CMFC - Audit Report / Information 2018

China Man-Made Fiber Corporation and Subsidiaries

Parent Company Only Financial Statements for the Years Ended December 31, 2018 and 2017 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 individual balance sheet of China Man-Made Fiber Co., Ltd. and subsidiary as of December 31, 2018 and 2017, and the related individual statement of income, individual statement of changes in shareholders equity, individual statement of cash flows, and Note of the individual financial statements (including major accounting policy) for the years then ended.

In my opinion, the financial statements as referred to, on the basis of my audit findings and the audit reports compiled by other certified public accountants, present fairly, in all material aspects, the financial position of China Man-Made Fiber Co., Ltd. as of December 31, 2018 and 2017, and the results of its operation and cash flows for the year then ended in conformity to the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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 separate 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 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.

Points of attention

As stated in Note 3 of the standalone financial statements, China Man-Made Fiber has since 2018 adopted the “Rules Governing the Preparation of Financial Statements by Securities Issuers” and the International Financial Reporting Standards, International Accounting Standards and IFRIC Interpretations as endorsed by the FSC in 2018 and chosen not to re-edit the standalone financial statements during the comparison periods. We did not revise the conclusions of our audit.

Key audit matter

Key audit matters are those matter that, in our professional judgment, were of most significant in our audit of the individual financial statements of China Man-Made Fiber Co., Ltd. in 2018. These matters were addressed in the content of our audit of the individual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on those matters.

Key audit procedures of the individual financial statements of China Man-Made Fiber Co., Ltd. in 2018 included:

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 is NT$1,186,121 thousand, revenue of the Chemical Department to specific customers is NT$905,081 thousand, accounting for 10% of the standalone net sales. The gross profit of the specific products and customers shows significant growth over the previous year. Therefore, the authenticity of sales revenue of specific products from the Chemical Fibers and Chemical Departments is one of the key audit items.

Please refer to Note 4 (15) of the 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.
Sampling inspection of the abovementioned sales revenue of specified departments and customers in accordance with IFRS 15, including the shipping, customs 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.

Adopt the equity method to assess the impairment of discounting and advances. Notes to key audit matters

As stated in Note 16 of the standalone financial statements, the amount of investment in Taichung Commercial Bank by China Man-Made Fiber adopting the equity method was NT$10,688,164 thousand, accounting for 27% of the total assets. Therefore, the financial performance of Taichung Commercial Bank will significantly impact China Man-Made Fiber’s number in subsidiaries, affiliates and joint ventures by equity method.

For 2018, the balance of discounting and advance and the expected credit loss from Taichung Commercial Bank are NT$452,594,552 thousand and NT$487,333 thousand, respectively. Taichung Commercial Bank’s decision in impairment loss involves the key estimates and judgments of its management, including the default probability and loss rate, and the

results of impairment loss can significantly affect Taichung Commercial Bank’s financial performance. Therefore, the adoption of equity method in the expected credit loss of the discounting and advances will be key audit issues. Audit response

We understand and examine the internal control related to the assessment of impairment of discount and evaluation of anticipated credit impairment of Taichung Commercial Bank.
Sampling inspection of each individual recognition of major expected credit loss from discounting and advances of Taichung Commercial Bank, in order to evaluate the reasonableness of collateral value.
For the comprehensive evaluation of the expected credit loss adopted by Taichung Commercial Bank, 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.

Other information

The financial statements of investees included in the standalone financial statements of China Man-Made Fiber 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 standalone 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, 2018 and 2017 are NT$1,228,959 thousand and NT$1,216,290 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 2018 and 2017 are NT$88,436 thousand and NT$82,450 thousand, respectively. The information on investees in Note 37 of the standalone financial statements is disclosed based on the reports from other accounting auditors.

Responsibilities of Management and Those in Charge with Governance of the Individual Financial Statements

Management is responsible for the preparation and fair presentation of the individual financial financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of individual financial financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the individual financial statements, the management is responsible for assessing the ability of China ManMade Fiber Co., Ltd. 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. 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..

Auditor’s Responsibilities for the Audit of the Individual Financial Statements

Our objectives are to obtain reasonable assurance about whether the individual 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 individual 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 individual 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 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..
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 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 individual 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. to cease to continue as a going concern.

Evaluate the overall presentation, structure, and content of the individual statements, including related notes, whether the individual statements represent the underlying transactions and events in a matter that achieves fair presentation.
Obtain sufficient and appropriate audit evidence on the financial information of business entities within the China ManMade Fiber Co., Ltd. in order to express an opinion on the individual 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..

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 individual financial statements of China Man-Made Fiber Co., Ltd. of 2018 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: Oscar Shih

