchange difference arising from the non-monetary assets or liabilities (such as, equity instruments) in foreign currency measured at fair value that are translated in accordance with the spot exchange rate at the balance sheet date is booked as a profit or loss. However, the exchange difference arising from the changes in fair value recognized as other comprehensive profit or loss should be booked in the “Other comprehensive profit or loss.”

When preparing the consolidated financial statements, the assets and liabilities of the consolidated company’s foreign operations should be translated into New Taiwan dollars in accordance with the exchange rate on the balance sheet date. Except for the translations at the exchange rate on the transaction date during a period which has sharp fluctuations, the other income and loss are translated at the the average exchange rate for the current period. The resulting exchange differences are recognized as other comprehensive income and are attributed to the owner of the Company and non-controlling interest.

(6) Bonds Purchased under Resell/Notes Issued under Repurchase Agreements

For underwritten bonds and securities that are sold under RP and RS agreements, recognize interest expense and interest income on the accrual basis between the purchase and sale dates and agreed RP and RS date; also, recognize RP (Debt) and bonds and securities sold under resell agreements between the sale and purchase dates.

(7) Inventories

Inventories include raw materials, supplies, work-in-progress, products contracted to be processed, finished goods and products. Inventory is valued in accordance with the lower of cost or net cash value. When comparing cost and net cash value, except for the homogeneous inventories, it

14 -

is based on the itemized lower of cost or net cash value. Net realizable value refers to the estimated sale price under normal circumstances net of the estimated cost needed to complete the project and the estimated expenses needed to complete the sale. Inventory cost is determined by the weightedaverage method.

The construction inventories were stated at the cost invested actually. The cost for availablefor-sale housing and land was amortized based on weighted-average building coverage method, and stated at the lower of cost or net realizable value at the end of period.

(8) Investments in the affiliated company

The term “associate” as set forth herein denotes an enterprise, which has significant effect upon the Consolidated Company, but is not a subsidiary or a joint venture.

The Consolidated Company’ adopts equity method for investment in associates. Under the equity method, investments in the affiliated companies were originally recognized at cost; the book value after the acquisition date fluctuates along with the distribution of profit or loss from the affiliated company and other comprehensive profit or loss by the consolidated company. Additionally, the change in the interests the Consolidated Company’ holds in the associates was recognized pro rata to the shareholding percentages.

When associates issue new shares, if the Consolidated Company fails to subscribe stock share proportionally to their shareholding, resulting in changes in shareholding ratio and thus causing changes in net equity investment, the increase or decrease amount should be adjusted to the additional paid-in capital – recognizing changes in net equity of associates under the equity method and investment under equity method. If the Consolidated Company’ did not subscribe to the new shares pro rata to the shareholding percentages and led to a decrease of the shareholding percentages subscribed to or obtained from the associate, nevertheless, the amount of other comprehensive income so recognized was reclassified pro rata to the decrease ratio in the associate. The accounting management was on the grounds same as the grounds the associate must comply with if it directly disposed assets or liabilities. If the aforementioned adjustment must be debited into capital reserve where the balance of capital reserve yielded by the investment in equity method, the difference was debited as retained earnings.

In the event that the Consolidated Company’’s shares of loss in the associates equal to or exceed its equity in the associates (including the book value of investment in the associates in equity method and other long-term interest of the Consolidated Company’ in the investment composition of the associates), the Consolidated Company’ discontinued recognition of the further losses. The Consolidated Company’ recognized extra losses and liabilities only in the event of occurrence of legal obligations, presumed obligations or within the scope that the Consolidated Company’ had made payment on behalf of the associate.

When assessing impairment, the consolidated company has the overall book value (including goodwill) of the investment deemed as a single asset when comparing the recoverable amount and the book amount in order to conduct impairment testing. The recognized impairment loss is an integral part of the book amount of the investment. Any reversal of the impairment loss can be recognized within the range of the recoverable amount of the subsequently increased investment.

Besides, all relevant amounts relevant to the associates recognized in other comprehensive income were managed on the accounting grounds same as the grounds which it should comply with if the associates directly disposed the relevant assets or liabilities.

The profit or loss resulting from the countercurrent, downstream and side-stream transactions between the consolidated company and the affiliated company is recognized in the consolidated financial statement within the range that is irrelevant to the consolidated company’s interest in the affiliated company.

(9) Property, plant and equipment

Real property, plant and equipment are recognized as costs, and they will be measured by the amount after the costs less the amount of accumulated depreciation and accumulated impairment losses afterwards.

Those real estate, plant buildings, equipment & facilities under construction were recognized at the amount of the costs after deducting the loss in the accumulated impairment. Cost includes professional service fees and loan costs that qualify for capitalization. When such assets are

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completed and reach expected use status, such assets will be classified to proper items under real property, plant and equipment and the provision of depreciation shall begin. Proprietary land is not depreciated.

The depreciation of each material part of real estate, plants, and equipment should be appropriated independently in accordance with the useful year and a straight-line method. The Consolidated Company shall at least inspect the estimated service life, residual value and depreciation method by the day of the end of each fiscal year and postpone the effect of applying estimated accounting changes.

In the case of delisting real estate, plants, and equipment, the difference between the net disposal price and the book value of the asset is recognized in profit or loss.

(10) Investment property

Investment property is the real property held for purpose of earning of rental income or appreciation or both. Investment property includes lands held at present without determination of future use.

Investment property is measured on the basis of initial cost (including transaction cost) and subsequent measurement shall be based on the subtraction of accumulated depreciations and accumulated impairment from cost.

The Consolidated Company has depreciation appropriated in accordance with the straight-line method

In removing investment property, the difference between the net proceeds of disposition and the book value shall be recognized as income.

(11) Goodwill

Goodwill from business combination is recorded at acquisition cost and subsequently measured at cost less accumulated impairment.

For impairment test purposes, goodwill is allocated to each cash-generating unit that benefits from the synergy of a business combination.

In testing assets for impairment, the Company compares the carrying amounts of operating segments (CGUs with allocated goodwill) to their recoverable amounts on a yearly basis (or when impairment indicators exist). CGUs with allocated goodwill arisen from company combination in the current year should be tested for impairment before the end of the year. When the recoverable amount of CGUs is below the carrying amount, an impairment loss should be recognized to reduce first the carrying amount of goodwill of the CGU, and then the carrying amounts of other assets of the CGU proportionately. Any impairment loss should be directly recognized as loss in the current period. Subsequent reversal of impairment loss is not allowed.

On disposal of the relevant CGU, the amount attributable to goodwill is included in the determination of the gain or loss on disposal.

(12) Intangible assets
Acquired separately

The intangible asset with limited useful life acquired separately was originally measured at cost and subsequently measured at cost, net of accumulated amortization and accumulated impairment losses. Intangible assets shall be subject to amortization under the straight-line method during its life span, and the estimation of life span, residual value and depreciation method shall be subject to review at least once a year and extend the effect of changes in applicable accounting policy. Intangible asset with indefinite useful lives is measured at cost net of accumulated impairment losses.

de-recognition

In removing intangible assets, the difference between the net proceeds of disposition and the book value shall be recognized as income.

(13) Impairment of tangible and intangible assets (except for goodwill).

The consolidated company at each balance sheet date is to assess whether there is any indication of the impairment occurring to the tangible and intangible assets (except for goodwill). If there is any indication of impairment occurring, the recoverable amount of the asset should be estimated. If the recoverable amount of an individual asset cannot be estimated, the consolidated company is to estimate the recoverable amount of the respective cash-generating unit. The common asset is amortized to each cash-generating unit in accordance with a consistent and reasonable sharing basis.

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The intangible asset with indefinite useful lives and not yet available for use should be tested for impairment at least annually or should be tested when there is an indication of impairment.

The recoverable amount is the fair value net of cost or the value in use whichever is higher. When the recoverable amount of an individual asset or cash-generating unit is less than its book amount, the book amount of the asset or cash-generating unit should be reduced to its recoverable amount. The impairment loss is recognized in the profit or loss.

When the impairment loss was reversed subsequently, the book amount of the asset or cashgenerating unit is increased to the adjusted recoverable amount, but the increased book amount may not exceed the book amount of the asset or cash-generating unit without recognizing the impairment loss in prior periods (net of amortization or depreciation). The reversed impairment loss is recognized in the profit or loss.

(14) Available-for-sale noncurrent assets

Noncurrent assets are classified as noncurrent assets held-for-sale if their carrying amount is mainly recovered through a sale rather than through usage. The non-current assets complying with the classification must be available for immediate sale in the current state and the probability of the sale must be highly likely. When the appropriate level of the management commits to sell the plan asset and the sale is expected to be completed within one year from the date of classification, the probability of the sale is highly likely.

The classified held-for-sale non-current asset is measured at book amount or fair value net of the selling cost whichever is lower and stop the appropriate depreciation for such assets. (15) Financial instruments

When the consolidated company has become a party to the instrument contract, the financial assets and financial liabilities are to be recognized in the consolidated balance sheet.

For the initial recognition of the financial assets and financial liabilities, if the financial assets or financial liabilities are not measured at fair value through profit or loss, it is measured at fair value plus transaction cost that is directly attributable to the acquisition or issuance of financial assets or financial liabilities. The transaction cost directly attributable to the acquisition or issuance of financial assets or financial liabilities that are measured at fair value through profit or loss is immediately recognized in the profit or loss.

Financial Assets

The customary transaction of financial assets is recognized and de-recognized in accordance with the trade date accounting. A customary transaction refers to the purchase or sale of financial assets and the delivery period is within the period prescribed by the regulations or customary market practice.

(1) Classification of measurement

The financial assets held by the consolidated company are financial assets at fair value through income statements, financial assets on the basis of cost after amortization, investment of debt instruments at fair value through other comprehensive income statements, and equity instruments at fair value through other comprehensive income.

A. Financial assets at fair value through profit and loss

Financial assets measured at fair value through profits or losses are financial assets that are mandatorily measured at fair value through profits or losses. Financial instruments designated at fair value through income statements included the investment of equity instruments not designated at fair value through other comprehensive income and those not conforming to the standard of debt instruments on the basis of cost after amortization or at fair value through other comprehensive income.

Financial assets measured at fair value through profit or loss (FVTPL) are evaluated at fair value. Dividends or interest generated through remeasurement of gains or losses are recognized as other revenue. Profits or losses generated by remeasurement are recognized as other gains and losses. Please refer to Note 40 for the determination of fair value.

B. Financial assets on the basis of cost after amortization
If the financial assets of the consolidated company met both of the following
conditions, classify as financial assets on the basis of cost after amortization:
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a. Financial assets held under particular mode of operation and the purpose of holding is for the collection of cash flow from contracts; and
b. Cash flow generated on particular dates deriving from the contacts and the cash flow is wholly for the payment of principal and interest accrued from the outstanding amount of the principal.

Financial assets on the basis of cost after amortization (including cash and cash equivalents and accounts receivable on the basis of cost after amortization) shall be determined for the total book value under the effective interest rate method after the initial recognition net of the cost of any impairment after amortization for measurement. Any exchange gains or loss will be recognized as income.

Interest income will be the product of effective interest rate and total book value of financial assets except under the following two conditions:

a. The interest income of financial assets procured or initiated under credit impairment will be the product of the effective interest rate after credit adjustment and the cost of financial assets after amortization.
b. Financial asset that has subsequently become credit-impaired, for which interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset.

Cash equivalents are time deposits within 3 months from the date of acquisition, with high liquidity, can be converted into cash with marginal risk on the change in value, and are used for the fulfillment of short-term commitment in cash settlement.

C. Debt instrument investments measured at fair value through other comprehensive income

if the investment of debt instruments by the consolidated company met both the two conditions below, classify as financial instruments at fair value through comprehensive income:

a. Financial assets held under the particular mode of operation and the purpose of holding being for collection of cash flow from contracts; and
b. Cash flow generated on particular dates deriving from the contacts and the cash flow is wholly for the payment of principal and interest accrued from the outstanding amount of the principal.

Other investment of debt instruments at fair value through comprehensive income should be measured at fair value. Changes in the book value shall be recognized as income under the calculation of interest income under the effective interest rate method, and exchange gain and loss and impairment or reversal benefits shall be recognized as income. Other changes shall be recognized as other comprehensive income and reclassified as income at the disposition of investment.

A. Equity instrument investments measured at fair value through other comprehensive income

The consolidated company may make an irrevocable choice at the time of initial recognition for designating the investment of equity instruments not available-for-sale and not recognized by the acquirer under corporate merger and acquisition or with consideration at fair value through other comprehensive income for measurement.

The investment of equity instruments at fair value through other comprehensive income is measured at fair value. Subsequent changes in fair value will be recognized as other comprehensive income and accumulated into other equity. In the disposition of assets, accumulated gains or loss shall be directly transferred to retained earnings without classification as income.

The dividend of the investment of equity instruments at fair value through other comprehensive income shall be recognized as income when the right of the consolidated company in the collection of dividends is ascertained, unless the dividend is obviously representing the recovery of the cost of investment in part.

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(2) Impairment of financial assets

The consolidated company shall, on each balance sheet day, evaluate the financial assets on the basis of cost after amortization on the basis of anticipated credit loss (including accounts receivable), the investment of debt instruments at fair value through other comprehensive income, and loss from receivable rents and impairment of contract assets.

Discounts and loans, accounts receivable and receivable rents shall be recognized for provisions for loss on the basis of anticipated credit loss within the perpetuity of the assets. Other financial assets shall be evaluated for any significant increase of risk from the day of initial recognition. If none is found, recognize for provision for anticipated credit loss along a period of 12 months. If it is, recognize for provision of anticipated credit risk within the perpetuity of the assets.

Anticipated credit loss is the weighted average loss of credit on the basis of the weight of the risk of default. Anticipated credit loss in a period of 12 months means the expected loss of credit from the financial instruments within 12 months due to default. Anticipated credit loss with the perpetuity of the financial instruments means the expected loss of credit from the financial instruments within the perpetuity of these financial instruments.

Further to the aforementioned evaluation, refer to the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Nonperforming/Non-accrual Loans” for information on loan assets, and consider the financial position of the borrowers and any overdue accounts in principal or interest payments. In addition, evaluate the collaterals pledged for the security of the debts and the possibility of recovery of loan assets. As per the aforementioned requirements, non-performing assets shall be classified as loss, doubtful, substandard, special mentioned and normal by the status of the collaterals and the duration of delinquency. Appropriation of 100%, 50%, 10%, 2% and 1 % of the balances of the aforementioned loans as provision for loss shall be necessary. The aforementioned provision for loss shall be recognized in accordance with Letter JinGuan-Yin-Fa-Zi. No. 10010006830, which accounted for approximately 1% of the total loans. The appropriation for provision of property for loss shall be made at a ratio not falling below 1.5% as stated in Letter Jin-Guan-Yin-Guo-Zi. No. 10300329440, and appropriated at the higher amount of the aforementioned evaluation result and the ratio.

All impairment of financial assets is recognized through the reduction of the book value of the provisioned account. However, the provision for loss of investment of debt instruments at fair value through comprehensive income shall be recognized as other comprehensive income without the reduction of its book value.

(3) The de-recognition of financial assets

The consolidated company has financial assets de-recognized only when the contractual rights from the cash flows of a financial asset becomes invalid or when the financial assets are transferred and almost all the risks and rewards of the asset ownership have been transferred to other enterprises.

When financial assets measured at amortized cost are derecognized, the carrying amounts and collected considerations plus the difference between the sums of any cumulative gains or losses already recognized as other comprehensive income will be recognized as profit or loss. When particular debt instruments measured at fair value through comprehensive income is entirely removed, the total sum of any other accumulated gains or loss of the difference between book value and consideration recognized as other comprehensive income shall be recognized as income. When particular equity instruments measured at fair value through comprehensive income are entirely removed, the accumulated gains of loss shall be directly transferred to retained earnings without being classified as income.

Equity instruments

The debt and equity instruments issued by the consolidated company are classified as financial liabilities or equity pursuant to the contractual agreements and the definition of financial liabilities and equity instruments.

Equity instruments issued by the consolidated company are recognized for an amount after deducting the direct issuing cost from the proceeds collected.

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The Company’s equity retrieved is debited or credited to the equity. The Company’s equity purchased, sold, issued, or cancelled is not recognized in the profit or loss.

Financial Liabilities
(1) Subsequent measurement

All financial assets shall be measured under the effective interest rate method on the cost after amortization except under the following circumstances:

A. Financial liabilities at fair value through profit and loss

Financial liabilities measured at fair value through profit or loss includes held-for-

sale.

Financial liabilities measured at fair value through profit or loss (FVTPL) are evaluated at fair value. Generated interest is recognized as financial costs. Other profits or losses generated by remeasurement are recognized as other gains and losses. Please refer to Note 40 for the determination of fair value.

B. Financial guarantee contract

The consolidated company issued financial guarantee contracts not at fair value through income statement with initial recognition to reflect provision for loss for anticipated credit impairment and the amount after amortization, whichever is higher.

(2) De-recognition of financial liabilities

When de-recognizing financial liabilities, the difference between the book amount and the consideration paid (including any transferred non-cash assets or assumed liabilities) is recognized as profit or loss.

Derivatives

The derivative instruments signed by the consolidated company include forward foreign exchange contracts, currency swap contracts, and convertible bond asset swap contracts that are used to manage the interest rate and exchange rate risk of the consolidated company.

Upon signing the contracts, derivatives are recognized at fair value initially and then subsequently measured at fair value on the balance sheet date. The profit or loss resulting from the subsequent measurement is directly booked under the profit or loss. Then, the timing of recognizing the designated and effective hedging derivatives depends on the nature of the hedging relationship. When the fair value of the derivatives is positive, it is classified as a financial asset; when the fair value is negative, it is classified as a financial liability.

Derivatives embedded in the master contract of the assets within the scope of IFRS 9 shall be classified on the basis of the overall contracts of the financial assets. If the derivatives are not embedded in the master contract of the assets within the scope of IFRS 9 (such as embedded in financial liabilities master contracts), and the embedded derivatives meet the definition of derivatives and the risks and characteristics of which are not closely associated with the risks and characteristics of the master contract and the omnibus contracts are not measured at fair value through income statement, such derivatives shall be construed as a unitary derivative.

(16) Provision for liabilities

The recognized liability reserve amount is with the risk and uncertainty of the obligation considered, and it is the optimum estimate of the expenditure required to settle the obligations on the balance sheet date. Provision for liabilities shall be measured based on the discount value of the estimated cash flow for the settlement of obligation.

(17) Treasury stock

Treasury stock was stated at cost and shown as a deduction in shareholders¡¦ equity when the Company repurchased the stock, while it was stated at fair value if it was donation accepted by the Company.

The gains resulting from disposal of the treasury stock, if any, were higher than the book value, the difference thereof was stated under “capital surplus - treasury stock”. If gains were lower than the book value, the difference should first be offset against capital surplus from the same class of treasury stock transactions, and the remainder, if any, should be debited to retained earnings.

When the Company retired treasury stock, the treasury stock was written off, and against the “capital surplus – stock premium” and “capital stock” on a pro rata basis. When the book value of the treasury stock exceeded the total of the “capital stock” and “capital surplus-capital stock premium”, the difference was charged to capital surplus generated from the same class of treasury

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stock transactions and to retained earnings for any remaining amount. When the book value was lower than the total, the difference was credited to capital surplus arising from the same class of treasury stock transactions.

(18) Recognition of revenue

The consolidated company, after identifying the performance obligations, had the transaction price amortized to each performance obligation and recognized as income when the performance obligations were fulfilled.

Contracts of which the time interval between the transfer of goods or services and the consideration is less than one year shall not have its major financial components, such as transaction price, adjusted.

Sales of products

The revenue from product sales is recognized as revenue and accounts receivable by the consolidated company at the time when the customer have set the prices and the right-of-use and are responsible for the resales and bear the risks of obsolete products.

When the material is supplied for processing, the ownership of the processed product is not transferred; therefore, the income is not recognized when the material is supplied.

Interest revenue

The interest income generated from financial assets is recognized when the economic benefit is likely to flow to the consolidated company and the amount of income can be reliably measured. Dividend revenues are recognized by the outstanding capital by the passage of time and the applicable effective interest rate on a accrual basis.

For a single or a group of similar financial asset that is reduced due to impairment losses, the subsequently recognized interest income is calculated in accordance with the interest rate that is used for the discounting of future cash flow when measuring the impairment loss.

Labor service provided

Labor service income is recognized at the time the service is provided.

Revenues yielded by the labor services rendered in accordance with the contract were recognized based on the progress degrees set forth under the contract.

Service fees and commission income

With respect to fee income and expense on the provision of loans or other services, the consolidated company allocates the transaction price to each contract obligation when customers contracts recognize the obligation and then recognizes the income upon fulfilling each performance obligation. Contracts of which the time interval between the services and the consideration is less than one year shall not have its major financial components, such as transaction price, adjusted.

Dividend income

Dividend income from investments is recognized when the shareholders’ right to receive payment is established; however, it is under the preconditions that the economic benefits associated with the transaction system are likely to flow into the consolidated company and the amount of revenues can be measured reliably.

(19) Leasing

2019

The Consolidated Company assesses whether or not the arrangement is (or includes) a lease arrangement on the agreement date

The consolidated company is the lessor

When the lease term is to have all risks and returns attached to the ownership of assets transferred to the lessee, it is classified as a financing lease. All other leases are classified as operating leases.

Lease payments associated with finance leases include fixed payments, in-substance fixed lease payments, and variable lease payments determined by indices or rates, guaranteed residual value, exercise price of purchase options exercised with reasonable assurance, lease termination penalties reflected in the lease period, deducted payable lease incentives. Net investment in a lease is measured based on the sum of the present values of receivable lease payments and unguaranteed residual value plus initial direct costs and shall be expressed as finance lease receivables. Financial revenue is amortized into each accounting period to reflect the

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consolidated company’s fixed rate of return available for each respective period from the outstanding net lease investment.

Lease payments for operating leases upon deduction of lease incentives are recognized as income on a straight-line basis in relevant lease periods. Initial direct costs generated in the acquisition of operating leases are added to the underlying asset carrying amount and recognized as expenses on a straight-line basis in lease periods.

The consolidated company is the lessee

Except for recognizing low-value asset leases applying to exemption and lease payments for short-term leases being recognized as an expense on a straight-line basis over the lease term, other leases will be recognized as right-of-use assets and lease liabilities at lease commencement date.

The right-of-use asset is measured at cost (including the amount equal to the lease liability at its initial recognition, lease payments made before the commencement of the lease less any lease incentives received, any initial direct costs incurred by the lessee, and an estimate of costs to be incurred by the restoring the underlying asset to the condition required) less any depreciation and any accumulated impairment losses. Additionally, the cost is subsequently adjusted for any remeasurement of the lease liability. Right-of-use assets are separately presented on the Consolidated Balance Sheet.

The right-of-use assets were depreciated on a straight-line basis over the period from the commencement date of the lease to expiration of its useful life or expiration of the lease term, whichever date is earlier.

Lease liabilities are measured initially based on the present value of lease payments (incl. fixed payments, in-substance fixed lease payments, and variable lease payments determined by indices or rates). If the implied interest rate of the lease is easily determined, the lease payments will be discounted to their present value using that interest rate. If such interest rate is not easily determined, the incremental borrowing rate will be used.

Subsequently, the lease liabilities are measured at amortised cost using effective interest method and the interest expenses are amortized over the lease term. If changes in indices or rates utilized to determine lease payments lead to changes in future lease payments, the merged company should remeasure lease liabilities and adjust right-of-use assets correspondingly. However, if right-of-use asset carrying amounts have already dropped to zero, remaining remeasurement amounts are recognized as profit or loss. Lease liabilities are separately presented on the Consolidated Balance Sheet.

Changes in rent as stipulated in lease agreements not determined by indices or rates are recognized as expenses in the current period. 2018

The consolidated company is the lessor

Under a financial lease, the amount to be collected from the lessee is recognized as lease receivables in accordance with the net lease investment of the consolidated company. Financial revenue is amortized into each accounting period to reflect the consolidated company’s fixed rate of return available for each respective period from the outstanding net lease investment.

The rental interest in the operational leasehold was recognized as profit within the duration of the relevant leasehold on the straight-line basis.

The consolidated company is the lessee

The financing leasehold was entered into account at the total amount of the current values of the lowest rental payments of various leasehold terms or fair value of the leasehold assets upon the starting date of leasehold, whichever is the lower. The rental liabilities payable were recognized simultaneously.

The implicit interest of the lease payment in each period is recognized as a financial expense for the current period. It can be capitalized if it can be directly classified into an asset that satisfies certain criteria.

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Operating leases payments are recognized as expenses on the linear basis during the lease

term.

(20) Borrowing cost

Borrowing costs directly belonging to acquiring, building or producing assets that meet the requirements are part of the costs of such assets until the completion of all necessary activities that the assets reaching the status of expected use or sale.

The income of a temporary investment with a specific loan that has not yet met the essential requirement of capital expenditure is deducted from the loan cost that meets the essential requirement of capitalization.

In addition to the transaction stated in the preceding paragraph, all other loan costs are recognized as profit and loss upon occurring.

(21) Employee benefits
Short-term employee benefits

Liabilities relating to short-term employee benefits are measured by the non-discounted amount of the expected payment in exchange for employee services.

Retirement benefits

The retirement benefit for the retirement plan is determined by the amount of the pension that should be paid during the period in which the employee provides the service, and is recognized as expenses for that period.

The determined cost of benefit for determined benefit retirement plan (including the cost of service, net interest, and reevaluation) is based on the actuary of projected unit method. The net interest arising from the cost of services (including current service costs and net defined benefit liabilities) is recognized as an employee benefits expense when incurred. The value of second measurement (including the profits and loss under actuary and the return on assets of the plan net or interest) shall be recognized as other comprehensive incomes and as retained earnings, if realized. No reclassification as profits and loss in subsequent periods.

Net defined benefit liability (asset) is the appropriation deficit (surplus) of the defined benefit pension plan. Net determined benefit asset shall not exceed the refund of the appropriated fund or decrease the present value of appropriation of fund in the future.

Employees preferential deposit benefit

The companies of the consolidated financial statements provide preferred deposit for the employees, including the offering of fixed amount preferred deposit at special rate for the employees currently in employment and for the payment to the retired employees and current employees at their retirement. The difference between the interest rate for the aforementioned preferred deposits and market rate shall fall within the scope of employee welfare.

According to the “Regulations Governing the Preparation of Financial Reports by Public Banks”, the interest from the preferred deposit for employees prearranged after retirement in excess of the interest under regular market rate shall be subject to actuarial calculation at the time of the retirement of the employees pursuant to IAS 19, “Employee Benefits” as recognized by FSC. However, the parameters for the assumptions in the actuarial calculation may be regulated by the competent authority, comply accordingly, if applicable.

Other long-term employee benefits

The accounting of long-term employee benefit and benefit after retirement is the same but related value under reevaluation shall be recognized as income.

(22) Income tax

Income tax expense is the sum of the current income tax and deferred income tax.

Income tax expenses in the current period

Additional income tax on unappropriated earnings is calculated in accordance with the provisions of the Income Tax Act of the Republic of China, to be recognized in the year of the shareholder resolution meeting.

The adjustment to prior period income tax payable is booked as current income tax.

Deferred tax

Deferred tax is computed in accordance with the temporary differences between the book value of assets and liabilities and the tax bases of taxable income. Deferred income tax liabilities are generally recognized for all taxable temporary differences. Deferred income tax assets are

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recognized when there is a likelihood to have taxable income available for income tax credit resulting from the expenses of deductable temporary differences and tax loss carryforwards.

The taxable temporary differences related to the investment in the equities of the subsidiaries, affiliates, and joint ventures are recognized as deferred income tax liabilities, except for those that the Consolidated Company can control the timing of reversing the temporary difference and the temporary difference is unlikely reversible in the foreseeable future. The deferred income tax asset arising from deductible temporary differences associated with such investment and equity is recognized as deferred income tax assets within the range of earnings that are with sufficient taxable income to realize temporary differences and are expected to be reversed in the foreseeable future.

The book amount of deferred income tax asset must be reviewed at each balance sheet date. The book amount of those that no longer have any sufficient taxable income to recover all or part of the asset, should be adjusted down. Those that are not originally recognized as deferred income tax assets should also be reexamined at each balance sheet date. The book amount of those that are likely to generate taxable income in the future for the recovery of all or part of its assets should be adjusted up.

Deferred income tax assets and liabilities are measured in accordance with the expected liability liquidation or the tax rate in the period when the asset is realized. The tax rate is based on the tax rate and tax laws that are legislated or substantively legislated at the balance sheet date. The measurement of deferred income tax liabilities and assets reflects the tax effect resulting from the book amount of the assets and liabilities expected to be recovered or liquidated at the balance sheet date.

Current & deferred income taxes

Current and deferred income taxes are recognized in the profit or loss, except for the current and deferred income taxes related to the items recognized in other comprehensive profit or loss or directly included in the equity are recognized in the other comprehensive profit or loss or directly included in the equity. If the current income tax or deferred income tax is resulting from a business consolidation, the income tax effect is included in the accounting process for consolidated company.

Major sources leading to major accounting judgments and uncertainties in estimate

When the accounting policies stated in Note IV adopted by the consolidated company, for the information that is hard to collect from other sources, the management should have the relevant judgments, estimates, and assumptions made in accordance with the historical experience and other relevant factors. Actual results may differ from the estimates.

The management will continue to review the estimates and basic assumptions. If the correction of estimates affects only the current period, it is recognized upon amendment. If the amended estimate affects both current and future periods, it is recognized in the current and future periods. Significant accounting judgments

Business model judgment for financial asset classification

The consolidated company assessed the mode of operation of the financial assets on the basis of the common management platform of a group of financial assets in order to achieve the designated business objective. All relevant evidence shall be considered in the evaluation, including the method for the measurement of asset performance, the risks affecting performance, and the method for determining remuneration to related managers, with the use of sound judgment. The consolidated company shall continue to evaluate whether the judgment of the mode of operation is appropriate, and based on this it shall keep track of financial assets on the basis of cost after amortization before maturity for removal and the investment of debt instruments at fair value through other comprehensive income so as to understand whether the evaluation of the disposition of assets is congruent with the business objective. If the operation was found to be in deviation from the course to the objective, the consolidated company shall postpone the classification of the acquisition of assets after adjustment.

Estimates and assumptions with regard to the main source of uncertainty

(1) Estimated impairment of financial assets

Estimated impairment of loans, discounts, bills purchased, receivables, debt instrument investments, and financial guarantee contracts is based on assumptions by the merged company with regard to default rate and expected loss ratio. Taking into account the consolidated company’s past

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experience, current market situation and future prediction, the consolidated company shall prepare a pro forma report and select appropriate inputs for impairment. For adopted key assumptions and entered values please refer to Note 40 and 41. If the actual future cash flows are less than expected, a material impairment loss may have resulted.

(2) Real estate, plant and equipment, and investment-based real estate’s residual cycle

As stated in Note 4 (10) and (11), the consolidated company reviews the estimated useful life of the property, plant and equipment and investment property on each balance sheet date. Please refer to Note 20 and 22 for the useful lives of the property, plant and equipment and investment property.

6. Cash and cash equivalents

Cash and cash equivalents
Cash on hand Bank deposits Notes and checks for clearing Due to Central Bank and other banks		December 31, 2019 $ 4,556,792 3,181,118 1,007,649 5,798,664 $ 14,544,223		December 31, 2018
				$ 4,333,984 2,968,670 5,715,928 5,828,080 $ 18,846,662

(1) With regard to the aforementioned cash and cash equivalent balances, it has been determined based on past experience and foresight that no loss allowances are appropriated for expected credit losses over 12 months as of December 31, 2018 and 2019.
(2) For cash and cash equivalent balances on the Consolidated Statement of Cash Flows and relevant items on the consolidated balance sheet as of 2019 and December 31, 2018, please refer to the Consolidated Statement of Cash Flows.
(3) The amounts of certificate of deposit at other banks from the consolidated company used as the operation bond of Taichung Commercial Bank Securities Brokerage as of December 31, 2019 and 2018 are both NT$200,000 thousand, and they are trasnferred to the refundable deposit, as described in Note 24.