CPA: Hsu Wen-Ya

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

Securities and Futures Commission Approval No. Tai-Tsai-Cheng (6) No. 0920123784

March 22, 2019

CHINA MAN-MADE FIBER CORPORATION Individual Balance Sheets

December 31, 2018 and 2017

Unit: NTD thousand

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December 31, 2018 December 31, 2017
Code Assets Amount % Amount %
Current assets
1100 Cash and cash equivalents (Note 3, 4, 6 and 33) $ 2,218,749 6 $ 2,616,734 7
1110 Financial assets through profit and/or loss with measuring for the faire
values-current (Note 3, 4 and 7) 988,569 3 885,367 2
1150 Notes receivable (Note 3, 4 and 12) 164,312 1 223,334 1
1170 Accounts receivable - non-related parties (Note 4, 9 and 12) 2,447,236 6 1,814,969 5
1180 Accounts receivable - related parties (Note 3, 4, 12 and 33) 109,064 - 133,182 -
1200 Other receivables (Note 3, 4, 12 and 33) 29,601 - 21,536 -
1220 Current income tax asset (Notes 4 and 27) 2,958 - 4,895 -
130X Inventory (Note 4 and 13) 2,303,352 6 1,676,447 5
1410 Prepaid (Note 14) 797,830 2 939,679 3
1460 Non-current Assets Held for Sale - net (Notes 4, 15 and 34) 769,610 2 - -
1470 Other current assets (Note 20 and 34) 162,928 - 172,275 -
11XX Total current assets 9,994,209 26 8,488,418 23
Non-Current assets
1517 Financial assets at fair value through other comprehensive income- non-
current (Note 3, 4 and 9) 1,677,531 4 - -
1523 Financial assets available-for sales – non-current (Note 3, 4, 10 and 34) - - 997,897 3
1543 Financial assets measured at cost- non-current (Note 3, 4 and 11) - - 112,246 -
1550 Investment by equity method (Note 3, 4, 16 and 34) 14,544,622 37 13,190,878 37
1600 Real estates, plant and equipment - net (Notes 4, 17 and 34) 11,286,138 29 11,357,316 31
1760 Real estate investments - net (Note 4, 18 and 34) 990,778 3 1,688,808 5
1780 Intangible assets – net (Note 4 and 19) 9 - 45 -
1840 Deferred income tax assets – net (Notes 4 and 27) 273,168 1 237,434 1
1990 Other assets (Note 3 and 20) 118,155 - 104,475 -
15XX Total non-current assets 28,890,401 74 27,689,099 77
1XXX Total assets $ 38,884,610 100 $ 36,177,517 100
Code Liabilities and equity
Current liabilities
2100 Short-term loans (Note 21 and 34) $ 6,806,669 17 $ 4,398,509 12
2110 Short-term bills payable (Note 21) 449,507 1 299,479 1
2150 Payable notes 36,420 - 13,549 -
2170 Accounts payable - non-related parties 1,538,390 4 1,288,668 4
2180 Accounts payable - related parties (Note 33) 343,210 1 470,089 1
2219 Other accounts payable (Note 22) 342,738 1 306,850 1
2320 Long-term liability due in one year or one business cycle (Note 21 and
34) 1,036,138 3 918,938 2
2399 Other current liabilities 44,533 - 40,951 -
21XX Total of current liabilities 10,597,605 27 7,737,033 21
Non-current liabilities
2540 Long-term loans (Note 21 and 34) 4,827,723 13 6,473,561 18
2550 Liability reserve (Note 4 and 23) 158,605 - 148,934 1
2570 Deferred tax liabilities (Note 4 and 27) 866,019 2 866,019 2
2670 Other liabilities (Note 4 and 24) 21,150 - 22,990 -
25XX Total non-current liability 5,873,497 15 7,511,504 21
2XXX Total liabilities 16,471,102 42 15,248,537 42
Equity (Note 25)
3110 Common stock capital 15,224,105 39 14,294,934 39
3200 Capital surplus 1,694,875 4 1,677,818 5
Retained earnings
3310 Legal reserve 718,272 2 638,873 2
3320 Special reserve 1,956,409 5 2,481,347 7
3350 Undistributed earnings 4,231,450 11 3,274,719 9
Other equity
3410 Exchange differences from the translation of financial statements of
- -
foreign operations ( 54,591 ) ( 41,611 )
3420 Unrealized gain or loss on financial assets at fair value through other
- - -
comprehensive profit or loss ( 129,103 )
3425 Unrealized loss on available-for-sale financial assets - - ( 169,191 ) ( 1 )
3500 Treasury stock ( 1,227,909 ) ( 3 ) ( 1,227,909 ) ( 3 )
3XXX Total equity 22,413,508 58 20,928,980 58
Total Liabilities and Equity $ 38,884,610 100 $ 36,177,517 100
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The notes attached shall constitute an integral part of this individual financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 22, 2019)

Chairman: Kuei-Hsien Wang Responsible Person: Ming-Shang Chuang

Accounting Supervisor: Guo-Hua Lin

CHINA MAN-MADE FIBER CORPORATION

Individual Income Statement

January 1 to December 31, 2018 and 2017

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Unit: NTD thousands, except Earnings Per Share (NTD)
2018 2017
Code Amount % Amount %
4000 Operating income (Note 4 and 33) $ 20,064,863 100 $ 16,904,870 100
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Code 4000 Operating income (Note 4 and 33)		2018 Amount $ 20,064,863	% 100	2017 Amount $ 16,904,870	% 100
5000 Operating expenses (Note 4, 13, 26 and 33) 5900 Gross profit 5910 Realized (unrealized) gain on the subsidiary, affiliated company and joint ventures (Note 4) 5950 Realized gross profits Operating expenses (Note 4 and 26) 6100 Marketing expenses 6200 Administrative and general affairs expenses 6000 Total operating expenses 6900 Operating profit Non-operating revenues and expenses 7070 Amounts of profit and/or loss of subsidiaries recognized in equity method, associates and the share of the profit or loss of joint ventures (Note 4) 7100 Interest revenues (Note 4 and 33) 7130 Dividend income (Note 4) 7190 Other gains and losses (Note 26 and 33) 7230 Foreign exchange gain (loss) – net 7235 Gain (loss) on financial assets and liabilities at fair value through profit and loss (Note 4 and 26) 7610 Losses from disposal of property or equipment 7670 Impairment (Note 4, 11 and 26) 7510 Financial cost (Note 4 and 26) 7000 Total non-operating revenues and expenses 7900 Income before tax from continuing operations 7950 Income tax gains (expenses) (Note 4 and 27) 8200 Net profits of the current year Other comprehensive profit or loss The items that are not re-classified as profit or loss 8311 Determined Benefit Plan Reevaluation (Note 4 and 23) 8316 Unrealized valuation of the capital gain/loss from equity instrument at fair value through comprehensive income statement as other comprehensive income 8330 The proportion of other comprehensive incomes from subsidiaries, associates, and equity joint-ventures accounted for under the equity method – not reclassified as profit and loss 8349 Income tax related to titles without reclassification (Notes 4 and 27) 8310 Items that may be re-classified subsequently under profit or loss 8362 Unrealized valuation gains of available-for-sale financial assets 8380 The proportion of other comprehensive income of subsidiaries, associates, and equity joint ventures accounted for under the equity method – may be reclassified as profit and loss. 8360 8300 Other comprehensive income of the current year (net amount after taxation) 8500 Total amount of comprehensive income of the current year Earnings per share (Note 28) 9750 Basic earnings per share 9850 Diluted earnings per share	( ( ( ( ( ( (	19,254,167 810,696 1,947 812,643 487,903 ) ( 268,349 ) ( 756,252 ) ( 56,391 1,143,227 18,667 40,481 22,975 144,290 99,562 9,265 ) - 166,852 ) ( 1,293,085 1,349,476 22,559 1,372,035 20,965 ) 23,639 9 ) 6,824 9,489 - 16,238 ) 16,238 ) 6,749 ) $ 1,365,286 $ 1.13 $ 1.13	96 4 - ( 4 3 ) ( 1 ) ( 4 ) ( - 6 - - - 1 ( 1 - ( - ( 1 ) ( 7 7 - ( 7 - ( - - ( - - ( - - - - 7	16,208,924 695,946 9,190 ) 686,756 402,125 ) ( 235,765 ) ( 637,890 ) ( 48,866 989,937 14,783 39,565 19,700 214,606 ) ( 87,944 242 ) 10,954 ) 167,104 ) ( 759,023 807,889 13,902 ) 793,987 17,322 ) - 6,638 ) 2,945 21,015 ) 67,520 31,964 99,484 78,469 $ 872,456 $ 0.66 $ 0.66	96 4 - 4 2 ) 2 ) 4 ) - 6 - - - 1 ) 1 - - 1 ) 5 5 - 5 - - - - - - - - - 5
	( ( (

The notes attached shall constitute an integral part of this individual financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 22, 2019)

Chairman: Kuei-Hsien Wang

Responsible Person: Ming-Shang Chuang

Accounting Supervisor: Guo-Hua Lin

CHINA MAN-MADE FIBER CORPORATION Individual Statements of Changes in Shareholders’ Equity January 1 to December 31, 2018 and 2017