7. Due from Central Bank and lend to Banks

Reserve for deposits Reserve for deposits – checking account Reserve for deposits – demand account Financial Information Service Co., Ltd. – liquidated account Reserve for deposits in foreign currency Call loans to banks Reserve for trust funds compensation		December 31, 2019 $ 14,879,013 16,997,138 1,512,809 60,000 368,014 60,000 $ 33,876,974		December 31, 2018
				$ 12,624,827 17,001,032 1,798,018 61,420 223,600 60,000 $ 31,768,897

(1) With regard to the aforementioned Due from the Central Bank & Call Loans to Banks, it has been determined based on past experience and foresight that no loss allowances are appropriated for expected credit losses over 12 months as of 2019 and December 31, 2018.
(2) The deposit reserve is the average balance of various deposits that are required to be deposited as reserve by Taichung Commercial Bank on a monthly basis, and it is deposited to the reserve account at the Central Bank in accordance with the required deposit reserve ratio. The demand account reserve can be used only for the monthly adjustment of the deposit reserve.
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(3) The Reserve for trust funds compensation by Government bonds on the basis of cost after amortization on December 31, 2019 is stated at the par value of NTD 60,000 thousand. Please refer to Note 37 for details.
Financial instrument at fair value through profit and loss

Financial assets at fair value through profit and loss Commercial papers Shares traded on the Taiwan Stock Exchange or OTC exchange Shares traded on foreign exchange or OTC exchange PEM Group Insurance policy assets Beneficiary certificate Corporate bond Assets swap agreement Foreign exchange contracts Forward contract FX options contracts NDF Interest rate derivatives Financial liabilities at fair value through profit and loss Foreign exchange contracts Forward contract FX options contracts NDF Interest rate derivatives	December 31, 2019 $ 20,074,138 914,420 98,199 1,029,839 801,720 89,816 1,812,530 71,394 82,809 $ 125,545 4,802 - $ 25,105,212 $ 88,092 27,168 113,590 4,953 - $ 233,803	December 31, 2018	December 31, 2018
			$ 22,044,240 1,629,612 65,560 998,147 524,766 57,899 1,911,673 29,105 49,726 $ 98,176 - 11 $ 27,408,915 $ 55,386 30,977 78,986 - 11 $ 165,360

(1) The consolidated company financial derivative contract related to a foreign exchange rate is a non-trading operation performed for the purpose of providing customers with a hedging tool for the foreign exchange position generated from import/export and foreign exchange and hedging the risk from business and meeting the need for foreign exchange funds.
(2) The foreign exchange contracts which have not yet matured before December 31, 2019 and 2018 are specified as follows:

==> picture [320 x 32] intentionally omitted <==

----- Start of picture text -----

December 31, 2019 December 31, 2018
Contract Amount Contract Amount (NT$
(NT$ thousand) Date of maturity thousand) Date of maturity
Sold CNY310,034 2020/01/13-2020/09/18 Sold CNY 121,693 2019/01/11-2019/11/13
----- End of picture text -----

Sold	CNY310,034	CNY310,034	2020/01/13-2020/09/18	Sold CNY	121,693	2019/01/11-2019/11/13
	HKD223,175		2020/05/26-2020/06/12	HKD	162,378	2019/01/22-2019/03/05
	USD	20,152	2020/01/03-2020/12/10	EUR	3,000	2019/01/09
	GBP	4,500	2020/01/06	USD	42,219	2019/01/07-2019/12/04
	EUR	4,600	2020/01/06	JPY	3,671,053	2019/01/04-2019/01/07
	NZD	3,000	2020/01/03	Bought CNY	28,799	2019/01/28-2019/12/04
	ZAR206,055		2020/01/10-2020/03/10	NZD	7,000	2019/01/11
	TWD335,433		2020/03/06-2020/09/11	ZAR	316,333	2019/01/11-2019/01/22
Bought	CNY	30,388	2020/02/11-2020/12/10	AUD	15,000	2019/01/07-2019/01/22
	NZD	7,500	2020/01/03	GBP	13,500	2019/01/04-2019/01/07
	ZAR174,963		2020/01/03-2020/03/10	USD	58,134	2019/01/04-2019/11/13
	AUD	8,445	2020/01/06
	CAD	3,376	2020/01/06-2020/05/26
	USD	96,741	2020/01/03-2020/09/18
	JPY 486,180		2020/01/06

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(3) The foreign exchange contracts which have not yet matured before December 31, 2019 and 2018 are specified as follows:

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----- Start of picture text -----

Contract Amount (NT$
Currency Date of maturity thousand)
----- End of picture text -----

pecified as follows:	Currency	Date of maturity	Contract Amount (NT$ thousand)
December 31, 2019
Forward exchange sold	USD translated into NTD	2020/01/02-2020/12/09	USD52,017/NTD1,587,47
			4
Forward exchange sold	EUR translated into NTD	2020/01/03-2020/03/27	EUR1,840/NTD62,316
Forward exchange sold	RMB translated into NTD	2020/02/10-2020/12/24	CNY5,370/NTD23,208
Forward exchange sold	JPY translated into NTD	2020/01/09-2020/11/19	JPY198,000/NTD55,703
Forward exchange sold	AUD translated into NTD	2020/04/23-2020/09/30	AUD1,550/NTD32,371
Forward exchange sold	HKD translated into NTD	2020/02/14-2020/04/01	HKD2,731/NTD10,603
Forward contract bought	NTD translated into USD	2020/01/17-2020/06/11	NTD422,335/USD14,000
Forward contract bought	JPY to GBP	2020/01/15-2020/02/27	JPY829,400/GBP6,000
Forward contract bought	USD translated into RMB	2020/01/10-2020/04/14	USD29,850/CNY208,618
Forward contract bought	USD translated into EUR	2020/01/16-2020/07/02	USD13,386/ EUR12,000
Forward contract bought	USD translated into GBP	2020/02/18-2020/07/02	USD11,786/GBP9,200
Forward contract bought	USD translated into NZD	2020/03/06	USD1,302/NZD2,000
Forward contract bought	RMB translated into USD	2020/01/10-2020/12/10	CNY55,696/USD7,904
Forward contract bought	EUR translated into USD	2020/01/17	EUR1,000/USD1,145
Forward contract bought	GBP translated into USD	2020/01/13-2020/03/27	GBP7,500/USD9,902
Forward contract bought	JPY translated into USD	2020/01/07-2020/04/17	JPY2,277,230/USD21,000
Forward contract bought	EUR translated into JPY	2020/03/09	EUR600/JPY72,444
Forward contract bought	USD translated into ZAR	2020/02/14-2020/03/19	USD9,000/ZAR133,478
Forward contract bought	USD translated into AUD	2020/03/30-2020/06/12	USD3,474/AUD5,000
December 31, 2018
Forward exchange sold	USD translated into NTD	2019/01/02-2019/11/08	USD53,603/NTD1,620,26
			7
Forward exchange sold	EUR translated into NTD	2019/02/12-2019/10/30	EUR3,215/NTD113,526
Forward exchange sold	RMB translated into NTD	2019/01/24	CNY1,000/NTD4,428
Forward exchange sold	JPY translated into NTD	2019/03/05-2019/12/04	JPY211,000/NTD57,484
Forward contract bought	NTD translated into USD	2019/02/15	NTD57,030/USD2,000
Forward contract bought	EUR translated into USD	2019/01/12-2019/06/21	EUR17,700/USD20,771
Forward contract bought	GBP translated into USD	2019/01/15-2019/05/17	GBP11,700 /USD15,167
Forward contract bought	JPY translated into USD	2019/01/23-2019/01/28	JPY441,740/USD4,000
Forward contract bought	RMB translated into USD	2019/01/09-2019/12/25	CNY88,843/USD12,982
Forward contract bought	USD translated into EUR	2019/02/21-2019/06/24	USD22,660/EUR19,600
Forward contract bought	USD translated into GBP	2019/03/12-2019/05/07	USD2,413/GBP1,900
Forward contract bought	Pound Sterling to	2019/02/15-2019/03/22	GBP7,600/JPY1,097,730
	Japanese Yen
Forward contract bought	USD translated into JPY	2019/03/20-2019/06/28	USD17,000 /JPY1,880,498
Forward contract bought	EUR translated into JPY	2019/06/25	EUR1,000/JPY125,910

(4) By 2019 and December 31, 2018, outstanding asset swap contract amounts of the merged company equaled NT$ 1,811,600 thousand and NT$ 1,911,400 thousand, respectively with an interest rate collar of 0.90%–1.35%
(5) By 2019 and December 31, 2018, outstanding foreign exchange option contract amounts equaled NT$ 12,375,872 thousand (US$ 412,529 thousand) and NT$ 6,617,168 thousand (US$ 215,473 thousand).
(6) By December 31, 2018, the outstanding interest-rate linked structured product contract amount equaled NT$ 14,889 thousand with an interest rate collar of 6.50%. By December 31, 2019, all interest-rate linked structured product contracts undertaken by the merged company had reached maturity.
Bonds and securities sold under repurchase agreements
As of December 31, 2019 and 2018, the consolidated company's repurchase of coupons and bonds
amounted NT$10,256,716 thousand and NT$9,294,168 thousand, with the interest rate range of 0.54% to 0.56% and 0.35% to 0.65%, and the re-sell amounts after the contract were NT$10,258,145 thousand and NT$9,295,812 thousand, respectively.
Notes receivable, accounts receivable and other receivables
27 -

Notes receivable Notes receivable - Taichung Commercial Bank Notes receivable Less:Unrealized gain on interest Less: Loss allowance - Taichung Commercial Bank Please refer to Note 37 for the status Accounts receivable Accounts receivable Accounts receivable - Taichung Commercial Bank Rent receivables Interest receivable - Banking industry Receivable transfers Receivable factoring Less:Unrealized gain on interest Less:Loss allowance Less: Loss allowance - Taichung Commercial Bank Other receivables Receivable spot exchange settlement payment Acceptances receivable Receivable proceeds for delivery of securities Other receivables Receivable proceeds for sale of securities Others Less:Loss allowance Less: Loss allowance - Taichung Commercial Bank	December 31, 2019 December 31, 2018 $ 4,586,001 $ 3,801,182 100,471 218,167 ( 198,902 ) ( 172,847 ) ( 55,774 ) ( 37,602 ) $ 4,431,796 $ 3,808,900 on notes receivable as short-term loan guarantee. December 31, 2019 December 31, 2018 $ 2,453,033 $ 3,269,068 785,636 748,384 3,358,947 2,645,781 1,216,731 1,317,322 756,458 1,286,128 649,997 133,277 ( 459,883 ) ( 333,290 ) ( 234,602 ) ( 239,423 ) ( 109,180 ) ( 112,689 ) $ 8,417,137 $ 8,714,558 $ 870,200 $ 1,909,476 505,650 836,196 686,758 475,828 December 31, 2019 December 31, 2018 $ - $ 119,576 453,044 378,779 2,515,652 3,719,855 ( 1,932 ) ( 1,932 ) ( 129,343 ) ( 147,554 ) $ 2,384,377 $ 3,570,369	December 31, 2018	December 31, 2018
		$ 3,269,068 748,384 2,645,781 1,317,322 1,286,128 133,277 ( 333,290 ) ( 239,423 ) ( 112,689 ) $ 8,714,558 $ 1,909,476 836,196 475,828 December 31, 2018
	( (	( (	$ 119,576 378,779 3,719,855 1,932 ) 147,554 ) $ 3,570,369

(1) Accounts receivable

The average credit period for the consolidated company's sales of goods is 30 to 90 days, and the accounts receivable are not interest-bearing. The unpaid balance 30 days over the credit period will incur an interest at 3% annual interest rate. The consolidated company only conducts transactions with the parties which have passed the internal credit check, and if necessary, shipment may be stopped and guarantee notes may be needed to mitigate the potential risk of financial losses caused by default. The consolidated company will use other publicly available financial information and historical transaction records to rate major customers. The consolidated company continuously monitors the credit risk exposure and the credit rating of the counterparty, and the total transaction amount is distributed to various customers with qualifying credit ratings. Every year, the management reviews and approves, based on their level of authorization, the credit limit of counterparties to manage the credit risk exposure.

28 -

In order to mitigate credit risk, the management of the consolidated company assigns dedicated personnel responsible for the decision on credit line, credit approval and other monitoring procedures to ensure that the overdue receivables are recovered and appropriate actions are taken. In addition, the consolidated company will review the recoverable amount of receivables on each balance sheet date to ensure that appropriate impairment loss has been appropriated for the uncollectible receivables. Under the circumstance, the Company’s management believes that the consolidated company’s credit risk is significantly reduced.

Except for Taichung Commercial Bank and its subsidiary, the consolidated company adopts the simplified approach of the IFRS 9 to recognize the loss allowance of receivables based on the expected credit loss of the duration. The full-lifetime expected credit losses are calculated using Provision Matrix, which considers the historical default records and current financial status, industry economic conditions, as well as GDP forecast and industry outlook. Due to the historical experience of credit losses of the consolidated companies, there is no significant difference in the loss patterns of different customer groups. Therefore, the provision matrix does not further distinguish the customer base, and only sets the expected credit loss rate based on the overdue days of receivables.

If there is evidence that the counterparty is facing serious financial difficulties and the consolidated company cannot reasonably expect the recoverable amount back, the consolidated company will directly write off the relevant accounts receivable, but will continue its recourses, and the amount recovered will be recognized in profit or loss.

The consolidated company (excluding Taichung Commercial Bank and its subsidiary) measures the notes receivable and the loss allowance of accounts in accordance with the provision matrix: December 31, 2019

==> picture [326 x 16] intentionally omitted <==

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Overdue 1 to Overdue 31 to Overdue 61 to Overdue over
Not overdue 30 days 60 days 120 days 120 days Total
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xpecte cret loss rate Total Book Value Allowance for loss (expected credit loss of the given duration) ( Cost after amortization	0%~5% $ 1,926,882 73,931 ) ( $ 1,852,951	13%~17% $ 476,222 78,245 ) ( $ 397,977	50%~75% $ 139,877 71,903 ) $ 67,974	75%~100% $ - - ( $ -	100% $ 10,523 10,523 ) ( $ -	- $ 2,553,504 234,602) $ 2,318,902

29 -

December 31, 2018

December 31, 2018	December 31, 2018	December 31, 2018
Not overdue Overdue 1 to 30 days Expected credit loss rate 0%~5% 13%~17% Total Book Value $ 2,589,952 $ 804,132 Allowance for loss (expected credit loss of the given duration) ( 71,475 ) ( 103,445 ) Cost after amortization $ 2,518,477 $ 700,687 Loss allowance of receivables as follows: Balance - beginning $ Add: Recover the bad debts that have been written off Add: Impairment loss appropriated in current period Less: Actual write-off amount in the current period ( Less: Reversal of impairment lossin current period ( Reclassification Foreigncurrency translation differences ( Balance - ending $			Overdue 31 to 60 days 65%~75% $ 82,066 ( 53,418 ) $ 28,648 2019	Overdue 61 to 120 days Overdue over 120 days Total 75%~100% 100% - $ 154 $ 10,931 $ 3,487,235 ( 154 ) ( 10,931 ) ( 239,423 ) $ - $ - $ 3,247,812 2018 $ 612,978 15,872 32,890 ) ( 43,353 ) ) - - ) ( 71,851 ) $ 546,536		Overdue over 120 days 100% $ 10,931 ( 10,931 ) $ - 2018	Total
				75%~1 $ (
				$	-
				) ) )
	( ( (	$	546,536 16,492 121,546 196,126 4,412 56,624 4,465		( (
		$	536,195

The loss allowance of the above-mentioned receivables include notes receivable, accounts receivable, other receivables and the loss allowance from non-loans transferred to collection.

(2) Changes in carrying amount of accounts receivable of Taichung Commercial Bank and its subsidiary: 2019

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Anticipated credit
loss within the
Anticipated credit perpetuity of the Financial assets with
loss in 12 months financial assets credit impairment Total
Balance as of January 1,
2019 $ 59,094,832 $ 226,460 $ 314,656 $ 59,635,948
Converted as anticipated
credit loss within the
perpetuity of the financial
assets ( 477,280 ) 483,005 ( 5,725 ) -
Converted as financial
assets with credit
impairment ( 73,185 ) ( 35,874 ) 109,059 -
Converted as anticipated
credit loss in 12 months 22,944 ( 9,661 ) ( 13,283 ) -
Initiated or procured
receivables 11,259,104 6,425 133,797 11,399,326
Write-off bad debts - ( 20,242 ) ( 175,884 ) ( 196,126 )
de-recognition ( 6,473,610 ) ( 95,016 ) ( 71,408 ) ( 6,640,033 )
Foreign exchange
settlement and other
changes ( 448,640 ) 2,220 23,859 ( 422,561 )
Balance - ending $ 62,904,165 $ 557,317 $ 315,071 $ 63,776,553
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30 -

2018

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Anticipated credit loss
Anticipated credit loss within the perpetuity of Financial assets with
in 12 months the financial assets credit impairment Total
Balance as of January 1, 2019 $ 59,913,373 $ 429,594 $ 302,897 $ 60,645,864
Converted as anticipated credit
loss within the perpetuity of
the financial assets ( 68,200 ) 68,250 ( 50 ) -
Converted as financial assets with
credit impairment ( 92,358 ) ( 22,337 ) 114,695 -
Converted as anticipated credit
loss in 12 months 30,898 ( 30,556 ) ( 342 ) -
Initiated or procured receivables 7,277,784 12,086 74,539 7,364,409
Write-off bad debts ( 2,866 ) - ( 112,012 ) ( 114,878 )
de-recognition ( 8,817,972 ) ( 235,487 ) ( 102,244 ) ( 9,155,703 )
Other changes 854,173 4,910 37,173 896,256
Balance - ending $ 59,094,832 $ 226,460 $ 314,656 $ 59,635,948
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The above-mentioned receivables include interbank deposits, the Central Bank deposits and interbank lending, bills and bonds purchased under resale agreements, notes receivable, credit card receivables, factoring, interest receivable, acceptance receivable, lease receivable, receivable from securities sold, receivable from securities delivered, other receivables, non-loans transferred to collection and refundable deposit.

(3) Statement of Changes in Loss Allowance for Accounts Receivable of Taichung Bank and its subsidiaries:

2019

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Impairment difference
recognized in
accordance with the
“Regulations
Governing
the Procedures for
Anticipated Banking Institutions
credit loss within Impairment to Evaluate Assets and
Anticipated the perpetuity of Financial assets recognized in Deal with Non-
credit loss in 12 months the financial assets imwith credit pairment waccordance ith IFRS 9 performing/ Non-accrual Loans” Total
Balance as of January 1, 2019 $ 87,567 $ 5,695 $ 151,315 $ 244,577 $ 57,500 $302,077
Changes in financial instruments
recognized at the beginning
of the period:
Converted as anticipated
credit loss within the
perpetuity of the
financial assets ( $ 6,905 ) $ 7,332 ( $ 427 ) $ - $ - $ -
Converted as financial
assets with credit
impairment ( 641 ) ( 819 ) 1,460 - - -
Converted as anticipated
credit loss in 12
months 6,542 ( 1,335 ) ( 5,207 ) - - -
Financial assets removed in
current period ( 71,437 ) ( 2,039 ) 2,892 ( 70,584 ) - ( 70,584 )
Procured or initiated new
financial assets 84,315 776 80,009 165,100 - 165,100
Impairment difference recognized
in accordance with the
“Regulations Governing
the Procedures for Banking
Institutions to Evaluate Assets
and Deal with Non-
performing/ Non-
accrual Loans” - - - - 8,507 8,507
Write-off bad debts - ( 20,242 ) ( 117,213 ) ( 137,455 ) ( 58,671 ) ( 196,126)
Recovered amount after write-off
bad debts - - - - 16,492 16,492
Foreign exchange settlement and
other changes ( 3,561 ) 22,257 52,395 71,091 - 71,091
Balance - ending $ 95,880 $ 11,625 $ 165,224 $ 272,729 $ 23,828 $296,557
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31 -

2018

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Allowance loss for above-mentioned receivables includes allowance for bad debts for delinquent loans other than loans transferred from loans. Please refer to Note 24 for details. 11. Inventory

nventory
Merchandise Finished goods Work in process Raw materials Supplies	December 31, 2019 $ 416,548 742,021 92,277 214,869 75,769 $ 1,541,484	December 31, 2018
			$ 1,143,707 838,475 148,893 483,756 74,203 $ 2,689,034

(1) The inventories of finished goods included the finished goods, by-products, supplies in transit and commissioned processed goods produced by the Consolidated Company, primarily the finished goods produced by Kaohsiung petrifaction plant, ethylene glycol, and the finished goods of the polyester plant, polyester silk, et al.

32 -
(2) The consolidated company's cost of goods sold related to inventory in 2019 and 2018 were NT$18,600,578 thousand and NT$22,612,538 thousand, respectively. Cost of goods sold include inventory losses (revaluation gains) of NT$(104,091) thousand and NT$4,520 thousand, respectively, and the loss from work stoppage were NT$660,388 thousand and NT$382,898 thousand, respectively.
(3) By 2019 and December 31, 2018, allowance to reduce inventory to market amounted to NT$ 360,125 thousand and 486,647 thousand, respectively.
Prepayments

12.	Prepayments
13.	Pre-paid expenses Pre-paid material purchases Tax credit Available-for-sale noncurrent ass	December 31, 2019 $ 760,261 87,029 111,101 $ 958,391 ets December 31, 2019 $ 769,610	December 31, 2018
			$ 729,629 95,534 206,574 $ 1,031,737 December 31, 2018 $ 769,610
	Land for sale

(1) China Man-Made Fiber Corporation has approved a land sale plan as per board resolution in 2018 and is currently actively searching for buyers. The land in question has therefore been reclassified as a non-current asset held for sale. When China Man-Made Fiber Corporation committed to the land sale plan, it already reasonably anticipated that actions by other parties regarding added transfer conditions and response to said conditions can only be initiated upon acquisition of a firm purchase commitment. However, it is likely that such a firm purchase commitment can be acquired within the upcoming year. Said land is therefore still classified as a non-current asset held for sale.
(2) Upon remeasurement of the carrying amount and fair value less costs to sell of the disposal group held for sale, it has been determined that no impairment loss is present.
(3) For the available-for-sale noncurrent assets furnished as the security for mortgage, please see Note 37.
Other current assets

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December 31, 2019 December 31, 2018
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Restricted assets – bank deposits Others	$ 543,795 19,336 $ 563,131	$ 606,217 11,532 $ 617,749

Restricted current assets are earmarked for Customs Office clearance procedures and pledged collateral for short-term loans – please refer to Note 37.

33 -

15. Discounting and advances - Net

Discounting and advances - Net
Bills negotiated and discounts Overdraft Secured overdraft Accounts receivable financing Securities receivable financing Short-term loan Short-term secured loans Mid-term loans Mid-term secured loans Long-term loans Long-term secured loans Delinquent Accounts Add: Adjustment of premium/discount Less: allowance for bad debt		December 31, 2019 $ 393,291 1,404 38,166 51,595 929,368 39,586,875 100,653,393 49,151,361 103,127,599 5,210,470 141,838,997 963,045 441,945,564 26,487 6,573,717 ) $ 435,398,334		December 31, 2018
	(		(	$ 475,822 1,061 10,031 80,862 866,372 43,046,052 103,198,900 49,659,266 109,958,945 4,499,987 145,623,202 1,662,082 459,082,582 44,071 6,532,101 ) $ 452,594,552

(1) As of December 31, 2019 and 2018, the balance of loans and other credits with frozen interest rates at Taichung Commercial Bank were NT$949,601 thousand and NT$1,640,185 thousand, respectively. The interest receivables not recorded were NT$22,534 thousand and NT$34,228 thousand, respectively.
(2) In 2019 and 2018, Taichung Commercial Bank did not have the cases of translation of creditor's rights without prosecution.
(3) The changes in the total book value of discounting and advances of Taichung Commercial Bank and its subsidiary are shown as follows:

2019

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----- Start of picture text -----

Anticipated credit
loss within the Financial assets
Anticipated credit perpetuity of the with credit
loss in 12 months financial assets impairment Total
Balance as of January 1,
2019 $435,868,501 $ 15,341,731 $ 7,916,421 $459,126,653
Converted as anticipated
credit loss within the
perpetuity of the
financial assets ( 7,768,850 ) 7,849,116 ( 80,266 ) -
Converted as financial
assets with credit
impairment ( 3,018,334 ) ( 1,694,994 ) 4,713,328 -
Converted as anticipated
credit loss in 12 months 2,487,600 ( 2,417,603 ) ( 69,997 ) -
Initiated or procured
discount and loans 217,508,394 2,752,410 593,167 220,853,971
Write-off bad debts ( 41,246 ) ( 366,663 ) ( 927,477 ) ( 1,335,386 )
de-recognition ( 210,078,061 ) ( 4,281,192 ) ( 2,954,801 ) ( 217,314,054 )
Foreign exchange
settlement and other
changes ( 19,414,260 ) ( 308,940 ) 364,067 ( 19,359,133 )
Balance - ending $415,543,744 $ 16,873,865 $ 9,554,442 $441,972,051
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34 -

2018

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----- Start of picture text -----

Anticipated credit
loss within the Financial assets
Anticipated credit perpetuity of the with credit
loss in 12 months financial assets impairment Total
Balance as of January 1,
2019 $402,804,819 $ 32,188,249 $ 2,209,702 $437,202,770
Converted as anticipated
credit loss within the
perpetuity of the
financial assets ( 7,160,622 ) 7,163,352 ( 2,730 ) -
Converted as financial
assets with credit
impairment ( 1,835,301 ) ( 4,787,508 ) 6,622,809 -
Converted as anticipated
credit loss in 12 months 7,142,086 ( 7,141,465 ) ( 621 ) -
Initiated or procured
discount and loans 251,247,141 3,555,867 1,327,498 256,130,506
Write-off bad debts ( 20,366 ) ( 306,169 ) ( 707,249 ) ( 1,033,784 )
de-recognition ( 195,580,567 ) ( 14,245,972 ) ( 875,437 ) ( 210,701,976 )
Other changes ( 20,728,689 ) ( 1,084,623 ) ( 657,551 ) ( 22,470,863 )
Balance - ending $435,868,501 $ 15,341,731 $ 7,916,421 $459,126,653
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(4) Changes in allowance loss of 2018 discounting and advances of Taichung Commercial Bank and its subsidiary:

2019

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----- Start of picture text -----

Impairment
difference
recognized in
accordance with
the “Regulations
Governing
the Procedures
for Banking
Institutions to
Anticipated Evaluate Assets
credit loss Impairment and Deal with
Anticipated within the Financial assets recognized in Non-performing/
credit loss in 12 perpetuity of the with credit accordance Non-
months financial assets impairment with IFRS 9 accrual Loans” Total
Balance as of January 1,
2019 $ 1,768,334 $ 661,840 $ 2,035,208 $ 4,465,382 $ 2,066,719 $ 6,532,101
Changes in financial
instruments
recognized at the
beginning of the
period:
Converted as
anticipated credit
loss within the
perpetuity of the
financial assets ( 20,881 ) 31,563 ( 10,682 ) - - -
Converted as
financial assets
with credit
impairment ( 8,619 ) ( 99,038 ) 107,657 - - -
Converted as
anticipated credit
loss in 12 months 133,519 ( 128,814 ) ( 4,705 ) - - -
Financial assets
removed in
current period ( 1,053,833 ) ( 155,288 ) ( 632,674 ) ( 1,841,795 ) - ( 1,841,795 )
Procured or initiated new
financial assets 1,127,791 112,374 192,290 1,432,455 - 1,432,455
Impairment difference
recognized in
accordance with the
“Regulations $ - $ - $ - $ - ($ 559,801 ) ($ 559,801 )
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35 -

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Governing
the Procedures for
Banking Institutions
to Evaluate Assets
and Deal with Non-
performing/ Non-
accrual Loans”
Write-off bad debts ( 118 ) ( 50,704 ) ( 370,099 ) ( 420,921 ) ( 914,465 ) ( 1,335,386 )
Recovered amount after
write-off bad debts - - - - 884,025 884,025
Foreign exchange
settlement and other
changes ( 169,565 ) 480,421 1,151,262 1,462,118 - 1,462,118
Balance - ending $ 1,776,628 $ 852,354 $ 2,468,257 $ 5,097,239 $ 1,476,478 $ 6,573,717
2018
Impairment
difference
recognized in
accordance with
the “Regulations
Governing
the Procedures
for Banking
Institutions to
Anticipated Evaluate Assets
credit loss Impairment and Deal with
Anticipated within the Financial assets recognized in Non-performing/
credit loss in 12 perpetuity of the with credit accordance Non-
months financial assets impairment with IFRS 9 accrual Loans” Total
Balance as of January 1,
2019 $ 1,644,957 $ 2,624,516 $ 490,440 $ 4,759,913 $ 1,584,897 $ 6,344,810
Changes in financial
instruments
recognized at the
beginning of the
period:
Converted as
anticipated credit
loss within the
perpetuity of the
financial assets ( 15,810 ) 16,855 ( 1,045 ) - - -
Converted as
financial assets
with credit
impairment ( 6,279 ) ( 442,489 ) 448,768 - - -
Converted as
anticipated credit
loss in 12 months 376,160 ( 376,096 ) ( 64 ) - - -
Financial assets
removed in
current period ( 1,035,356 ) ( 1,590,753 ) ( 172,658 ) ( 2,798,767 ) - ( 2,798,767 )
Procured or initiated new
financial assets 1,277,528 200,940 421,442 1,899,910 - 1,899,910
Impairment difference
recognized in
accordance with the
“Regulations
Governing
the Procedures for
Banking Institutions
to Evaluate Assets
and Deal with Non-
performing/ Non-
accrual Loans” - - - - 550,859 550,859
Write-off bad debts ( 3 ) ( 15,876 ) ( 242,177 ) ( 258,056 ) ( 775,728 ) ( 1,033,784 )
Recovered amount after
write-off bad debts - - - - 706,691 706,691
Foreign exchange
settlement and other
changes ( 472,863 ) 244,743 1,090,502 862,382 - 862,382
Balance - ending $ 1,768,334 $ 661,840 $ 2,035,208 $ 4,465,382 $ 2,066,719 $ 6,532,101
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36 -

16. Financial assets at fair value through other comprehensive profit or loss

Financial assets at fair value through other comprehensive profit or loss
December 31, 2019 December 31, 2018 Equity instrument investments measured at fair value through other comprehensive income Equity investment $ 4,696,243 $ 3,521,896 Debt instrument 30,000,344 27,492,194 $ 34,696,587 $ 31,014,090 (1) Equity instrument investments measured at fair value through other comprehensive income December 31, 2019 December 31, 2018 Domestic publicly listed, OTC and Emerging Stock Board companies $ 3,319,533 $ 2,412,780 Non listed (OTC) domestic stock 1,085,654 905,465 Overseas listed, OTC and non- listed companies 291,056 203,651 $ 4,696,243 $ 3,521,896	December 31, 2018
		$ 2,412,780 905,465 203,651 $ 3,521,896

The consolidated company invested in the aforementioned common shares of companies in line with its long-term investment strategic objective with the anticipation of return from long-term investment. The management of the consolidated company holds that the short-term fluctuation in the fair value of these investments shall be recognized as income or loss and is not congruent with the aforementioned long-term investment plan, therefore they chose to designate these investments as financial assets at fair value through other comprehensive income.
For circumstances of equity instruments posting for mortgaging guarantee under other general loss or gain measured by fair value, please refer to Note 37.
(2) Debt instrument investments measured at fair value through other comprehensive income

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December 31, 2019 December 31, 2018
Corporate bond $ 21,503,613 $ 20,730,435
----- End of picture text -----

Government bonds Overseas bond Financial bonds	5,997,423 799,314 1,699,994 $ 30,000,344	5,976,359 785,400 - $ 27,492,194

The consolidated company assessed the expected credit loss of debt instruments measured at fair value through other comprehensive income in 2019 and 2018 and recognized a reversal of asset impairment at NT$ 113 thousand and NT$3,820 thousand.
With respect to the credit risk management of debt instruments measured at fair value through comprehensive income and the assessment of impairment, please refer to Note 41.
37 -

17.	Investment of debt instruments on the basis of cost after amortization December 31, 2019 Overseas bond $ 23,806,064 Government bonds 14,246,649 Negotiable certificate of deposits issued by Central Bank 59,535,000 Corporate bond 11,413,931 Debt instruments 9,291 109,010,935 Less: Allowance for losses ( $ 41,662 ) Less: Deduction of provision for trust compensation reserve and refundable security deposits. ( 844,900) $ 108,124,373 (1) Overseas bonds denominated in foreign currencies: December 31, 2019 USD $ 638,859 RMB 550,000 AUD 61,000 ZAR 450,000		December 31, 2018
		( (	$ 21,361,293 13,123,603 55,500,000 11,418,843 9,511 101,412,891 $ 105,129 ) 845,000) $ 100,462,761 December 31, 2018
			$ 571,613 510,000 61,000 70,000

(2) The face value of government bonds/foreign bonds measured at amortized cost provided by the merged company as repurchase agreement terms amounted to NT$ 2 billion and 8.85 billion (US$ 295 million), and NT$ 1.2 billion and 9,642,940,000 (US$ 314 million), in 2019 and December 31, 2018, respectively. For more information on carrying amounts, please refer to Note 42.
(3) Upon assessment of expected credit losses of debt instruments measured at amortized cost in 2019 and 2018, gain on reversal of asset impairment of NT$ 6,338,000 and asset impairment loss of NT$ 21,308,000 were recognized by the merged company.
(4) With respect to the credit risk management of debt instruments carried at cost after amortization and the assessment of impairment, please refer to Note 41.
Subsidiaries
(1) Subsidiaries included in the consolidated financial statements

The business entities of the consolidated financial statements are as follows:

Investor CHINA MAN-MADE FIBER CORPORATION	Name of Subsidiary Deh Hsing Investment Co., Ltd. Chou Chin Industrial Co., Ltd. Pan Asia Chemical Corporation	Nature of the operation General investment business Manufacturing and trading Petrochemical business	Percentage of shareholdings	Percentage of shareholdings
			December 31, 2019 100% 50% 49%	December 31, 2018
				100% 50% 49%

(Continued on next page)

38 -

(Continued from previous page)

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Nature of the December December
Investor Name of Subsidiary operation 31, 2019 31, 2018
Taichung Securities Securities investment 50% 50%
----- End of picture text -----

Investor	Name of Subsidiary Taichung Securities	Nature of the operation Securities investment	December 31, 2019 50%	December 31, 2018 50%
	Investment Trust Co., Ltd.	trust business
	(Original name: Reliance
	Securities Investment
	Trust Co., Ltd.)
	Taichung Commercial Bank	Banking business	29%	29%
	Co.
	EUREKAINVESTMENT	General investment	100%	100%
	COMPANY LIMITED	business
	Melasse	Cosmetics and	100%	100%
		cleaning appliances
		manufacturing
Deh Hsing Investment	Xiang-Feng Development	General investment	100%	100%
Co., Ltd.		business
	IOLITE	General investment	100%	100%
	COMPANY LIMITED	business
IOLITE	Hammock (Hong Kong)	General investment	100%	100%
COMPANY LIMITED	Company Limited	business
	Precious Wealth	General investment	100%	100%
	International Limited	business
Hammock (Hong Kong)	Hebei Hanoshi Contact Lens	Manufacturing and	100%	100%
Company Limited	Co., Ltd.	trading
Xiang-Feng	Tou-Ming Industry	Real estate	99%	99%
Development		development and
		leasing industry
Tou-Ming Industry	Jin-Bang-Ge Industry	Real estate	99%	99%
		development and
		leasing industry
Chou Chin Industrial	GREENWORLD FOOD	Food manufacturing,	96%	96%
Co., Ltd.	CO., LTD.	and distribution
		and warehousing of
		beverages
	Chou Chang Corporation	Distribution and	64%	63%
		warehousing of
		beverages
	Pan-Feng Industry	Restaurant industry	100%	100%
	Bomy Enterprise	General investment	62%	62%
		business
	Yuju Universal Corporation	General investment	90%	90%
		business
Yuju Universal	Noble House Glory	Short-term	100%	100%
Corporation		accommodation
		service
Bomy Enterprise	Bomy Shanghai	Manufacturing and	99%	99%
		trading
Taichung Commercial	Taichung Commercial Bank	Taichung	100%	100%
Bank Co.	Insurance Broker	Commercial Bank
	Co., Ltd.	Co., Ltd.
	Taichung Commercial	Leasing	100%	100%
	Bank Lease Enterprise
	Taichung Commercial Bank	Securities Brokerage	100%	100%
	Securities Co., Ltd.

39 -

Investor	Name of Subsidiary TCCBL Co., Ltd. Taichung Bank Leasing (Suzhou)	Nature of the operation	December 31, 2019 100% 100%	December 31, 2018
Taichung Commercial Bank Lease Enterprise TCCBL Co., Ltd.		General investment business Financing Leasing and investments		100% 100%

The shareholding percentages of the above are based on the combined shareholding percentages.
The consolidated company has substantial control over Taichung Commercial Bank, so the Bank and its subsidiaries are included in the consolidated financial statements.
The consolidated company invested US$375 thousand in Precious Wealth International Limited in April 2018.
The consolidated company participated in the cash capital increase of Taichung Commercial Bank in November 2018 and added 32,246 shares thousand at the cost of NT$328,914 thousand. As the subscription did not follow the original shareholding percentage, there were changes to the shareholding percentage. The additional paid-in capital was decreased, resulting in a change of NT$3,429 thousand in the net value of equity of the affiliate company by equity method.
In the context of the subscription by the merged company to common stock issued for cash by Technic Investment (International) Ltd. in March and May 2019 and 2018, a total of 10 million, 10 million, and 20 million new shares were acquired at a cost of NT$ 100 million, 100 million, and 200 million, respectively.
The consolidated company increased its investment in Taichung Securities in 2018 by 1,140 thousand shares at the cost of NT$10,262 thousand. As there were changes to the shareholding percentage of the consolidated company in Taichung Securities, the additional paid-in capital was changed, resulting in an increase of NT$5,532 thousand in the net value of equity of the affiliate company by equity method.
The consolidated company participated in the cash capital increase of Rui-Jia Investment in 2018, adding 1,250 thousand shares at the cost of NT$12,500 thousand.
The consolidated company participated in the cash capital increase of transparent company in 2018, adding 5,000 thousand shares at the cost of NT$50,000 thousand.
In the context of the subscription by the merged company to common stock issued for cash by Jinbangge Construction Co., Ltd. in September 2019, a total of 2 million new shares were acquired at a cost of NT$ 20 million.
In July and September 2019, the merged company acquired 23,000 new shares from Bomy at a cost of NT$ 115,000.
In July and August 2019, the merged company acquired 88,000 new shares from JeouChang Co., Ltd. at a cost of NT$ 819,000.
In 2019 and 2018, the merged company increased its investment in Iolite Company Ltd. by NT$ 93,171,000 (US$ 3 million) and 92,475,000 (US$ 3 million), respectively.
In 2018, the merged company increased its investment in Hammock (Hong Kong) Co., Ltd. by NT$ 92,145,000 (US$ 3 million) and 92,475,000 (US$ 3 million).
In 2018, the merged company increased its investment in Hammock (Hebei) Contact Lenses by NT$ 92,145,000 (US$ 3 million) and 92,475,000 (US$ 3 million).
(2) Information of the significant but non-controlling equity in subsidiaries

Non-controlling equity shareholding and voting right

ratio

Name of Subsidiary Taichung Commercial Bank Co.	Main places of business operations Taichung City	December 31, 2019 71%	December 31, 2018
			71%

40 -

Profit and loss distributed to the non-controlling equity 2019 2018 $ 3,225,225 $ 2,992,649 85,363 44,951 $ 3,310,588 $ 3,037,600	Non-controlling interest	Non-controlling interest
2019 $ 3,225,225 85,363 $ 3,310,588	2019 years December 31 $ 36,511,631 2,087,012 $ 38,598,643	2018 years December 31
		$ 34,031,312 1,835,968 $ 35,867,280

The following summary of financial information of subsidiaries with significant non-controlling interests is prepared based on the amount before the inter-company cancelled transaction: Taichung Commercial Bank and its subsidiaries

19.	- Assets Liabilities Equity Equity attributable to: Owners of the Company Non-controlling interests of Taichung Commercial Bank Net revenue Net income Other comprehensive profit or loss Total comprehensive income Profit attributable to: Owners of the Company Non-controlling interests of Taichung Commercial Bank The total comprehensive income belongs to: Owners of the Company Non-controlling interests of Taichung Commercial Bank Cash flows Operating activities Investing activities finance activities Impact of changes in exchange rate on cash and cash equivalents Net cash inflow (outflow) Investment under the equity method Investments in the affiliated company	41 - December 31, 2019 $ 682,688,922 631,379,716 $ 51,309,206 $ 14,797,575 36,511,631 $ 51,309,206 2019 $ 12,095,628 $ 4,319,883 152,812 $ 4,472,695 $ 1,094,658 3,225,225 $ 4,319,883 $ 1,131,592 3,341,103 $ 4,472,695 $ 17,392,955 ( 12,246,988 ) ( 6,399,696 ) ( 57,989 ) ( $ 1,311,718 ) December 31, 2019 $ 1,180,884	December 31, 2018
			$ 690,832,103 643,008,450 $ 47,823,653 $ 13,792,341 34,031,312 $ 47,823,653 2018 $ 11,689,424 $ 4,008,369 33,153 $ 4,041,522 $ 1,015,720 2,992,649 $ 4,008,369 $ 1,024,121 3,017,401 $ 4,041,522 $ 8,293,638 ( 11,582,261 ) 3,073,444 180 ( $ 214,999 ) December 31, 2018 $ 1,241,811

Investments in the affiliated company

(1) The balance of the consolidated company's investments in associate companies:

A major affiliated company Nan Chung Petrochemical Corp. Individual non-dominant associates Wei-Kang International Storm Model Management BONWELL	December 31, 2019 $ 1,170,017 3,710 6,616 541 $ 1,180,884	December 31, 2018	December 31, 2018
			$ 1,228,959 3,298 7,746 1,808 $ 1,241,811

(2) A major affiliated company

Company name	Nature of the operation	Main places of business operations Yunlin County	Shareholding and voting right ratio	Shareholding and voting right ratio
			December 31, 2019 50%	December 31, 2018
Nan Chung Petrochemical Corp.	Petrochemical business			50%

Summary financial information of Nan-Chung Petrochemical: December 31, 2019 December 31, 2018 Total assets $ 3,045,138 $ 3,263,392 Total Liabilities 705,103 805,473 Equity 2,340,035 2,457,919 The consolidated company’s shareholding ratio 50% 50% Book value of investment $ 1,170,017 $ 1,228,959 2019 2018 Operating income - current $ 6,757,302 $ 8,510,067 Net income $ 34,675 $ 176,872 Current period other comprehensive income $ 6,306 $ - Summarized information of individually immaterial associates. 2019 2018 Share of the Consolidated Company Net income (loss) for the year ( $ 3,339 ) ( $ 1,390 ) Current period other comprehensive income - - Total comprehensive income ( $ 3,339) ( $ 1,390)	Summary financial information of Nan-Chung Petrochemical: December 31, 2019 December 31, 2018 Total assets $ 3,045,138 $ 3,263,392 Total Liabilities 705,103 805,473 Equity 2,340,035 2,457,919 The consolidated company’s shareholding ratio 50% 50% Book value of investment $ 1,170,017 $ 1,228,959 2019 2018 Operating income - current $ 6,757,302 $ 8,510,067 Net income $ 34,675 $ 176,872 Current period other comprehensive income $ 6,306 $ - Summarized information of individually immaterial associates. 2019 2018 Share of the Consolidated Company Net income (loss) for the year ( $ 3,339 ) ( $ 1,390 ) Current period other comprehensive income - - Total comprehensive income ( $ 3,339) ( $ 1,390)	Summary financial information of Nan-Chung Petrochemical: December 31, 2019 December 31, 2018 Total assets $ 3,045,138 $ 3,263,392 Total Liabilities 705,103 805,473 Equity 2,340,035 2,457,919 The consolidated company’s shareholding ratio 50% 50% Book value of investment $ 1,170,017 $ 1,228,959 2019 2018 Operating income - current $ 6,757,302 $ 8,510,067 Net income $ 34,675 $ 176,872 Current period other comprehensive income $ 6,306 $ - Summarized information of individually immaterial associates. 2019 2018 Share of the Consolidated Company Net income (loss) for the year ( $ 3,339 ) ( $ 1,390 ) Current period other comprehensive income - - Total comprehensive income ( $ 3,339) ( $ 1,390)	Summary financial information of Nan-Chung Petrochemical: December 31, 2019 December 31, 2018 Total assets $ 3,045,138 $ 3,263,392 Total Liabilities 705,103 805,473 Equity 2,340,035 2,457,919 The consolidated company’s shareholding ratio 50% 50% Book value of investment $ 1,170,017 $ 1,228,959 2019 2018 Operating income - current $ 6,757,302 $ 8,510,067 Net income $ 34,675 $ 176,872 Current period other comprehensive income $ 6,306 $ - Summarized information of individually immaterial associates. 2019 2018 Share of the Consolidated Company Net income (loss) for the year ( $ 3,339 ) ( $ 1,390 ) Current period other comprehensive income - - Total comprehensive income ( $ 3,339) ( $ 1,390)	Summary financial information of Nan-Chung Petrochemical: December 31, 2019 December 31, 2018 Total assets $ 3,045,138 $ 3,263,392 Total Liabilities 705,103 805,473 Equity 2,340,035 2,457,919 The consolidated company’s shareholding ratio 50% 50% Book value of investment $ 1,170,017 $ 1,228,959 2019 2018 Operating income - current $ 6,757,302 $ 8,510,067 Net income $ 34,675 $ 176,872 Current period other comprehensive income $ 6,306 $ - Summarized information of individually immaterial associates. 2019 2018 Share of the Consolidated Company Net income (loss) for the year ( $ 3,339 ) ( $ 1,390 ) Current period other comprehensive income - - Total comprehensive income ( $ 3,339) ( $ 1,390)
			$	3,263,392 805,473 2,457,919 50% 1,228,959 2018 8,510,067 176,872 - 2018

			$
			$ $
			$

			( (	$ 1,390 ) - $ 1,390)

(3) Summarized information of individually immaterial associates.