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Unit: NTD thousand
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
Code Common stock Capital surplus Legal reserve Special reserve earnings foreign operations profit or loss assets Treasury stock Total equity
A1 Balance as of January 1, 2017 $ 14,294,934 $ 1,681,992 $ 638,873 $ 2,481,347 $ 2,501,747 ( $ 25,319 ) $ - ( $ 284,967 ) ( $ 1,273,586 ) $ 20,015,021
C7 Changes in shareholdings in the subsidiaries,
affiliated companies and joint ventures
- - - - - - - -
under the equity method ( 8,282 ) ( 8,282 )
D1 2017 Profit - - - - 793,987 - - - - 793,987
D3 Other comprehensive net income in 2017
- - - - - -
(after tax) ( 21,015 ) ( 16,292 ) 115,776 78,469
N1 Share-based payment transaction (Note 29) - 4,108 - - - - - - 45,677 49,785
Z1 Balance as of December 31, 2017 14,294,934 1,677,818 638,873 2,481,347 3,274,719 ( 41,611 ) - ( 169,191 ) ( 1,227,909 ) 20,928,980
A3 Effect of retroactive applicability - - - - 286,131 - ( 203,678 ) 169,191 - 251,644
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
The 2017 appropriation and distribution of
earnings
B1 Legal reserve appropriated - - 79,399 - ( 79,399 ) - - - - -
B5 Cash dividends - - - - ( 142,949 ) - - - - ( 142,949 )
B9 Stock dividends 929,171 - - - ( 929,171 ) - - - - -
B17 Reversal of special reserve - - - ( 524,938 ) 524,938 - - - - -
C7 Changes in shareholdings in the subsidiaries,
affiliated companies and joint ventures
- - - - - - -
under the equity method (Note 16) 5,532 ( 6,483 ) ( 951 )
D1 2018 Profit - - - - 1,372,035 - - - - 1,372,035
D3 Other comprehensive net income in 2018
- - - - - -
(after tax) ( 25,235 ) ( 12,980 ) 31,466 ( 6,749 )
M1 Dividends distributed to the subsidiaries
- - - - - - - -
adjusted to the additional paid-in capital 14,954 14,954
M7 Changes in the ownership equity on a
subsidiary - ( 3,429 ) - - 199 - ( 226 ) - - ( 3,456 )
Q1 Equity instrument investment at fair value
through other comprehensive income
- - - - - - - -
statement (Note 8) ( 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
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Chairman: Kuei-Hsien Wang

The notes attached shall constitute an integral part of this individual financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 22, 2019) Responsible Person: Ming-Shang Chuang Accounting Supervisor: Guo-Hua Lin

CHINA MAN-MADE FIBER CORPORATION Individual Statements of Cash Flow

January 1 to December 31, 2018 and 2017

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Unit: NTD thousand
Code 2018 2017
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Cash flow from operating activities A10000 Current year net profit before taxation A20100 Depreciation expenses A20200 Amortization expenses A20400 Gain (loss) on financial assets and liabilities at fair value through profit and loss ( A20900 Financial costs A21200 Interest revenue ( A21300 Dividend income ( A21900 Employee stock option compensation cost A22400 Shareholding in profit of subsidiaries, affiliated company and joint ventures under the equity method ( A22500 Loss on disposal and scrapping of property, plant and equipment A23200 Gains from disposal of investment accounted for using equity method ( A23500 Financial assets impairment loss A23900 Unrealized gain on the subsidiary, affiliated company and joint ventures ( Net change in operating assets and liabilities A31110 Held-for-sale financial assets A31115 Financial assets mandatorily measured at fair value through profit or loss ( A31180 Accounts receivable ( A31200 Inventory ( A31230 Prepayments A31240 Other current assets A32180 Payables A32230 Other current liabilities A32200 Employee benefit liabilities reserve ( A33000 Cash generated 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 B00030 De-capitalization refunded monies of financial assets at fair value through other comprehensive profit or loss (decrease) B00300 Acquisition of available-for-sale financial assets B01300 De-capitalization refunded monies of financial assets carried at cost 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 B05400 Acquisition of investment property ( B06800 Increase in other assets ( BBBB Net cash outflow from investing activities ( Cash flow from financing activities C00100 Increase of short-term loans C00500 Increase (decrease) in short-term notes and bills payable C01600 Proceeds from long-term loan C01700 Re-payments of long-term borrowings ( C03000 Increase in deposits received C03100 Decrease in guarantee deposits ( C04500 Cash dividend released ( C04800 Proceeds from the stock option exercised by the employees CCCC Net cash inflow from financing activities EEEE Net decrease in cash and cash equivalents ( E00100 Cash and cash equivalents balance – beginning of year E00200 Cash and cash equivalents balance – end of year	$ 1,349,476 491,588 36 99,562 ) ( 166,852 18,667 ) ( 40,481 ) ( - 1,143,227 ) ( 9,265 27 ) - 1,947 ) - 21,647 ) 559,140 ) ( 626,905 ) ( 141,849 9,370 179,687 5,529 ( 11,294 ) ( 169,245 ) ( 20,615 482,754 164,936 ) ( 4,414 ) ( 164,774 398,192 ) 4,123 2,922 - ( - 541,414 ) ( 420,675 ) ( 77 13,680 ) - 80,657 ) 24 ) ( 1,447,520 ) ( 2,408,160 150,028 ( 3,440,000 4,968,638 ) ( - 1,840 ) 142,949 ) - 884,761 397,985 ) ( 2,616,734 $ 2,218,749	$ 807,889 543,421 8,922 87,944 ) 167,104 14,783 ) 39,565 ) 4,232 989,937 ) 242 - 10,954 9,190 13,886 - 313,048 ) 504,694 ) 75,589 15,861 155,665 23,828 ) 13,375 ) 174,219 ) 14,844 534,961 166,220 ) 13,068 ) 196,298 - - - 20,000 ) 36,567 150,000 ) 373,804 ) 827 - 203,516 - 23 ) 302,917 ) 336,424 46 ) 3,650,000 3,958,648 ) 76 - - 45,553 73,359 33,260 ) 2,649,994 $ 2,616,734

The notes attached shall constitute an integral part of this individual financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 22, 2019) Chairman: Kuei-Hsien Wang Responsible Person: Ming-Shang Chuang Accounting Supervisor: Guo-Hua Lin

Notes to the Individual Financial Statements

January 1 to December 31, 2018 and 2017 (In Thousands of New Taiwan Dollars, Unless Otherwise Noted)

I. Company Profile

(I) The Company 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, 2018 is NT$15,224,105 thousand.
(II) The Company is primarily engaged in the following business lines:
Manufacture, processing and trading of artificial fiber, glass paper, polyamine fiber, polyester fiber, chemical products and raw materials thereof;
Development, manufacture and trading of the machines referred to in the preceding paragraph;
Manufacture and trading of ethylene glycol, eto ethylene oxide, nonylphenol, ethylene, LGP and petrochemical industry-related products;
Lease and sale of national housing and commercial buildings constructed by commissioned contractors;
Distribution, sorting, handling and storage of various products;
Management of supermarkets, trading of fresh foods, vegetables, fish, dried merchandise and various seasonings;
Production and sale of steam and industrial power generated by cogeneration (no power may be sold to energy users);
Agency and distribution of cogeneration and pollution-prevention equipment, and contract of installation work;
Manufacture and trading of oxygen, liquid oxygen, nitrogen, argon, liquid argon, CO2 and compressed air;
Gas station.
(III) This parent company only financial statement is denominated in NT Dollar, the functional currency of the Bank.