With respect to investments adopting the equity method and the consolidated company's share of profit or loss and the other comprehensive income, Wei-Kang International, Storm Model Management and Bonwell did not have audited financial reports, while the rest did offer audited financial reports. The management of the consolidated company believed that the un-audited companies should not have significant impact to the overall financial report.

42 -
(4) Please see Note 37 for the status on investments adopting the equity method provided as pledge collaterals.

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20. Property, plant and equipment
December 31, 2019 December 31, 2018
The book amount of each category
Proprietary land $ 11,263,642 $ 11,027,579
House and Building 2,543,621 2,402,440
Machine and Equipment 7,251,448 4,881,688
Transportation Equipment 54,023 49,466
Machinery and equipment 174,437 71,025
Other equipment 377,018 426,411
Construction in process and
prepayment for machinery
purchase 1,921,107 3,570,262
$ 23,585,296 $ 22,428,871
2019
Uncompleted
Transportation construction and
and Machinery equipment
House and Machine and communication and Miscellaneous pending
Land Building Equipment equipment equipment equipment inspection Total
Cost
Balance -
beginning $ 11,112,292 $ 4,844,813 $ 11,153,083 $150,566 $396,697 $ 1,403,857 $ 3,570,262 $ 32,631,570
Increase in
current
period 216 43,989 201,995 20,871 7,346 321,083 1,575,307 2,170,807
Decrease in
current
period - ( 28,850) ( 13,553) ( 11,753 ) ( 37,690 ) ( 23,739) ( 115,585)
Reclassification 236,109 265,756 2,859,863 - 112,658 ( 243,262) ( 3,213,656) 17,468
Foreign
exchange
impact
amount ( 262) ( 6,002) ( 17,515) ( 76 ) - ( 3,327) ( 10,806) ( 37,988)
Subsidiaries
sold this
period - - - - - - - -
Balance -
ending 11,348,355 5,119,706 14,183,873 159,608 479,011 1,454,612 1,921,107 34,666,272
Accumulated
depreciation
Balance -
beginning - 2,259,341 6,054,515 100,082 325,002 947,974 - 9,686,914
Increase in
current
period - 131,507 689,636 15,158 15,042 126,001 - 977,344
Decrease in
current
period - - ( 13,324) ( 10,632 ) ( 36,140 ) ( 23,326) - ( 83,422)
Reclassification - 6,603 - - - - - 6,603
Foreign
exchange
impact
amount - ( 4,022) ( 14,621) ( 18 ) - ( 2,478) - ( 21,139)
Subsidiaries
sold this
period - - - - - - - -
Balance -
ending - 2,393,429 6,716,206 104,590 303,904 1,048,171 - 10,566,300
Accumulated
impairment
Balance -
beginning 84,713 183,032 216,880 1,018 670 29,472 - 515,785
Increase in
current
period - - - - - - - -
Decrease in
current
period - - ( 15) ( 23 ) - - - ( 38)
Reclassification - - - - - - - -
Foreign
exchange
impact
amount - ( 376) ( 646) - - ( 49) - ( 1,071)
Balance -
ending 84,713 182,656 216,219 995 670 29,423 - 514,676
Net - ending $11,263,642 $ 2,543,621 $ 7,251,448 $ 54,023 $174,437 $ 377,018 $ 1,921,107 $23,585,296
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2018
Uncompleted
construction
Transportation and
and Machinery equipment
House and Machine and communication and Miscellaneous pending
Land Building Equipment equipment equipment equipment inspection Total
Cost
Balance -
beginning $ 11,110,668 $ 4,847,156 $ 12,661,265 $133,874 $416,958 $1,289,474 $3,026,506 $ 33,485,901
Increase in
current
period 1,624 416 104,412 20,953 5,558 133,226 636,987 903,176
Decrease in
current
period - ( 1,267) ( 1,694,511) ( 5,490 ) ( 27,123 ) ( 15,025 ) ( 8,894 ) ( 1,752,310 )
Reclassification - 1,850 91,652 1,229 1,304 ( 2,280 ) ( 84,337 ) 9,418
Foreign
exchange
impact
amount - ( 3,342) ( 9,735) - - ( 1,538 ) - ( 14,615 )
Balance -
ending 11,112,292 4,844,813 11,153,083 150,566 396,697 1,403,857 3,570,262 32,631,570
Accumulated
depreciation
Balance -
beginning $ - $ 2,136,068 $ 6,956,334 $ 91,104 $338,841 $837,635 $ - $ 10,359,982
Increase in
current
period - 125,681 570,906 13,168 12,657 125,526 - 847,938
Decrease in
current
period - ( 248) ( 1,464,589) ( 4,185 ) ( 26,496 ) ( 14,002 ) - ( 1,509,520 )
Reclassification - - - - - - - -
Foreign
exchange
impact
amount - ( 2160) ( 8,136) ( 5 ) - ( 1,185 ) - ( 11,486 )
Balance -
ending - 2,259,341 6,054,515 100,082 325,002 947,974 - 9,686,914
Accumulated
impairment
Balance -
beginning 84,713 183,284 442,785 1,095 1,912 29,499 - 743,288
Increase in
current
period - - 325 - - - - 325
Decrease in
current
period - ( 43) ( 225,871) ( 77 ) ( 1,242 ) - - ( 227,233 )
Reclassification - - - - - - - -
Foreign
exchange
impact
amount - ( 209) ( 359) - - ( 27 ) - ( 595 )
Balance -
ending 84,713 183,032 216,880 1,018 670 29,472 - 515,785
Net - ending $ 11,027,579 $ 2,402,440 $ 4,881,688 $ 49,466 $ 71,025 $426,411 $3,570,262 $ 22,428,871
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(1) Property and equipment of the consolidated company are appreciated in accordance with the straight line method over the useful years as follows:

e method over the useful years as follows:
House and Building
Buildings	20 to 60 years
Renovation engineering	8 to 29 years
Machine and Equipment	2 to 47 years
Transportationandcommunication
equipment	2 to 15 years
Miscellaneousequipment	2 to 30 years
Machinery and equipment	5 years

(2) Uncompleted projects and prepayments for business facilities by the merged company as of December 31, 2019 are mainly related to the office building of the merged company which is currently under construction.
(3) The consolidated company’s 2019and 2018 capitalized finance cost at NT$5,287,172 thousand and NT$4,815,335 thousand respectively, and tis real estate, plant and equipment’s capitalized financial
44 -

cost amounts are at NT$2,272 thousand and NT$17,665 thousand respectively, with the yearly capitalization interest rates at 1.85%.

(4) Buildings leased out by the merged company as operating leases for a period of 1–2 years. The lessee has no preferential purchase option with regard to the asset when the lease period ends. Total receivable lease payments for operating leases are as follows:

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----- Start of picture text -----

December 31, 2019 December 31, 2018
First year $ 860 $ 178
----- End of picture text -----

Second year	133 $ 993	- $ 178

(5) For the state of real estate, plant and equipment pledged as collateral guarantee, please refer to Note 37.

21. Lease contract

(1) Right-of-use assets-2019

ontract ght-of-use assets-2019
Carrying amount of the right-of-use asset Land and house Transportation Equipment Machine and Equipment Addition of right-of-use assets Depreciation expense of the right-of-use asset Land and house Transportation Equipment Machine and Equipment ase liabilities-2018 Carrying amount of the lease liabilities Current Non-current The range of discount rates for lease liabilities is as follows: Land Buildings Transportation Equipment Machine and Equipment		December 31, 2019
	$ 959,169 111,637 57,590 $ 1,128,396 2019 $ 340,629 $ 155,331 93,611 9,918 $ 258,860 December 31, 2019 $ 241,038 $ 754,957 December 31, 2019 1.01%~4.14% 1.01%~5.95% 1.01%~5.96% 1.82%

(2) Lease liabilities-2018

(3) Main lease activities and provisions

The merged company has leased several machines and transportation equipment for production and operations for a period of 1–8 years. The lease agreement does not stipulate renewal of the lease or purchase options at the time of expiry of the lease.

The merged company has also leased several plots of land and buildings as factory buildings, offices, branches, and ATM sites for a period of 1–7 years. Lease payments have been adjusted in accordance with market lease rates. The merged company has no preferential purchase option with regard to the leased land and buildings at the time of expiry of the lease.

(4) Other lease-related information
45 -

For more details on operating lease agreements for self-owned buildings and investment property of the merged company, please refer to Note 20 and 22. 2019

Short-term lease expense Low-value asset lease expense Total cash of leases outflow	(	2019 $ 82,422 $ 11,441 $ 372,627 )

The merged company chooses to apply recognition exemption as applicable to office and transportation equipment leased for short periods and computer and office equipment that meets lowvalue asset criteria. Right-of-use assets and lease liabilities for said equipment is not recognized. 2018

The total future minimum lease payments of the non-cancelable operating leases are as follows:

Less than 1 year 1 to 5 years More than 5 year	December 31, 2018	December 31, 2018
		$ 248,988 274,050 540

Investment property

2019

				2019	2019
Cost Balance - beginning Increase in current period Reclassification of finance leases Reclassification Balance - ending Accumulated depreciation Balance - beginning Increase in current period Reclassification Balance - ending Accumulated impairment Balance - beginning Increase in current period Reclassification Balance - ending Net - ending		Land $ 1,295,282 - - 4,468 ) 1,290,814 - - - -		Buildings Investment property in construction $ 99,047 $ 86,290 121,785 15,000 - ( 101,290 ) 6,603 ) - 214,229 - 26,143 - 1,701 - 6,603 ) - 21,241 - 2019		Total
	(		( (			$ 1,480,619 136,785 ( 101,290 ) ( 11,071 ) 1,505,043 26,143 1,701 ( 6,603 ) 21,241
		Land $ 18,094 - - 18,094 $ 1,272,720		Buildings $ 1,000 - - 1,000 $ 191,988	Investment property in construction $ - - - - $ -		Total
							$ 19,094 - - 19,094 $ 1,464,708

46 -

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2018
Investment property
Land Buildings in construction Total
Cost
Balance -
beginning $ 2,058,474 $ 54,985 $ 22,500 $ 2,135,959
Increase in
current
period 26,697 53,960 63,790 144,447
Decrease in
current
period ( 20,279 ) - - ( 20,279 )
Reclassification ( 769,610 ) ( 9,898 ) - ( 779,508 )
Balance - ending 1,295,282 99,047 86,290 1,480,619
Accumulated
depreciation
Balance -
beginning - 25,794 - 25,794
Increase in
current
period - 1,783 - 1,783
Decrease in
current
period - - - -
Reclassification - ( 1,434 ) - ( 1,434 )
Balance - ending - 26,143 - 26,143
Accumulated
impairment
Balance -
beginning 38,373 1,000 - 39,373
Increase in
current
period - - - -
Decrease in
current
period ( 20,279 ) - - ( 20,279 )
Reclassification - - - -
Balance - ending 18,094 1,000 - 19,094
Net - ending $ 1,277,188 $ 71,904 $ 86,290 $ 1,435,382
----- End of picture text -----

Investment property is leased out for a period of 2-5 years. Upon closure of the leasehold duration, the lessee was not entitled to preferential leasehold power over the real estate.

As of December 31, 2019, total receivable lease payments for operating leases of investment property are as follows:

First year Second year	December 31, 2019	December 31, 2019
		$ 600 482 $ 1,082

As of December 31, 2018, total receivables for non-cancellable operating leases are as follows:

follows:
Less than 1 year 1 to 5 years More than 5 year	December 31, 2018
		$ 1,631 1,305 - $ 2,936

47 -

The merged company has adopted general risk management policies to reduce residual asset risks of leased out investment property at the time of lease expiry.

Investment property of the appreciated in accordance with the straight line method over the useful years as follows:

House and Building Buildings 30 to 60 years Renovation engineering 2 to 29 years

(1) In March 2018, the board of Chou Chin Industrial resolved to sell part of its investment property. The selling price was NT$14,025 thousand, with a gain of NT$14,025 thousand on the disposal of investment property.
(2) The assessed fair value of the investment property as of December 31, 2019 and 2018 was NT$ 1,733,829,000 and 1,518,260,000, respectively (NT$ 177,214,000 and 149,412,000 were not valuated by independent appraisers; the remaining value was classified by an independent appraisal company as Level 3 inputs on December 31, 2019 and 2018, respectively; valuations were carried out with reference to market evidence of similar real property transaction prices). Key assumptions and valuated fair values are as follows:

nd valuated fair values are as follows:
Asset earning power The overall capital interest rate during development	December 31, 2019 15%~19% 1.91%	December 31, 2018
		18% 2.09%

(3) All investment in real estate owned by the Consolidated Company’ was in its own interests. Please see Note 37 for the status on investment property provided as pledge collaterals.
Intangible assets

ntangible assets
Goodwill Business right Computer software Shell Royalty Less: accumulated impairment	December 31, 2019 $ 426,381 28,000 125,551 159,052 738,984 ( 557,161 ) $ 181,823	December 31, 2018
	(	(	$ 426,381 28,000 135,974 159,052 749,407 557,161 ) $ 192,246

(1) With respect to the consolidated company acquiring the shareholding of its subsidiaries, goodwill is considered when the acquisition cost is higher than the net asset value. As of December 31, 2019, the accumulated impairment loss was NT$398,109 thousand.
(2) The intangible assets of the consolidated company is the assigned right of operation from Feng Sing Securities. The right of operation is intangible assets that the life span cannot be determined and no amortization is made. As of December 31, 2019, no impairment of such right of operation has been declared in the evaluation.
(3) Changes in the costs of computer software and Shell's royalty:

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2019
Royalties Computer software Total
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Cost Balance - beginning Increase in current period Amortization in the current period Reclassification Net exchange differences	$ 159,052 - - ( - - (	$ 135,974 41,520 52,488) ( 610 65) (	$ 295,026 41,520 52,488) 610 65)

48 -

Balance - ending Accumulated impairment Balance - beginning Provided in the current period Balance - ending Net - ending Cost Balance - beginning Increase in current period Amortization in the current period Reclassification Net exchange differences Balance - ending Accumulated impairment Balance - beginning Provided in the current period Balance - ending Net - ending		159,052 159,052 - 159,052 $ -		125,551 - - - $ 125,551 2018		284,603 159,052 - 159,052 $ 125,551
		Royalties $ 159,052 - - - - 159,052 159,052 - 159,052 $ -	Computer software $ 134,060 56,595 ( 54,854 ) 190 ( 17 ) 135,974 - - - $ 135,974			Total
			( (		( (	$ 293,112 56,595 54,854 ) 190 17 ) 295,026 159,052 - 159,052 $ 135,974

In order to obtaining patent technologies required for the operations of ethylene glycol plant, CMFC signed an EO/EG patent agreement with Shell Research Limited. The authorized use of the patent lasts 5 years, starting the effective date of the agreement. However, due to the environmental concern of the construction site, the progress was seriously delayed. The follow-up negotiation with Shell Research enabled the continued use of patent, but royalty in full was recognized as impairment after assessment. CMFA later on updated the design and then constructed a new ethylene glycol plant following a revised cash capital increase. The Company signed a Shell EO/EG manufacturing process patent agreement (different from the manufacturing technologies originally signed as mentioned above) with Shell, and the total of the technical service fees of royalty according to the terms of contract was US$5,323 thousand.

Other assets

Other assets
Refundable deposit Non-delinquent loans restated from loans-net Collected payment of shares underwritten and pending payments to be delivered Prepaid lease payments - Land use rights Others	December 31, 2019 $ 1,804,910 2,246 4 - 3,746 $ 1,810,906	December 31, 2018
			$ 1,778,156 1,111 726 157,406 - $ 1,937,399

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(1) The time deposits and government bonds held to maturity deposited by the consolidated company as the security bond for provisional seizure at court and for business guarantee on December 31, 2019 and 2018 were NT$ 984,900 thousand and NT$ 985,000 thousand, which are stated as refundable deposits.
(2) Non-loans transferred to collection - Breakdown of net:

December 31, 2019 Non-delinquent loans restated from loans $ 4,506 Less: Allowance for bad debts - Taichung Commercial Bank (Note 10) ( 2,260 ) $ 2,246 Details of delinquent accounts, net are summarized as follows: December 31, 2019 Delinquent Accounts $ 3,104 Less: Allowance for bad debts - Collection (Note 10) ( 3,104 ) $ - owing Shot-term borrowings December 31, 2019 Secured loans -Secured loan $ 7,469,532 Unsecured loans - Credit loan 4,397,507 - Material procurement loan 2,248,730 6,646,237 $ 14,115,769	December 31, 2018	December 31, 2018
	$ 5,343 ( 4,232 ) $ 1,111 December 31, 2018
	$ 3,104 ( 3,104 ) $ - December 31, 2018
		$ 5,710,634 4,149,886 4,706,669 8,856,555 $ 14,567,189

(3) Details of delinquent accounts, net are summarized as follows:
Borrowing
(1) Shot-term borrowings
1. The interest rates of bank borrowings as of December 31, 2018 and 2018 were 1.00% to 5.44% and 1.20% to 5.70%, respectively.
2. For the foresaid loan collateral information, please refer to Note 37.
(2) Short-term notes payable

Short-term notes payable
Short-term notes payable Less: Discount of short-term notes and bills payable Long-term borrowings Secured loans - Bank loans Less: Amount due in one year Long-term borrowings	December 31, 2019 $ 3,045,000 ( 3,197 ) $ 3,041,803 December 31, 2019 $ 8,293,123 ( 2,842,955 ) $ 5,450,168	December 31, 2018
		$ 2,360,000 ( 2,296 ) $ 2,357,704 December 31, 2018
	(	(	$ 6,958,811 1,245,188 ) $ 5,713,623

(3) Long-term borrowings
As of December 31, 2019 and 2018, CMFC had long-term syndicate loans led by Taiwan Cooperative Bank at NT$1,694,100 thousand and NT$2,699,500 thousand, with the borrowing rate currently at 1.85%. In March 2019, the early repayment of principal was NT$100,000 thousand. CMFC will repay the borrowings periodically based on the loan agreement and a
50 -

total of NT$1,694,100 thousand will be due in the next year. The land and buildings of Kaohsiung plant are used as the collateral for the borrowing.

As of December 31, 2019 and 2018, CMFC had intermediate- and long-term borrowings from Taiwan Business Bank at NT$232,800 thousand and NT$250,000 thousand, for both year, with the borrowing rate currently at 1.7%. Starting March 2019, CMFC will repay the borrowings periodically based on the loan agreement and a total of $17,200 thousand will be due in the next year. The land and buildings are used as the collateral for the borrowing.
The company’s long-term borrowing with Mizuho Bank as of DDecember 31, 2019 and 2018 is both at $300,000 thousand, with loan interest rate currently at 1.30%, with onetime repayment initially due in December 2020, and later extended to a onetime repayment in December 2021.
As of December 31, 2019 and 2018, CMFC had long-term borrowings from Land Bank of Taiwan at NT$60,923 thousand and NT$74,461 thousand, respectively, with the borrowing rate currently at 1.50%. CMFC has repaid the borrowings periodically based on the loan agreement and a total of $13,538 thousand will be due in the next year. The land and buildings are used as the collateral for the borrowing.
As of 2019 and December 31, 2018, China Man-Made Fiber Corporation’s long-term loans with Union Bank of Taiwan amounted to NT$ 650 million and 349.9 million, respectively, with a borrowing rate of interest of 1.58%–1.61%. The original loan payment start date of May 2019 was extended to November 2020. Loan payments will be made in a timely manner as prescribed in the loan agreements. In the upcoming year, a loan of NT$ 50 million will reach maturity. Said loans serve as collateral for 106 million shares of Taichung Bank.
As of December 31, 2019 and 2018, CMFC had long-term borrowings from Bank of Panhsin at NT$500,000 thousand, for both year, with the borrowing rate currently at 1.55%. CMFC originally planned to make repayments in one payment in May 2020, and now it has postponed the one-time payment to June 2022. The job site and buildings in Sanchong District of New Taipei City are used as the collateral for the borrowing.
As of December 31, 2019 and 2018, CMFC had long-term borrowings from Sunny Bank at NT$600,000 thousand, for both year, with the borrowing rate currently at 1.50%. CMFC originally planned to make repayments in one payment in August 2020, and now it has postponed the one-time payment to August 2022. 95,000 thousand shares of Taichung Commercial Bank's stocks are used as the collateral for the borrowing.
As of 2019 and December 31, 2018, China Man-Made Fiber Corporation’s long-term loans with Jih Sun International Bank amounted to NT$ 1.03 billion and 340 million, respectively, with a borrowing rate of interest of 1.50%. The deadline for bullet repayment which was originally due in October 2019 has been extended to June 2021. Said loans serve as collateral for 130 million shares of Taichung Bank and 15 million shares of Taiwan Tea Corporation.
As of December 31, 2019 and 2018, CMFC had long-term borrowings from Taiwan Cooperative Bank at NT$650,000 thousand, with the borrowing rate currently between 1.50%. CMFC will repay the borrowings periodically, starting February 2020, based on the loan agreement and a total of $216,667 thousand will be due in the next year. The land and buildings in Yunlin are used as the collateral for the borrowing.
As of December 31, 2019 and 2018, CMFC had taken a loan from Bank of Kaohsiung at NT$100,000 thousand, with the borrowing rate currently at 1.50%. A total of $100,000 thousand will be due in the next year, which will be repaid in one payment in December 2020.
As of December 31, 2019, China Man-Made Fiber Corporation’s loan with Shanghai Commercial Bank amounted to NT$ 200 million, with a borrowing rate of interest of 1.50. Starting in January 2021, loan payments will be made in a timely manner. Said loan serves as collateral for 33.4 million shares of Taichung Bank acquired by China Man-Made Fiber Corporation.
As of December 31, 2018 and 2017, PACC had intermediate-term borrowings from Taiwan Cooperative Bank at NT$604,000 thousand and NT$212,000 thousand, respectively, with the borrowing rate currently at 1.70%. PACC has repaid the borrowings periodically based on the loan agreement and a total of $24,000 thousand will be due in the next year. Said loan serves as collateral for land and buildings of the Kaohsiung Plant of Pan Asia Chemical Corporation.
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As of 2019 and December 31, 2018, Pan Asia’s long-term loans with Union Bank of Taiwan amounted to NT$ 175 million and 100 million, respectively, with a borrowing rate of interest of 1.64%. Loan payments are made in a timely manner as prescribed in the loan agreements. Said loans serve as collateral for China Man-Made Fiber Corporation stocks held by Pan Asia Chemical Corporation.
As of December 31, 2019 and 2018, PACC had intermediate-term borrowings from Bank of Panhsin at NT$60,000 thousand and NT$90,000 thousand, respectively, with the borrowing rate currently at 1.64%. PACC has repaid the borrowings periodically based on the loan agreement and a total of $10,000 thousand will be due in the next year.
As of 2019 and December 31, 2018, Pan Asia’s long-term loans with Jih Sun International Bank amounted to NT$ 100 million and 150 million, respectively, with a borrowing rate of interest of 1.53%. The deadline for bullet repayment which was originally due in October 2020 has been extended to October 2022. Said loans serve as collateral for China Man-Made Fiber Corporation stocks held by Pan Asia Chemical Corporation.
As of December 31, 2019, Pan Asia’s long-term loan with Taiwan Business Bank amounted to NT$ 595 million, with a borrowing rate of interest of 1.50%. Loan payments are made in a timely manner as prescribed in the loan agreements. In the upcoming year, the loan of NT$ 595 million will reach maturity.
As of 2019 and December 31, 2018, Jinbangge Construction Co., Ltd.’s long-term loans with Taiwan Business Bank amounted to NT$ 49 million and 57 million, respectively, with a borrowing rate of interest of 2.37%. Payment was originally due in May 2019. Pursuant to the new contract provisions, Jinbangge must repay the principal of 8 million by December 2020. The remainder must be paid in a bullet repayment when maturity is reached upon extension in May 2021. Said loans serve as collateral for the plot of land in the Zhixing Section of Wanhua District.
As of December 31, 2018, Chou Chin Industrial Co., Ltd.’s long-term loan with Taiwan Business Bank amounted to NT$ 60 million, with a borrowing rate of interest of 1.99%. The remainder of the loan was repaid in full in October 2019. Said loan serves as collateral for the factory buildings in Changhua, Dajia, and Fugong.
As of December 31, 2019 and 2018, Chou Chin Industrial had long-term borrowings from Union Bank of Taiwan at NT$110,400 thousand and NT$127,000 thousand, respectively, with the borrowing rate currently between 1.70% ~ 1.89%. Chou Chin Industrial has repaid the borrowings periodically based on the loan agreement and a total of $59,400 thousand will be due in the next year. The bonds of Taichung Commercial Bank and shares of Hua Nan Financial Holdings are used as the collateral for the borrowing.
As of December 31, 2019, Chou Chin Industrial Co., Ltd.’s total long-term loans with Jih Sun International Bank amounted to NT$ 120 million, with a borrowing rate of interest of 1.70%. Loan payments are made in a timely manner as prescribed in the loan agreements. In the upcoming year, a loan amount of NT$ 32 million will reach maturity. Said loans serve as collateral for Hua Nan Financial Holdings stocks held by Chou Chin Industrial Co., Ltd.
As of December 31, 2019, Chou Chin Industrial Co., Ltd.’s long-term loans with First Commercial Bank amounted to NT$ 170 million, with a borrowing rate of interest of 1.60%. Loan payments are made in a timely manner as prescribed in the loan agreements. In the upcoming year, a loan amount of NT$ 10 million will reach maturity. Said loans serve as collateral for the factory buildings in Changhua.
As of 2019 and December 31, 2018, Chou Chang Co., Ltd.’s long-term loans with Sunny Bank amounted to NT$ 165 million and 168 million, respectively, with a borrowing rate of interest of 2.03%. In the upcoming year, a loan of NT$ 9 million will reach maturity. Said loans serve as collateral for financial bonds of Taichung Bank.
As of 2019 and December 31, 2018, Chou Chang Co., Ltd.’s long-term loans with Far Eastern International Bank amounted to NT$ 126.9 million and 130.95 million, respectively, with a borrowing rate of interest of 2.02%. In the upcoming year, a loan of NT$ 4.05 million will reach maturity. Said loans serve as collateral for financial bonds of Taichung Bank.
Please refer to Note 37 for the collateral of the long-term borrowings:
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26. 27. 28. 29.	Bills and bonds sold under repurchase agreements December 31, 2019 Government bonds $ 2,002,755 Overseas bond 8,366,270 $ 10,369,025 Post-period re-purchase amount and interest rate are as follows: December 31, 2019 Government bonds $ 2,003,566 Overseas bond 8,415,535 $ 10,419,101 Government bonds 0.50%～0.54% Overseas bond 2.18%～2.45% Foreign bonds are valued in foreign currencies as follows: December 31, 2019 USD $ 278,876 Due to Central Bank and other banks December 31, 2019 Call loans to banks $ 6,200,860 Due to Chunghwa Post Co., Ltd. 326,187 Deposits of other banks 13 $ 6,527,060 Other payables December 31, 2019 Payable expenses $ 2,397,682 Notes and checks in clearing 1,007,649 Payable spot exchange settlement payment 870,282 Receivable accounts for settlement 716,756 Acceptances payable 514,383 Payable interest 472,580 Account payable for underwriting 49,615 Securities purchase payable - Others 728,318 $ 6,757,265 Deposits and remittances December 31, 2019 Check deposits $ 8,067,416 Demand deposits 137,883,306 Current saving deposits 134,211,159 Time deposits 143,685,998 Time saving deposits 159,025,088 Remittances 162,288 $ 583,035,255	Bills and bonds sold under repurchase agreements December 31, 2019 Government bonds $ 2,002,755 Overseas bond 8,366,270 $ 10,369,025 Post-period re-purchase amount and interest rate are as follows: December 31, 2019 Government bonds $ 2,003,566 Overseas bond 8,415,535 $ 10,419,101 Government bonds 0.50%～0.54% Overseas bond 2.18%～2.45% Foreign bonds are valued in foreign currencies as follows: December 31, 2019 USD $ 278,876 Due to Central Bank and other banks December 31, 2019 Call loans to banks $ 6,200,860 Due to Chunghwa Post Co., Ltd. 326,187 Deposits of other banks 13 $ 6,527,060 Other payables December 31, 2019 Payable expenses $ 2,397,682 Notes and checks in clearing 1,007,649 Payable spot exchange settlement payment 870,282 Receivable accounts for settlement 716,756 Acceptances payable 514,383 Payable interest 472,580 Account payable for underwriting 49,615 Securities purchase payable - Others 728,318 $ 6,757,265 Deposits and remittances December 31, 2019 Check deposits $ 8,067,416 Demand deposits 137,883,306 Current saving deposits 134,211,159 Time deposits 143,685,998 Time saving deposits 159,025,088 Remittances 162,288 $ 583,035,255	Bills and bonds sold under repurchase agreements December 31, 2019 Government bonds $ 2,002,755 Overseas bond 8,366,270 $ 10,369,025 Post-period re-purchase amount and interest rate are as follows: December 31, 2019 Government bonds $ 2,003,566 Overseas bond 8,415,535 $ 10,419,101 Government bonds 0.50%～0.54% Overseas bond 2.18%～2.45% Foreign bonds are valued in foreign currencies as follows: December 31, 2019 USD $ 278,876 Due to Central Bank and other banks December 31, 2019 Call loans to banks $ 6,200,860 Due to Chunghwa Post Co., Ltd. 326,187 Deposits of other banks 13 $ 6,527,060 Other payables December 31, 2019 Payable expenses $ 2,397,682 Notes and checks in clearing 1,007,649 Payable spot exchange settlement payment 870,282 Receivable accounts for settlement 716,756 Acceptances payable 514,383 Payable interest 472,580 Account payable for underwriting 49,615 Securities purchase payable - Others 728,318 $ 6,757,265 Deposits and remittances December 31, 2019 Check deposits $ 8,067,416 Demand deposits 137,883,306 Current saving deposits 134,211,159 Time deposits 143,685,998 Time saving deposits 159,025,088 Remittances 162,288 $ 583,035,255		December 31, 2018
					$ 1,200,036 8,704,431 $ 9,904,467 December 31, 2018
					$ 1,200,797 8,768,302 $ 9,969,099 0.42%～0.52% 2.69%～2.90% December 31, 2018
					$ 283,440 December 31, 2018
	Call loans to banks Due to Chunghwa Post Co., Ltd. Deposits of other banks Other payables Payable expenses Notes and checks in clearing Payable spot exchange settlement payment Receivable accounts for settlement Acceptances payable Payable interest Account payable for underwriting Securities purchase payable Others Deposits and remittances Check deposits Demand deposits Current saving deposits Time deposits Time saving deposits Remittances
					$ 2,874,850 503,276 626 $ 3,378,752 December 31, 2018
					$ 2,167,311 5,715,927 1,912,669 476,395 845,279 561,466 33,552 438,763 617,124 $ 12,768,486 December 31, 2018
					$ 9,765,880 128,942,094 126,189,743 164,939,938 157,855,126 28,125 $ 587,720,906

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30. Bonds payable

Bonds payable
Subordinate financial bonds Less: Part owned by the consolidated company Bills with less than one year to maturity		December 31, 2019 $ 14,000,000 1,510,000 ) 2,500,000 ) $ 9,990,000		December 31, 2018
	( (		( (	$ 20,000,000 1,510,000 ) 6,000,000 ) $ 12,490,000

(1) As approved by FSC’s Letter under Jin-Guan-Yin-Piao-Zi No. 10100305900 dated September 24, 2012, the Taichung Bank issued 1[st] term subordinate financial bonds November 13, 2012 upon the following terms and conditions:
Approved: NTD3,000,000 thousand.
Issued: NTD3,000,000 thousand.
Denomination: NTD1,000 thousand, issued at par value.
Duration: 7 years, matured on November 13, 2019.
Coupon rate: Fixed annual interest rate 2.1%.
Repayment Methods: repayment in lump sum upon maturity.
Payment of interest: interest paid per six months as of the date of issuance.
(2) As approved by FSC’s Letter under Jin-Guan-Yin-Piao-Zi No. 10200089330 dated April 8, 2013, the Taichung Bank issued 1[st] term and 2[nd] term subordinate financial bonds June 25 and December 16, 2013 upon the following terms and conditions:
Approved: NTD6,000,000 thousand.
Issued:
- (1) 1[st] term 2013: 2,500,000 thousand.
- (2) 2[nd] term 2013: 3,000,000 thousand.
Denomination:
- (1) 1[st ] term 2013: NTD 500 thousand, issued at par value.
- (2) 2[nd ] term 2013: NTD 500 thousand, issued at par value.
Duration:
- (1) 1[st] term 2013: 7 years, matured on June 26, 2020.
- (2) 2[nd] term 2013: 6 years, matured on December 16, 2019.
Coupon rate:
- (1) 1[st] term 2013: the fixed annual rate of 2.1%.
- (2) 2[nd] term 2013: the fixed annual rate of 2.1%.
Repayment Methods: repayment in lump sum upon maturity.
Payment of interest: interest paid per six months as of the date of issuance.
(3) The company has been approved by Financial Supervisory Commission under Letter Jin-GuanYin-Piao-Zi No. 10400200460 dated August 26, 2015 for the issuance of no maturity noncumulative subordinated financial debentures 1st term for 2015 on December 28 2015. The terms and conditions for issuance are shown below:
Approved: NTD1,500,000 thousand.
Issued: NTD1,500,000 thousand.
Denomination: NTD10,000 thousand, issued at par value.
Duration: no maturity date.
Coupon rate: is the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 3.08%.
Repayment Methods: executed in accordance with the regulations of issuance.
Payment of interest: interest paid per yeae as of the date of issuance.
(4) The Taichung Bank has been approved by Financial Supervisory Commission under Letter JinKuan-Yin-Piao-Zi No. 10500210950 dated September 2, 2016 for the issuance of no maturity non-cumulative subordinated financial debentures 1st term and 2nd term and 3rd term for 2017 and 1st term for 2016 on March 28, May 18, August 28, 2017 and December 28, 2016. The terms and conditions for issuance are shown below:
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Approved: NTD3,500,000 thousand.
Issued:
- (1) 1[st] term 2016: 1,500,000 thousand.
- (2) 1[st] term 2017: 1,000,000 thousand.
- (3) 2[nd] term 2017: 500,000 thousand.
- (4) 3[th] term 2017: 500,000 thousand.
Denomination:
- (1) 1[st ] term 2016: NTD 10,000 thousand, issued at par value.
- (2) 2017 Q1: NT$10,000 thousand, issued at face value.
- (3) 2[nd ] term 2017: NTD 10,000 thousand, issued at par value.
- (4) 3[rd ] term 2017: NTD 10,000 thousand, issued at par value.
Duration: no maturity date.
Coupon rate: is the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 3.08%.
Repayment Methods: executed in accordance with the regulations of issuance.
Payment of interest: interest paid per yeae as of the date of issuance.
(5) The company has been approved by Financial Supervisory Commission under Letter Jin-GuanYin-Piao-Zi No. 10600229120 dated September 22, 2017 for the issuance of no maturity noncumulative subordinated financial debentures 1st term for 2018 and 4[th] , 5[th] term for 2017 on April 25, 2018 and December 5, December 27, 2017. The terms and conditions for issuance are shown below:
Approved: NTD5,000,000 thousand.
Issued:
- (1) 4[th] term 2017: 1,350,000 thousand.
- (2) 5[th] term 2017: 2,650,000 thousand.
- (3) 2018 Q1: NT$1,000,000 thousand.
Denomination:
- (1) 4[th ] term 2017: NTD 10,000 thousand, issued at par value.
- (2) 5[th ] term 2017: NTD 10,000 thousand, issued at par value.
- (3) 1[st ] term 2018: NTD 10,000 thousand, issued at par value.
Duration: no maturity date.
Coupon rate: is the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 3.08%.
Repayment Methods: executed in accordance with the regulations of issuance.
Payment of interest: interest paid per yeae as of the date of issuance.
(6) The company has been approved by Financial Supervisory Commission under Letter Jin-GuanYin-Piao-Zi No. 10702156550 dated August 23, 2018 for the issuance of no maturity noncumulative subordinated financial debentures 2nd term for 2018 on December 18, 2018. The terms and conditions for issuance are shown below:
Approved: NTD1,500,000 thousand.
Issued: NTD1,500,000 thousand.
Denomination: NTD10,000 thousand, issued at par value.
Duration: no maturity date.
Coupon rate: is the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 3.08%.
Repayment Methods: executed in accordance with the regulations of issuance.
Payment of interest: interest paid per yeae as of the date of issuance.
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31. Provision for liabilities

Employee benefit liabilities reserve Reservefor guarantee liability Provision for commitment of financing Allowance for contingency (1) Employee benefit liabilities reser Defined benefit liabilities Employees preferential deposit plan Other long-term employee benefit liabilities	December 31, 2019 $ 1,361,110 174,463 63,357 11,878 $ 1,610,808 ve is detailed as follows: December 31, 2019 $ 1,200,158 131,433 29,519 $ 1,361,110	December 31, 2018	December 31, 2018
		$ 1,389,757 189,848 63,809 23,933 $ 1,667,347 December 31, 2018
			$ 1,246,000 120,769 22,988 $ 1,389,757

1. Defined contribution plan

The pension system of the “Labor Pension Act” that is applicable to the Company and its subsidiaries of the consolidated company is a defined contribution pension plan subject to government management with an amount equivalent to 6% of the monthly salary appropriated and contributed to the personal account with the Bureau of Labor Insurance.