II. Financial reporting date and procedures

The individual financial statements were approved for publication by the board of directors on March 18, 2019.

III. Application of new and revised standards and interpretation
(I) The first use of the Regulations Governing the Preparation of Financial Reports by Securities Issuers after amendment, and the IFRS, IAS, IFRIC, and SIC (hereinafter collectively known as “IFRSs”) recognized by the Financial Supervisory Commission (hereinafter referred to as the “FSC”).
- Apart from the following descriptions, the application of amended Regulations Governing the Preparation of Financial Reports by Securities Issuers
- and IFRSs that have been approved and proclaimed and entered into effect by the Financial Supervisory Commission (FSC) will not cause material changes on the accounting policy of the Company:
- IFRS 9 “Financial Instruments” and related amendment

IFRS 9, “Financial Instruments” replaced IAS 39, “Financial Statements: Recognition and Measurement,” and was adopted in conjunction with other standards such as the amended IFRS 7, “Financial Instruments: Disclosure.” The new rules in IFRS 9 covered the classification, measurement and impairment of financial assets and general hedge accounting. Refer to Note 4 for further information on accounting principles.

The Company retroactively applied treatment of the classification, measurement and impairment of financial assets on January 1, 2018 and postponed the adoption of general hedge accounting for one year. Items removed on or before December 31, 2017 were not covered by IFRS9. Classification, measurement and impairment of financial assets and liabilities

The Company evaluated the classification of financial assets effective on January 1, 2018 for retroactive adjustment on the basis of the reality and circumstances of the day and elected not to recompile the statements for comparison. As of January 1, 2018, the categories and book value of financial assets to be measured under IAS 39 and IFRS 9 and the changes therein are specified below:

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Classification of measurement Book Value
Category of financial
assets IAS 39 IFRS 9 IAS 39 IFRS 9 Remark
Cash and cash Loans and Measured on the basis $ 2,616,734 $ 2,616,734
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equivalents	accounts	of cost after
	receivable	amortization
Financial assets at fair	Measured at fair	Measured at fair values	885,367	885,367
value through profit and	values through	through profit and/or
loss	profit and/or loss	loss
Notes receivable,	Loans and	Measured on the basis	2,172,330	2,172,330	(4)
accounts receivable, and	accounts	of cost after
other accounts receivable	receivable	amortization
Restricted assets	Loans and	Measured on the basis	155,283	155,283
(recognized in other	accounts	of cost after
current assets)	receivable	amortization
Stock investment	Available-for-	Equity instrument	957,897	957,897	(2)
	sale financial	investments measured
	assets	at fair value through
		other comprehensive
		income
	Financial assets	Equity instrument	112,246	264,848	(3)
	carried at cost	investments measured
		at fair value through
		other comprehensive
		income
Bond investment	Available-for-	Debt instrument	40,000	40,000	(1)
	sale financial	investments measured
	assets	at fair value through
		other comprehensive
		income
Refundable deposits	Loans and	Measured on the basis	104,475	104,475
(recognized in other	accounts	of cost after
assets)	receivable	amortization
Changes in the categories of financial	assets measured	retroactively under IFRS 9 as of January 1, 2018 are specified below:

			Effect on retained
	Book value of December	Book value of December	earnings as of January	Effect on other equity
	31, 2018 (IAS 39)	Reclassification Reevaluation 31, 2018 (IFRS 9)	1, 2018	as of January 1, 2018 Remark
Financial assets at fair value through	$ 885,367	$ - $ - $ 885,367	$ -	$ -
profit and loss
Financial assets at fair value through
other comprehensive profit or loss
-Debt instruments

Add: Reclassification of available- for-sale financial assets (IAS 39) -Equity instruments Add: Reclassification of available- for-sale financial assets (IAS 39) Add: Reclassification on the basis of costs (IAS 39) Financial assets on the basis of cost after amortization Add: Reclassification of loans and receivables (IAS 39) Total Book value of December 31, 2018 (IAS 39) Investment under the $ 13,190,878	Add: Reclassification of available- for-sale financial assets (IAS 39) -Equity instruments Add: Reclassification of available- for-sale financial assets (IAS 39) Add: Reclassification on the basis of costs (IAS 39) Financial assets on the basis of cost after amortization Add: Reclassification of loans and receivables (IAS 39) Total Book value of December 31, 2018 (IAS 39) Investment under the $ 13,190,878	Add: Reclassification of available- for-sale financial assets (IAS 39) -Equity instruments Add: Reclassification of available- for-sale financial assets (IAS 39) Add: Reclassification on the basis of costs (IAS 39) Financial assets on the basis of cost after amortization Add: Reclassification of loans and receivables (IAS 39) Total Book value of December 31, 2018 (IAS 39) Investment under the $ 13,190,878		- - - 885,367 - $ 885,367 Adjustments arising from initial application		40,000 957,897 112,246 1,110,143 5,048,822 $6,261,807 Book value of December 31, 2018 (IFRS 9) r $ 13,289,920	40,000 957,897 112,246 1,110,143 5,048,822 $6,261,807 Book value of December 31, 2018 (IFRS 9) r $ 13,289,920	- 40,000 - 957,897 152,602 264,848 152,602 1,262,745 - 5,048,822 $ 152,602 $6,414,409 Effect on etained earnings as of January 1, 2018 Effect on other equity as of January 1, 2018 Remark $ 37,311 $ 61,731 (5)	- 40,000 - 957,897 152,602 264,848 152,602 1,262,745 - 5,048,822 $ 152,602 $6,414,409 Effect on etained earnings as of January 1, 2018 Effect on other equity as of January 1, 2018 Remark $ 37,311 $ 61,731 (5)	- 40,000 - 957,897 152,602 264,848 152,602 1,262,745 - 5,048,822 $ 152,602 $6,414,409 Effect on etained earnings as of January 1, 2018 Effect on other equity as of January 1, 2018 Remark $ 37,311 $ 61,731 (5)	- 40,000 - 957,897 152,602 264,848 152,602 1,262,745 - 5,048,822 $ 152,602 $6,414,409 Effect on etained earnings as of January 1, 2018 Effect on other equity as of January 1, 2018 Remark $ 37,311 $ 61,731 (5)	- - 248,820 ( 248,820 ( - $ 248,820 (	- (1) - (2) 96,218) (3) 96,218) - (4) $96,218)
											ther of 2018
		$ 13,190,878		$ 99,042		$ 13,289,920		$ 37,311		$ 61,731

equity method

(1) With respect to the bond investments classified as "Financial assets available for sale" according to IAS 39, the assessment as of January 1, 2018 based on facts and circumstances determined that the purpose of the business model was to collect contractual cash flows, and the cash flows at the initial recognition was fully used to pay for the interest on principal and principal outstanding. The assessment also determined that the financial assets held was to collect contractual cash flows and for sale. They were classified as other comprehensive income measured at fair value and the expected credit loss was evaluated in accordance with IFRS 9.
(2) Financial assets in public (OTC) listed and OTC traded shares available for sale as classified by IAS 39 totals to $957,897,000 thousand, and by IFRS 9 classification is selected and designated as other general loss or gain as measured by fair value.
(3) Stocks not listed in TWSE (TPEx) measured on the basis of costs under IAS 39 amounted to NTD112,246 thousand and were classified as financial assets at fair value through comprehensive income statement with a new round of measurement at fair value under IFRS 9. The retrospective adoption resulted in an increase of retained earnings amounting to NTD248,820 thousand and a decrease of other equity amounting to NTD96,218 thousand as of January 1, 2018 through adjustment.
(4) Notes receivable, accounts receivable and other receivables are classified as loans and receivables per IAS 39, and classified as amortized financial assets measured by cost per IFRS 9, and also assessed as expectant credit loss.
(5) With its subsidiaries posthumously applicable to IFRS 9, the company has on Jan. 1, 2018 adopted the equity method for investment adjustment of an increase of $99,042 thousand, an increase of other equity adjustment by $61,731 thousand, retained earnings adjusted with an incr`ease of $37,311 thousand.

2. IFRS 15 “Revenue from Contracts with Customers” and relating amendments

IFRS 15 regulates the recognition principle for revenue from contracts with customers, which will replace IAS 18 “Revenue”, IAS 11 “Construction Contracts” and relating interpretations. Refer to Note 4 for further information on accounting principles.

The Company after adopting IFRS 15 has income recognized according to the following steps:

(1) Identify customer contracts:
(2) Identify performance obligations in the contract;
(3) Determine the transaction price;
(4) Amortize transaction price to the performance obligations in the contract and
(5) Recognize income upon fulfilling performance obligation of the contract.
(II) Regulations Governing the Preparation of Financial Reports by Securities Issuers applicable in 2019 and the IFRSs recognized by the Financial Supervisory Commission

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The new / amended / revised standards or interpretation IASB publication effective date (Note 1)
“2015 – 2017 annual improvement” January 1, 2019
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Commission The new / amended / revised standards or interpretation “2015 – 2017 annual improvement”	IASB publication effective date (Note 1) January 1, 2019
Amendments to IFRS 9 “Prepayment Features with	January 1, 2019 (Note 2)
Negative Compensation”
IFRS 16 “Leases”	January 1, 2019
Amendments to IAS19 “Plan Amendment, Curtailment or	January 1, 2019 (Note 3)
Settlement”
Amendments to IAS 28 “Long-term Interest in Associates	January 1, 2019
and Joint Ventures”
IFRIC 23 “Uncertainty under Income Tax Treatments”	January 1, 2019

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

Note 2: FSC permitted the adoption of this amendment before January 1, 2018

Note 3: The plan amendment, curtailment, or settlement after Jan. 1, 2019 apply to this amendment.

1. 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.

Definition of lease

At the adoption of IFRS 16 for the first time, the 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 Company is the lessee.

At the time when IFRS 16 becomes applicable, except lowly priced asset leases and short-term leases choose for classifying the expenditures using the straight line basis, the other leases are recognized as utilization right asset and lease liability in the individual balance sheet. The individual 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 individual 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. Before adopting IFRS 16, contracts classified as operating leases recognize expenses based on the straightline method. The difference from the amount paid due to the leveling rent is recognized as other payables. Cash flows from operation lease were presented as operating activities in the individual statement of cash flows. Contracts classified as financing lease were recognized as leasehold assets and payable lease payment in the individual balance sheet.

The Company elected to adjust the accumulated influence under IFRS 16 in retrospect as retained earnings on January 1, 2019, and does not recompile comparative information.

At present, the treatment of the agreements of operation leases under IAS 17 the leasehold liabilities will be measured on the basis of the leasehold liability as of January 1, 2019 on all tenancy right assets on the remainder of lease payment at the discount rate of the Lessee for additional loan on that day. Further to the estimation of the following expediency, the recognized tenancy right will be subject to assessment for impairment under IAS 36. The following expedient methods are expected to be applicable to the Company:

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

Right-of-use assets Effect of assets Lease liabilities – current Lease liabilities – noncurrent Effect of liabilities	Book value of December 31, 2018 $ - $ - $ - - $ -	Adjustments arising from initial application $ 33,257 $ 33,257 $ 12,677 20,580 $ 33,257	January 1, 2019 Adjusted face value	January 1, 2019 Adjusted face value
				$ 33,257 $ 33,257 $ 12,677 20,580 $ 33,257

IFRIC 23 “Uncertainty under Income Tax Treatments”

IFRIC 23 clarifies that when there exists uncertainty in the accounting process for income tax, the Company shall assume that the competent authority can obtain all related data for investigation. If concluding that its accounting process for income tax is very likely to be accepted by the competent authority, the Company’s determination of taxable income, tax base, unused tax loss, unused tax credit, and the tax rate must be consistent with that in reporting income tax. If the competent authority is not very likely to accept the accounting process for income tax reported, the Company shall evaluate based on the most probable amount or expected value (i.e., the method that can better predict the uncertain final result shall be adopted). If the truth and situation change, the Company shall re-evaluate its judgment and estimation.

Further to the above effects, the assessment of Company on other IFRSs as of the day this individual financial statement was approved for release did not cause significant influence on the financial position and consolidated financial performance.

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(III) The IFRSs released by the IASB but not yet approved and announcement effective by the Financial Supervisory Commission
The new / amended / revised standards or IASB publication effective date (Note
interpretation 1)
Amendment to “Definition of a business” in January 1, 2020 (Note 2)
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The new / amended / revised standards or interpretation Amendment to “Definition of a business” in	IASB publication effective date (Note 1) January 1, 2020 (Note 2)
IFRS 3
Amendment to IFRS 10 and IAS 28, “Sale or	Undefined
Contribution 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 and IAS 8 “Definition	January 1, 2020 (Note 3)
of Materiality”

Note 1: Unless otherwise stated, the aforementioned new / revised / amended standards or interpretations become effective in the year after the respective date stated.
Note 2: 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 3: This amendment is with prospective application for the annual reporting period starting after January 1, 2020.

The Company continues to assess the effect of the revision of other IFRSs on the individual financial position and performance as of the date this report was approved and released. Information on related influence will be disclosed on completion of the assessment.

IV. Summary of important accounting policies

(I) Statement of Compliance

The individual financial statements were prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers.”

(II) 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 individual 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.

The Company when preparing the individual financial statements has the investment in subsidiaries and affiliated companies processed under the equity method. To align the individual financial statements to be identical to the current year’s loss or gain, other general loss or gain and equity and the company’s

consolidated statements belonging to company owner’s current year’s loss or gain, other general loss or gain and equity, under the individual basis and consolidation basis, those involving accounting processing variations pertain to adjusting “investment adopting the equity method”, “share amounts of subsidiaries, affiliated enterprises adopting the equity method” and related equity items.

(III) 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. For those that are not current assets or liabilities above are classified as non-current assets or liabilities.

(IV) Corporate Merger

Business combinations are accounted for using the acquisition method. Acquisition cost are expensed in the period in which the costs are incurred and the services are received.