2. Defined benefit plan

The consolidated company’s pension system under the “Labor Standards Act” of the R.O.C. is a defined benefit pension plan. Pension payment is calculated in accordance with the years of service and the average salary six months prior to the authorized retirement date. The consolidated company has contributed to the employee pension fund monthly based on the total salaries to Labor Pension Reserve Supervisory Committee for deposit at the special account in the Bank of Taiwan bearing the title of the committee. If the balance of the special account before the end of the fiscal year is insufficient to settle the payment for employees qualified for retirement in the next fiscal year, the company shall make up the difference in lump sum by the end of March of the next fiscal year. The special account has been commissioned to the Bureau of Labor Fund of the Ministry of Labor Affairs for management. The company contained in the consolidated financial statements exercises no influence on the right of the bureau in its investment management strategy.

The amount of determined benefit plan recognized in the consolidated balance sheet is shown below:

hown below:
Present value of the defined benefit obligations The fair value of plan assets Appropriation shortage Net determined benefit liability	December 31, 2019 $ 2,295,198 ( 1,095,040 ) 1,200,158 $ 1,200,158	December 31, 2018
	(	(	$ 2,222,641 976,641 ) 1,246,000 $ 1,246,000

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Change in net determined benefit liability is shown below

January 1, 2018 Service cost Current service cost Interest expenses (revenues) Recognized in the profit or loss Reevaluation Planned ROE (except the amount of net interest) Actuarial loss – change in the assumption of the census Actuarial loss – change in financial assumptions Actuarial loss – adjustment through experience Recognized in the other comprehensive profit of loss Employer appropriation Planned asset payment Company account payment December 31, 2018 Service cost Current service cost Interest expenses (revenues) Recognized in the profit or loss Reevaluation Planned ROE (except the amount of net interest) Actuarial loss – change in the assumption of the census Actuarial loss – change in financial assumptions Actuarial loss – adjustment through experience Recognized in the other comprehensive profit of loss Employer appropriation Planned asset payment Company account payment December 31, 2019	Pr ( ( Pr	esent value of the defined benefit obligations $ 2,160,082 22,487 26,507 48,994 2,160,082 752 31,299 68,280 100,331 - 76,731) 10,035) 2,222,641 17,586 24,545 42,131 - 1,742 esent value of the defined benefit obligations $ 87,656 68,344 157,742 - 108,576) 18,740) $ 2,295,198	T ( ( ( ( ( ( ( ( ( ( T	he fair value of plan assets $ 936,330 ) - 11,569 ) 11,569) 27,208) - - - 27,208) 78,265) 76,731 - 976,641) - 13,057) 13,057) 30,630) - he fair value of plan assets $ - - 30,630) 183,288) 108,576 - $ 1,095,040)	( ( ( (	Net determined benefit liability $ 1,223,752 22,487 14,938 37,425 27,208) 752 31,299 68,280 73,123 78,265) - 10,035) 1,246,000 17,586 11,488 29,074 30,630) 1,742 Net determined benefit liability
	( (		( ( (		( (	$ 87,656 68,344 127,112 183,288) - 18,740) $ 1,200,158

The pension fund system of the company contained in the consolidated financial statements is exposed to the following risks due to the “Labor Standards Act”:

(1) Investment risk: The Bureau of Labor Fund of the Ministry of Labor Affairs uses the labor pension fund for investment in domestic and foreign equity securities and debt securities, and as bank deposits through proprietary trade or commissioned third parties. However, the amount attributable to the planned asset of the consolidated company shall not fall below the interest rate offered by the banks in the regions or countries of investment for 2-year time deposit as return.

(2) Interest risk: the decline of the interest rate for government/corporate bonds will cause an increase in the present value of determined benefit obligation. However, the ROI of the debt of the planned assets will also increase accordingly. The effect of the two on net determined benefit liability is mutually offsetting.

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(3) Salary risk: the calculation of the present value of determined benefit obligation is based on the salaries of the members in the plan of the future. As such, an increase of the salaries of the members of the plan is bound to increase the present value of determined benefit obligation.

The determined benefit obligation of the company contained in the consolidated financial statements is based on the actuarial calculation of the actuary and the major assumption as of the evaluation day is shown below:

==> picture [324 x 17] intentionally omitted <==

----- Start of picture text -----

2019 2018
Discount rate 0.68%～0.80% 0.97%～1.13%
----- End of picture text -----

Discount rate	2019 0.68%～0.80%	2018 0.97%～1.13%
The expected rate of
increase in salaries	1.50%～2.75%	1.50%～2.75%

In case of reasonable and possible change in the major actuarial assumptions, and other assumptions remained unchanged, the amount of increase (decrease) in the present value of determined benefit obligation will be:

bligation will be:
Discount rate Increase by 0.25% Decrease by 0.25% The expected rate of increase in salaries Increase by 0.25% Decrease by 0.25%	December 31, 2019 ( $ 60,535 ) $ 62,757 $ 61,080 ( $ 59,225 )	December 31, 2018
	( (	( (	$ 60,202 ) $ 62,490 $ 61,005 $ 59,068 )

Actuarial assumptions may be inter-related. The possibility of change in specific assumption is not high. The aforementioned sensitivity analysis may not be able to reflect the actual change in the present value of determined benefit obligation.

Prepaid amount for 1 year Average maturity of determined benefit obligation	December 31, 2019 $ 147,951 9 to 16 years	December 31, 2018 $ 42,258 9 to 17 years

3. Employees preferential deposit plan

With effect on December 21, 2014, Taichung Bank in the financial statements adjusted the interest rate for the deposit of the banking staff. According to Order Jin-Guan-Yin-Fa-Zi No. 10110000850 and the Regulations Governing the Preparation of Financial Reports by Public Banks, the employee preferred deposit plan liabilities shall be subject to the actuarial calculation of a qualified actuary professional. Contingent liabilities included in the consolidated balance sheet due to employees' preferential deposit plan at Taichung Commercial Bank are shown as follows:

Present value of preferred deposit plan The fair value of plan assets Appropriation shortage Provision for liability – preferred deposit plan	December 31, 2019 $ 131,433 - 131,433 $ 131,433	December 31, 2018	December 31, 2018
			$ 120,769 - 120,769 $ 120,769

58 -

Change in employee preferred deposit plan liability is shown below:

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----- Start of picture text -----

Present value of the
defined benefit The fair value of plan Net determined
obligations assets benefit liability
January 1, 2018 $ 108,779 $ - $ 108,779
----- End of picture text -----

Service cost Service costs from previous period Interest expenses Recognized in the profit or loss Reevaluation Actuarial loss – change in the assumption of the census Actuarial loss – adjustment through experience Recognized in the other comprehensive profit of loss Company account payment ( December 31, 2018 Service cost Service costs from previous period Interest expenses Recognized in the profit or loss Reevaluation Actuarial loss – change in the assumption of the census Actuarial loss – adjustment through experience Recognized in the other comprehensive profit of loss Company account payment ( December 31, 2019	9,112 3,855 12,967 6,076 20,173 26,249 27,226 ) 120,769 6,700 4,286 10,986 6,770 21,177 27,947 28,269 ) $ 131,433	- - - - - - - ( - - - - - - - - ( $ -	9,112 3,855 12,967 6,076 20,173 26,249 27,226 ) 120,769 6,700 4,286 10,986 6,770 21,177 27,947 28,269 ) $ 131,433

The amount of employee preferred deposit plan recognized as profit and loss by function is summarized below:

Operating expenses		2019 $ 10,986		2018 $ 12,967

The employee preferred deposit obligation of the Taichung Commercial Bank is based on the actuarial calculation of professional actuary and the major assumption as of the evaluation day is shown below:

59 -

Discount rate Return on deposited fund Excessive interest rate The withdrawal rate of preferred deposits	December 31, 2019 4.00% 2.00% 2.00% 3.50%	December 31, 2018
		4.00% 2.00% 2.00% 4.00%

Discount rate Increase by 0.25% Decrease by 0.25% The withdrawal rate of preferred deposits Increase by 0.25% Decrease by 0.25%	December 31, 2019 ( $ 3,202 ) $ 3,343 $ 3,454 ( $ 3,599 )	December 31, 2018	December 31, 2018
	( (	( (	$ 2,858 ) $ 2,982 $ 3,099 $ 3,227 )

Prepaid amount for 1 year The average maturity of employee preferred deposit obligation	December 31, 2019 $ - 10.4 years	December 31, 2018 $ - 10.1 years

4. Other long-term employee benefits

The other long-term employee benefits of the Taichung Commercial Bank meant for the longterm disability benefits. The Company will issue pensions to the employees who die of sickness or accidents at work for reasons other than occupational hazards.

Taichung Commercial Bank recognized long-term employee benefits in the consolidated comprehensive income statement for an amount of NTD 6,531thousand and NTD 4,542 thousand in 2019 and 2018, respectively. The other long-term employee benefit liabilities reserve amounted to NT$ 29,519 thousand and NT$ 22,988 thousand as of December 31, 2019 and 2018, respectively.

60 -

(2) Taichung Bank Statement of Changes in Reserves for Guarantees 2019

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----- Start of picture text -----

Impairment
difference
recognized in
accordance with
the
“Regulations
Governing
the Procedures
for Banking
Institutions to
Evaluate Assets
Anticipated and Deal with
credit loss Impairment Non-
Anticipated within the Financial assets recognized in performing/
credit loss in 12 perpetuity of the with credit accordance with Non-
months financial assets impairment IFRS 9 accrual Loans” Total
Balance as of January 1, 2019 $ 121,061 $ 1,751 $ 55,221 $ 178,033 $ 11,815 $ 189,848
Changes in financial instruments
recognized at the beginning of
the period:
Converted as anticipated
credit loss within the
perpetuity of the
financial assets ( 3 ) 3 - - - -
Converted as financial assets
with credit impairment ( 434 ) - 434 - - -
Converted as anticipated
credit loss in 12
months 11,027 ( 292 ) ( 10,735 ) - - -
Financial assets removed in
current period ( 86,834 ) ( 1,458 ) ( 7,647 ) ( 95,939 ) - ( 95,939 )
Procured or initiated new
financial assets 80,868 1,720 4,221 86,809 - 86,809
Impairment difference recognized
in accordance with the
“Regulations Governing
the Procedures for Banking
Institutions to Evaluate Assets
and Deal with Non-
performing/ Non-
accrual Loans” - - - - ( 7,471 ) ( 7,471 )
Write-off bad debts - - - - - -
Recovered amount after write-off
bad debts - - - - - -
Foreign exchange settlement and
other changes ( 15,965 ) 54 17,127 1,216 - 1,216
Balance - ending $ 109,720 $ 1,778 $ 58,621 $ 170,119 $ 4,344 $ 174,463
----- End of picture text -----

61 -

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----- Start of picture text -----

2018
Impairment
difference
recognized in
accordance with
the
“Regulations
Governing
the Procedures
for Banking
Institutions to
Evaluate Assets
Anticipated and Deal with
credit loss Impairment Non-
Anticipated within the Financial assets recognized in performing/
credit loss in 12 perpetuity of the with credit accordance with Non-
months financial assets impairment IFRS 9 accrual Loans” Total
Balance as of January 1, 2019 $ 161,287 $ 78,453 $ 112 $ 239,852 $ 3,785 $ 243,637
Changes in financial instruments
recognized at the beginning of
the period:
Converted as anticipated
credit loss within the
perpetuity of the
financial assets ( 82) 82 - - - -
Converted as financial assets
with credit impairment ( 1,071) ( 10) 1,081 - - -
Converted as anticipated
credit loss in 12
months 2,682 ( 2,682) - - - -
Financial assets removed in
current period ( 127,962) ( 75,721) ( 6) ( 203,689) - ( 203,689)
Procured or initiated new
financial assets 91,123 592 8,075 99,790 - 99,790
Impairment difference recognized
in accordance with the
“Regulations Governing
the Procedures for Banking
Institutions to Evaluate Assets
and Deal with Non-
performing/ Non-
accrual Loans” - - - - 8,030 8,030
Write-off bad debts - - - - - -
Recovered amount after write-off
bad debts - - - - - -
Foreign exchange settlement and
other changes ( 4,916) 1,037 45,959 42,080 - 42,080
Balance - ending $ 121,061 $ 1,751 $ 55,221 $ 178,033 $ 11,815 $ 189,848
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Bad debt expense, commitment and guarantee liability provisions recognized in 2019 and 2018.

62 -

(3) Taichung Bank Statement of Changes in Contingency Reserves 2019

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2018

==> picture [349 x 226] intentionally omitted <==

Other revenue except for interest income recognized in 2019 and 2018.

63 -

(4) Taichung Bank Statement of Changes in Reserves for Financial Commitments 2019

==> picture [348 x 461] intentionally omitted <==

----- Start of picture text -----

Impairment
difference
recognized in
accordance with the
“Regulations
Governing
the Procedures for
Banking Institutions
Anticipated credit Impairment to Evaluate Assets
loss within the Financial assets recognized in and Deal with Non-
Anticipated credit loss in 12 months perpetuity of the financial assets imwith credit pairment accordance with IFRS 9 performing/ Non-accrual Loans” Total
Balance as of January 1, 2019 $ 61,769 $ 2,040 $ - $ 63,809 $ - $ 63,809
Changes in financial instruments
recognized at the beginning of the
period:
Converted as anticipated credit
loss within the perpetuity
of the financial assets ( 4) 4 - - - -
Converted as financial assets with
credit impairment ( 4) ( 4,032) 4,036 - - -
Converted as anticipated credit
loss in 12 months 1,177 ( 1,177) - - - -
Financial assets removed in
current period ( 9,439) ( 791) - ( 10,230) - ( 10,230)
Procured or initiated new financial
assets 21,880 1,041 - 22,921 - 22,921
Impairment difference recognized in
accordance with the “Regulations
Governing the Procedures for
Banking Institutions to Evaluate
Assets and Deal with Non-
performing/ Non-accrual Loans” - - - - - -
Write-off bad debts - - - - - -
Recovered amount after write-off bad
debts - - - - - -
Foreign exchange settlement and other
changes ( 17,895) 4,763 ( 11) ( 13,143) - ( 13,143)
Balance - ending $ 57,484 $ 1,848 $ 4,025 $ 63,357 $ - $ 63,357
2018
Impairment
difference
recognized in
accordance with the
“Regulations
Governing
the Procedures for
Banking Institutions
Anticipated credit Impairment to Evaluate Assets
loss within the Financial assets recognized in and Deal with Non-
Anticipated credit loss in 12 months perpetuity of the financial assets imwith credit pairment accordance with IFRS 9 performing/ Non-accrual Loans” Total
Balance as of January 1, 2019 $ 45,440 $ 9,183 $ 2,150 $ 56,773 $ - $ 56,773
Changes in financial instruments
recognized at the beginning of the
period:
Converted as anticipated credit
loss within the perpetuity
of the financial assets 1,703 ( 1,703) - - - -
Converted as financial assets with
credit impairment ( 6) ( 20) 26 - - -
Converted as anticipated credit
loss in 12 months 2,532 ( 2,532) - - - -
Financial assets removed in
current period ( 20,131) ( 4,757) ( 2,150) ( 27,038) - ( 27,038)
Procured or initiated new financial
assets 21,975 1,655 - 23,630 - 23,630
Impairment difference recognized in
accordance with the “Regulations
Governing the Procedures for
Banking Institutions to Evaluate
Assets and Deal with Non-
performing/ Non-accrual Loans” - - - - - -
Write-off bad debts - - - - - -
Recovered amount after write-off bad
debts - - - - - -
Foreign exchange settlement and other
changes 10,256 214 ( 26) 10,444 - 10,444
Balance - ending $ 61,769 $ 2,040 $ - $ 63,809 $ - $ 63,809
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64 -

As of 2019 and December 31, 2018, bad debt expense allowances and commitment/guarantee reserve allowances.

32. Equity

(1) Paid-in capital

Authorized number of shares (thousand shares) Authorized capital Number of shares issued with fully paid-in capital (thousand shares) Outstanding capital		December 31, 2019 1,680,000 $ 16,800,000 1,621,367 16,213,672		December 31, 2018 1,680,000 $ 16,800,000 1,522,410 $ 15,224,105

Common stock shares issued at NTD 10 Par and each share is entitled to one voting right and dividends.

On June 12, 2018, the shareholder meeting resolved to recapitalize the undistributed earnings of NT$929,171 thousand to 92,017 shares (both in thousand), at a par value of NT$10 per share, all of which were common stocks. As of December 31, 2018, the paid-in capital of CMFC has increased to NT$15,224,105 thousand, consisting of 1,522,410 thousand shares of common stock at a par value of NT$10 per share.

On June 5, 2019, the shareholder meeting resolved to recapitalize the undistributed earnings of NT$989,567 thousand to 989,567 shares (both in thousand), at a par value of NT$10 per share, all of which were common stocks. As of December 31, 2019, the paid-in capital of CMFC has increased to NT$16,213,672 thousand, consisting of 1,621,367 thousand shares of common stock at a par value of NT$10 per share.

(2) Capital surplus

of NT$10 per share. Capital surplus
For covering loss carried forward, payment in cash or capitalization as equity shares (Note) Shares issued in excess of par value The differences between carrying amount and market price of actual acquisition or disposal of shares in subsidiaries. Assets received Treasury stock transactions For covering loss carried forward only. Changes in the ownership equity on a subsidiary Transaction of treasury stock (cash dividends paid to subsidiaries) May not be used for any purpose. Employees’ stock options	December 31, 2019 $ 590,001 6,270 2,129 772,194 184,238 December 31, 2019 $ 153,376 2,600 $ 1,710,808	December 31, 2018
		$ 590,001 6,270 2,129 772,194 184,238 December 31, 2018
			$ 137,443 2,600 $ 1,694,875

Note: Such additional paid-in capital can be used to make up for losses; also, when the company is without any loss, it can be applied for cash distribution or capitalization. However, it is limited to a certain percentage of the annual paid-in capital for the purpose of capitalization.

(3) Retained earnings and Dividend Policy

65 -

According to the Articles of Incorporation of China Man-Made Fiber Corporation, the policy for the distribution of earnings stated that if there is a surplus after account settlement of the fiscal year, the company shall pay applicable taxes and cover loss carried forward, followed by the allocation of 10% of the remainder as legal reserve, and appropriate for special reserve or reverse special reserve. If there is still a balance, it will be pooled up with the undistributed earnings carried forward from previous years for distribution as shareholder dividend under a proposal prepared by the Board subject to the final approval of the General Meeting of Shareholders. For information on the policy of remuneration to employees, Directors, and Shareholders to the Articles of Incorporation, refer to Note 33 (8) remunerations for employees, directors and supervisors.

The Company’s dividend policy shall be drafted subject to the Company’s future investment environment and long-term financial planning, and also takes the shareholders' equity into consideration. The dividends shall be allocated in the form of cash dividend as the first priority per year, and may be allocated in the form of stock dividend, provided that the ratio of allocation of stock dividend shall be no more than 95% of the total dividends.

China Man-Made Fiber Corporation has a special reserve appropriated and reversed in accordance with FSC.Certificate.Issue.Tzi No. 1010012865 Letter, FSC.Certificate.Issue.Tzi No. 1010047490 Letter, and “Special reserve appropriation Q&A after the adoption of International Financial Reporting Standards (IFRSs).” If the amount debited to the other shareholders’ equity is reversed subsequently, the reversed amount can be distributed.

The legal reserve should be contributed until its balance reaches the Company’s total paid-in capital. The legal reserve may be applied to make up loss. If there is no loss, the amount of legal reserve in excess of the paid-in capital by 25% could be allocated as capital stock and paid out as cash dividend.

China Man-Made Fiber Corporation held General Shareholders Meetings on June 5, 2019 and June 12, 2018, which adopted resolutions with regard to the 2018 and 2017 surplus distribution proposals as follows:

posals as follows:
Legal reserve Special reserve Cash dividends Stock dividends	Earnings Distribution Proposal 2018 2017 $ 137,204 $ 79,399 ( 20,283) ( 524,938) 152,241 142,949 989,567 929,171	Dividend Per Share (NTD)
	2018 $ 137,204 ( 20,283) 152,241 989,567	2018 $ - - 0.10 0.65	2017
			$ - - 0.10 0.65

China Man-Made Fiber Corporation recorded an after-tax loss in 2019. The board of directors therefore proposed on March 16, 2020 not to distribute dividends and set aside a special reserve of NT$ 4,696,000 pursuant to the Securities and Exchange Act.

The proposal for the distribution of earnings in 2019 is pending on the resolution of the General Meeting of shareholders scheduled to be held in June 2020.

For more information on the proposal approved by the board of directors of China Man-Made Fiber Corporation and the surplus distribution proposal adopted by resolution of the General Shareholders Meeting, please refer to the TWSE Market Observation Post System.

66 -

(4) Other equity

Exchange differences from the translation of financial statements of foreign operations

Balance - beginning ( The exchange differences yielded by net assets of overseas operating institutions ( Balance - ending ( Unrealized gain or loss on financial asset oss Balance - beginning ( Accrued in current year Unrealized gain or loss Debt instruments Equity instruments The shares of profit and/or loss at equity method over the associates The accumulated gain/loss from the disposition of equity instruments will be transferred to retained earnings. ( Balance - ending		2019 2018 $ 54,591 ) ( $ 41,611 ) 32,404 ) ( 12,980 ) $ 86,995 ) ( $ 54,591 ) s at fair value through other comprehensive profit 2019 2018 $ 129,103 ) ( $ 203,678 ) 12,476 - 509,505 31,466 - ( 226 ) 10,862 ) 43,335 $ 382,016 ( $ 129,103 )		2018
	( (		( ( (	$ 203,678 ) - 31,466 226 ) 43,335 $ 129,103 )

Unrealized gain or loss on financial assets at fair value through other comprehensive profit or loss
(5) Treasury stock

The details and changes of the treasury stocks of CMFC in 2019 and 2018 are shown as follows:

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----- Start of picture text -----

Shares of parent
company held by
subsidiaries (in thousand
Cause shares) Total (thousand shares)
Number of shares on January 1,
----- End of picture text -----

2019 Increase in current period Number of shares as of December 31, 2019 Number of shares on January 1, 2018 Increase in current period Number of shares on December 31, 2018	310,784 20,201 330,985 291,815 18,969 310,784	310,784 20,201 330,985 298,504 18,969 310,784

In 2019 and 2018, stocks of the parent held by subsidiaries increased by 20,201,000 and 18,969,000, respectively. This can be attributed to stock dividend distributions by the parent.
67 -
As of December 31, 2019 and 2018, CMFC shares held by the subsidiaries are as follows: Number of shares

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----- Start of picture text -----

held (thousand
Name of Subsidiary shares) Book Value Market Value
December 31, 2019
----- End of picture text -----

Pan Asia Chemical Corporation 251,443 Deh Hsing Investment Co., Ltd. 11,172 Chou Chin Industrial Co., Ltd. 59,123 Chou Chang Corporation (subsidiary of Chou Chin Industrial CO., LTD.) 9,247 December 31, 2018 Pan Asia Chemical Corporation 236,096 Deh Hsing Investment Co., Ltd. 10,491 Chou Chin Industrial Co., Ltd. 55,514 Chou Chang Corporation (subsidiary of Chou Chin Industrial CO., LTD.) 8,683	$ 971,926 25,787 195,060 35,136 $ 1,227,909 $ 971,926 25,787 195,060 35,136 $ 1,227,909	$ 1,023,453 92,733 229,558 28,960 $ 1,374,704 $ 1,180,972 107,005 264,890 33,656 $ 1,586,523

According to the Securities and Exchange Act, the treasury stocks held by CMFC shall not be pledged, nor shall they be entitled to dividends distribution and voting rights. Shares of CMFC held by its subsidiaries shall be considered as treasury stocks, and except for the provisions of Article 167 and 179 of the Company Act, the rest share the same rights as the general shareholders.
(6) Non-controlling interest

6) Non-controlling interest
Balance - beginning Adjusted non-controlling interest of dividends distributed to subsidiaries The number of shares attributed to non-controlling interests Net income Reevaluation of determined benefit plan Financial assets at fair value through other comprehensive profit or loss Exchange differences from the translation of financial statements of foreign operations Cash dividends paid by subsidiaries Change in non-controlling interest Balance - ending		2019 $ 35,867,280 15,146 3,310,588 92,309 ) 301,753 72,910 ) 730,905 ) - $ 38,598,643		2018
	( ( (		( (	$ 32,767,674 14,228 3,037,600 25,672 ) 27,114 9,518 1,066,594 ) 1,103,412 $ 35,867,280

68 -

33. Business units in continuing operation income

Income from continuing operations department includes the following items (1) Interest income and expense

(1) Interest income and expense
Interest revenue Discount and loan interest income Due from bank and interbank offered interest income Security investment interest income Others Interest expenses Deposits Interest expenses Central Bank and interbank interest expense Bond issuance interest expense Interest expense on borrowings Lease liability interest expenses Other Interest expenses Less: Recognized cost of property, plant and equipment (Note 20) (2) Fee income and expense Income from handling fees Brokerage fee revenue Trust business income Loan service fee income Commission income for bank guarantee Other service fee revenue Service charges Commission expense Inter-bank service fee Other service fee expenses		2019 $ 11,046,706 158,560 1,592,043 657,696 $ 13,455,005 $ 3,895,512 207,985 643,380 257,879 40,665 241,751 5,287,172 2,272) $ 5,284,900 2019 1,292,348 901,283 466,542 152,298 339,599 3,152,070 93,237 35,904 109,614 238,755			2018
	(		(	$	10,785,290 141,778 1,517,886 637,878 13,082,832 3,570,151 257,130 581,800 178,097 - 228,157 4,815,335 17,665) 4,797,670 2018
				$
				$

				$

	$				$ 1,487,633 809,086 461,478 159,332 358,691 $ 3,276,220 $ 283,735 35,082 111,229 $ 430,046
	$
	$
	$

The consolidated company provides custody, trust, investment management and advisory services to third parties; therefore, the consolidated company engages in the planning, management and trading decision of financial instruments. For a trust fund or investment portfolio that is commissioned for management and utilization, a separate bookkeeping is arranged and financial statements are prepared for internal management purposes, excluding the financial statements of the consolidated company.

69 -

(3) Gain (loss) on financial assets and liabilities at fair value through profit and loss

		2019 132,342 345,149 2,310 ) 2,580 ) 9,206 481,807 1,507 ) 23,679 102,011 51,349 - 2019 109 ) 60,149 235,572 717,379 2019			2018
( ( (	$			( ( ( ( (	$ 146,516 8,762 ) 77,018 ) 27 ) 18,344 79,053 3,046 190,069 48,167 ) 14,456 15 ) 2018 230 29,046) 130,573 209,626 2018


$			(	$

$				$

		$ - $ 113 6,338 4,412 $ 10,863		( ( (	$ 325) $ 3,820 21,308) 1,300 $ 16,188)

70 -

(5) Bad debt expense, commitment and guaranty reserve

			2019		2018
Lodgment of the expenses of
doubtful account		$	121,547	$	32,835
receivables
Lodgment of the expenses of
doubtful accounts for
discount and loans			509,127		487,333
Guarantee reserve reversed		(	15,226 )	(	54,000 )
Provision for commitment of
financing			26		6,604
		$	615,474	$	472,772
Other income
			2019		2018
Dividend income		$	133,539	$	116,117
Management fee income			35,997		32,824
Rental revenue			32,704		37,204
Others			35,257		65,914
		$	237,947	$	252,059
Depreciation and amortization
		2019		2018
Property, plant, and equipment
expenses	$	977,344		$	847,938
Depreciations of
Investment Property			1,701		1,783
Intangible assets amortization
expenses			52,488		54,854
Right-of-use assets		258,860			-
Total	$	1,290,393		$	904,575
Consolidation of depreciation
expenses based on functions
Operating cost	$	765,407		$	611,281
Operating expenses		472,498			238,440
	$	1,237,905		$	849,721
Consolidation of amortization
expenses based on functions
Operating cost	$		55	$	731
Operating expenses			52,433		54,123
	$		52,488	$	54,854

(6) Other income

(7) Depreciation and amortization

71 -
(8) Employee benefits expenses 2019

Employee benefits expenses 2019
Salary & wage Labor insurance and national health insurance Pension expenses Defined contribution pension plan Defined benefit plan (Note 31) Other employee benefits expenses Total employee benefits expenses 2018 Salary & wage Labor insurance and national health insurance Pension expenses Defined contribution pension plan Defined benefit plan (Note 31) Other employee benefits expenses Total employee benefits expenses	Operating cost $ 619,636 62,323 681,959 27,479 4,309 31,788 36,804 $ 750,551 Operating cost $ 588,310 57,035 645,345 $ 23,293 4,615 27,908 39,151 $ 712,404	Operating expenses $ 3,567,662 233,353 3,801,015 110,851 24,765 135,616 257,890 $ 4,194,521 Operating expenses $ 3,501,679 215,918 3,717,597 $ 99,625 32,810 132,435 244,296 $ 4,094,328	Total
			$ 4,187,298 295,676 4,482,974 138,330 29,074 167,404 294,694 $ 4,945,072 Total
			$ 4,089,989 272,953 4,362,942 $ 122,918 37,425 160,343 283,447 $ 4,806,732

(9) Remuneration to employees, Directors and Supervisors

The Company appropriated 1% to 5% and no more than 0.3% of the earnings before taxation before the deduction of remuneration to the employees, Directors and Supervisors of the same year. Since the Company recorded an after-tax loss in 2019, no employee and director/supervisor compensations were allocated. Estimated employee and director/supervisor compensations in 2018 are as follows:

are as follows:
Estimate on ratio Remuneration to employees Remuneration to directors/supervi sors	2019 - -	2018
		1.0% 0.3%

72 -

Amount Remuneration to employees Remuneration to directors/sup ervisors		2019 $ - $ -		2018 $ 13,673 $ 4,102

If there are still changes in the amount specified in the consolidated financial statement after announcement, proceed to the accounting of change and adjusted for booking in the next fiscal year. China Man-Made Fiber Corporation held board meetings on March 18, 2019 and March 23, 2018, which adopted resolutions to approve the 2018 and 2017 employee and director/supervisor compensations as follows:

Amount

mount
Amount resolved by the Board of Directors for release Amount recognized in financial statements of respective years	2018 Remuneration to employees Remuneration to directors/supervi sors $ 13,673 $ 4,102 $ 13,673 $ 4,102	2017
	Remuneration to employees $ 13,673 $ 13,673	Remuneration to employees $ 8,185 $ 8,185	Remuneration to directors/supervi sors $ 2,456 $ 2,456

The actual amount for remuneration to employees, Directors and Supervisors in 2018 and 2017 did not vary from the amount recognized in the consolidated financial statements of 2018 and 2017. For further information on the appropriation of remuneration to the employees and Directors and Supervisors by the Board of China Man-Made Fiber Corporation in 2020 and 2019, visit the “MOPS” website of Taiwan Stock Exchange Corporation.

34. Continuing department income tax

(1) Income tax recognized in profit or loss

The major components of income tax expense are as follows:

Income tax expenses in the current period Accrued in current year Additional levy on undistributed earnings Prior year adjustment Land revaluation increment tax Deferred tax Accrued in current year Change in tax rate Income tax expense recognized in the profit or loss		2019 $ 916,556 6,382 832 ) - 386,848 ) - $ 535,258		2018
	( (		(	$ 807,023 20,662 8,367 292 35,255 136,472 ) $ 735,127

73 -

The adjustments of 2019 and 2018 accounting income and the income tax expense of the year:

Income before tax from continuing operations Income tax expense of net income before tax at the statutory tax rate Non-deductible expenses and losses for tax purposes Non-taxable income Additional levy on undistributed earnings Land revaluation increment tax Income tax expense of prior years adjusted in the current year Unrecognized loss carryforward Unrecognized deductible temporary differences Change in tax rate Effect of variation in taxation rates on the consolidation of the group and individual entities. Income tax expense recognized in the profit or loss	( ( (	2019 $ 3,116,082 $ 623,216 7,433 63,074 ) 6,382 - 832 ) 127 41,691 ) - 3,697 $ 535,258	( ( ( (	2018 $ 5,144,762 $ 1,028,952 21,458 177,990 ) 20,662 292 8,367 12,389 ) 18,488 ) 136,472 ) 735 $ 735,127

In 2018, Taiwan amended the R.O.C. Income Tax Act, increasing its corporate income tax rate from 17% to 20%. Said amendment also prescribes a decrease of the applicable tax rate for undistributed surpluses in 2018 from 10% to 5%.

(2) Income tax recognized in the other comprehensive profit or loss

		2019		2018
Deferred tax
Accrued in current year
- Re-evaluation of
determined benefit plan	$	29,500	$	48,464
Unrealized gain or loss on
financial assets at fair
value through other
comprehensive profit or
loss	(	20,877 )	(	10,830 )
Income tax benefits recognized in
the other comprehensive profit
or loss	$	8,623	$	37,634
rrent income tax asset and liability
	December 31, 2019		December 31, 2018
Current income tax asset
Tax refund receivable	$	14,469	$	5,293
Current Tax Liability
Payable income tax	$	398,167	$	386,857

(3) Current income tax asset and liability
74 -

(4) Deferred income tax assets and liabilities

Changes in the deferred income tax assets and liabilities are as follows: 2019

2019
Deferred income tax assets Temporary difference Property, plant and equipment Inventory Defined benefit pension plans Loss allowance Unrealized loss from structured note indemnity Others Loss credit Deferredtax liabilities Temporary difference Allowance for land increment value tax 2018 Deferred income tax assets	Balance, beginning of year $ 34,789 11,158 309,329 372,522 223,761 23,276 974,835 99,103 $ 1,073,938 $ 1,021,567 Balance, beginning of year		Recognized in the profit or loss ( $ 12,827 ) 11,976 ( 5,333 ) 50,538 ( 10,270 ) ( 20,285 ) 13,799 373,049 $ 386,848 $ - Recognized in the profit or loss ( $ 2,449 ) 1,674 19,756 41,735 31,106 37,789 129,611 ( 27,849 ) $ 101,762 $ 545		Recognized in the other comprehensive profit of loss $ - - 29,500 - - ( 20,877 ) 8,623 - $ 8,623 $ - Recognized in the other comprehensive profit of loss $ - - 48,464 - - ( 10,830 ) 37,634 - $ 37,634 $ -	Balance, end of year
			( ( ( (			$ 21,962 23,134 333,496 423,060 213,491 ( 17,886 ) 997,257 472,152 $ 1,469,409 $ 1,021,567 Balance, end of year
	(	$ 37,238 9,484 241,109 330,787 192,655 3,683 ) 807,590 126,952 $ 934,542 $ 1,021,022		( (	(		$ 34,789 11,158 309,329 372,522 223,761 23,276 974,835 99,103 $ 1,073,938 $ 1,021,567
Temporary difference Property, plant and equipment Inventory Defined benefit pension plans Loss allowance Unrealized loss from structured note indemnity Others Loss credit Deferredtax liabilities
Temporary difference Allowance for land increment value tax

75 -
(5) Deductible temporary differences and unused deduction of loss for deferred income tax assets are not recognized in the balance sheet.

Deductible temporary differences Allowance to reduce inventory to market Defined benefit pension plans Loss credit	December 31, 2019 $ 114,314 7,550 98,010 $ 219,874	December 31, 2018	December 31, 2018
			$ 282,592 - - $ 282,592

(6) Unused losses credit related information

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Loss deduction as at December 31, 2019:
Uncredited balance Last year of credit
$ 70,159 2020
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	5,221 2022 505,260 2026 1,876,127 2029 $ 2,456,767

(7) Income tax audit
Approved by the Company up to 2016.
The Taichung Commercial Bank was audited up to the year 2017.
The Taichung Commercial Bank Insurance Broker Co., Ltd. was audited up to the year of 2017.
The Taichung Commercial Bank Lease Enterprise was audited up to the year of 2017.
TCB Securities was approved until 2017.
The Pan Asia Chemical Corporation was audited up to the year 2016.
Approved by De-Hsin Investment up to 2017.
Approved by Taichung Securities Investment Trust up to 2017.
Approved by Chou Chin Industrial up to 2017.
Approved by Ge Ling up to 2017.
Approved by Jeou Chang up to 2017.
Approved by Rui-Jia Investment up to 2017.
Approved by Xiang-Feng Development up to 2017.
Approved by Mélasse up to 2017.
Approved by Pan-Feng Industry up to 2017.
Approved by Tou-Ming Industry up to 2017.
Approved by Jin-Bang-Ge Industry up to 2017.
Earnings (losses) per share

Basic earnings per share (losses) Diluted earnings per share (losses)	( (	2019 $ 0.57 ) $ 0.57 )		2018 $ 1.06 $ 1.06

When calculating earnings per share, the impact of the stock dividend had been retroactively adjusted. The payment date of bonus shares is on August 12, 2019. Due to retrospective adjustment, the 2018 basic and diluted earnings per share changes are as follows:

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Basic earnings per share Diluted earnings per share	Cum-dividend $ 1.13 $ 1.13	Unit: NTD per share Ex-dividend $ 1.06 $ 1.06

The net income (loss) and weighted average common stock shares used for calculating earnings (deficit) per share are as follows:

Net income (loss) for current period

Net profit (loss) attributable to the company Quantity Weighted average common stock shares used to calculate basic earnings per share Effect of dilutive potential common stock: Remuneration to employees Weighted average common stock shares used to calculate diluted earnings per share		(	2019 $ 729,764 ) 2019 1,290,382 - 1,290,382			2018 $ 1,372,035 Unit: Thousand Shares 2018 1,290,382 1,537 1,291,919

If the consolidated company may choose to have the employee compensation distributed via a stock or cash dividend, calculate the diluted earnings (deficit) per share, assuming that the bonus to employees is with a stock dividend distributed, with the weighted average number of shares outstanding included when the potential common stock has a diluted effect. When the Company estimated diluted earnings (losses) per share prior to the adoption of a resolution regarding the number of shares issued as employee compensations by the shareholders meeting in the following year, it also considered potential common share dilution effects.

Related Party Transactions
(1) Name and affilation of related parties

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Name Affiliation
Chung Chien Investment Co., Ltd. Investors with control
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ered potential common share dilution effects. arty Transactions e and affilation of related parties Name Chung Chien Investment Co., Ltd.	Affiliation Investors with control
Pan Asia Investment Co., Ltd.	Investors with control
Nan Chung Petrochemical Corp.	Affiliated enterprises
Wei-Kang International	Affiliated enterprises
BONWELL PRADISE Co., Ltd	Affiliated enterprises
Storm Model Management	Affiliated enterprises
Qian Teng PR Planning (Shanghai), Co., Ltd.	Affiliated enterprises
Shanghai Nianjia Cultural Diffusion Co., Ltd.	Affiliated enterprises
Hua Nan Financial Holding	Substantial related party
Hua Nan Bank	Substantial related party
Hua Nan Insurance	Substantial related party
TAIWAN FILAMENT WEAVING	Substantial related party
DEVELOPMENT CO., LTD.
Hsu Tian Investment Co., Ltd	Substantial related party
TA YI DEVELOPMENT CO., LTD.	Substantial related party
Midea	Substantial related party
Formosa Imperial Wineseller Corp.	Substantial related party
Formosawine Vintners Corporation	Substantial related party

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Name Affiliation Da Fa Investment Company Substantial related party Sheng Jen Knitted Textiles Co., Ltd. Substantial related party Tai Yi Investment Substantial related party Reliance Consolidated Securities Co., Ltd. Substantial related party Wang Wan Chin Education Foundation Substantial related party Sheng Yuan Cher Investment Company Substantial related party Chao-Qing Investment Substantial related party Peng Hsu Investment Company Substantial related party General Pride Enterprise Co., Ltd. Substantial related party Shield Bright Investment Limited Substantial related party Taichung Commercial Bank Cultural and Educational Substantial related party Foundation, Taichung Commercial Bank Workers’ Welfare Commission Ho Yang Management Consultant Co., Ltd. Legal director of Taichung Commercial Bank Others (Note 1, 2)

Legal director of Taichung Commercial Bank Key management personnel of the merged company and their spouses and relatives within the second degree of kinship

Note 1: Chairman Chin-Yuan Lai of Taichung Bank resigned on June 26, 2018. The standing committee of the Board elected Ming-Hsiung Huang as the new Chairman of Taichung Bank on June 27, 2018. Chairman Ming-Hsiung Huang later resigned for health reasons on July 12, 2018. The standing committee of the Board elected Kuei-Fong Wang as the new Chairman on the same day.
Note 2: Note 2: Representative Huang Ching-Tai of Hsu Tian Investment Co., Ltd., an Institutional Director of Taichung Bank, resigned on April 20, 2018. Hsu Tian Investment appointed Lai-Hsiang Tsai as the Representative on April 27, 2018. Representative Chin-Yuan Lai of Hsu Tian Investment Co., Ltd., an Institutional Director of Taichung Bank, resigned on June 26, 2018. Hsu Tian Investment appointed Yeh Shu Hui as the Representative on May 28, 2018.
(2) Important transactions between the Company and related parties:
Sales revenue

Name Substantial related party		2019 $ 42		2018 $ -

There are no significant differences between sales prices and collection terms for related parties of the merged company and regular customers.

Purchases

Name Nan Chung Petrochemical Corp.		2019 $ 3,361,822		2018 $ 4,246,032

The terms and conditions of the Consolidated Company’s purchase from said related parties are as same as that to the general suppliers. The general suppliers apply the A/R settlement 1 month~2 months.

Bank deposits and interest revenue

Name Hua Nan Bank		2019 Balance - ending Interest revenue $132,779 $ 115		2018	2018
		Balance - ending $132,779		Balance - ending $ 111,807	Interest revenue $ 181

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4. Payable accounts from related parties

Name Payable accounts and notes Nan Chung Petrochemical Corp. Substantial related party 5. Other income Name Hua Nan Bank TAIWAN FILAMENT WEAVING DEVELOPMENT CO., LTD.	December 31, 2019 $ 307,149 - $ 307,149 2019 $ 8,197 96 $ 8,293	December 31, 2018	December 31, 2018
			$ 342,359 3,986 $ 346,345 2018
			$ 6,799 96 $ 6,895

The company’s 2019 and 2018 other income from Hua Nan Commercial Bank Company pertains to the company serving as Hua Nan Commercial Bank Co.’s institutional director has received of director/auditor remuneration and director/auditor attendance travel expense income.

6. Disposal of financial assets January 1 to December 31, 2019

Name Pan Asia Investment Co., Ltd.	Account titles in book The financial assets measured for the fair values through other comprehensive income- non-current	Number of traded shares 1,000 thousand shares	Transaction object Taiwan Tea Corp. common shares		Disposal price $ 16,576

The merged company sold 1 million common shares of Taiwan Tea Corporation at a transaction price of NT$ 16.65 to the related party Pan Asia in accordance with the method for trading after hours on the Open Market Stock Exchange on September 23, 2019. The proceeds minus a processing fee of NT$ 24,000 and transaction tax of NT$ 50,000 amounted to NT$ 16,576,000 (gain/loss from disposal of (548,000). Equity carried over to retained surpluses.

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7. Loan

2019

Unit: NTD thousand

Difference in

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Number of Performance trading
accounts or Maximum No- conditions and
name of Balance in Balance - performing Interest Collateral terms with non-
Type stakeholder Current Period ending Normal loans loans revenue Contents stakeholders
Customer 11 accounts $ 4,772 $ 3,223 $ 3,223 $ - $ 67 Credit loans N/A
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loans to
employees
Residential	37 accounts	187,417	115,535	115,535	-	1,585	Real estate	"
mortgage
loans
Other loans	Lee OO	2,685	2,552	2,552	-	41	"	"
	Chen OO	4,000	-	-	-	17	"	"
	Liu OO	2,044	1,911	1,911	-	29	"	"
	Yang OO	846	-	-	-	4	"	"
	Chung OO	12,230	-	-	-	154	"	"
	Fan OO	4,432	1,916	1,916	-	34	"	"
	Lin OO	38,000	18,800	18,800	-	354	"	"
	Liang OO	1,002	886	886	-	14	"	"
	Yeh OO	33,000	11,000	11,000	-	166	"	"
	Huang OO	1,701	1,570	1,570	-	27	"	"
	Chiu OO	3,534	3,238	3,238	-	49	"	"
	Tsai OO	1,529	-	-	-	29	"	"
	Chen OO	1,600	-	-	-	5	"	"

2018

				2018
Type Customer loans to employees Residential mortgage loans Other loans	Number of accounts or name of stakeholder 9 accounts 27 accounts Lee OO Ni OO Chu OO You OO Chen OO Liu OO Yang OO Chung OO Lin OO Liang OO Chen OO Huang OO Chuang OO Chuang OO Chiu OO Tsai OO Huang OO Lee OO Lin OO	Maximum Balance in Current Period	Balance - ending $ 2,911 83,660 2,685 - - - 4,000 2,044 846 12,230 19,000 1,002 - 1,701 - 1,620 3,534 1,529 - - -	Perfor	mance No- performing loans $ - - - - - - - - - - - - - - - - - - - - -	Interest revenue $ 44 1,032 43 8 31 15 54 31 16 206 337 23 54 30 24 22 53 43 26 17 2	Unit: Collateral Contents	NTD thousand Difference in trading conditions and terms with non- stakeholders
				Normal loans $ 2,911 83,660 2,685 - - - 4,000 2,044 846 12,230 19,000 1,002 - 1,701 - 1,620 3,534 1,529 - - -
		$ 4,317 109,451 2,817 1,500 4,500 4,300 7,000 2,176 1,298 14,387 38,000 3,053 4,000 1,830 1,487 1,769 3,826 3,642 2,500 3,600 1,500					Credit loans Real estate 〃〃〃〃〃 Real estate 〃〃〃〃〃〃〃〃〃〃〃〃〃	N/A 〃〃〃〃〃〃 N/A 〃〃〃〃〃〃〃〃〃〃〃〃〃

According to Articles 32 and 33 of the Banking Act of the Republic of China, no non-secured credit loans shall be granted to any party interested with the Bank’s staff, unless they are consumer loans and loans extended to the Government Apparatus; secured credit loans shall be granted under sufficient collateral and the terms of such credit extension shall not be more favorable than those offered to other customers in the same category.

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8. Deposit

8. Deposit
Taichung Commercial BankWorkers’Welfare Commission Taichung Commercial Bank Cultural and Educational Foundation Formosa Imperial Wineseller Corp. Yu Hwei Technology Co., LTD. Hsu Tian Investment Co., Ltd Reliance Consolidated Securities Co., Ltd. Peng Hsu Investment Company Pan Asia Investment Co., Ltd. Ho Yang Management Consultant Co., Ltd. Others		2019	Interest Expenses $ 7,258 88 1 - 13 104 - - - 4,180 $11,644		2018
	Balance - ending $139,771 8,223 206 4 46,712 13,652 3 6 - 321,852 $530,429	Interest Rate Collars % 0.01～5.09 0.01～1.09 0.08 0.01 0.01～0.48 0.08～0.80 0.01 0.01 - 0.00~5.09		Balance - ending $141,566 8,232 2,393 4 11,888 - - - 34,828 242,116 $441,027	Interest Rate Collars % 0.01～5.09 0.01～1.09 0.08 0.01 0.01~0.43 - - - 0.01 0.00~5.09	Interest Expenses
						$ 7,367 88 - - 86 - - - 1 3,847 $11,389

With the exception of the interest rate for bank clerks’ deposits on December 31, 2019 and 2018 were 5.09% respectively, the other interest rates are not materially different from those offered to general customers.

9. Financial bonds payable

Taichung Bank commissioned Masterlink Securities Corp., Yuanta Securities, SinoPac Securities Corp., Concord Securities, and KGI Securities as financial advisors for bond issuance and offering of the second tranche of subordinated financial bonds in 2013 and non-cumulative perpetual subordinated financial bonds (first tranche in 2015, first tranche in 2016, first, second, third, fourth, and fifth tranche in 2017, and first and second tranche in 2018).

As of December 31, 2019, the financial bonds of Taichung Bank Company subscribed by the related parties through the underwriters are as follows:

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Subscription
Trading Counterpart amount Session
Hsu Tian Investment $ 4,000,000 1st term in 2015, 1st term in 2016, 1st and 5th term
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Trading Counterpart Hsu Tian Investment	Subscription amount $ 4,000,000	Session 1st term in 2015, 1st term in 2016, 1st and 5th term
Co., Ltd.		in 2017, 1st term and 2ndterm in 2018 of
		perpetual non-accumulative subordinated
		debentures
Other related parties	2,241,000	Second tranche of subordinated financial bonds in
		2013 and non-cumulative perpetual
		subordinated financial bonds (first tranche in
		2015, first tranche in 2016, first, second, third,
		fourth, and fifth tranche in 2017, and first and
		second tranche in 2018).

As of December 31, 2019 and 2018, Taichung Bank should pay bond interest from bank debentures to the aforementioned related parties amounting to NT$40,882 thousand, and NT$ 40,883 thousand, respectively. The interest expenses as of December 31, 2019 and 2018 amounted to NT$ 258,358 thousand and NT$ 204,210 thousand, respectively.

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(3) Rewards to management

The 2019 and 2018 total remuneration to directors and the other management are as follows:

Short-term employee benefits Retirement benefits Other long-term employee benefits		2019 $ 255,613 2,116 13 $ 257,742		2018
				$ 250,985 2,950 25 $ 253,960

The salaries and remunerations to directors and other key management were determined by the Salary Committee in accordance with the personal performances and trends in the markets:

37. Pledged assets

The consolidated company provides assets as operation bonds, collaterals for bank borrowings, guarantee for repurchase agreement, guarantee for overdraft limit, margin for financial derivatives, guarantee for import duty and guarantee for hiring foreign workers (list them based on the book value):

Notes receivable Due from bank- time deposits Restricted assets - Bank borrowings (list other current assets) Financial assets at fair value through other comprehensive profit or loss Investment of debt instrument on the basis of cost after amortization – government bonds Investment under the equity method Available-for-sale noncurrent assets Investment property Property, plant and equipment Land House and Building	December 31, 2019 $ 2,889,030 200,000 543,795 893,516 844,900 117,002 769,610 1,086,856 3,411,627 485,983	December 31, 2018 $ 2,277,240 200,000 606,217 186,865 845,000 122,896 769,610 1,090,166 3,179,986 530,813

38. Significant undertakings or contingencies

In addition to the undertaking for financial products specified in Notes 8, 9 and 26, the consolidated company have had the following undertakings or contingent liabilities until December 31, 2019 and 2018: (1) Guarantee notes issued by CMFC:

Banking facility Advance payment and performance bond		December 31, 2019 $ 18,027,828 320,000 $ 18,347,828		December 31, 2018
				$ 14,676,846 320,000 $ 14,996,846

(2) As of December 31, 2019 and 2018, the consolidated company had opened unused credit line of letter of credit at NT$2,424,494 thousand and NT$1,976,370 thousand, respectively.
(3) CMFC and Air Liquide Far Eastern signed a gas purchase agreement, which specified the minimum purchase volume of oxygen and nitrogen. The monthly purchase is about NT$13,800 thousand, with adjustments made every April in accordance with the customer price index. The purchase volume of oxygen and nitrogen is based on the contract price. The purchase agreement has a term of 240 months. The agreement will be automatically renewed for 36 months upon expiration if neither party has objection. A 24-month notice is required for the termination of the agreement. Both parties agreed on July 1, 2014 as the effective date of the agreement.
(4) Taichung Commercial Bank has other commitments:

Undisbursed credit committee (exclusive of credit cards)	- 82 - December 31, 2019 $ 139,176,198	December 31, 2018
		$ 152,638,816

Credit card committee 11,743,903 10,507,270 Receivable guarantees 16,485,312 18,335,961 Trust liabilities 67,330,687 65,770,665 The balance of opened but unused letter of credit 3,318,935 4,140,679 Not yet initiated finance lease contractual commitments during lease periods 1,240,804 1,803,183

(5) The balance sheet and trust property catalogue of the trust account is disclosed pursuant to Article 17 of the “Enforcement Rules of Trust Enterprise Act” as follows:

Balance Sheet of Trust Accounts December 31, 2019

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Trust assets Amount Trust liabilities Amount
Bank deposits $ 3,588,759 Payable securities in
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Short-term investment Structured product investment Real estate Land House and Building Securities in custody Total trust assets	custody 54,341,837 Trust capital 2,041,602 Net income Deferred carry-over ( 1,350,853 123,079 5,884,557 $ 67,330,687 Total trust liabilities	$ 5,884,557 61,446,130 2,047,880 2,047,880 ) $ 67,330,687

Property Catalogue of Trust Accounts December 31, 2019

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Investment Amount
Bank deposits $ 3,588,759
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Investment Bank deposits		Amount $ 3,588,759
Short-term investment Structured product investment Real estate Land House and Building Securities in custody Income Statement of TrustAccounts 2019 Amount Interest revenue Dividend income Trust expenses Administration expenses Taxation Income before taxation Income tax expenses Income after taxation		54,341,837 2,041,602 1,350,853 123,079 5,884,557 $ 67,330,687 Amount
	( (	$ 2,921,019 27,138 900,164 ) 113 ) 2,047,880 - $ 2,047,880

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Balance Sheet of Trust Accounts
December 31, 2018
Trust assets Amount Trust liabilities Amount
Bank deposits $ 1,945,793 Payable securities in
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Short-term investment Structured product investment Real estate Land House and Building Securities in custody Total trust assets	custody 52,565,072 Trust capital 2,369,583 Net income Deferred carry-over ( 1,745,119 123,233 7,021,865 $ 65,770,665 Total trust liabilities	$ 7,021,865 58,748,800 2,001,849 2,001,849 ) $ 65,770,665

Property Catalogue of Trust Accounts December 31, 2018

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----- Start of picture text -----

Investment Amount
Bank deposits $ 1,945,793
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Short-term investment Structured product investment Real estate Land House and Building Securities in custody	52,565,072 2,369,583 1,745,119 123,233 7,021,865 $ 65,770,665

Income Statement of Trust Accounts 2018

House and Building Securities in custody Income Statement of TrustAccounts 2018		123,233 7,021,865 $ 65,770,665
Amount Interest revenue Dividend income Trust expenses Administration expenses Taxation Income before taxation Income tax expenses Income after taxation		Amount
	( (	$ 2,777,593 33,056 808,648 ) 152 ) 2,001,849 - $ 2,001,849

(6) Leasing contracts and capital expenditure commitments maturity analysis The consolidated company’s leasing contract commitments include operating leases and financing leases.

The operating lease commitment meant for the minimum lease payment of the consolidated company as a lessee or lessor under the irrevocable operating lease. For operating lease contractual commitments please refer to Note 21 (4).

The term “finance lease commitments” refers to the present value of total lease investments and minimum receivable lease payments with the merged company as lessor in accordance with the finance lease terms.

Capital expenditure commitment refers to the contract signed for the capital expenditures paid to receive architecture and equipment.

In consideration of the gradually expanding scope of operations and manpower, Taichung Bank publicly invited tenders online for the new Taichung Commercial Bank Head Office construction project on February 11, 2019. On March 29, 2019, the tender was jointly awarded to Dacin Construction Co., Ltd. and Earthpower. The contract has a total value of NT$ 11.16 billion.

84 -

Initiation of the project was reported on April 27, 2019. Fees charged by YSL Architects & Associates for design planning and technical supervision services amounted to NT$ 480,492,000. Maturity analysis for finance lease contractual commitments and capital expenditure commitments with the merged company as lessor is provided below:

December 31, 2019 Lease contract commitments Total finance lease revenue Present value of finance lease revenue Capital expenditure commitments December 31, 2018 Lease contract commitments Total finance lease revenue Present value of finance lease revenue Capital expenditure commitments	L	ess than 1 year $ 2,836,102 $ 2,551,965 $ 823,970 ess than 1 year $ 1,543,678 $ 1,362,538 $ 117,104		1 ~5 years $ 522,845 $ 373,579 $ 9,396,811 1 ~5 years $ 1,102,103 $ 1,006,172 $ 104,725	M	ore than 5 year $ - $ - $ - ore than 5 year $ - $ - $ -		Total
	L				M			$ 3,358,947 $ 2,925,544 $10,220,781 Total
								$ 2,645,781 $ 2,368,710 $ 221,829

(7) On November 1, 2019, the Ministry of Justice Investigation Bureau requested access to relevant information from China Man-Made Fiber Corporation (hereinafter referred to as “CMFC”) in connection with the New Site Industries, Inc. loan fraud case. A CMFC employee was detained and held incommunicado as per order of Taipei District Court. In addition, O-Bank filed a lawsuit against CMFC in February 2020 for the alleged role of some of its employees as contact persons in the receipt of claim transfer notifications and handling of other notifications in complicity with New Site Industries, Inc. The bank claimed that this resulted in serious blunders on the part of its employees who were misled into believing that CMFC had engaged in transactions with Highlite Industries, Inc. The bank therefore continued to grant loans and drawdowns. It claims that CMFC and its employees should bear joint and several liability. CMFC has commissioned a defense attorney to represent the Company in this lawsuit. The attorney argues that this case does not objectively involve performance of duties by CMFC employees and that CMFC should therefore bear no joint and several liability with regard to this case. However, the court believes after hearing the case that the bank is entitled to request compensation from CMFC, but it should also consider negligence on the part of the bank, which could result in the reduction or exemption of the liability to compensation thereby affecting the compensation amount payable by CMFC. It is therefore currently impossible to estimate the potential scope of liability and compensation.

39. Other matters

The distributors for PACC provided certificates of deposits valued at NT$2,000 thousand to PACC and also provided performance bond from bank valued at NT$2,000 thousand.

40. Financial instruments

(1) Fair value information- Financial instruments that are not measured at fair value

With the exception of the following, the book value of financial instruments not at fair value through income statement approximated its fair value or the fair value of which could not be measured with reliability. The fair value is not disclosed.

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----- Start of picture text -----

1. Fair value bracket
December 31, 2019
Fair value
Book Value Level 1 Level 2 Level 3 Total
Financial Assets
Investment of debt
instruments on
the basis of cost
after
amortization $108,969,273 $ 85,512,551 $ 24,092,164 $ - $109,604,715
Financial Liabilities
Financial liabilities
on the basis of
cost after
amortization:
-Financial bonds
payable 14,000,000 - 14,014,140 - 14,014,140
December 31, 2018
Fair value
Book Value Level 1 Level 2 Level 3 Total
Financial Assets
Investment of debt
instruments on
the basis of cost
after
amortization $101,307,761 $ 80,185,438 $ 21,028,688 $ - $101,214,126
Financial Liabilities
Financial liabilities
based on cost
after
amortization:
-Financial
bonds payable 20,000,000 - 20,098,746 - 20,098,746
2. Evaluation techniques and an input value of Level 2 fair value measurement
Categories of
financial instruments Evaluation techniques and input values
Non-derivatives The bid price in active markets is not taken as fair
value.
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(2) Information on fair value – financial instruments at fair value on repetition.

Fair value bracket

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December 31, 2019
Level 1 Level 2 Level 3 Total
Financial assets at fair value through
profit and loss
Derivatives $ - $2,097,080 $ - $2,097,080
Commercial papers 20,074,138 - - 20,074,138
Listed stocks – domestic and
emerging stock 878,084 36,336 - 914,420
Foreign TSEC/GTSM listed
shares 98,199 - - 98,199
Beneficiary certificates of
funds 801,720 - - 801,720
Domestic corporate bonds 89,816 - - 89,816
Others - 1,029,839 - 1,029,839
Financial assets at fair value through
other comprehensive profit or
loss
Equity investment
- Listed stocks – domestic
and emerging stock 3,319,533 - - 3,319,533
- Foreign TSEC/GTSM
listed shares 282,672 - - 282,672
- Non listed (OTC)
domestic stock - - 1,085,654 1,085,654
- Non-listed (OTC)
overseas stock - - 8,384 8,384
Debt instrument
- Domestic corporate bonds 21,503,613 - - 21,503,613
- Domestic government
bonds 5,997,423 - - 5,997,423
- Overseas bond - 799,314 - 799,314
- Financial bonds 1,699,994 - - 1,699,994
Financial liabilities at fair value
through profit and loss
Derivatives - 233,803 - 233,803
Reconciliation of financial instruments at Level 3 fair value:
Financial assets at fair value through other
comprehensive profit or loss
Financial Assets Equity instruments Debt instruments Total
Balance - beginning $ 914,338 $ - $ 914,338
Recognized in the other
comprehensive income
(Unrealized gain or loss on
financial assets at fair value
through other comprehensive
profit or loss) 178,880 - 178,8800
- Purchase 820 - 820
Balance - ending $ 1,094,038 $ - $ 1,094,038
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	December	31,2018
Level 1 $ - 22,044,240 1,601,719 65,560 524,766 57,899 - 2,412,780 194,778 - - 20,730,435 5,976,359 - -	Level 2 $2,088,691 - 27,893 - - - 998,147 - - - - - - 785,400 165,360	Level 3 $ - - - - - - - - - 905,465 8,873 - - - -	Total
			$2,088,691 22,044,240 1,629,612 65,560 524,766 57,899 998,147 2,412,780 194,778 905,465 8,873 20,730,435 5,976,359 785,400 165,360

Reconciliation of financial instruments at Level 3 fair value:

Financial Assets Balance - beginning Recognized in the other comprehensive income (Unrealized gain or loss on financial assets at fair value through other comprehensive profit or loss) - Purchase - Capital reduction and return of share capital Balance - ending	F	inancial assets at fair value through othercomprehensive profitor loss Equity instruments Debt instruments $ 978,480 $ - 62,457) - 1,237 - 2,922) - $ 914,338 $ -	inancial assets at fair value through othercomprehensive profitor loss Equity instruments Debt instruments $ 978,480 $ - 62,457) - 1,237 - 2,922) - $ 914,338 $ -		Total
		Equity instruments $ 978,480 62,457) 1,237 2,922) $ 914,338	D
	( (			( (	$ 978,480 62,457) 1,237 2,922) $ 914,338

In 2019 and 2018, there was no transfer of fair values measures in Level I and Level II.

Evaluation techniques and an input value of Level 2 fair value measurement
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3.	Categories of financial instruments Evaluation techniques and input values Non-derivatives The bid price in active markets is not taken as fair value. Derivatives Options Contracts Model Evaluation Method: The prices of execution of all contracts, market fluctuation and maturity, interest rate, and exchange rate were taken as parameters for evaluation, and were subject to evaluation using the close-box model. FX swap contracts, and forwards contracts Cash flow discount method: Estimate the future cash flow on the basis of observable forwards rate and the forwards contracts entered into, and subject to discount on the basis that could reflect the risk discount rate for respective counterparties. Assets swap agreement The calculation of the closing price of convertible bonds on the day of net bond value: net bond value shall be discounted through the adjustment of risk discount on the basis of the TAIBIR on short-term Taiwan bills compiled at TDCC on the basis of the future cash flow of convertible bonds. Structured products Interest rate derivatives Quotation of counterparties. Techniques and input value for measurement of Level 3 fair value Categories of financial instruments Evaluation techniques and input values Unlisted/OTC Market multiple method: The fair value of the subject matter may be evaluated by comparison with the bid price of the stocks in the industry in the active market with liquidity discount ratio taken into account and the corresponding net value of multiples.	Categories of financial instruments Evaluation techniques and input values Non-derivatives The bid price in active markets is not taken as fair value. Derivatives Options Contracts Model Evaluation Method: The prices of execution of all contracts, market fluctuation and maturity, interest rate, and exchange rate were taken as parameters for evaluation, and were subject to evaluation using the close-box model. FX swap contracts, and forwards contracts Cash flow discount method: Estimate the future cash flow on the basis of observable forwards rate and the forwards contracts entered into, and subject to discount on the basis that could reflect the risk discount rate for respective counterparties. Assets swap agreement The calculation of the closing price of convertible bonds on the day of net bond value: net bond value shall be discounted through the adjustment of risk discount on the basis of the TAIBIR on short-term Taiwan bills compiled at TDCC on the basis of the future cash flow of convertible bonds. Structured products Interest rate derivatives Quotation of counterparties. Techniques and input value for measurement of Level 3 fair value Categories of financial instruments Evaluation techniques and input values Unlisted/OTC Market multiple method: The fair value of the subject matter may be evaluated by comparison with the bid price of the stocks in the industry in the active market with liquidity discount ratio taken into account and the corresponding net value of multiples.	Evaluation techniques and input values
			The bid price in active markets is not taken as fair value. Model Evaluation Method: The prices of execution of all contracts, market fluctuation and maturity, interest rate, and exchange rate were taken as parameters for evaluation, and were subject to evaluation using the close-box model. Cash flow discount method: Estimate the future cash flow on the basis of observable forwards rate and the forwards contracts entered into, and subject to discount on the basis that could reflect the risk discount rate for respective counterparties. The calculation of the closing price of convertible bonds on the day of net bond value: net bond value shall be discounted through the adjustment of risk discount on the basis of the TAIBIR on short-term Taiwan bills compiled at TDCC on the basis of the future cash flow of convertible bonds. Quotation of counterparties. measurement of Level 3 fair value Evaluation techniques and input values
		Market multiple method: The fair value of the subject matter may be evaluated by comparison with the bid price of the stocks in the industry in the active market with liquidity discount ratio taken into account and the corresponding net value of multiples.

The measurement of Level 3 fair value is the sensitivity analysis of the reasonable substituted assumption of fair value

The significant unobservable input value under the market multiple method adopted by the consolidated company is the liquidity discount ratio. When the ratio increases, the fair value of the investment decreases. Sensitivity analysis is compiled as follows:

==> picture [319 x 60] intentionally omitted <==

----- Start of picture text -----

Risk factors Changes Effects
Liquidity Discount 10%
Ratio ( $ 34,870 )
(3) Categories of financial instruments
December 31, 2019 December 31, 2018
Financial Assets
----- End of picture text -----

(3) Categories of financial instruments

Financial Assets
Measured at fair values through profit
and/or loss
Measured at fair value through income
under compulsion	$	25,105,212	$	27,408,915
Financial assets on the basis of cost after
amortization (Note 1)		619,782,635		631,445,240
Financial assets at fair value through other
comprehensive profit or loss
Equity investment		4,696,243		3,521,896
Debt instrument		30,000,344		27,492,194
Financial Liabilities
Measured at fair values through profit
and/or loss		233,803		165,360
Based on cost after amortization (Note 2)		646,619,579		658,939,255

Note 1: The balance include cash and cash equivalent, the Central Bank deposits and interbank lending, bills and bonds purchased under resale agreements, notes receivables and accounts, other receivables, net discounts and lending, financial assets at amortized cost - Non-current, restricted assets, refundable deposits and other financial assets at amortized cost.

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Note 2: The balance include short-term loans, short-term notes payable, repurchase coupons andbonds liabilities, the Central Bank and interbank deposits, bills payable and accounts, other payables (excluding dividend payable), deposits and remittances, bills payable (including those with one-year to maturity), long-term borrowings (including those with one-year to maturity), refundable deposits and other financial liabilities measured at amortized cost.

41. Purpose and policy of financial risk management

The China Man-Made Fiber Co., Ltd.’s financial management department shall provide services to each business unit, to plan and coordinate operations in the domestic and international financial markets, and to monitor and manage the consolidated company’s operation-related financial risks with the internal risk report, with the risk exposure analyzed in accordance with the degree and breadth of risks. The risks include market risk, credit risk and liquidity risk. The financial risks associated with the consolidated company mainly come from the key subsidiary, Taichung Commercial Bank.

The consolidated company’s financial risk management objective is to achieve business objectives, the overall risk tolerance and legal restrictions in order to reach the balance of risks and returns. The main operating risks faced by the consolidated company include the credit risk on and off the financial statements, market risks (including interest rates, foreign exchange rates, equity securities and instrument price risks) and liquidity risks.

The consolidated company have the related risk management policies defined and approved by the Board of Directors in order to effectively identify, measure, monitor, and control credit risk, market risk and liquidity risk.

The Board of Directors is the highest decision-making unit of the consolidated company and assumes the ultimate responsibility for risk management. The consolidated company has established a Risk Management Commission and Risk Management Department responsible for granting risk authority and the relevant authorities to the relevant departments to ensure the successful operation of risk management. The Committee’s functions are specified as follows:

(1) Review of risk management projects.
(2) The review and discussion on risk limit.
(3) Review of motions for institutionalization of risk management.
(4) Periodical report to the Board of Directors

The commissioners of the Risk Management Committee shall set the various risk management indicators by nature of business and functions of departments and Risk Management Dept. report them to the Risk Management Committee for high-ranking supervisors’ reference in decision making.

Market risk
(1) Source and definition of market risk

Market risk refers to the unfavorable changes in market price causing possible losses on and off the consolidated balance sheet. The so-called market price refers to interest rates, exchange rates, equity security prices and instrument prices.

(2) Market risk management policy

The consolidated company’s market risk management objective is to develop a sound and effective market risk management mechanism that is compatible with the Company’s business scale, nature and complexity in order to ensure that the Company’s risks can be properly managed and effectively identify, measure, monitor, control market risks; also, establish a balance between the tolerable risk level and the expected rate of return.

(3) Market risk management process
A. Identification and Measurement

Before the promotion and operation of new products, business activities, processes and systems, the relevant market risk should be assessed through appropriate procedures and determine whether the risk exposure is within the range of risk tolerance included for consideration. The consolidated company’s responsible business units shall use business analysis or product analysis to verify the source of market risk and define market risk factors for each financial instrument as appropriate specifications.

Market risk measurement can be processed with a variety of effective measurement methods in order to properly measure risk, including but not limited to

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the following methods: statistical basis measurement method, sensitivity analysis, and scenario analysis. The Risk Management Department should measure the risk position daily and regularly; also, conduct stress tests regularly to measure the possible extraordinary loss amount of current positions under the simulated extreme situations or historically extreme situations.

B. Monitoring and reporting

The Risk Management Department should regularly report and make suggestions to the Risk Management Committee and the Board of Directors on the Bank’s overall market risk management, including the Bank’s market risk positions, risk level, profit and loss, using excess of limit and market risk management related compliance. The Business Department has defined the relevant rules governing excess of limit, stop-loss mechanism and operating procedure for excess of limit in order to effectively control the market risk. The excess of limit or exception occurring shall be reported immediately in order to exercise responsive measures.

(4) Exchange rate risk
A. Definition of exchange rate risk

Exchange rate risk refers to the gains and losses resulting from the conversion of two different currencies at different times. The consolidated company’s exchange rate risk mainly arises from the spot and forward foreign exchange business. Since the consolidated company’s engages in foreign exchange trading mostly to meet the need for customer’s position daily; therefore, the exchange rate risk is relatively low.

B. Measurement methods and management procedures

The consolidated company manages its exchange risk by limit control whereby the limits of respective currencies during daytime trade and nighttime trade were set with the upper limit of the maximum exposure in foreign exchange authorized to personnel of different ranks for control. The upper limit for particular counterparty has also been set. The result of the monitoring and control was reported to the Risk Management Committee and the Board for discussion.