Business reputation is based on the total amount of the transfer price tradeoff’s fair value and the purchaser’s previously held of the acquired party’s equity at fair value on the acquisition date, and the recognizable asset and the assumed liability are measured by the net amounts on the acquisition date. If, after the re-measurement, the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed still exceeds the total of the consideration transferred and the acquisition date fair value of the acquirer's previously-held equity interest in the acquiree, the difference is a bargain purchase in profit or loss and is immediately recognized in profit or loss.

(V) Foreign currencies

In the process of compiling the parent company only financial statement, all transactions conducted other than the functional currency of the Bank shall be converted into the functional currency for bookkeeping as of the exchange rate effective on the transaction date.

Foreign currency monetary items are translated at the closing rate on each balance sheet date. The exchange differences arising from the settlement of monetary items or translating monetary items are recognized in the current profit or loss.

The foreign non-currency items measured at fair value are translated in accordance with the exchange rate on the fair value determination date and the exchange difference is booked as current profit or loss. However, for the changes in fair value recognized in the other comprehensive profit or loss, the exchange difference is recognized in the other comprehensive profit or loss.

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.

Upon preparation of the Individual Financial Report, the assets and liabilities of the Company’s and overseas operating institutions (including the subsidiaries, associates, joint ventures or branches in the countries of business operation or those using currencies different from the Company’s) were converted to New Taiwan Dollars based on the exchange rate quoted on every balance sheet date. The profits and losses are translated in accordance with

the current average exchange rates, and the exchange differences resulted is booked in other comprehensive profit and loss and attributable to the Company’s shareholders and non-controlling equity respectively.

When liquidating an offshore operating entity, and which also results in losing control or with critical impact to said offshore operating entity, equity relating to said offshore operating entity that can be classified to company owner’s equity will be reclassified as loss or gain.

(VI) 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 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 weighted-average method.

The construction inventories were stated at the cost invested actually. The cost for available-for-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.

(VII) Investment under the equity method

The Company has the investment in subsidiaries and affiliated companies handled in accordance with the equity method.

Investment in subsidiaries

Subsidiaries are the entities controlled by the Company.

Under the equity method, investments were originally recognized at cost; the book value after the acquisition date fluctuates along with the distribution of profit or loss from the subsidiaries and other comprehensive profit or loss. In addition, for the changes in the affiliated company’s equity, the Company is entitled to have it recognized proportionately to the shareholding.

When the Company’s change in the ownership of the subsidiary does not result in loss of control, it is treated as an equity transaction. The difference between the book amount of the investment and the fair value of the consideration paid or received shall be directly recognized as equity.

If the company’s loss share amount to a subsidiary equals to or exceeds said subsidiary’s equity (including the subsidiary’s book value amount using the equity method and said subsidiary’s other long-term equity in its investment makeup portion tangibly belonging to the company), it pertains to continuing to recognize as a loss by shareholding ratio.

Acquisition costs in excess of the Company's share of net identifiable assets and liabilities (i.e. fair value) in a subsidiaries on the date of acquisition are recognized as goodwill. This goodwill includes book value of the investment and is not amortized. Share of net identifiable assets and liabilities (i.e. fair value) in subsidiaries that exceeds acquisition cost on the date of acquisition is recognized as gains for the current year.

In assessing impairment, the Company based on the cash drivers of the financial statements and compared the recoverable amount and book value. If the amount of recoverable assets increased in the future, the reversal of impairment shall be recognized as income. The book value of the reversal of impaired assets shall not exceed the book value before recognition for impairment net of amortization. Subsequent reversal of impairment loss is not allowed.

In the event of loss of control over the subsidiary, the Company shall measure the fair value of the residual investment in the subsidiary on the date loss of control over the subsidiary. The difference between the fair value of the residual investment and the amount of disposal and the book amount of the investment on the date loss of control over the subsidiary is recognized in the profit and loss of the year. In addition, the accounting treatment for the amounts recognized in the other consolidated gains and losses that are related to the subsidiary is same as the accounting principle to be complied with while the Company directly disposing the relevant assets or liabilities.

The unrealized concurrent trade between the company and the subsidiaries stated in the financial statement of individual entities shall be removed. The profit or loss resulting from the countercurrent, and side-stream transactions between the Company and the subsidiary are recognized in the individual financial statement within the range irrelevant with the Company’s interest in the subsidiary.

2. Investments in the affiliated company

The company has a significant influence on an affiliated company that is not a subsidiary or joint venture. The Company adopts equity method for investment in associates and joint ventures.

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. In addition, the changes in the equity of affiliates shall be recognized in proportion to the proportion of shareholding.

When associates issue new shares, if the 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, and joint 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 and joint ventures, nevertheless, the amount of other comprehensive income so recognized was reclassified pro rata to the decrease ratio in the associate and joint ventures. 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 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 Company’ discontinued recognition of the further losses. The 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 the Company performs an impairment evaluation, the overall carrying amount of the investments are treated as one single asset, and then the impairment test performed to compare its recoverable amount with the carrying amount. The recognized impairment loss will not be allocated to any asset that causes the components of the carrying amount of investments. 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 Company and the affiliated company is recognized in the individual financial statement within the range that is irrelevant to the Company’s interest in the affiliated company.

(VIII) 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. Costs include professional service expanses and loan costs that meet the capitalization conditions. When such assets are 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 Company shall review the estimation of life span, residual value and depreciation method at least once a year and extend the effect of changes in applicable accounting policy.

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.

(IX) 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 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.

(X) 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.

2. Derecognition

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

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

The Company at each balance sheet date is to assess whether there is any indication of 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 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.

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 cashgenerating 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 cash-generating 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.

(XII) 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.

(XIII) Financial instruments

When the Company has become a party to the instrument contract, the financial assets and financial liabilities are to be recognized in the individual 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.

(1) Classification of measurement

2018

The financial assets held by the 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.

The financial assets measured at fair value though profit or loss is measured at fair value; also, the profit or loss of revaluation (including any dividend or interest arising from the financial asset) is recognized in the profit and loss. Please refer to Note 32 for the determination of fair value.

B. Financial assets on the basis of cost after amortization
- If the financial assets of the Company met both of the following conditions, classify as financial assets on the basis of cost after amortization:
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, notes receivable on the basis of cost after amortization, accounts receivable and other receivables) 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 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.

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

The 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 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 Company in the collection of dividends is ascertained, unless the dividend is obviously representing the recovery of the cost of investment in part.

2017

Financial assets are classified into four categories, including financial assets measured at fair value through profit or loss, available-for-sale financial assets, and loans and receivables. The said classification is determined depending on the nature and purpose of the financial assets initially recognized.

A. Financial assets at fair value through profit and loss

Financial assets measured at fair value through profit or loss includes held-for-sale and designated financial assets measured at fair value through profit or loss.

The company, under the following circumstances, specifies financial asset to be measured by fair value on loss or gain:

a. Where the said designation could rule out or significantly reduce the inconsistency in measuring or recognition; or
b. The financial assets, financial liabilities or both, according to a written risk management or investment strategy, are managed at fair value with the performance evaluated and the investment portfolio information provided to management within the Company is also based on the fair value; or
c. Where such would include one or multiple imbedded derivative financial instruments in combination (association) contract for integral designation.

B. Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified as loans and receivables, held-to-maturity investments or financial assets measured at fair value through profit or loss.

Financial assets available for sale are measured at fair value. If the change in book value of financial assets available for sale is exchange gain/loss from foreign currencies, recognize as profit or loss based on the interest income calculated under the effective interest rate. The same principle is applicable to the dividend of equity investment available for sale. The changes in the book value of the other available-for-sale financial assets are recognized in the other comprehensive profit or loss and are reclassified to the profit or loss upon disposal of the investment or when the impairment is confirmed.

The dividends of available-for-sale equity investments are recognized when the right in collection of the Company is established. If the available-for-sale financial asset is an equity investment no open market price and the fair value cannot be reliably measured and the derivatives that are linked to the equity instrument without a market quote and the settlement must be completed with the equity instrument delivered, it is measured subsequently at cost, net of impairment loss, and it is individually booked as “Financial assets measured at cost.” If such financial assets could be subsequently measured at fair value, measure based on fair value and the difference between the book value and the fair value shall be recognized under other comprehensive income. In case of impairment, recognize as profit or loss.

C. Loans and accounts receivable

Loans and receivables (including notes receivable, accounts receivable, cash and cash equivalents and other accounts receivable) are measured at the amortized cost net of impairment loss in accordance with the effective interest method, but except for the insignificant interest of short-term receivables.

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.

(2) Impairment of financial assets

2018

The company measures its amortized financial assets (including accounts receivable) measured by cost and other general loss or gain by fair value on investments’ impairment loss measured by debt instruments with anticipated credit loss assessment on every balance sheet date.

Notes receivable and receivable accounts 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.

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.

2017

Except for the financial assets measured at fair value through profit or loss, the Company examines whether there is an evidence of impairment occurring on the other financial assets at each balance sheet date. When there is objective evidence of one or more events occurring after the initial recognition of financial assets with a resulting loss to the future cash flow of the financial asset, the impairment of the financial assets had already occurred.

For financial assets reported at amortized cost, such as, notes receivable, accounts receivable and other receivables, if such assets are assessed and concluded to be without any evident impairments, a collective assessment of the impairments should be initiated. The collective objective evidence of impairment occurring on the receivables may include the consolidated company’s past experiences in collection, the increase in delayed payments over the average credit period of 60-day, and observable changes in national or regional economic situation related to the receivable arrears.

The impairment amount of the financial assets measured at amortized cost is the difference between the book value of the assets and the present value of the future cash flows discounted at the financial asset’s original effective interest rate.

If the financial assets being recognized after the amortization of the cost showed a decrease of the amount of impairment in subsequent periods, and the decreased amount of impairment is related to the events after the recognition for impairment, the impairment so recognized previously shall be directly reversed or via the adjustment of provision of accounts and recognized as profit or loss. However, the amount of such reversal shall not exceed the cost after amortization before the recognition of impairment on the day of recognition.

When the fair value of the available-for-sale equity investments below cost and the decline is significant or persistent, it will be deemed as an objective evidence of impairment.

For the objective evidence of impairment of other financial assets, please refer to the note on financial assets booked at the amortized cost. When available-for-sale financial asset is impaired, the cumulative loss previously recognized in the other comprehensive profit or loss will be reclassified into profit or loss.

The impairment loss of the available-for-sale equity instruments that is already recognized in the profit or loss may not be reversed through the profit or loss. The fair value reversed amount after recognizing the impairment losses is recognized in the other comprehensive profit or loss. If the fair value of the available-for-sale financial assets increased in the subsequent period and the increase is objectively linked to an event occurring after the impairment is recognized, the impairment loss is reversed and recognized in the profit or loss.

The impairment amount of the financial assets measured at cost is the difference between the book value of the assets and the present value of the future cash flows discounted at the financial asset’s current market rate of return. The said impairment loss shall not be reversed in subsequent periods.

The impairment loss of all financial assets is directly deducted from the book value of the financial asset. However, the book value of the accounts receivable and loans is adjusted down by the allowance for bad debt. The accounts receivable and loans that are concluded to be uncollectible are written off against the allowance account. The amount previously written off and collected subsequently is credited to the allowance account. Except for writing off the uncollectible accounts receivable against the allowance account, the change in the book value of the allowance account is recognized as profit or loss.

(3) The de-recognition of financial assets

The Company’s financial assets are 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. By 2017, on derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received, receivable and the cumulative gain or loss that had been recognized in other comprehensive profit and loss and accumulated in equity is recognized in profit or loss. Since 2018, on derecognition of a financial asset measured at amortized costs in its entirety, the difference between the asset’s carrying amount and the consideration received is recognized in 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.

Financial Liabilities
(1) Subsequent measurement

All financial liabilities are evaluated at the amortized cost using the effective interest method.

(2) De-recognition of financial liabilities

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

(XIV) Shares held in vault

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 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. (XV) Recognition of revenue

2018

The 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
When income on goods sold having had a price and utilization right defined by the customer and who also shoulders the primarily resale liability, and who also assumes the goods’ shelfing and dating risk, the company recognizes the income and accounts receivable at said timing point. 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.
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.

2017

The revenue was recognized based on the consideration receivable or having been received, measured at fair values, deducted with estimated refunds, discounts claimed by customers or other similar allowances. Sales returns are appropriated reasonably in accordance with past experience and other factors.

Sales of products
The sale of goods is recognized as income at the time when the following conditions are fully fulfilled:
(1) The Company has the significant risks and returns of the instruments transferred to the buyer.
(2) The Company does not involve in the management of the instruments sold nor maintain effective control.
(3) The amount of income can be measured reliably.
(4) Where the economic benefits linked up with the transactions were very likely to be flown to the Company; and
(5) The transaction-related cost incurred or to be incurred can be measured reliably.

When material is provided for processing, the significant risks and rewards related to the ownership of the finished goods have not been transferred; therefore, the material provided for processing is not treated as sales.

Revenue generated from the sale of real property within the normal business scope is recognized when each real property is completed and delivered to the buyer. The guarantee and installment repayment collected when meeting the foresaid income recognition criteria pertain to those stated under the liquid liability in the individual balance sheet.

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.
Dividend revenues and interest revenues
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 Company and the amount of revenues can be measured reliably.

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

(XVI) Leasing

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.

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

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

Lease incentives obtained from operating leases are recognized as liabilities. The total amount of incentive benefits are recognized on the linear basis as the deduction of lease expenses.

(XVII) 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.

(XVIII) 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

Under the defined contribution pension plan, the pension amount appropriated during the service years of the employees is recognized as an expense.

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.

(XIX) 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

Income 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 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 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 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 period’s income tax or deferred income tax is incurred from acquiring a subsidiary, the income tax impact sum is streamlined into the invested subsidiary’s accounting processing.

(XX) Employee stock option

 - Employee Stock Option (ESO) is based on the fair value of the equity instrument and the optimized estimation of projected entitlement as of the day of transfer and recognized as expense under the straight line method within the period of projected entitlement, and subject to adjustment of capital surplus simultaneously – ESO. If gain is realized as of the day of transfer, recognize as expenses in full amount as of the transfer day.