C. Sensitivity analysis

Assuming that the other variables remain constant, if the USD/NTD, CNY/NTD, and AUD/NTD exchange rate was relatively valued/devalued by 3%, the Company and its subsidiaries’ net income before tax as of December 31, 2019 and 2018 decreased/increased by NT$ 63,682 thousand and NT$ 14,150 thousand; the equity increased/decreased by NT$ 48,665 thousand and NT$ 47,853 thousand, respectively.

(5) Interest rate risk
A. Definition of interest rate risk

Interest rate risk refers to the changes in interest rates that cause changes in the fair value of the consolidated company’s interest rate or losses. The main sources of risk include deposit and loan and interest-rate related marketable securities.

B. Measurement methods and management procedures

Entities in CMFC borrow funds at floating interest rates, thus the exposure to interest rate risk. Taichung Commercial Bank adopts a gap management approach to the interest rate risk, setting indicators for monitoring and regularly reports the results to the asset and liability management committee, risk management commission and the board, and makes necessary adjustments according to the overall operating conditions of the Company.

C. Sensitivity analysis

Assuming that the other variables remain constant, if the yield curve goes up/down by 100 points, the consolidated company’s net income before tax as of December 31, 2019 and 2018 increased/decreased by NT$ 608,460 thousand and NT$ 600,706 thousand; the other equity decreased/increased by NT$ 2,039,615 thousand and NT$ 2,280,815 thousand, respectively.

(6) Equity security price risks
A. Definition of equity securities price risk
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The market risk of the consolidated company’s equity securities includes individual risks arising from changes in equity securities market prices and general market risks arising from changes in the overall market prices. The main sources of risk includes listed/OTC stocks and beneficiary certificates.

B. Measurement methods and management procedures

CMFC is exposed to equity price risk due to the investments in publicly traded and OTC securities. The equity investments (except for financial assets at fair value through profit or loss) are not held for trading and are considered strategic. CMFC has not actively traded such investments. The equity price risk of CMFC is mainly on the petrochemical industry equity instruments in Taiwan's exchange. Taichung Commercial Bank adopts a limit management approach to the equity price risk, ensuring that personnel at all levels conduct their transactions within an authorized amount. Stop-loss measures are also implemented, and the monitoring results are regularly presented to the risk management committee and the board for discussion.

C. Sensitivity analysis

Assuming that the other variables remain constant, if the equity securities price up/down by 15%, the Company and its subsidiaries’ net income before tax as of December 31, 2019 and 2018 increased/decreased by NT$ 297,399 thousand and NT$ 316,943 thousand; the equity decreased/increased by NT$ 700,680 thousand and NT$ 664,655 thousand, respectively.

(7) Sensitivity analysis is compiled as follows:

==> picture [327 x 275] intentionally omitted <==

----- Start of picture text -----

December 31, 2019
The main Affected amount
risk Magnitude changes Other equity Profit and loss
Exchange USD/NTD, CNY/NTD, and AUD/NTD $ 48,665 $ 63,682
rate risk valued by 3%, respectively.
USD/NTD, CNY/NTD, and AUD/NTD ( 48,665 ) ( 63,682 )
decreased by 3%, respectively.
Interest rate Interest rate curve rises 100BPS ( 2,039,615 ) 608,460
risk
Interest rate curve drops 100BPS 2,039,615 ( 608,460 )
Equity 700,680 297,399
securities Equity securities price increased by 15%.
price risk
Equity securities price decreased by 15%. ( 700,680 ) ( 297,399 )
December 31, 2018
Affected amount
The main risk Magnitude changes
Other equity Profit and loss
Exchange rate USD/NTD, CNY/NTD, and $ 47,853 $ 14,150
risk AUD/NTD valued by 3%,
respectively.
USD/NTD, CNY/NTD, and ( 47,853 ) ( 14,150 )
AUD/NTD decreased by 3%,
respectively.
Interest rate risk Interest rate curve rises 100BPS ( 2,280,815 ) 600,706
Interest rate curve drops 100BPS 2,280,815 ( 600,706 )
Equity securities Equity securities price increased by 664,655 316,943
price risk 15%.
Equity securities price decreased by ( 664,655 ) ( 316,943 )
15%.
----- End of picture text -----

Credit risk
(1) Source and definition of credit risk
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Credit risk refers to the financial loss inflicted on the consolidated company due to the nonperformance of contractual obligations by the customers or the counterparties. The sources of credit risk covered on and off balance sheet items. On the sheet risk, exposure to the consolidated company mainly comes from discount, loans, credit cards, due from and call loans to banks, acceptance, debt instruments, and derivatives. Off the sheet items are financial guarantee, L/C and undertaking of loans that also exposed the consolidated company to credit risk.

(2) Credit risk management policies

In order to mitigate credit risk, the management of the consolidated company assigns dedicated personnel responsible for the decision on credit line, credit approval and other monitoring procedures to ensure that the overdue receivables are recovered and appropriate actions are taken. In addition, the consolidated company will review the recoverable amount of receivables on each balance sheet date to ensure that appropriate impairment loss has been appropriated for the uncollectible receivables. Accordingly, the consolidated company’s management believes that the consolidated company’s credit risk is significantly reduced.

The consolidated company continues to assess the financial condition of the customers of accounts receivable.

Except for the major customer Company A of the consolidated company, the consolidated company does not have a significant credit exposure to any single counterparty or any group counterparty with similar characteristics. When the counterparty is an affiliated company, the consolidated company has it defined as a counterparty with similar characteristics. The concentration of credit risk of Company A in 2019 and 2018 accounted for 0.2% and 0.1%, respectively, of the total monetary assets.

In addition, financial products held or issued by the merged company may lead to losses due to failure of transaction counterparties or third parties to perform contract obligations. The consolidated company will evaluate credit carefully to grant loans and guarantees. The loans secured by collateral accounted for about 79% of the total loans on December 31, 2019. The proportion of financing guarantee and collateral held by commercial L/C was approximately 39%, because the collateral required by loans, loaning commitments or guarantees usually referred to cash, inventory, marketable securities or other property. In the event of the trading counterpart’s or the other party’s default, the consolidated company was entitled to perform compulsory execution against the collateral or other guarantees to effectively reduce the credit risk, provided that the fair value of collateral would not be taken into consideration when the maximum credit exposure was disclosed.

(3) Credit risk management procedures

Notes to the credit risk management procedures and methods of assessment of the consolidated company by businesses:

A. Loans (including commitments of financing and guarantees)
a. Judgment of significant increase of credit risk after initial recognition

The consolidated company evaluated the change in the default risk inherent to its loan assets within the perpetuity of these assets on each reporting day to determine if the credit risk increased significantly after initial recognition. For evaluation, the consolidated company considers the information (including prospective information) for justifying the significant increase of credit risk after the initial recognition. The major indicators for consideration are:

Quantified indicators

(a) Changes in external TCRI credit rating

TCRI ratings of companies listed at TWSE or TPEx corresponding to external ratings for downgrading the level to non-investment grade, which determined that the credit risk increased significantly after initial recognition.

(b) Information on delinquency

If the contracts turned delinquent for more than 1 month, it could be determined that the credit risk inherent to the financial assets has increased significantly.

Quality indicators

(a) Unfavorable change at present or as forecast to the operation, financial position or economic condition that significantly affected the debtors in performing their obligations in retirement of loans.
(b) The actual or forecasted significant change in operational results of the debtors.
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(c) The credit risk of other financial instruments of particular debtor increased significantly.
b. Definition of default and financial assets with credit impairment

The consolidated company defined the agreement on financial assets as identical with the determination of credit impairment of financial assets. If any of the following are applicable, it could be determined that the financial asset has turned default with credit impairment:

Quantified indicators

(a) Changes in external TCRI credit rating

The TCRI ratings of companies listed at TWSE or TPEx rated as DEFAULT implied that credit impairment occurred after initial recognition.

(b) Information on delinquency

If the proceeds from contracts turned delinquent for more than 3 months, it could be determined that credit impairment occurred to the financial assets after initial recognition.

Quality indicators

If there is evidence implying that the borrower is unable to pay the contract amount, or indicating severe financial hardship of the borrower, such as:

(a) The debtor has gone bankrupt or had declared bankruptcy or financial restructuring.
(b) Other financial instrument contracts of the debtors have turned default.
(c) Due to the economic or contractual reasons related to the financial hardship of the debtors, the creditors gave the debtor a leeway which would otherwise not be considered for the borrowers and declared as non-performing loans.

The aforementioned default and credit impairment will be defined as applying to all financial assets held by the combined companies, and such definition is congruent with the financial assets relevant to the internal purpose of credit risk management and applied to the model for the evaluation of related impairments.

c. Measurement of anticipated credit loss

The consolidated company classified loan assets into the following combinations by the purpose of the loan, the nature of the industry, type of collaterals, and the mode of financing for the purpose of assessing anticipated credit loss:

==> picture [178 x 108] intentionally omitted <==

----- Start of picture text -----

Product portfolio
Corporate Finance Corporate Finance-secured
Operation Corporate Finance-non-secured
Consumer banking House loan
business Personal, other, secured
Product portfolio
Personal, other, unsecured
Consumer banking Credit loans
business Cash card
Credit card
----- End of picture text -----

The consolidated company measured the provision for loss of financial assets that have no significant increase in credit risk after initial recognition on the basis of anticipated credit loss over a period of 12 months. The provision for loss of financial assets that have significant increases in credit risk after initial recognition shall be measured on the basis of anticipated credit loss within the perpetuity of the financial assets.

For the measurement of anticipated credit loss, the consolidated company considers the probability of default (PD) of the debtors in 12 months ahead and the perpetuity of the loans, and includes into the Loss Given Default (LGD), then multiplies by Exposure at Default (EAD). The effect of the time value of currency is also considered in this calculation.

The probability of default is the ratio of loss in case the particular debtor acted in default. The PD and LGD adopted by Taichung Bank in the assessment of loans is based on the internal historical information of the product portfolios (such as the experience in credit loss), and also the

94 -

observable information at present and the prospective macroeconomic performance in grouping the products for separate evaluation.

The consolidated company assessed the EAD by a direct evaluation method for different groups of products. In assessing the commitment of financing in 12 months and the anticipated credit loss within the perpetuity of the assets, Taichung Bank adopted the direct assessment method for different groups and considered the portion of drawdown within 12 months after the reporting day of the commitment of financing and the anticipated renewal period to determine the EAD of anticipated credit loss.

Consideration of prospective information

In assessing anticipated credit loss, the consolidated company adopted the economic factors affecting credit risks and that were relevant to anticipated credit loss, and takes prospective information into account. Prospective information is the “Economic Signal” released by the National Development Council of the ROC that served as the standard for the overall economic performance of Taiwan and relevant signals as the indicators. The signal system is classified as the expansion phase, contraction phase, and level phase. The consolidated company will based on the judgment of economic performance to adjust the probability of default and incorporate this information into the assessment of overall anticipated credit risk.

B. Debt instrument

The consolidated company will consider the historical record on the rate of default at different levels from external rating institutions, and the financial position of the debtors at present, to assess the anticipated credit loss of the investment of debt instruments for 12 months in the future or the anticipated credit loss within the perpetuity of the instruments.

The securities held by the consolidated company shall be recognized for anticipated credit loss for a period of 12 months or within the perpetuities of the securities. The consolidated company shall determine the quality of securities as follows:

a. Judgment of significant increase of credit risk after initial recognition

The consolidated company shall assess the changes in the default risk of the investment of debt instruments within the perpetuity of the instruments on each reporting day to determine if there is any significant increase of credit risk after initial recognition. For evaluation purpose, the information for justifying the significant increase of credit risk after initial recognition in consideration shall include the following indicators:

Quantified indicators

(a) At the time of initial recognition, the credit rating of the issuers is at investment grade and higher. However, on the financial reporting day, the credit rating of the issuers fell to noninvestment grade.
(b) The credit rating of the issuers of the debt instruments for investment was non-investment grade on the initial day of recognition and such status remained unchanged.
(c) If the credit rating of the issuers is at non-investment grade and further decline on the reporting day to certain extent.

Quality indicators

(a) The credit rating of the issuers indicated that credit risk has increased significantly.
(b) The fair value of the investment of debt instrument underwent unfavorable significant change on the reporting day.
b. Definition of default and financial assets with credit impairment

If any of more of the following are applicable to the investment of debt instrument, it could be determined that the financial assets were default with credit impairment.

Quantified indicators

(a) The debt instruments were bonds with credit impairment at the time of investment.
(b) The credit rating of the issuers or the debt instruments for investment fell to the default level on the reporting day.

Quality indicators

(a) The issuers revised the conditions for the issuance of the debt instruments or failed to pay principal or interest as the conditions of issuance due to financial hardship.
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(b) Discontinuation of operation, petition for restructuring, bankruptcy, dissolution, the disposition of major assets of the company that significant affected continued operation of the issuers or the guarantors.

Measurement of anticipated credit loss

  - (a) For the measurement of anticipated credit loss, the consolidated company considers the probability of default (PD) of the debtors for 12 months in the future and the perpetuity of the loans, and includes into the Loss Given Default (LGD), then multiplies by Exposure at Default (EAD). The effect of the time value of currency is also considered in this calculation.

  - (b) Compare the default risk of debt instruments on the reporting day and the default risk of debt instruments at the time of initial recognition, and consider the information for justifying the significant increase of default risk after initial recognition to determine if the credit risk of the financial instruments has significantly increased after initial recognition.

     - i. For “normal credit risk” category, estimate the anticipated amount of loss on the basis of PD in one year.

     - ii. For “significant increase of credit risk” category, consider the perpetuity of the assets and calculated the PD in respective perpetuity of the assets to evaluate the cash flow from contracts in relevant periods (which is the EAD). Adopt the cash flow method to evaluation the anticipate amount of credit loss. If it is impossible to assess the cash flow in relevant periods, use the EAD of the current period for the calculation.

     - iii. For “abnormal credit risk,” the PD is 100% thereby the PD for the perpetuity of respective assets will not be necessary, but just consider the amount that could be recovered and asses the amount of overall credit loss.

     - iv. The PD of debt instrument has adopted the numerical value released by credit rating institutions at regular intervals, which insinuates the possibility of market fluctuation in the future.

(4) Credit risk hedge or mitigation policy
A. Collateral

Among the policies and procedures taken by the consolidated company addressing to loan operation for the reduction of credit risk, the request for collaterals from the borrowers is most common mean. The consolidated company has established the procedures for the scope of collaterals, the appraisal of the collaterals, the management and disposition of the collaterals for the protection of right of debts.

Main loan collateral categories of the Bank include the following:

a. Real estate
b. Movable property and pledge of rights
c. Assurance by external certification bodies

With a view to enhancing transaction risk protection, contracts for derivative transactions between the bank and customers stipulate that customers provide the following guarantees in accordance with the nature of the transaction:

a. Bonds for investment quotas: Bonds of different ratios are requested based on the customer credit rating
b. Bonds for high-risk transactions: Requested if customer undertakes transactions of products with implicit put options.
c. Performance bonds (trading position losses): Bonds requested for trading position losses exceeding mark-to-market upper limits determined by the Bank.

The consolidated company paid close attention to the value of the collaterals for the financial instruments, and considered the financial assets necessary for recognition of credit impairment. Information on financial assets with credit impairment and collaterals with slight potential loss is shown below:

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Impaired financial assets: Discounts and loans Accounts receivable Guarantee and L/C Debt instruments Others Total financial assets with impairment			Decem	ber31,2019	ber31,2019
		Total Book Value $ 9,554,442 315,071 182,882 17,477 11,000 $ 10,080,872	Provision for impairment	Exposure measure (Cost after amortization)			Fair value of collaterals
			( $ 2,468,257 ) ( 165,224 ) ( 58,628 ) ( 17,477 ) ( 4,025 ) ( $ 2,713,611 )		$ 7,086,185 149,847 124,254 - 6,975 $ 7,367,261		$ 7,086,185 76,067 88,672 - 6,975 $ 7,257,899

Impaired financial assets: Discounts and loans Accounts receivable Guarantee and L/C Debt instruments Total financial assets with impairment				December31,2018	December31,2018	December31,2018
	T	otal Book Value $ 7,916,421 314,656 418,070 74,444 $ 8,723,591		Provision for impairment	Exposure measure (Cost after amortization)			Fair value of collaterals
			( ( ( ( (	$ 2,035,208 ) 151,315 ) 55,221 ) 74,444 ) $ 2,316,188 )		$ 5,881,213 163,341 362,849 - $ 6,407,403		$ 5,881,213 105,184 301,416 - $ 6,287,813

B. Control of credit risk limit and credit risk concentration.

For avoiding the over-concentration of risk, the consolidated company has set the credit limit of transactions with particular counterparty and particular group in its policy and procedure for lending. In the policies and procedures for investment and equity investment risk control, limit has also been set for particular party (enterprise) or particular affiliate (group) enterprises in investment. For the control of the concentration of risk of all assets, the consolidated company has set the credit limit by industry, group enterprise, country, pledge of stocks as collaterals to monitor the concentration of risk of the assets. In addition, monitoring and control of particular counterparty, group enterprise, affiliate, industry, nationality, and the country of final risk through system integration for the control of concentration of relevant risks.

C. The reinforcement of other credit

The set-off clause has been explicitly stated in the loan agreements whereby all deposits of the borrowers at the consolidated company shall be set off for covering the liabilities in the event of credit problem to reduce credit risk.

(5) Maximum exposure of credit risk for the consolidated company

The maximum credit risk exposure of the assets stated in the consolidated balance sheet without the consideration of collaterals or other reinforced credit instruments approximate their book value. The amount of maximum credit risk exposure related to the items off the consolidated balance sheet (without the consideration of collaterals or other reinforced credit instruments and the maximum risk amount is irrevocable) is shown below:

irrevocable) is shown below:
Irrevocable undertaking of loan The available credit limit after the activation of revolving credit of credit card Receivable guarantees The balance of opened but unused letter of credit	December 31, 2019 $ 7,152,089 11,743,903 16,485,312 3,318,935	December 31, 2018
		$ 5,810,795 273,680 18,335,961 4,140,679

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The management of the consolidated company holds that the credit risk exposure of off balance sheet items could be controlled and minimized in continuation under evaluation because the consolidated company has adopted a strict evaluation process with routine evaluation after approval.

(6) Credit risk concentration of the consolidated company

Where financial instrument transactions are apparently concentrated on one person, or most of the multiple trading counterparts of financial instruments are engaged in similar business activities and possess similar economic characteristics and thereby the effects of economic or other conditions to their ability to perform the contracts are similar, the concentration of credit risk arises accordingly. The characteristics of credit risk concentration include the nature of business activities conducted by debtors. The consolidated company did not concentrate any transactions on one single customer or trading counterpart, other than similar counterparts, industrial type, and regions. The amount of contract based on concentrated credit risk:

Counterpart December 31, 2019	Counterpart December 31, 2019	Counterpart December 31, 2019	December 31,	December 31,	2018
Private enterprise $	248,612,635		$	261,140,346
Natural person	217,305,317			223,436,581
Others	2,626,646			1,931,734
$	468,544,598		$	486,508,661
Industrial type	December 31, 2019			December 31, 2018
Natural person	$	217,305,317		$	223,436,581
Manufacturer			84,278,234		91,638,350
Commerce			54,445,987		60,759,475
Real estate			60,316,865		53,991,855
Construction industry			14,458,438		18,082,362
Commercial and industrial
service business			11,490,230		13,378,876
Financial and insurance
business			10,820,858		11,905,926
Warehousing and information			8,000,869		8,000,887
Others			7,427,800		5,314,349
	$	468,544,598		$	486,508,661
Region	December 31, 2019			December 31, 2018
Domestic	$	434,606,494		$	454,099,851
Territory of Asia			18,224,815		15,694,693
Territory of America			11,519,422		11,766,992
Others			4,193,867		4,947,125
	$	468,544,598		$	486,508,661
Collateral	December 31, 2019			December 31, 2018
Non-secured	$		73,956,256	$	78,629,858
Secured
Secured by property		352,931,718			363,656,359
Secured by Letter of
Guarantee			15,598,868		17,201,082
Secured by Chattel			5,755,471		6,148,543
Secured by bonds			12,696,708		12,411,927
Notes receivable			1,582,648		1,851,735
Secured by stocks			2,872,996		3,585,658
Others			3,149,933		3,023,499
	$	468,544,598		$	486,508,661

98 -

(7) Writing-off policies

Any non-performing loans or non-accrual loans shall be written off as bad debt after subtracting the estimated recoverable portion if one of the following conditions exists:

a. The loan cannot be recovered in full or in part because the debtors have dissolved, gone into hiding, reached a settlement, declared bankruptcy, or for other reasons.
b. The collateral and property of the primary/subordinate debtors have been appraised at a very low value or become insufficient to repay the loan after the subtraction of senior mortgages; or the execution cost approaches or possibly exceeds the amount that the bank might collect [from the debtor(s)] where there is no financial benefit in execution.
c. The primary/subordinate debtor’s collateral has failed to sell at successive auctions where the price of such collateral has been successively lowered, and there is no financial benefit to be derived from the bank’s taking possession of such collateral.
d. More than two (2) years have elapsed since the maturity date of the non-performing loans or nonaccrual loans, and the efforts of collection have failed.
e. If the monthly minimum payment for credit cards is delayed by more than six (6) months from the specified payment deadline, all advances made thereto shall be written off within three (3) months thereafter.

(8) Information on credit risk quality

The consolidated company concludes that certain financial assets held by the consolidated company, such as cash and cash equivalents, due from the Central Bank and other banks, financial assets measured at fair value through profit or loss, bonds and securities sold under repurchase agreements, refundable deposits, operating bond, and settlement and clearing funds, because the counterparties are with good credit rating, are with low credit risks. In addition to the aforementioned, the credit quality of the other financial assets is analyzed as follows:

A. Discounts and loans and receivables credit quality analysis

December 31, 2019

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----- Start of picture text -----

Discounts and loans
Impairment
Stage 1 Stage 2 Stage 3 difference
recognized in
accordance with the
“Regulations
Governing
the Procedures for
Banking Institutions
to Evaluate Assets
Credit loss within Credit loss within and Deal with Non-
Anticipated credit the perpetuity of the perpetuity of performing/ Non-
loss in 12 months financial assets financial assets accrual Loans” Total
Products by category
Corporate banking $ 216,003,227 $ 3,305,915 $ 6,117,319 $ - $ 225,426,461
Consumer banking 199,516,196 13,565,815 3,437,092 - 216,519,103
Others 24,321 2,135 31 - 26,487
Total Book Value 415,543,744 16,873,865 9,554,442 - 441,972,051
Provision for
impairment ( 1,776,628 ) ( 852,354 ) ( 2,468,257 ) - ( 5,097,239 )
Required impairment
recognized in
accordance with the
“Regulations
Governing
the Procedures for
Banking Institutions
to Evaluate Assets
and Deal with Non-
performing/ Non-
accrual Loans” - - - ( 1,476,478 ) ( 1,476,478 )
Total $ 413,767,116 $ 16,021,511 $ 7,086,185 ($ 1,476,478 ) $ 435,398,334
----- End of picture text -----

99 -

						Accountsreceivabl	Accountsreceivabl	e	e	e
Stage 1			Stage 2			Stage 3		Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans”				Total
Anticipated credit loss in 12 months			Credit loss within the perpetuity of financial assets			Credit loss within the perpetuity of financial assets
	$ 10,696,826 873,412 51,333,927 62,904,165 ( 95,880 ) - $ 62,808,285		$ 526,388 30,693 236 557,317 ( 11,625 ) - $ 545,692 Irre		vo	$ 230,201 33,988 50,882 315,071 ( 165,224 ) - $ 149,847 cable undertaking		( ( of loan		$ - - - - - 23,828) $ 23,828)	$	11,453,415 938,093 51,385,045 63,776,553 272,729 ) 23,828) 63,479,996
											( ( $

	Stage 1		Stage 2			Stage 3		Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans”				Total
Anticipated credit loss in 12 months			Credit loss within the perpetuity of financial assets			Credit loss within the perpetuity of financial assets
(		$ 7,015,489 125,600 7,141,089 49,950 ) - $ 7,091,139		$ - - - - - $ -		(	$ 11,000 - 11,000 4,025 ) - $ 6,975		$ - - - - - $ -		(	$ 7,026,489 125,600 7,152,089 53,975 ) - $ 7,098,114

100 -

				Cre	ditcard committ	ee	ee
Stage 1		Stage 2			Stage 3	Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans”			Total
Anticipated credit loss in 12 months		Credit loss within the perpetuity of financial assets		Cr th fi	edit loss within e perpetuity of nancial assets
(	$ 11,670,034 11,670,034 7,534 ) - $ 11,662,500	(	$ 73,869 73,869 1,848 ) - $ 72,021	Rec	$ - - - - $ - eivable guarante	es	$ - - - - $ -	(	$ 11,743,903 11,743,903 9,382 ) - $ 11,734,521
	Stage 1		Stage 2		Stage 3	Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans”			Total
Anticipated credit loss in 12 months		Credit loss within the perpetuity of financial assets		Credit loss within the perpetuity of financial assets
(	$ 16,287,614 16,287,614 109,720 ) - $ 16,177,894	(	$ 14,864 14,864 1,778 ) - $ 13,086	(	$182,834 182,834 58,621 ) - $124,213	( (	$ - - - 4,344) $ 4,344 )	( (	$ 16,485,312 16,485,312 170,119 ) 4,344 ) $ 16,310,849

101 -

			The payment	ofopened butunused	ofopened butunused	letterofcredit	letterofcredit
Stage 1			Stage 2	Stage 3		Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans”			Total
Anticipated credit loss in 12 months		Cr th fi	edit loss within e perpetuity of nancial assets	Credit loss within the perpetuity of financial assets
(	$ 3,318,887 3,318,887 9,638 ) - $ 3,309,249		$ - - - - $ -	(	$ 48 48 7 ) - $ 41	( (	$ - - - 2,233) $ 2,233 )	( (	$ 3,318,935 3,318,935 9,645 ) 2,233) $ 3,307,057

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December 31, 2018
Discounts and loans
Impairment
Stage 1 Stage 2 Stage 3 difference
recognized in
accordance with the
“Regulations
Governing
the Procedures for
Banking
Institutions to
Evaluate Assets and
Credit loss within Credit loss within Deal with Non-
Anticipated credit the perpetuity of the perpetuity of performing/ Non-
loss in 12 months financial assets financial assets accrual Loans” Total
Products by category
Corporate
banking $ 227,802,577 $ 3,019,498 $ 5,573,360 $ - $ 236,395,435
Consumer
banking 208,024,931 12,318,911 2,343,305 - 222,687,147
Others 40,993 3,322 ( 244 ) - 44,071
Total Book Value 435,868,501 15,341,731 7,916,421 - 459,126,653
Provision for
impairment ( 1,768,334) ( 661,840 ) ( 2,035,208 ) - ( 4,465,382 )
Required impairment
recognized in
accordance with the
“Regulations
Governing
the Procedures for
Banking
Institutions to
Evaluate Assets and
Deal with Non-
performing/ Non-
accrual Loans” - - - ( 2,066,719 ) ( 2,066,719 )
Total $ 434,100,167 $ 14,679,891 $ 5,881,213 ( $ 2,066,719 ) $ 452,594,552
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102 -

							A	cco	untsreceivable
Stage 1						Stage 2			Stage 3	a E	Impairment difference recognized in ccordance with the “Regulations Governing the Procedures for Banking Institutions to valuate Assets and Deal with Non- performing/ Non- accrual Loans”				Total
Anticipated credit loss in 12 months					Cre the fin	dit loss within perpetuity of ancial assets		Cre the fin	dit loss within perpetuity of ancial assets
	$	9,583,734 1,355,009 48,156,089 59,094,832 87,567 ) - 59,007,265		(	$	194,095 32,364 1 226,460 5,695 ) - 220,765 Ir	( rev	$	221,337 37,536 55,783 314,656 151,315 ) - 163,341 ble undertaking	( ( of	$ - - - - - 57,500) $ 57,500 ) loan		( (	$	9,999,166 1,424,909 48,211,873 59,635,948 244,577 ) 57,500) 59,333,871

	$				$			$						$
								oca
		Stage 1				Stage 2			Stage 3		Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans”				Total
		Anticipated cred loss in 12 mont		it hs		Credit loss withi the perpetuity of financial assets	n	C t	redit loss within he perpetuity of financial assets
		(	$ 5,545,278 248,450		(	$ 17,067 - 17,067 741 ) - $ 16,326			$ - - - - - $ -			$ - - - - - $ -		(	$ 5,562,345 248,450 5,810,795 54,427 ) - $ 5,756,368

103 -

					Cr	editcard committ	ee	ee
Stage 1				Stage 2		Stage 3	Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans”			Total
Anticipated credit loss in 12 months			C t	redit loss within he perpetuity of financial assets		Credit loss within the perpetuity of financial assets
	$ 10,458,065 10,458,065 8,083 ) - $ 10,449,982		(	$ 49,205 49,205 1,299 ) - $ 47,906	Re	$ - - - - $ - ceivable guarante	es	$ - - - - $ -	(	$ 10,507,270 10,507,270 9,382 ) - $ 10,497,888 Total $ 18,335,961 18,335,961 178,033) 11,815) $ 18,146,113
	Stage 1			Stage 2		Stage 3	Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans”
	Anticipated credit loss in 12 months			Credit loss within the perpetuity of financial assets		Credit loss within the perpetuity of financial assets
	(	$ 17,878,645 17,878,645 121,061) - $ 17,757,584	(	$ 39,246 39,246 1,751 ) - $ 37,495	(	$ 418,070 418,070 55,221 ) - $ 362,849	( (	$ - - - 11,815) $ 11,815)	( (

104 -

		The paymen	opened butunused	letterofcredit
Stage 1		Stage 2	Stage 3	Impairment difference recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non- accrual Loans” $ - - - ( 11,825) ( $ 11,825 )		Total
Anticipated credit loss in 12 months		Credit loss within the perpetuity of financial assets	Credit loss within the perpetuity of financial assets
(	$ 4,140,679 4,140,679 12,108 ) - $ 4,128,571	$ - - - - $ -	$ - - - - $ -	( (	( (	$ 4,140,679 4,140,679 12,108 ) 11,825 ) $ 4,116,746

B. Credit quality analysis on investment of debt instruments December 31, 2019

December 31, 2019
Product category (Note) Investment grade bonds Non-investment grade bonds Total Book Value Provision for impairment Required impairment recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans” Total Product category (Note) Investment grade bonds Non-investment grade bonds Other (Central Bank NCD) Total Book Value Provision for impairment Required impairment recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non- performing/ Non-accrual Loans” Total		Financial a	ssetsat fairvaluethroughothercomprehensive profit								or loss
		Stage 1 Anticipated credit loss in 12 months $ 30,015,749 - 30,015,749 15,405 ) - $ 30,000,344 F	Stage 2		si	Stage 3			ion		Total
			Credit loss within the perpetuity of financial assets			Credit loss within the perpetuity of financial assets
	(		ina	$ - - - - $ - ncial assets on the ba		s	o	$ - - - - - $ - fcost after amortizat		(	$ 30,015,749 - 30,015,749 15,405 ) - $ 30,000,344
				Stage 2 Credit loss within the perpetuity of financial assets				Stage 3 edit loss within the perpetuity of financial assets			Total
						C	r
	(	$ 49,458,458 - 59,535,000 108,993,458 24,185 ) - $ 108,967,273		$ - - - - - - $ -		(		$ - 17,477 - 17,477 17,477 ) - $ -	(	$	49,458,458 17,477 59,535,000 109,010,935 41,662 ) - 108,969,273

										$

Note: Bond rating is based on Moody's, Fitch, S&P and Taiwan Ratings, in order to obtain the current credit ratings.

105 -

The consolidated company's debt instruments are financial assets at fair value through other comprehensive income and financial assets measured at amortized cost:

Total Book Value Loss allowance Cost after amortization Fair value adjustment	Me o	asured at fair values through ther comprehensive income $ 29,857,621 15,405 ) 29,842,216 158,128 $ 30,000,344	M	easured on the basis of cost after amortization
	(		(	$ 109,010,935 41,662 ) 108,969,273 - $ 108,969,273

The current credit risk evaluation approach of the Consolidated Company and the total carrying amount of debt instrument investments with various credit ratings are shown as below:

Credit rating Normal (Stage 1) Abnormal (Stage 2) Default (Stage 3) Write-off	Definition The debtors’ credit risk is low and also has sufficient capability to pay off contractual cash flows. Significant increase of credit risk after initial recognition Evidence of credit impairment There is evidence that the debtor is facing serious financial difficulties and the consolidated company cannot reasonably expect recovery.	Basis for recognizing expected credit losses Anticipated credit loss in 12 months Lifetime expected credit loss (no credit impairment) Lifetime expected credit loss (with credit impairment) Direct write-off	Expected credit loss rate 0.00%~0.45% 100%	Total book value of December 31, 2019
				Measured at fair values through other comprehensive income Measured on the basis of cost after amortization
				$ 29,857,621 $108,993,458 - - - 17,477 - -

106 -

With respect to the consolidated company's debt instrument investments at fair value through other comprehensive income and measured at amortized cost, the information regarding the changes in loss allowance based on credit risk ratings are summarized as follows:

		Credit rating	Credit rating
Normal (Anticipated credit loss in 12 months)		Abnormal (Lifetime expected credit loss no credit impairment)		Default (Lifetime expected credit loss credit impairment)
( ( ( (	$ 15,525 - - - 2,910 2,142 ) - 888 ) $ 15,405 $ 30,685 - - - 2,017 800 ) 7,717 ) $ 24,185		$ - - - - - - - - $ - $ - - - - - - - - $ -	(	$ - - - - - - - - $ - $ 74,444 - - - - 56,967 ) - - $ 17,477

107 -

December 31, 2018

December 31, 2018
Product category (Note) Investment grade bonds Non-investment grade bonds Total Book Value Provision for impairment Required impairment recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/ Non- accrual Loans” Total Product category (Note) Investment grade bonds Non-investment grade bonds Other (Central Bank NCD) Total Book Value Provision for impairment Required impairment recognized in accordance with the “Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/ Non- accrual Loans” Total	Financialassets	at	fairvaluethrough	ot	hercomprehensive profitor loss
	Stage 1 Anticipated credit loss in 12 months $ 27,507,719 - 27,507,719 ( 15,525 ) - $ 27,492,194 Financ		Stage 2 redit loss within he perpetuity of financial assets $ - - - - - $ - assets on the basis		Stage 3 redit loss within he perpetuity of financial assets $ - - - - - $ - costafteramortiz		Total
		C t		C t
		ial		of		$ 27,507,719 - 27,507,719 ( 15,525 ) - $ 27,492,194 ation
			Stage 2 redit loss within he perpetuity of financial assets $ - - - - - - $ -				Total
		C t		C t
						$ 45,838,446 74,444 55,500,000 101,412,890 ( 105,129 ) - $ 101,307,761

Note Bond rating is based on Moody's, Fitch, S&P and Taiwan Ratings, in order to obtain the current credit ratings. The consolidated company's debt instruments are financial assets at fair value through other comprehensive income and financial assets measured at amortized cost:

Total Book Value Loss allowance Cost after amortization Fair value adjustment	Me o	asured at fair values through ther comprehensive income $ 27,399,829 15,525 ) 27,384,304 107,890 $ 27,492,194	M	easured on the basis of cost after amortization
	(		(	$ 101,412,890 105,129 ) 101,307,761 - $ 101,307,761

108 -

The current credit risk evaluation approach of the Consolidated Company and the total carrying amount of debt instrument investments with various credit ratings are shown as below:

Credit rating	Definition	Basis for recognizing expected credit losses	Expected credit loss rate 0.00%~2.09 % 100%	Total book value 20	of December 31, 18
				Measured at fair values through other comprehensive income $ 27,399,827 - - -	Measured on the basis of cost after amortization
Normal (Stage 1) Abnormal (Stage 2) Default (Stage 3) Write-off	The debtors’ credit risk is low and also has sufficient capability to pay off contractual cash flows. Significant increase of credit risk after initial recognition Evidence of credit impairment There is evidence that the debtor is facing serious financial difficulties and the consolidated company cannot reasonably expect recovery.	Anticipated credit loss in 12 months Lifetime expected credit loss (no credit impairment) Lifetime expected credit loss (with credit impairment) Direct write-off			$ 101,338,446 - 74,444 -

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Credit rating
Normal Abnormal Default
(Anticipated credit loss in 12 (Lifetime expected credit loss (Lifetime expected credit loss
months) no credit impairment) credit impairment)
----- End of picture text -----

$ - 19,336 19,336 - - - - 2,799 ) - 1,012) $ 15,525 $ - 9,177 9,177 - - - 22,732 994 ) - 230 ) $ 30,685	$ - - - - - - - - - - $ - $ - - - - - - - - - - $ -	$ - - - - - - - - - - $ - $ - 74,444 74,444 - - - - - - - $ 74,444

109 -
Liquidity risk
(1) Sources and definitions of liquidity risk

The consolidated company's current liability exceeds its current assets of NT$93,415,897 thousand. The consolidated company currently has unused borrowing limit sufficient to meet all contractual obligations, so there is no liquidity risk with being unable to raise funds to perform contractual obligations.

Liquidity risks of the merged company mainly stem from Taichung Bank. The term “liquidity risks” refers to potential losses generated by the inability of Taichung Bank to acquire capital to fund increases in assets or repay liabilities as they come due (e.g., withdrawals by depositors, credit drawdowns, other interest or expenses, or cash outflows associated with off-balance sheet transactions); measures to replenish capital and increase liquidity include sufficient cash-on-hand, immediately realizable securities, spread deployment, absorbed deposits, or financing loan channels.

(2) Taichung Bank liquidity risk management policies may be described as follows:

Taichung Bank develops capital movement strategies by adopting a conservative approach. It effectively spreads funding sources and deadlines, participates in the capital call market, maintains close contact with fund providers, and keeps fund-raising channels open to ensure a stable and reliable source of capital.

Taichung Bank has formulated relevant norms and regulations governing operating procedures for risk identification, measurement, monitoring, and reporting. The bank has established a limit monitoring mechanism and has set management indicators for liquidity ratios and cash flow gaps. It maintains a firm grasp of potential warning signals and conducts regular stress tests. Analysis of crisis scenarios with assumed impacts on capital flows serves as a reference for the assessment of liquidity buffer levels. Response measures are adopted in a timely manner.

The Asset and Liability Management Committee (hereinafter referred to as “This Committee”) is the dedicated management unit of Taichung Bank for liquidity risks. The Committee must adopt monitoring procedures as required based on liquidity risk management policies to ensure adequate liquidity and sufficient capital under normal conditions and specific stress scenarios and thereby guarantee fulfillment of the bank’s payment obligations. The Committee must report regularly to the board of directors to ensure effective management of liquidity risks.

Non-derivative financial liabilities maturity analysis

The analysis on the cash outflow of the consolidated company’s non-derivative liabilities is based on the remaining period from the consolidated balance sheet date to the contract maturity date as follows: The amount in the statements is based on the contractual cash flows; therefore, the amount of some items disclosed is not consistent with the respective items on the consolidated balance sheet.

December31,2019	0 to 30 days	31 to 90 days	91 to 180 days	181 days to 1 year	More than 1 year	Total
Due to Central Bank and other banks	$4,760,161	$1,599,224	$ 730	$ 166,945	$ -	$6,527,060
Bills and bonds sold under repurchase agreements Shot-term borrowings Short-term notes payable Long-term borrowings Payables Customer deposits and remittances Financial bonds payable Lease liabilities	6,870,766 2,263,275 2,395,000 20,400 5,872,132 44,914,960 - 21,558	3,548,335 4,609,648 400,000 388,368 902,102 65,567,852 - 51,996	- 2,564,105 250,000 264,060 514,835 74,710,831 2,501,005 64,496	- 4,555,960 - 2,162,128 515,999 150,260,795 68,701 103,859	- 122,781 - 5,458,168 341,478 247,580,817 11,500,000 879,936	10,419,101 14,115,769 3,045,000 8,293,123 8,146,546 583,035,255 14,069,706 1,121,845
Other matured capital outflowitems	145,015	27,790	74,584	114,448	400,737	762,574

110 -

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December 31, 2018 0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total
Due to Central Bank and
other banks $2,934,764 $ 99,224 $ 730 $ 344,034 $ - $3,378,752
Bills and bonds sold
under repurchase
agreements 4,752,462 5,216,637 - - - 9,969,099
Shot-term borrowings 2,553,828 4,003,128 5,628,549 2,267,684 114,000 14,567,189
Short-term notes payable 950,000 1,010,000 400,000 - - 2,360,000
Long-term borrowings - 234,035 341,060 670,093 5,173,623 6,958,811
Payables 12,378,337 1,135,185 351,632 572,278 360,947 14,975,911
Customer deposits and
remittances 52,195,290 74,868,276 80,769,714 145,026,424 234,834,202 587,720,906
Financial bonds payable - - 12,202 6,068,723 14,000,000 20,080,925
Other matured capital
outflow items 210,565 52,875 44,341 73,008 363,807 744,596
Derivative financial liabilities maturity analysis
(1) Derivative instruments cleared and settled at net value
The consolidated company’s derivatives that are settled and cleared at net value include:
FX derivatives: FX forwards and options
It is concluded that the contractual maturity is the essential element to understand all derivative
financial instruments listed on the consolidated balance sheet. The amount in the statements is based
on the contractual cash flows; therefore, the amount of some items disclosed is not consistent with
the respective items on the consolidated balance sheet. Financial liabilities cleared and settled at net
amount maturity analysis:
91 to 180 181 days to 1 More than 1
December 31, 2019 0 to 30 days 31 to 90 days days year year T o t a l
Derivative financial
liabilities at fair value
through profit and loss
deriForeign exchange vatives $ 8,052 $ 26,392 $ 25,784 $ 26,322 $ - $ 86,550
Total $ 8,052 $ 26,392 $ 25,784 $ 26,322 $ - $ 86,550
91 to 180 181 days to 1 More than 1
December 31, 2018 0 to 30 days 31 to 90 days days year year T o t a l
Derivative financial
liabilities at fair value
through profit and loss
deriForeign exchange vatives $ 4,976 $ 19,442 $ 19,717 $ 11,987 $ - $ 56,122
Total $ 4,976 $ 19,442 $ 19,717 $ 11,987 $ - $ 56,122
----- End of picture text -----

Derivative financial liabilities maturity analysis

(1) Derivative instruments cleared and settled at net value

(2) Derivatives cleared and settled at total value

The consolidated company’s derivatives that are settled at total value include: Foreign exchange derivatives: Forward foreign exchange and foreign exchange swaps.

Illustrate the consolidated company’s derivatives that are settled at total value in accordance with the remaining period from the consolidated balance sheet date to the contract maturity date. It is concluded that the contractual maturity is the essential element to understand all derivative financial instruments listed on the consolidated balance sheet. The amount in the statements is based on the contractual cash flows; therefore, the amount of some items disclosed is not consistent with the respective items on the consolidated balance sheet. Financial liabilities cleared and settled at total value maturity analysis:

111 -

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December 31, 2019 0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total
Derivative financial
liabilities at fair value
through profit and loss
Foreign exchange
derivatives
- Cash outflow $1,104,025 $1,907,146 $2,013,035 $ 929,481 $ - $5,953,687
- Cash inflow 1,087,564 1,876,039 1,974,123 904,147 - 5,841,873
Subtotal of cash outflow 1,104,025 1,907,146 2,013,035 929,481 - 5,953,687
Subtotal of cash inflow 1,087,564 1,876,039 1,974,123 904,147 - 5,841,873
Net cash flow ( $ 16,461 ) ( $ 31,107 ) ( $ 38,912 ) ( $ 25,334 ) $ - ( $ 111,814 )
181 days to 1 More than 1
December 31, 2018 0 to 30 days 31 to 90 days 91 to 180 days year year Total
Derivative financial
liabilities at fair value
through profit and loss
Foreign exchange
derivatives
- Cash outflow $3,489,472 $1,284,922 $ 672,246 $ 373,458 $ - $5,820,098
- Cash inflow 3,441,202 1,267,212 662,755 365,797 - 5,736,966
Subtotal of cash outflow 3,489,472 1,284,922 672,246 373,458 - 5,820,098
Subtotal of cash inflow 3,441,202 1,267,212 662,755 365,797 - 5,736,966
Net cash flow ( $ 48,270 ) ( $ 17,710 ) ( $ 9,491 ) ( $ 7,661 ) $ - ( $ 83,132 )
----- End of picture text -----

The maturity analysis of items not on the statement

The analysis on the maturity date of the items not on the consolidated company’s balance sheet in accordance with the remaining period from the consolidated balance sheet date to the contract maturity date. For financial guarantee contracts issued, the earliest time period that maximum amounts of the guarantee may be requested for guarantee performance. The amount in the statements is based on the contractual cash flows; therefore, the amount of some items disclosed is not consistent with the respective items on the consolidated balance sheet.

December31,2019	0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total	0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total	0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total	0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total	0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total	0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total
Uundisbursed credit committee	$ 10,197,687 $ 17,979,600 $ 27,233,146 $ 64,306,327 $ 31,203,341 $150,920,101
The balance of opened but unused letter of credit Receivable guarantees Lease contract commitments	985,636 1,955,514 276,456 101,329 - 3,318,935 2,095,901 5,829,509 1,215,728 1,878,103 5,466,071 16,485,312 963,551 252,675 7,727 16,851 - 1,240,804
Total	$14,242,775	$26,017,298	$28,733,057	$66,302,610	$36,669,412	$171,965,152

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December 31, 2018 0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Total
Uundisbursed credit
committee $ 12,176,189 $ 24,525,708 $ 30,931,999 $ 65,838,590 $ 29,673,600 $163,146,086
The balance of opened
but unused letter of 1,557,248 2,428,724 143,161 11,546 - 4,140,679
credit
Receivable guarantees 6,264,671 3,749,910 858,950 1,659,683 5,802,747 18,335,961
Lease contract commitments 1,803,183 - - - - 1,803,183
Total $ 21,801,291 $ 30,704,342 $ 31,934,110 $ 67,509,819 $ 35,476,347 $187,425,909
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112 -
Cash flow risk estimated under interest rate changes

The future cash flow of assets and liabilities estimated based on mobile interest rate held and borne by the Consolidated Company might fluctuate and even generate risk due to the market interest rate changes. However, upon evaluation, the Consolidated Company, in practice, tends to control the net liquidity gap to reduce the cash flow risk resulting from the interest rate changes.

42. Information on transfer of financial assets

Transferred financial assets not being removed in all

In the routine transaction of the consolidated company, financial assets did not qualified under all the conditions have been transferred. Most are debt securities with R/P agreement or equity securities lent under the securities lending agreement. The cash flows from the contract of the aforementioned transactions received by the consolidated company have been transferred to a third party and reflected related liabilities of the consolidated company in the responsibility of repurchasing the financial assets already transferred at fixed price in the future. For this type of transactions, the consolidated company cannot use, sell or pledge the financial assets already transferred within the effective period of the trade, but the consolidated company shall still assume interest risk and credit risk and is not being removed in whole. The table below shows the financial assets not qualified under all conditions and related financial liabilities:

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December 31, 2019
Book value of
Book value of Fair value of Fair value of
related Net fair value
Category of financial assets financial assetstransferred financial financial assetstransferred related financial liabilities position
liabilities
Financial assets on the basis of
cost after amortization
R/P agreement $
$ 11,011,466 10,369,025 $ 11,123,977 $10,369,025 $ 754,952
December 31, 2018
Book value of
Book value of Fair value of Fair value of
related Net fair value
Category of financial assets financial assetstransferred financial financial assetstransferred related financial liabilities position
liabilities
Financial assets on the basis of
cost after amortization
R/P agreement $ 10,895,694 $ 9,904,467 $ 10,708,019 $ 9,904,467 $ 803,552
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43. Offsetting of financial assets and liabilities

The consolidated company does not have transactions of offsetting financial instruments specified by IAS 32.42 as recognized by the FSC. The financial assets and liabilities related to such type of transactions are expressed in net on the balance sheet. The consolidated company has transactions that are or are similar to net settled master netting arrangements but do not meet the offsetting criteria. The above transactions are settled on a net basis after offsetting financial assets with financial liabilities if both parties of the transaction choose to use net settlement; the above transactions are settled on a gross basis if both parties do not choose to use net settlement. However, if one party breaches the contract, the counterparty can choose to use net settlement. By 2019 and December 31, 2018, the merged company did not have any record of offsetting or net settlement of the aforementioned financial assets and liabilities.

113 -

December 31, 2019

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Gross amounts Related amounts not offset in the
of recognized balance sheet
financial Net amounts of
Gross amounts liabilities offset financial assets Cash
of recognized in the balance presented in the Financial collateral
Financial Assets financial assets sheet balance sheet instruments received Net
Reverse
repurchase
and
securities
borrowing
agreement $10,256,716 $ - $10,256,716 $10,256,716 $ - $ -
Related amounts not offset in the
Gross amounts Net amounts of balance sheet
Gross amounts of recognized financial
of recognized financial assets liabilities Cash
Financial Liabil financial offset in the presented in the Financial collateral
ities liabilities balance sheet balance sheet instruments pledged Net
Repurchase and
securities
lending
agreement $10,369,025 $ - $10,369,025 $10,369,025 $ - $ -
December 31, 2018
Related amounts not offset in the
Gross amounts balance sheet
Gross of recognized
amounts of financial Net amounts of
recognized liabilities offset financial assets Cash
financial in the balance presented in the Financial collateral
Financial Assets assets sheet balance sheet instruments received Net
Reverse
repurchase
and
securities
borrowing
agreement $ 9,294,168 $ - $ 9,294,168 $ 9,294,168 $ - $ -
Related amounts not offset in the
balance sheet
Gross Gross amounts Net amounts of
amounts of of recognized financial
recognized financial assets liabilities
Financial Liabil financial offset in the presented in the Financial Cash collateral
ities liabilities balance sheet balance sheet instruments pledged Net
Repurchase and
securities
lending
agreement $ 9,904,467 $ - $ 9,904,467 $ 9,904,467 $ - $ -
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114 -
Information to be disclosed pursuant to Article 16 of the “Regulations Governing the Preparation of Financial Reports by Public Banks”

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(1) Asset quality
December 31, 2019 December 31, 2018
Item Allowance Allowance
NPL
NPL rate Allowance for bad debt NPL amount NPL rate Allowance for bad debt
amount Total amount Total amount
Type (Note 1) (Note 2) for bad debt coverage (Note 3rate ) (Note 1) (Note 2) for bad debt coverage (Note 3rate )
Corporate Secured 596,122 146,760,794 0.41% 1,560,901 261.84% 980,023 152,938,946 0.64% 1,471,243 150.12%
banking Non-secured 156,327 78,622,829 0.20% 3,005,494 1,922.57% 350,210 83,415,828 0.42% 3,126,240 892.68%
Residential mortgage loans (Note 4) 164,457 55,404,669 0.30% 863,083 524.81% 277,102 57,027,677 0.49% 915,184 330.27%
Cash card - 30 - 3 - - 40 - 5 -
Consumer Small credit loans
banking (Note 5) 2,676 840,780 0.32% 86,721 3,240.70% 5,417 872,621 0.62% 90,357 1,668.03%
Secured 428,694 144,347,108 0.30% 692,342 161.50% 395,286 150,125,230 0.26% 577,436 146.08%
Others
Non-
(Note 6) secured 34,021 15,039,986 0.23% 364,775 1,072.21% 46,306 13,835,868 0.33% 351,238 758.52%
Total amount 1,382,297 441,016,196 0.31% 6,573,319 475.54% 2,054,344 458,216,210 0.45% 6,531,703 317.95%
December 31, 2019 December 31, 2018
Allowance
Item
Balance of Allowance Balance of for bad
NPL Allowance Allowance
receivable NPL rate for bad debt NPL amount receivable NPL rate debt
Type amount accounts for bad debt coverage rate accounts for bad debt coverage
rate
Credit card 2,568 786,214 0.33% 22,982 894.94% 4,710 749,434 0.63% 27,453 582.87%
Non-recourse factoring (Note 7) - 694,997 - 10,538 - - 133,277 - 12,165 -
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NPL or non-performing receivable accounts exempted from report

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December 31, 2019 December 31, 2018
Total non-performing Total non-performing
Total NPL exempted from Total NPL exempted from
receivable accounts exempted receivable accounts exempted
report from report report from report
Amount exempted from report upon debt
negotiation and performance (Note 8) 2,114 1,100 2,896 1,376
Performance of debt clearance program and
rehabilitation program (Note 9) 9,635 17,396 9,103 17,680
Total 11,749 18,496 11,999 19,056
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115 -
Note 1: The NPL amount is recognized according to "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans". The credit card NPL is recognized based on that provided under the Letter Jin-Guan-Yin (4) Zi No. 0944000378 dated July 6, 2005.
Note 2: Non-performing loan ratio = Non-performing loan/total loan amount. Non-performing credit card ratio = Non-performing amount/accounts receivable balance
Note 3: NPL Coverage Ratio = Allowance for bad debt appropriated for loans/Non-performing amount. Non-performing credit card receivables coverage ratio = Allowance for bad debt appropriated for credit card receivables/non-performing amount.
Note 4: Borrowers apply for residential mortgage loans for the purpose of purchasing or building residences or decorating houses. The loans shall be secured by the residence purchased (owned) by the borrower himself/herself, or his/her spouse or minor children in full, and the mortgage shall be pledged to the financial institution.
Note 5: Small credit loans mean those provided in the Letter under Jin-Guan-Yin (4) Zi No. 09440010950 dated December 19, 2005 and those other than small loans by credit cards/cash cards.
Note 6: The “Other” consumer finance refers to the secured or unsecured consumer finance loans other than the “residential mortgage loans”, “cash cards”, and “small credit loans”, excluding credit cards.
Note 7: According to the Letter under Jin-Guan-Yin (5) Zi No. 094000494 dated July 19, 2005, factoring without recourse shall be recognized as NPL within three months after the factoring Consignee or insurance company confirms that no compensation should be granted.
Note 8: Total NPL exempted from report upon debt negotiation and performance and the balance of total non-performing receivable accounts exempted from report upon debt negotiation and performance were disclosed pursuant to the Letter under Jin-Guan-Yin (1) Zi No. 09510001270 dated April 25, 2006.
Note 9: The balance of total NPL exempted from report upon performance of debt clearance program and rehabilitation program and balance of total non-performing receivable accounts exempted from report upon performance of debt clearance program and rehabilitation program were disclosed pursuant to the Letter under Jin-Guan-Yin (1) Zi No. 09700318940 dated September 15, 2008.

(2) Status of credit risk concentration

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December 31, 2019 Unit: NTD thousand
% of the total
Rank Total amount of
equity as of
(Note Business type of company or group (Note 2) outstanding loans December 31,
1) (Note 3) 2019
1 Group A 010892 Noodle products manufacturing $ 2,665,813 5.20%
2 Group B 016700 Real estate development 2,525,418 4.92%
3 Group C 016700 Real estate development 2,503,343 4.88%
4 Group D 016700 Real estate development 2,390,690 4.66%
5 Group E 016811 Real estate lease and sale 2,375,429 4.63%
6 Group F 012411 Iron and steel manufacturing 2,283,081 4.45%
7 Group G 016700 Real estate development 2,115,000 4.12%
8 Group H 015500 Accommodation service 2,085,229 4.06%
Group I 012699 other electronic parts and
9 1,799,897 3.51%
components manufacturing without classification
10 Group I 014612 Wholesale of brick and tiles, 1,550,001 3.02%
gravels, cement, and their products.
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116 -

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December 31, 2018 Unit: NTD thousand
Rank Total amount of Percentage of net
value as of
(Note Business type of company or group (Note 2) outstanding loans
December 31,
1) (Note 3)
2018
1 Group A 016811 Real estate lease and sale $ 2,460,000 5.14%
2 Group B 010892 Noodle products manufacturing 2,321,274 4.85%
3 Group C 016700 Real estate development 2,286,478 4.78%
4 Group D 015500 Accommodation service 2,151,855 4.50%
5 Group E 012411 Iron and steel manufacturing 1,937,578 4.05%
6 Group F 016700 Real estate development 1,333,917 2.79%
Group G 014612 Wholesale of bricks, tiles, sand,
7 1,258,337 2.63%
rocks, cement and other products
8 Group H 016700 Real estate development 1,099,800 2.30%
9 Group I 016700 Real estate development 1,095,680 2.29%
10 Group J 012203 plastic shell and components 1,073,192 2.24%
manufacturing
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Note 1: The top ten enterprises other than public or state enterprises were identified according to rank of the total balance of loans to these enterprises. If the account refers to a group, the loan to the group should be identified and summed up, and disclosed in the form of “code” and “business type”. In the case of group, the business type of the group with the maximum exposure should be disclosed. The business type shall be specified in “detailed item” according to the business classification defined by Directorate General of Budget, Accounting and Statistics (e.g. Company (Group) A, real estate development).
Note 2: The enterprises mean those defined in Article 6 of “Supplementary Rules of TSEC’s Criteria for Reviewing Listing of Marketable Securities”.
Note 3: The balance of total credit extension means the total balance of the various loans (including import negotiation, export negotiation, discount, overdraft, short-term loans, short-term secured loans, receivable securities financing, mid-term loans, mid-term secured loans, longterm loans, long-term secured loans, Delinquent loans), inward remittances, factoring without recourse, Acceptances receivable and guarantee payments.

(3) Interest rate sensitivity information

Interest rate sensitivity assets and liabilities analysis data (NTD) December 31, 2019

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Unit: NTD thousand, %
Item 1 to 90 days (inclusive) 91 to 180 days (inclusive) 181 days to 1 year (inclusive) Over 1 year Total
Interest rate
sensitivity assets 463,217,920 7,445,473 9,154,304 86,858,937 566,676,634
Interest rate
sensitivity 145,583,754 290,922,949 99,916,922 5,351,959 541,775,584
liabilities
Interest rate
sensitivity gap 317,634,166 ( 283,477,476 ) ( 90,762,618) 81,506,978 24,901,050
Net value 51,309,206
Interest rate sensitivity assets and liabilities rate 104.60%
Interest rate sensitivity gap and net worth rate 48.53%
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117 -

December 31, 2018 Unit: N	TD thousand, %
Item 1 to 90 days (inclusive) 91 to 180 days (inclusive) 181 days to 1 year (inclusive) Over 1 year	Total
Interest rate sensitivity assets 473,227,441 6,893,149 11,984,930 83,634,023	575,739,543
Interest rate sensitivity liabilities 160,487,053 284,562,819 97,600,888 7,323,668	549,974,428
Interest rate sensitivity gap 312,740,388 ( 277,669,670 ) ( 85,615,958 ) 76,310,355	25,765,115
Net value	47,823,653
Interest rate sensitivityassets and liabilities rate	104.68%
Interest rate sensitivity gapand net worth rate	53.87%

Note: 1. The table specifies the amount in NTD (exclusive of foreign currencies) of Taichung Bank Head Office and local branches.
Interest rate sensitivity assets and liabilities mean the assets and liabilities with interest of which the income or cost varies depending on the interest rate.
Interest rate sensitivity gap=Interest rate sensitivity assets - Interest rate sensitivity liabilities.
Ratio of interest-rate-sensitive assets to liabilities = Interest-rate-sensitive assets ÷ Interest-rate-sensitive liabilities (denominated in NT$)

Interest rate sensitivity assets and liabilities analysis data (USD) December 31, 2019

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Unit:USD thousand; %
Item 1 to 90 days (inclusive) 91 to 180 days (inclusive) 181 days to 1 year (inclusive) Over 1 year Total
Interest rate
sensitivity assets 1,210,594 231,333 26,028 436,459 1,904,414
Interest rate
sensitivity 781,756 909,543 216,067 - 1,907,366
liabilities
Interest rate
sensitivity gap 428,838 ( 678,210 ) ( 190,039 ) 436,459 ( 2,952 )
Net value 1,710,307
Interest rate sensitivity assets and liabilities rate 99.85%
Interest rate sensitivity gap and net worth rate ( 0.17% )
December 31, 2018
Unit:USD thousand; %
Item 1 to 90 days (inclusive) 91 to 180 days (inclusive) 181 days to 1 year (inclusive) Over 1 year Total
Interest rate
sensitivity assets 1,063,068 256,810 20,502 457,260 1,797,640
Interest rate
sensitivity 831,067 738,109 192,424 - 1,761,600
liabilities
Interest rate
sensitivity gap 232,001 ( 481,299 ) ( 171,922 ) 457,260 36,040
Net value 1,557,266
Interest rate sensitivity assets and liabilities rate 102.05%
Interest rate sensitivity gap and net worth rate 2.31%
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Note: 1. This table reports the total amount, in US$, held by the headquarters and domestic branches of Taichung Commercial Bank, its international financial business branches and overseas branches, excluding contingent assets and contingent liabilities.

Interest rate sensitivity assets and liabilities mean the assets and liabilities with interest of which the income or cost varies depending on the interest rate.
Interest rate sensitivity gap=Interest rate sensitivity assets - Interest rate sensitivity liabilities.
Ratio of interest-rate-sensitive assets to liabilities = Interest-rate-sensitive assets ÷ Interest-rate-sensitive liabilities (denominated in US$)
118 -

(4) Profitability:

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Unit: %
Item December 31, 2019 December 31, 2018
Before Income 0.75 0.69
Return on assets Tax
After Income 0.64 0.60
Tax
Before Income 10.22 10.17
Tax
ROE
After Income 8.72 8.79
Tax
Net profit rate 38.88 37.55
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Note: 1. ROA = Income before (after) taxation/Average total assets

ROE=Income before (after) taxation / Average net worth
Profit (loss) rate = Income after taxation/income-net
Income before (after) taxation means the income accumulated from January of the current year until the current quarter

(5) Analysis on maturity of assets and liabilities

Analysis of maturity structure of NTD December 31, 2019

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Unit: NTD thousand
Remaining balance to maturity
Total 91 to 180 181 days to 1 More than 1
0 to 10 days 11 to 30 days 31 to 90 days days year year
Main
capital
inflow 609,292,349 85,555,035 43,772,344 29,767,509 51,719,298 97,885,687 300,592,476
upon
maturity
Main
capital
outflow 726,163,310 24,967,880 30,412,825 72,406,095 98,591,847 192,988,476 306,796,187
upon
maturity
( 116,870,961
Gap 60,587,155 13,359,519 ( 42,638,586) ( 46,872,549) ( 95,102,789) ( 6,203,711)
)
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December 31, 2018

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Unit: NTD thousand
Remaining balance to maturity
Total 91 to 180 181 days to 1 More than 1
0 to 10 days 11 to 30 days 31 to 90 days days year year
Main
capital
inflow 619,398,838 97,398,772 34,941,879 31,135,311 55,245,416 98,133,621 302,543,839
upon
maturity
Main
capital
outflow 742,326,833 29,605,923 35,688,786 81,243,268 105,947,813 196,715,151 293,125,892
upon
maturity
(122,927,995
Gap 67,792,849 ( 746,907 ) (50,107,957) (50,702,397) ( 98,581,530) 9,417,947
)
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Note: The table only specifies the amount in NTD (exclusive of foreign currencies) of Taichung Bank Head Office and local branches.

119 -

Analysis of maturity structure of USD December 31, 2019

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Unit: USD thousand
Remaining balance to maturity
Total 0 to 30 days 31 to 90 days 91 to 180 181 days to 1 More than 1
days year year
Main capital
inflow upon 2,159,517 287,818 258,938 239,853 141,120 1,231,788
maturity
Main capital
outflow upon 2,795,533 559,115 765,666 551,532 752,039 167,181
maturity
Gap ( 636,016 ) ( 271,297 ) ( 506,728 ) ( 311,679 ) ( 610,919 ) 1,064,607
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December 31, 2018

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Unit: USD thousand
Remaining balance to maturity
Total 0 to 30 days 31 to 90 days 91 to 180 181 days to 1 More than 1
days year year
Main capital
inflow upon 2,035,175 272,430 298,059 257,196 77,992 1,129,498
maturity
Main capital
outflow upon 2,857,122 602,245 811,276 484,962 812,641 145,998
maturity
Gap ( 821,947 ) ( 329,815 ) ( 513,217 ) ( 227,766 ) ( 734,649 ) 983,500
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Note: 1. The table specifies the total amount in USD of Taichung Bank Head Office, local branches and International Banking Branch. Unless otherwise provided, it shall be stated at the Book Value, and it is not necessary to include any accounts that are not stated in the table (e.g. negotiable certificates of deposit, bonds or stocks scheduled to be issued).

Where offshore assets account for more than 10% of the Bank’s total assets, it is necessary to provide supplementary disclosure.

45. Capital risk management

The consolidated company manages capital to ensure the Group’s enterprises to maximize shareholder’s returns by optimizing the balance of debt and equity under the precondition of continuing operation.

The capital structure of the consolidated company consists of the net debt (borrowings less cash and cash equivalents) and the interests (equity, capital reserve, retained earnings and other equity items) of the Company's owners.

The consolidated company is not required to comply with other external capital requirements.

The management of the consolidated company re-examines the Group’s capital structure on a quarterly basis, including considering various capital costs and the related risks. The consolidated company based on the suggestions of management has the overall capital structure balanced by paying dividends, issuing new shares, buying back shares and issuing new debts or paying back old debts.

120 -

46. Information about foreign exchange of foreign currency financial assets and liabilities

The information about foreign currency financial assets and liabilities rendering material effect on the Consolidated Company:

			December 31,2019
USD	RMB	JPY	AUD	EURO	Other foreign currencies	Total
$ 3,314,754 60,000 1,249,165 1,081,986 34,318,741 2,870,828 19,180,305 196,186 1,490,060 114,000 47,488,086 104,773 864,310 - 8,366,270 28,552 73,580 29.98	$ 1,181,883 94,754 14,669 - 877,054 3,283,338 2,368,093 86,140 - 2,502,533 5,630,709 - 213,257 48,951 - - 9,505 4.31	$ 1,035,072 - - - 369,279 161,925 - - - - 678,269 - 111,876 - - - 1,803 0.28	$ 369,682 273,260 210 - 78,956 39,577 1,282,208 - - - 2,278,560 300 8,857 - - - - 21.01 December 31,2018	$ 150,899 - - - 414,949 109,455 - - 100,860 - 539,523 65 126,869 - - - 3,343 33.59	$ 389,872 - - - 848,924 70,775 959,972 - 9,940 - 1,838,341 - 116,283 7,726 - - -	$ 6,442,162 428,014 1,264,044 1,081,986 36,907,903 6,535,898 23,790,578 282,326 1,600,860 2,616,533 58,453,488 105,138 1,441,452 56,677 8,366,270 28,552 88,231
USD $ 3,068,439 61,420 1,144,719 980,178 34,421,321 4,731,102 17,538,248 140,863 1,074,850 377,733 44,331,207 71,504 1,288,299 8,704,431 29,944 205,768 30.72	RMB $ 1,078,324 223,600 - - 1,266,246 2,460,502 2,280,163 3,202 - 2,039,436 3,556,606 - 232,846 - - 11,418 4.47	JPY $ 514,590 - - - 351,738 251,121 - - - - 664,068 - 92,118 - - - 0.28	AUD $ 465,958 - - - 216,969 11,470 1,322,022 - - - 2,336,307 - 6,612 - - - 21.67	Euro $ 1,310,534 - - - 470,514 150,493 - - - - 506,670 - 1,208,131 - - 1,360 35.20	Other foreign currencies $ 807,162 - 11 - 655,638 85,759 148,932 - - - 1,610,067 10 116,473 - - 2,127	Total
						$ 7,245,007 285,020 1,144,730 980,178 37,382,426 7,690,447 21,289,365 144,065 1,074,850 2,417,169 53,004,925 71,514 2,944,479 8,704,431 29,944 220,673

The consolidated company's gain on foreign currency exchange (realized and unrealized) in 2019 and 2018 were NT$200,438 thousand and NT$387,106 thousand, respectively. Due to the wide variety of foreign currency transactions, it is difficullt to disclose all exchange gains or losses based impact significance.

121 -

47. Disclosures

1. Loans to others: Unit: NTD thousand, unless otherwise noted

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Item No.(Note 1) Lender Borrower Transaction (Note 2) title Are they related parties current period Maximum balance – (Note 3) Balance - (Note 8) ending The actual disbursed amounts Interest Rate Collars (Note 4) of Loan Nature TransactionAmount of Business (Note 5) term loan (Note offering short-necessary for Reasons 6) allowance for Amount of bad debt Name Collateral Value particular borrowerLimit of loan to (Note 7) Total limit of financing (Note 7) Remark
1 Taichung Commercial Chang Hong International Other No $ 21,989 $ - $ - 4%-10% Necessary for $ - Working capital $ - Real estate $ 29,079 $ 190,460 $ 761,841 Note 9
Bank Lease Development Co., Ltd. receivables offering short-
Enterprise term loan
1 Taichung Commercial Yan Xin Construction Co., Ltd. 〃〃 64,170 - - 4%-10% 〃 - 〃 - Real estate 58,613 190,460 761,841 〃
Bank Lease
Enterprise
1 Taichung Commercial General Energy Solutions 〃〃 23,476 - - 4%-10% 〃 - 〃 - Refundable 5,000 190,460 761,841 〃
Bank Lease deposits
Enterprise
1 Taichung Commercial Yi Lei Construction Co., Ltd. 〃〃 63,050 - - 4%-10% 〃 - 〃 - Real estate 65,161 190,460 761,841 〃
Bank Lease
Enterprise
1 Taichung Commercial Huang Chao Golden Hall Inc. 〃〃 16,696 - - 4%-10% 〃 - 〃 - Refundable 6,000 190,460 761,841 〃
Bank Lease deposits
Enterprise
1 Taichung Commercial Yuanli Engineering Co., Ltd. 〃〃 35,678 16,298 16,298 4%-10% 〃 - 〃 163 N/A - 190,460 761,841 〃
Bank Lease
Enterprise
1 Taichung Commercial Kuang Ming Shipping 〃〃 100,000 42,150 42,150 4%-10% 〃 - 〃 222 Refundable 20,000 190,460 761,841 〃
Bank Lease deposits
Enterprise
1 Taichung Commercial Baomei Construction Co., Ltd. 〃〃 104,000 - - 4%-10% 〃 - 〃 - Real estate 88,813 190,460 761,841 〃
Bank Lease
Enterprise
1 Taichung Commercial Wisdom Marine International Inc. 〃〃 100,000 75,177 75,177 3.5%-10% 〃 - 〃 752 N/A - 190,460 761,841 〃
Bank Lease
Enterprise
1 Taichung Commercial Baohong Construction Co., Ltd. 〃〃 116,000 114,260 114,260 4%-10% 〃 - 〃 1,143 Real estate 100,194 190,460 761,841 〃
Bank Lease
Enterprise
1 Taichung Commercial New Rich Material Co., Ltd. 〃〃 58,520 58,520 - 4%-10% 〃 - 〃 - Real estate 59,632 190,460 761,841 〃
Bank Lease
Enterprise
1 Taichung Commercial Megaful Co., Ltd. 〃〃 120,000 115,070 55,070 4%-10% 〃 - 〃 551 Real estate 70,984 190,460 761,841 〃
Bank Lease
Enterprise
2 TCCBL Co., Ltd. EVER MERIT 〃〃 18,960 - - 5.25% 〃 - 〃 - Stock 60,480 78,651 314,603 Note 10
(B.V.I.) TRADING LIMITED
2 TCCBL Co., Ltd. LEAGUE 〃〃 7,900 - - 4%-10% 〃 - 〃 - Refundable 3,000 78,651 314,603 〃
(B.V.I.) INTERNATIONAL LIMITED deposits
2 TCCBL Co., Ltd. CROSS 〃〃 29,230 23,070 23,070 4%-10% 〃 - 〃 201 Refundable 3,000 78,651 314,603 〃
(B.V.I.) BORDER PROFITS LIMITED deposits
2 TCCBL Co., Ltd. TCT CAPITAL CO., LTD 〃〃 50,560 - - 4%-10% 〃 - 〃 - Refundable 4,800 78,651 314,603 〃
(B.V.I.) deposits
3 Taichung Commercial Zhangjiajie Zhongjun Real Estate Loan by 〃 27,600 14,213 14,213 9.6% 〃 - Capital 213 Real estate 232,190 290,419 290,419 Note 11
Bank Leasing mandate Expenditures
(Suzhou) Ltd.
4 Chou Chin Industrial Noble House Glory Related party Yes 35,000 35,000 35,000 2% 〃 - Working capital - N/A - 289,209 578,419 Note 12
Co., Ltd. receivables
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Note 1: The column for numbering is elaborated below:

(1) Fill in 0 for the issuer.

(2) The investees are sequentially numbered from 1 and so forth.

Note 2: The receivables-affiliates, receivables-related parties, shareholders accounts, prepayments, temporary payments and others as stated in book shall be filled in here if they are classified as financing. Note 3: Maximum balance of financing a third party in current period. Note 4: Specify if the nature of financing is for business transactions or short-term financing is necessary. Note 5: If the nature of financing is for business transactions, specify the amount of business transactions. The amount of business transactions shall be the amount of business conducted between the lender and the beneficiary of financing. Note 6: If it is necessary for short-term financing, specify the reasons and the beneficiary of financing and the use of the fund, such as: retirement of loans, procurement of equipment, and working capital.

122 -
Note 7: Specify the Procedure for Financing Third Parties and the upper limit of financing in favor of particular beneficiary and the total limit of financing, and also the method for the calculation of the upper limit of financing in favor of particular beneficiary and the total limit of financing in the space provided in this field.
Note 8: For public companies proposed the lending of funds before the Board for resolution case by case pursuant to Article 14-1 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”, the amount approved by the Board but not yet being drawn shall still be included in the amount for announcement for the disclosure of risk being assumed. If the loans are being retired in the future, disclose the outstanding balance to reflect the adjustment of risk. For public companies proposed the lending of funds before the Board for resolution case by case pursuant to Article 14-2 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” whereby the Board resolved to authorize the Chairman to effect the drawdown or in revolving credit in tranches within specific limit and in the year, the amount and the limit approved by the Board shall still be announced as the outstanding balance. In subsequent retirement of loans, repeated drawdown shall still be considered and the amount and the limit approved by the Board shall still be announced as the outstanding balance.
Note 9: The loaning of TCB Leasing Co., Ltd. to a particular enterprise shall be up to 10% of the net worth of the Company. The total amount of loaning of funds shall not exceed 40% of the net worth of TCB Leasing Co., Ltd.
Note 10: The loaning of TCCBL Co., Ltd. (B.V.I.) to a particular enterprise shall not exceed 10% of the net worth of TCCBL Co., Ltd. (B.V.I.) The total amount of loaning of funds shall not exceed 40% of the net worth of TCCBL Co., Ltd. (B.V.I.).
Note 11: The loaning of TC Bank Financing and Leasing (Suzhou) Co., Ltd. to a particular enterprise shall be up to 40% of the net worth of the Company. The total amount of loaning of funds shall not exceed 40% of the net worth of Taichung Commercial Bank Finance Lease (Suzhou) Co., Ltd.
Note 12: The total amount of funds lent by Chou Chin Industrial Co., Ltd. to a single enterprise must not exceed 20% of the net worth of Chou Chin. Total loan amounts must not exceed 40% of the net worth of Chou Chin.

2. Endorsements/guarantees to others:

										Unit: NTD thousand, unle	Unit: NTD thousand, unle	ss otherwi	senoted
		Endors	ed/Guaranteed						Accumulated amount f		Guarantee d	Guarantee and	Guarantee
Item No.	Name of Endorser/Guarantor	Company name	Affiliation	Limit of endorsement/guarantee to a single enterprise (Note 1)	Maximum balance in current period (Note 3)	Balance- ending	The actual amounts disbursed	Endorsement/guarantee with collateral	o endorsement/guarantee in proportion to the net worth stated in the financial statements of the most recent period	Upper limit of endorsement/guarantee (Note 2)	an endorsement of parent company to subsidiary (Note 4)	endorsement by subsidiary to parent company (Note4)	and endorsement in Mainland China (Note 4)

1 2	Chou Chin Industrial Co., Ltd. Taichung Commercial Bank Lease Enterprise	GREENWORLD FOOD CO., LTD. TCCBL Co., Ltd. （B.V.I.）	Subsidiary of Chou Chin Industrial Co., Ltd. 100% and directly owned subsidiary	$ 723,024 11,427,612	$ 15,000 1,221,512	$ 15,000 942,289	$ - 114,000	$ - -	1.04 49.48	$ 1,446,047 19,046,020	－－	－－	－－
2	Taichung Commercial Bank Lease Enterprise	Taichung Commercial Bank Leasing (Suzhou)Ltd.	100% and indirectly owned subsidiary	11,427,612	2,083,830	1,841,251	1,663,922	-	96.68	19,046,020	－	－	Y

Note 1: Chou Chin Industrial stipulated in its Operating Procedures for Endorsement Guarantee that its endorsement guarantee for an enterprise shall not exceed 50% of the net value of the latest financial statements. If the guarantee is for business transaction relationships, the amount shall not exceed the total transaction in the most recent year. Taichung Bank Leasing stipulated in its Operating Procedures for Endorsement Guarantee that its endorsement guarantee for an enterprise shall not exceed six times the net value of the latest financial statements.
Note 2: Chou Chin Industrial stipulated in its Operating Procedures for Endorsement Guarantee that its total endorsement guarantee shall not exceed the net value of the latest financial statements. Taichung Bank Leasing stipulated in its Operating Procedures for Endorsement Guarantee that its total endorsement guarantee shall not exceed ten times the net value of the latest financial statements.
Note 3: The highest balance of endorsements and/or guarantees in the current year.
Note 4: For guarantee and endorsement from parent company to subsidiaries, from subsidiaries to parent company, and to Mainland China, as in the case of TWSE/GTSW-listed companies, fill in Y.
123 -

3. Marketable securities held – end of year

Unit: thousand shares/ NTD thousand

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Securities Holder of Type and Name of Securities Affiliation with Securities Issuer Account Title Quantity Book ValueEnding Shareholding % Market Value Remark
CHINA MAN- Shares traded on the Taiwan
MADE Stock Exchange or OTC
FIBER exchange
CORPORA Taiwan Business Bank N/A Financial assets mandatorily measured at fair 10,874 $ 137,009 - $ 137,009
TION value through profit or loss- current
First Financial Holding 〃〃 1,872 44,362 - 44,362
Apex Biotechnology 〃〃 300 8,505 - 8,505
Corporation
Hua Nan Financial Holding CHINA MAN-MADE FIBER Equity instrument investments measured at fair 64,632 1,421,905 1 1,421,905 1,148 thousand shares
CORPORATION is its corporate value through other comprehensive pledged
supervisor. income- non-current
Maxigen Biotech Inc. N/A 〃 569 14,373 1 14,373
Taiwan Tea Corporation N/A 〃 16,175 266,079 2 266,079 15,000 thousand shares
pledged
Domestic Emerging Stock Board
JiMicron Technology N/A Equity instrument investments measured at fair 270 4,918 - 4,918
value through other comprehensive
income- non-current
Shares traded on foreign
exchange or OTC exchange
Citigroup Inc. N/A Financial assets mandatorily measured at fair 41 98,199 - 98,199
value through profit or loss- current
Non listed (OTC) domestic stock
EVERSOL CORP. N/A Financial assets mandatorily measured at fair 35 - 1 -
value through profit or loss- current
Non listed (OTC) domestic stock
Sunny Bank N/A Equity instrument measured at fair value 2,506 24,533 - 24,533
through other comprehensive income-
non-current
Formosa Imperial Wineseller Affiliate 〃 1,900 - 10 -
Corp.
TAIWAN FILAMENT CHINA MAN-MADE FIBER 〃 11,542 31,394 20 31,394
WEAVING CORPORATION is its corporate
DEVELOPMENT director.
CO., LTD.
WK Technology Fund N/A 〃 598 11,283 3 11,283
Pu Shih Joint Venture(??) 〃〃 682 6,253 2 6,253
Minchali Metal Industrial 〃〃 7,193 87,968 3 87,968
Co., Ltd.
TWSE 〃〃 1,294 97,247 - 97,247
Everterminal Co., Ltd. 〃〃 298 3,530 - 3,530
China Trade & Development 〃〃 756 - 1 -
Corp.
Chia Hsin Food and Synthetic 〃〃 103 - - -
Fiber Co., Ltd.
Taitung Business Bank 〃〃 4,027 - 1 -
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Holder of Securities Type and Name of Securities Affiliation with Securities Issuer Account Title Quantity Book ValueEnding Shareholding % Market Value Remark
CHINA MAN- Non-listed (OTC) overseas stock
MADE FIBER
CORPORATI
ON
UNFON CONSTRUCTION Affiliate Equity instrument investments measured at fair 3,250 $ 8,384 18 $ 8,384
CO., LTD (Hong Kong) value through other comprehensive
income- non-current
Beneficiary certificate
Reliance Chinese Selected Growth Fund managed by Taichung Financial assets mandatorily measured at fair 9,653 127,609 - 127,609
Equity Fund Securities Investment Trust value through profit or loss- current
Co., Ltd.
The RSIT First Digital Fund 〃〃 1,842 66,608 - 66,608
Reliance Da-Fa Fund 〃〃 1,505 50,745 - 50,745
Reliance Taiwan Main Stream Small 〃〃 3,042 67,688 - 67,688
& Medium Cap Fund
Domestic corporate bonds
Taichung Commercial Bank financial A subsidiary of CHINA MAN- Debt instrument investments measured at fair 110,000 110,000 - 110,000
bonds MADE FIBER value through other comprehensive
CORPORATION income- non-current
Deh Hsing Shares traded on the Taiwan Stock
Investment Exchange or OTC exchange
Co., Ltd.
CHINA MAN-MADE FIBER Parent company of Deh Hsing Equity instrument investments measured at fair 11,173 92,733 - 92,733
CORPORATION Investment Co., Ltd. value through other comprehensive
income- current
Taiwan Tea Corporation N/A 〃 3,000 49,350 - 49,350
Non listed (OTC) domestic stock
Formosa Imperial Wineseller Corp. Affiliate Equity instrument investments measured at fair 2,000 - 10 -
value through other comprehensive
income- current
Wan Tai Lease Co., Ltd. N/A 〃 628 - 3 -
Beneficiary certificate
Reliance Chinese Selected Growth Fund managed by Taichung Financial assets mandatorily measured at fair 2,163 28,600 - 28,600
Equity Fund Securities Investment Trust value through profit or loss- current
Co., Ltd.
The RSIT First Digital Fund 〃〃 67 2,427 - 2,427
Pan Asia Chemical Shares traded on the Taiwan Stock
Corporation Exchange or OTC exchange
CHINA MAN-MADE FIBER Parent company of Pan Asia Equity instrument investments measured at fair 251,443 2,086,976 16 2,086,976 77,954 thousand shares
CORPORATION Chemical Corporation value through other comprehensive pledged
income- non-current
Yuan Ji Solar Technology N/A 〃 1,529 11,623 1 11,623
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Holder of Securities Type and Name of Securities Affiliation with Securities Issuer Account Title Quantity Book Value Ending Shareholding % Market Value Remark
Pan Asia Chemical Shares traded on the Taiwan Stock
Corporation Exchange or OTC exchange
Taiwan Tea Corporation N/A Equity instrument investments 11,800 $ 194,110 1 $ 194,110
measured at fair value through
other comprehensive income-
non-current
Domestic Emerging Stock Board
JiMicron Technology N/A Equity instrument investments 440 8,030 1 8,030
measured at fair value through
other comprehensive income-
non-current
Non listed (OTC) domestic stock
TWSE N/A Equity instrument investments 267 20,112 - 20,112
measured at fair value through
other comprehensive income-
non-current
Chung Chien Investment Co., Ltd. Affiliate 〃 12,000 19,680 18 19,680
Chung Shing Textile Co., Ltd. N/A 〃 120 - - -
Domestic corporate bonds
Taichung Commercial Bank financial bonds A subsidiary of CHINA MAN- Equity instrument investments 200,000 200,000 - 200,000
MADE FIBER measured at fair value through
CORPORATION other comprehensive income-
non-current
Beneficiary certificate
Reliance Taiwan Main Stream Small & Fund managed by Taichung Financial assets mandatorily 743 16,535 - 16,535
Medium Cap Fund Securities Investment Trust measured at fair value through
Co., Ltd. profit or loss- current
Pan Asia Chemical Beneficiary certificate
Corporation
Reliance TAROBO Robotics Quantitative Fund managed by Taichung Financial assets mandatorily 1,319 15,855 - 15,855
Chinese Fund Securities Investment Trust measured at fair value through
Co., Ltd. profit or loss- current
The RSIT First Digital Fund 〃〃 420 15,198 - 15,198
Taichung Securities Non listed (OTC) domestic stock
Investment Taiwan Futures Exchange N/A Equity instrument investments 1,239 105,739 - 105,739
Trust Co., Ltd. measured at fair value through
other comprehensive income-
non-current
Beneficiary certificate
THE RSIT ENHANCED MONEY Fund managed by Taichung Financial assets mandatorily 1,483 17,810 - 17,810
MARKET FUND Securities Investment Trust measured at fair value through
Co., Ltd. profit or loss- current
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Holder of Securities Type and Name of Securities Affiliation with Securities Issuer Account Title Quantity Book Value Ending Shareholding % Market Value Remark
Reliance Da-Fa Fund 〃〃 36 $ 1,217 - $ 1,217
The RSIT First Digital Fund 〃〃 39 1,422 - 1,422
Reliance Chinese Selected Growth Equity Fund 〃〃 360 4,762 - 4,762
Reliance Taiwan Main Stream Small & 〃〃 69 1,541 - 1,541
Medium Cap Fund
S&P 1xInverse N/A 〃 25 275 - 275
Taiwan 50 1xInverse 〃〃 210 2,098 - 2,098
Chou Chin Shares traded on the Taiwan Stock Exchange or
Industrial OTC exchange
Co., Ltd.
Taiwan Business Bank N/A Equity instrument investments measured 1,014 12,774 - 12,774
at fair value through other
comprehensive income- current
Taichung Commercial Bank Co. A subsidiary of CHINA MAN- 〃 6,358 76,300 - 76,300
MADE FIBER
CORPORATION
Chou Chin Shares traded on the Taiwan Stock Exchange or
Industrial OTC exchange
Co., Ltd.
CHINA MAN-MADE FIBER Ultimate parent of Chou Chin Equity instrument investments measured 59,123 490,719 4 490,719 45,000 thousand shares
CORPORATION Industrial Co., Ltd. at fair value through other pledged
comprehensive income- current
Hua Nan Financial Holding CHINA MAN-MADE FIBER 〃 19,698 433,361 - 433,361 18,530 thousand shares
CORPORATION is its pledged
corporate supervisor.
Taiwan Tea Corporation N/A 〃 15,298 251,652 - 251,652 13,000 thousand shares
pledged
Non listed (OTC) domestic stock
Sunny Bank N/A Equity instrument investments measured 1,253 12,267 - 12,267
at fair value through other
comprehensive income- non-
current
Beneficiary certificate
Reliance Chinese Selected Growth Equity Fund Fund managed by Taichung Financial assets mandatorily measured at 813 10,743 - 10,743
Securities Investment Trust fair value through profit or loss-
Co., Ltd. current
Reliance Taiwan Main Stream Small & 〃〃 111 2,468 - 2,468
Medium Cap Fund
Reliance TAROBO Robotics Quantitative 〃〃 500 6,009 - 6,009
Chinese Fund
Capital Securities Global Strategy N/A 〃 200 1,992 - 1,992
Domestic corporate bonds
Taichung Commercial Bank financial bonds A subsidiary of CHINA MAN- Debt instrument investments measured 850,000 850,000 - 850,000 NT$850,000 thousand
MADE FIBER at fair value through other pledge
CORPORATION comprehensive income- current
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Holder of Securities	Type and Name of Securities	Affiliation with Securities Issuer	Account Title		Ending			Remark
				Quantity	Book Value	Shareholding%	Market Value
Chou Chang Corporation	Shares traded on the Taiwan Stock Exchange or OTC exchange
	Taichung Commercial Bank Co. CHINA MAN-MADE FIBER CORPORATION Non listed (OTC) domestic stock Hsin Tung Yang Chou Chin Industrial Co., Ltd. Domestic corporate bonds	A subsidiary of CHINA MAN-MADE FIBER CORPORATION Ultimate parent of Chou Chin Industrial Co., Ltd. N/A The investor evaluating Chou Chang Corporation under equity method	Equity instrument investments measured at fair value through other comprehensive income- non-current 〃 Equity instrument investments measured at fair value through other comprehensive income- non-current 〃	12,701 9,248 64 453	$ 152,406 76,756 691 2,603	- 1 - 1	$ 152,406 76,756 691 2,603	10,000 thousand shares pledged 4,000 thousand shares pledged
	Taichung Commercial Bank financial bonds	A SUBSIDIARY OF CHINA MAN- MADE FIBER CORPORATION	Debt instrument investments measured at fair value through other comprehensive income- current	350,000	350,000	-	350,000	NT$ 350 million pledge

Note: Taichung Commercial Bank and its subsidiaries are exempt from disclosure due to that they are in the financial, insurance and securities businesses. 4. Cumulative amount of the same marketable securities purchased or sold reaching NT$300 million or more than 20% of the Paid-in sharescapital.

											U	nit: NTD th	ousand\thousand shares	ousand\thousand shares
Buyer/Seller	Type and Name of Securities	Account Title	Trading Counterp art	Affiliat ion	Beginning		Bought			Sol	d		End ofperiod (Note1)
					Shares (in Thousand shares)	Amount	Shares (in Thousand shares)	Amount	Shares (in Thousand shares)	Amount	Cost	Gain (loss) from disposal	Shares (in Thousand shares)	Amount
CHINA MAN- MADE FIBER CORPOR ATION	Taiwan Business Bank common stock	Financial assets mandatorily measured at fair value through profit or loss- current	-	-	57,390	$ 593,987	718 (Note 1)	$ -	47,234	$583,698	$288,282	$295,416	10,874	$137,009 (Note 2)

Note 1: Distributed stock dividends. Note 2: Amount at end of period includes valuation amount at end of period.

Acquisition amount of real estate reaching NT$300 million or more than 20% of the Paid-in sharescapital (None)
Amount on disposal of real estate reaching NT$300 million or more than 20% of the Paid-in sharescapital (None)
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7. Amount on purchase from and sale to related parties reaching NT$100 million or more than 20% of the Paid-in sharescapital Unit: NTD thousand
Status Distinctive terms and conditions of trade and the reasons Receivable (payable) accounts/notes Remark
Purchaser/Seller Trading Counterpart Affiliation Purchase (sale) Amount total purchase (sale) amount Percentage in Duration Unit Price Duration Balance Percentage in total receivable (payable)
% accounts/notes %
CHINA MAN-MADE Nan Chung Petrochemical THE COMPANY ’ S INVESTEE Purchase $ 3,361,822 27% 30~60 days Not distinctive 30~90 days for ( $ 307,149 ) 29%
FIBER Corp. UNDER EQUITY METHOD the general
CORPORATION transactions
CHINA MAN-MADE Pan Asia Chemical A SUBSIDIARY OF CHINA MAN- Sale ( 836,909 ) ( 6% ) 30~60 days 〃〃 170,057 9%
FIBER Corporation MADE FIBER CORPORATION
CORPORATION
Pan Asia Chemical CHINA MAN-MADE Parent company of Pan Asia Purchase 836,909 54% 30~60 days 〃〃 ( 170,057 ) ( 76% )
Corporation FIBER Chemical Corporation
CORPORATION
Chou Chin Industrial GREENWORLD FOOD Subsidiary of Chou Chin Industrial Sale ( 1,190,175 ) ( 47% ) A/C 120 days - - 204,863 67%
Co., Ltd. CO., LTD. Co., Ltd.
GREENWORLD Chou Chin Industrial Parent company of GREENWORLD Purchase 1,190,175 74% A/C 120 days - - ( 204,863 ) ( 86% )
FOOD CO., LTD. Co., Ltd. FOOD CO., LTD.
8. Accounts receivable-related party reaching NT$100 million or more than 20% of the Paid-in sharescapital. Unit: NTD thousand
Overdue receivables with related
Company of receivables on book Trading Counterpart Affiliation Balance of receivables with related party Turnover Rate Amount partyof PrMode ocessing Receivables with related party after period collection Amount of allowance for bad debt
CHINA MAN-MADE FIBER Pan Asia Chemical A SUBSIDIARY OF CHINA MAN-MADE $ 170,057 6.00 $ - － $ 68,630 $ -
CORPORATION Corporation FIBER CORPORATION
Chou Chin Industrial Co., Ltd. GREENWORLD A subsidiary of Chou Chin Industrial 204,863 6.31 - － 204,584 -
FOOD CO., LTD. Co., Ltd.
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Transactions in engaging in derivative financial instruments. (Note 8)
129 -

10. Other: Business relationship and main dealings between the parent and its subsidiaries Unit: NTD thousand

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Transactions
Item No. (Note 1) Trader’s name Counterparty Relationship with trader(Note 2) Title Amount (Note 3) Terms and conditions revenue or total assets consolidated total Percentage in
(Note 4)
2019
0 CHINA MAN-MADE FIBER CORPORATION Pan Asia Chemical Corporation 1 Sales revenue $ 836,909 No significant difference from the general 2%
customer
0 CHINA MAN-MADE FIBER CORPORATION Pan Asia Chemical Corporation 1 Accounts receivable 170,057 No significant difference from the general -
customer
0 CHINA MAN-MADE FIBER CORPORATION Taichung Commercial Bank Co. 1 Cash and cash equivalents 67,328 No significant difference from the general -
customer
1 Taichung Commercial Bank Co. Pan Asia Chemical Corporation 3 Customer deposits and 38,487 No significant difference from the general -
remittances customer
1 Taichung Commercial Bank Co. Taichung Securities Investment Trust 3 Customer deposits and 176,452 No significant difference from the general -
Co., Ltd. remittances customer
1 Taichung Commercial Bank Co. Chou Chin Industrial Co., Ltd. 3 Interest Expenses 35,190 No significant difference from the general -
customer
1 Taichung Commercial Bank Co. Taichung Commercial Bank Insurance 3 Customer deposits and 1,452,291 No significant difference from the general -
Broker Co., Ltd. remittances customer
1 Taichung Commercial Bank Co. Taichung Commercial Bank Insurance 3 Income from handling fees 250,000 No significant difference from the general 1%
Broker Co., Ltd. customer
1 Taichung Commercial Bank Co. Taichung Commercial Bank Lease 3 Customer deposits and 68,474 No significant difference from the general -
Enterprise remittances customer
2 Chou Chin Industrial Co., Ltd. GREENWORLD FOOD CO., LTD. 3 Sales revenue 1,190,175 No significant difference from the general 3%
customer
2 Chou Chin Industrial Co., Ltd. GREENWORLD FOOD CO., LTD. 3 Accounts receivable 204,863 No significant difference from the general -
customer
2 Chou Chin Industrial Co., Ltd. GREENWORLD FOOD CO., LTD. 3 Other receivables 34,900 No significant difference from the general -
customer
2 Chou Chin Industrial Co., Ltd. Noble House Glory 3 Other receivables 35,000 No significant difference from the general -
customer
2 Chou Chin Industrial Co., Ltd. GREENWORLD FOOD CO., LTD. 3 Other income 109,188 No significant difference from the general -
customer
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Note 1: The information about transactions between parent company and subsidiaries shall be numbered and noted in the following manner in the box of numbers: 1. 0 is for the Parent Company.
Subsidiaries are numbered from number 1.

Note 2: The relationship with the trade party is classified into three categories as follows:

Parent Company to subsidiaries.
Subsidiaries to Parent Company.
Subsidiaries to subsidiaries.

Note 3 : Written-off upon consolidation.

Note 4: For computing the ratio of trade amount to total sales revenue or total assets, if it is for asset and liability account, the computation is based on the ratio of ending balance to total consolidated assets; however, if it is for income and expense account, the computation is based on the ratio of interim cumulative amount to total consolidated revenue. Note 5: Major transactions refer to transactions with amount of NTD30,000 thousand and shall be subject to disclosure.

130 -

11. Information about the investee’s name, location…..

Unit: NTD thousand

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Investor Investor Location Major Business Lines Current period-endingInitial Investment Amount Previous period-ending Quantity Equity OwnershiPercentage % p by the ComBook Value pany Current period net gain (loss) of the investee Investment gain (loss) recognized in current period Remark
CHINA MAN-MADE Taichung Commercial Bank Taichung City Banking business $ 6,355,643 $ 6,355,643 826,726 22 $ 11,465,093 $ 4,319,883 $ 962,909 364,400
FIBER CORPORATION thousand
shares pledged
Pan Asia Chemical Corporation Taipei City Petrochemical business 968,472 968,472 127,242 44 1,088,318 290,294 117,365
Nan Chung Petrochemical Corp. Yunlin County Petrochemical business 1,000,002 1,000,002 100,000 50 1,170,017 34,675 17,337 10,000
thousand
shares pledged
Deh Hsing Investment Co., Ltd. Taipei City General investment business 1,550,000 1,350,000 155,000 100 1,495,098 27,642 26,593
Taichung Securities Investment Trust Taipei City Securities investment trust business 6,295 6,295 922 3 12,025 ( 7,804) ( 230 )
Co., Ltd.
Chou Chin Industrial Co., Ltd. New Taipei City Manufacturing and trading 176,430 176,430 31,071 46 404,039 117,452 51,660
EUREKA INVESTMENT Taipei City General investment business 37,500 37,500 3,750 100 35,265 ( 145) ( 145 )
COMPANY LIMITED
Melasse Taipei City Cosmetics and cleaning appliances 14,500 14,500 1,450 50 13,217 ( 2,466) ( 1,233 )
manufacturing
Pan Asia Chemical Taichung Commercial Bank Taichung City Banking business 1,347,834 1,347,834 212,466 6 2,940,018 4,319,883 247,529
Corporation
Taichung Securities Investment Trust Taipei City Securities investment trust business 15,738 15,738 979 3 12,800 ( 7,804) ( 245 )
Co., Ltd.
Melasse Taipei City Cosmetics and cleaning appliances 14,500 14,500 1,450 50 13,217 ( 2,466) ( 1,233 )
manufacturing
Taichung Commercial Bank Taichung Commercial Bank Lease Taichung City Leasing industry 1,800,000 1,800,000 189,729 100 1,904,602 74,928 74,928
Enterprise
Taichung Bank Insurance Agency Taichung City Insurance agency 6,000 6,000 128,600 100 2,204,588 471,300 471,300
Co., Ltd.
Taichung Commercial Bank Securities Taichung City Securities business 1,500,000 1,500,000 150,000 100 1,404,823 20,671 20,671
Co., Ltd.
Taichung Securities Investment Trust Taipei City Securities investment trust business 120,000 120,000 12,000 38 156,788 ( 7,804) ( 3,002 )
Co., Ltd.
Taichung Commercial TCCBL Co., Ltd. British Virgin Financing, leasing and investments. 893,373 893,373 30,000 100 786,508 33,564 33,564
Bank Lease Enterprise Islands
TCCBL Co., Ltd. Taichung Commercial Bank Leasing Suzhou Financing Leasing and investments 893,373 893,373 - 100 726,048 25,808 25,808
(Suzhou) Ltd.
Deh Hsing Investment Taichung Commercial Bank Taichung City Banking business 86,017 86,017 11,348 - 163,549 4,319,883 13,352 4,500 thousand
Co., Ltd. shares
pledged
Pan Asia Chemical Corporation Taipei City Petrochemical business 150,612 150,612 13,437 5 214,298 293,686 13,774
Taichung Securities Investment Trust Taipei City Securities investment trust business 20,162 20,162 1,716 6 22,421 ( 7,804) ( 429 )
Co., Ltd.
Chou Chang Corporation Taipei City Distribution and warehousing of beverages 44,000 44,000 4,000 15 41,782 14,003 2,029
Chou Chin Industrial Co., Ltd. New Taipei City Manufacturing and trading 10,243 10,243 1,482 3 36,151 117,452 2,937
Xiang-Feng Development Taipei City General investment business 283,000 283,000 28,300 100 264,655 ( 1,725) ( 1,725)
Wei-Kang International Taipei City Retail 5,000 5,000 300 30 3,710 1,373 412
IOLITE COMPANY Ltd. Samoa General investment business 595,750 502,579 19,005 100 519,836 ( 6,295) ( 6,295 )
Storm Model Management Taipei City General Advertising Services 8,000 8,000 200 40 6,616 ( 2,823) ( 1,129)
IOLITE COMPANY Ltd. Hammock (Hong Kong) Hong Kong General investment business 470,685 470,685 15,000 100 400,138 ( 6,301) ( 6,301 )
Company Limited
Precious Wealth International Limited Samoa General investment business 10,969 10,969 USD 375 100 10,988 ( 232) ( 232 )
Hammock (Hong Kong) Hebei Hanoshi Contact Lens Co., Ltd. Hebei Province Manufacturing and trading 470,685 470,685 15,000 100 400,790 ( 5,952) ( 5,952 )
Company Limited
Xiang-Feng Development Tou-Ming Industry Taipei City Real estate trading and leasing industry 221,900 221,900 22,190 99 204,253 ( 1,643) ( 1,643 )
Tou-Ming Industry Jin-Bang-Ge Industry Taipei City Real estate trading and leasing industry 172,000 152,000 17,200 99 157,035 ( 1,673) ( 1,663)
Chou Chin Industrial GREENWORLD FOOD CO., LTD. Taichung City Food manufacturing, and distribution and 233,463 233,348 17,531 90 79,324 57,039 52,210
Co., Ltd. warehousing of beverages
Chou Chang Corporation Taichung City Distribution and warehousing of beverages 308,796 307,977 13,142 49 137,293 14,003 6,847
Pan-Feng Industry Taipei City Restaurant industry 14,897 14,897 1,500 100 1,040 ( 809) ( 809)
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(3) Information about investment in Mainland China:

Name of the investee company in the Mainland Area, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, investment gain or loss, carrying amount of the investment at the end of the period, repatriated investment gains, and limit on the amount of investment in the Mainland Area. Unit: NTD thousand and foreign currency thousand

				Amount remitted from Ti i lti	Investment Rem Regain during t period	ittance or he current	Amount remitted from Ti i lti	It	The Company’ s Direct or	Investment gain (loss)	Investment at end of	Accumulated amount ittd bk
Investee	Major Business Lines	Paid-in capital	Mode of investment	awan n accumuaon at beginning of the present term	Remittance	Regain	awan n accumuaon at ending of the present term	nvesee Net income	Indirect Investment Holding Ratio %	recognized in current period (Note 3)	year Book Value	reme ac to Taiwan Investment income
Bomy Shanghai	OEM, production and marketing of canned vegetable and fruit juice, and beverages	$ 645,000 ( USD 20,000 )	Invested through the third area	$ 638,972 ( USD 19,850 )	$ -	$ -	$ 638,972 ( USD 19,850 )	$ 11,535 ( USD 373 )	62% (Note 1)	$ 7,101 ( USD 230 ) (2)C	$ 170,947 ( USD 5,702 )	$ -
Chou Chin Shanghai Hebei Hanoshi Contact Lens Co., Ltd. Qian Teng PR Plan ning (Shanghai), Co., Ltd. Taichung Bank Leasing (Suzhou)	Manufacturing, processing and sale of modem, PC, computer shell and related metal stamping, interface, main frame and fiber optical system appliances Manufacturing and trading Exhibition design, corporate marketing consultation, and advertising copy planning Finance lease business	30,746 ( USD 1,001 ) 470,685 ( USD 15,000 ) 7,416 ( USD 250 ) 893,373 ( RMB 186,329 )	〃〃〃〃	14,486 ( USD 450 ) 470,685 ( USD 15,000 ) - 893,373 ( RMB 186,329 )	- - 3,147 ( USD 100) -	- - - -	14,486 ( USD 450 ) 470,685 ( USD 15,000 ) 3,147 ( USD 100 ) 893,373 ( RMB 186,329 )	- ( 5,952 ) ( RMB 1,331 ) ( 6,299 ) ( RMB 1,409 ) 25,808 ( RMB 5,774 )	49% (Note 2) 100% 40% (Note 3) 29% (Note 4)	- ( 5,952 ) ( RMB 1,331 ) (2)B ( 2,520 ) ( RMB 564 ) (3) 7,484 ( RMB 1,675 ) (2)B	- 400,790 ( RMB 93,099 ) 1,285 ( RMB 299 ) 210,554 ( RMB 48,886 )	- - - -
Shanghai Nianjia Cultural Diffusion Co., Ltd.	Culture and art exchanges and PR activity planning	431 ( USD 100 )	Investment in the Chinese company was made with Qian Teng PR Plannin g (Shanghai)’s own funds	-	-	-	-	( 192 ) ( RMB 43 )	40%	( 77 ) ( RMB 17 ) (3)	98 ( RMB 23 )	-

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Amount accumulated, remitted from Taiwan for investment in Mainland China at the end of the current term Investment Amount Approved by Investment Commission of MOEA	Amount accumulated, remitted from Taiwan for investment in Mainland China at the end of the current term Investment Amount Approved by Investment Commission of MOEA	Mainland China Investment Ceiling As Regulated by Investment Commission of MOEA(Note4)
$ 2,020,663 （US$ 35,400 and RMB$ 186,329）	$ 2,204,953 (US$ 41,400 and RMB$ 186,329)	$ 2,942,516

Note 1: The consolidated shareholding calculated based on the reinvestment by Chou Chin Industrial Co., Ltd. and GREENWORLD FOOD CO., LTD. through Bomy Enterprise.
Note 2: The consolidated shareholding calculated based on the reinvestment by Chou Chin Industrial Co., Ltd. and Chou Chang Corporation through a third area.
Note 3: Percentage of comprehensive cross holding of Chou Chin Industrial Co., Ltd. through investment in companies in the third region.
Note 4: Percentage of comprehensive cross holding of Taichung Bank Leasing through investment in companies in the third region.
Note 5: Recognized as gains or losses on investment in current period:
(1) Please note if the investee is still under preparation and there was no investment gain or loss.
(2) The basis of recognition of investment income is classified into following three types, which should be marked out:
- A. Financial statements audited and audited and attested by an international accounting firm that has a cooperative relationship with a certified public accounting firm registered in the Republic of China.
- B. Financial statements audited and attested by the independent accounts of the parent company.
- C. Others: Shanghai Bomy Food conducts analytical procedures based on the provisions of the Standards on Auditing No. 20 regarding the determination of key composition.
(3) Not audited by a CPA
Note 6: The ceiling calculated by the applicant, Chou Chin Industrial Co., Ltd., Taichung Commercial Bank Lease Enterprise and Deh Hsing Investment Co., Ltd. according to the “Regulations Governing the Review of Investment or Technical Cooperation in Mainland China" of Investment Commission, MOEA.
Note 7: The foreign currency, if any, has been translated into NTD (USD1=NT$29.98, USD1=NT$30.91, CNY1=NT$4.31, CNY1=$4.47) at the foreign exchange rate-ending and average foreign exchange rate prevailing on the date of the financial statement.
With Mainland China, major transactions, and other prices, payment conditions, unrealized gains and losses that happened directly or indirectly through the third region by the investment company.
(1) Input amounts, percentages, balance, & percentages of relevant payable at end of the term. (None)
(2) Sales amounts, percentages, balance, & percentages of relevant receivables at end of the term. (None)
(3) Amount of property transaction and amount of the profit and/or loss so incurred. (None)
(4) Balance and purposes of endorsements/guarantees or collateral provided at end of the term. (See page 192 for details)
(5) The highest balance of fund financing balance at end of the term, range of interest rates and total amount of interest in the current term. (None)
(6) Other transactions having significant effect upon profit and/or loss or financial standing of the current term, e.g., provision or acceptance of services. (None)

48. Segment information

(1) Revenues and operating results of segments

Revenues and operating results of the consolidated company’s continuing units are analyzed in accordance with segments to be reported, which are summarized as follows:

Chemical Industry Dept. Chemical Fiber Department Bank departments Other Depts. Total		Department	Department	income 2018 $ 14,765,426 7,023,347 16,315,947 3,444,467 $ 41,549,187		Gain(loss)f	rom	operation
		2019 $ 10,593,744 4,554,248 17,178,875 3,405,155 $ 35,732,022				2019 $ 1,601,215 ) 440,643 ) 5,206,985 49,045 ) $ 3,116,082		2018
					( ( (		(	$ 348,099 157,303 ) 4,759,883 194,083 $ 5,144,762

Revenues reported above are generated from transactions with external customers. There were no inter-departmental sales generated on 2019 and 2018.

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The term department profits refers to profits earned by each department, which does not include income tax expenses. The measured figures are provided for main decision makers to allocate resources to segments and evaluate the performance of each segment.

(2) Departmental total assets

Departmental total assets
Segment assets Chemical Industry Dept. Chemical Fiber Department Construction Dept. Bank departments Others Total segment assets		December 31, 2019 $ 4,461,127 1,413,270 1,112,465 682,688,922 22,228,452 $ 711,904,236		December 31, 2018
				$ 4,843,231 1,507,185 990,778 690,832,103 22,733,645 $ 720,906,942

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AI assistant

CMFC — Annual Report 2019

51899_rns_2019-11-14_3db56323-01f8-4324-beeb-c846fc04810f.pdf

China Man-Made Fiber Corporation and Subsidiaries

Independent Auditor’s Audit Report

To CHINA MAN-MADE FIBER CORPORATION:

Audit opinions

The basis for opinions

Key audit matter

Audit response

Auditor’s responsibilities for the audit of the consolidated financial statements

Deloitte & Touche

China Man-Made Fiber Corporation and subsidiary Consolidated Balance Sheet December 31, 2019 and 2018

China Man-Made Fiber Corporation and subsidiary Consolidated Income Statement

January 1 to December 31, 2019 and 2018

China Man-Made Fiber Corporation and subsidiary Consolidated Statements of Changes in Shareholders’ Equity January 1 to December 31, 2019 and 2018

China Man-Made Fiber Corporation and subsidiary Consolidated Statements of Cash Flow January 1 to December 31, 2019 and 2018

Notes to consolidated financial statement

Definition of lease

(2) Impairment of financial assets

6. Cash and cash equivalents

7. Due from Central Bank and lend to Banks

(1) Accounts receivable

December 31, 2018

2018

2019

2018

15. Discounting and advances - Net

2019

2019

16. Financial assets at fair value through other comprehensive profit or loss

Investments in the affiliated company

21. Lease contract

(3) Main lease activities and provisions

2019

30. Bonds payable

31. Provision for liabilities

1. Defined contribution plan

2. Defined benefit plan

Change in net determined benefit liability is shown below

3. Employees preferential deposit plan

4. Other long-term employee benefits

2018

32. Equity

(4) Other equity

33. Business units in continuing operation income

(7) Depreciation and amortization

34. Continuing department income tax

(1) Income tax recognized in profit or loss

(4) Deferred income tax assets and liabilities

4. Payable accounts from related parties

6. Disposal of financial assets January 1 to December 31, 2019

7. Loan

2019

2018

8. Deposit

9. Financial bonds payable

(3) Rewards to management

37. Pledged assets

38. Significant undertakings or contingencies

Income Statement of Trust Accounts 2018

39. Other matters

40. Financial instruments

(2) Information on fair value – financial instruments at fair value on repetition.

Reconciliation of financial instruments at Level 3 fair value:

(3) Categories of financial instruments

41. Purpose and policy of financial risk management

B. Measurement methods and management procedures

(7) Sensitivity analysis is compiled as follows:

Quantified indicators

Quality indicators

Quantified indicators

Quality indicators

Consideration of prospective information

Quantified indicators

Quality indicators

Quantified indicators

Quality indicators

Measurement of anticipated credit loss

(5) Maximum exposure of credit risk for the consolidated company

CMFC Annual Report 2019