V. Main source of significant accounting judgment, estimates and assumptions uncertainty
When adopting accounting policy, the management of the Company shall make related judgments, estimations, and assumptions for information that cannot be easily retrieved from other sources based on historical experiences and other relevant factors. Actual results may differ from the estimates. The management will continue to review the estimates and basic assumptions. If the amendment affects only the current estimates, it is recognized in the current period. If the amendment of accounting estimates affects both current and future periods, it is recognized in the respective current and future periods.
- (I) Real estate, plant and equipment, and investment-based real estate’s residual cycle
  - As described in Note 4 (9) and (11), the company reviews its real estate, plant and equipment and investment-based real estate’s estimated residual cycle on every balance sheet date. For real estate, plant and equipment and investment-based real estate’s residual cycle, please refer to Note 15 and 16.

VI. Cash and cash equivalents

VI.	16. Cash and cash equivalents
		December 31, 2018			December 31, 2017
	Cash on hand	$		603	$	603
	Bank checks and
	demand deposits		2,218,146			2,616,131
		$	2,218,749		$	2,616,734
VII.	Financial instrument at fair value through		profit and loss
		December 31, 2018			December 31, 2017
	Financial assets-current
	Held-for-sale
	Non-derivative financial
	assets
	- Shares traded on the
	Taiwan Stock Exchange or
	OTC exchange		$	-	$	504,842
	- Foreign TSEC/GTSM
	listed shares			-		90,792
	- Domestic corporate bonds			-		10,700
					27

Beneficiary certificate - 279,033

- Beneficiary certificate	-	279,0
Financial assets-current Measured at fair value through income under compulsion Non-derivative financial assets - Shares traded on the Taiwan Stock Exchange or OTC exchange - Foreign TSEC/GTSM listed shares - Beneficiary certificate	$ 654,932 65,560 268,077 $ 988,569	$ - - -
		$ 885,367

VIII. Financial assets at fair value through other comprehensive profit or loss-2018

ncial assets at fair value through other comprehensive profit	or loss-2018	or loss-2018
Non-current Equity instrument investments measured at fair value through other comprehensive income Debt instrument investments measured at fair value through other comprehensive income	December 31, 2018
		$ 1,567,531 110,000 $ 1,677,531

Equity instrument investments measured at fair value through other	Equity instrument investments measured at fair value through other	comprehensive income
	December 31, 2018
Non-current
Domestic investment
Listed stocks and emerging
stock
Hua Nan Financial Holding
Company common shares	$	1,060,161
Taiwan Tea Corp. common
shares		231,750
Maxigen Biotech Inc.
common shares		13,178
JMicron Technology
Corporation common shares		3,482

Unlisted/OTC Sunny Commercial Bank Co. common shares WK Technology Fund Co. common shares WK Technology Fund Co. common shares Common stock of Minchali Metal Industrial Co., Ltd. Taiwan Silk & Filament Weaving Development Co. common shares Common stock of TWSE Everterminal Co. common shares Foreign investments Unlisted/OTC Common stock of UNFON CONSTRUCTION CO., LTD (Hong Kong)	21,792 7,174 3,683 91,348 33,472 89,500 3,118
	1,558,658
	8,873
	$ 1,567,531

The 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 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. Said investments are initially classified, per IAS 39, as financial assets available for sale and financial assets measured by cost; for the reclassification and 2017 information, please refer to Note 3, 10 and11.
Among equity instrument investments measured by fair value in 2018 under other general loss or gain, Guo Guang Petrochemical Co. has been liquidated in full in the current year, hence the company classifies it in 2018 under other general loss or gain with a valuation gain at $4,123 thousand and past year's cumulative recognition of an unrealized valuation loss at $47,458 thousand under other equity item reclassified as retained earnings.
Among 2018 equity instrument investments measured by fair value under other general loss or gain, WK Technology Fund Co. has sought a capital reduction, thus returning company capital of 292,000 shares, totaling $2,922 thousand.

For circumstances of equity instruments posting for mortgaging guarantee under other general loss or gain measured by fair value, please refer to Note 34.
(II) Debt instrument investments measured at fair value through other comprehensive income

Non-current Domestic investment Bank debentures of Taichung Commercial Bank	December 31, 2018	December 31, 2018
		$ 110,000

The company holds of debt instruments are classified initially, per IAS 39, as financial assets available for sale; for the reclassification and 2017 information, please refer to Note 3 and 10.
Refer to Note 9 for further information on investment of debt instruments measured at fair value through other comprehensive income and related risk management and evaluation of impairment.

IX. Credit risk management for investment in debt instruments – Year 2018

The company has invested of debt instruments are classified as financial assets measured by fair value under other general loss or gain.

December 31, 2018

Total Book Value Loss allowance Cost after amortization Fair value adjustment	Measured at fair values through other comprehensive income	Measured at fair values through other comprehensive income
		$ 110,000 - 110,000 - $ 110,000

The company has adopted of policy for merely investing in debt instruments with an investment grade or higher (inclusive) and with loss assessment being low in credit risk. Bonds are classified in accordance with the initial credit rating classification from MOODY’s, FITCH, S&P and Taiwan Ratings. The company would continue to follow up on external assessment information, through which to monitor the credit risk fluctuations on its invested debt instruments, and also monitors the bond yield ratio curve and creditors’ critical information among other information, to assess whether the debt instruments’ credit risk has apparently increased following the initial recognition.

The company takes into consideration of outside assessment entities-supplied various levels of history default loss ratios, debtors’ current financial standing and the industries’ future forecasts, to measure the debt instrument investment’s 12-month expectant credit loss or expectant credit loss during the sustaining period.

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

Credit rating Normal	Definition The debtors’ credit risk is low and also has sufficient capability to pay off contractual cash flows.	Basis for recognizing expected credit losses Anticipated credit loss in 12 months	Expected credit loss rate 0%~0.5%	Total book value of December 31, 2018 $ 110,000

X. Available-for-sale financial assets - non-current-2017

December 31, 2017

Listed stocks and emerging stock Domestic financial deb	$ 957,897 40,000
	$ 997,897

For information on mortgaged financial asset available for sale, refer to Note 34.

XI. Financial assets measured at cost- non-current-2017

cial assets measured at cost-non-current-2017
Domestic non-listed (OTC) company Foreign unlisted shares	December 31, 2017
		$ 101,795 10,451 $ 112,246

(I) The unlisted/OTC equity investment referred to above of the Company is measured at cost less impairment losses on the balance sheet date, because a reasonable estimate of the fair value range is significant and the probability of a variety of estimates cannot be reasonably assessed, causing the Company’s management to believe that the fair value cannot be reliably measured.
(II) The company holds of unlisted (un-OTC listed) share investment, upon evaluated, has an impairment loss of $10,954 thousand as classified in 2017.
XII. Notes receivable, accounts receivable, and other accounts receivable

December 31, 2018 December 31, 2017

Notes receivable

Measured on the basis of cost after amortization Notes receivable’s total book value amount Less: Allowance for losses Accounts receivable Measured on the basis of cost after amortization Accounts receivable – nonrelated parties’ total book value amount Accounts receivable – related parties; total book value amount Less: Allowance for losses ( Other receivables Receivable tax refund Others Less: Allowance for losses (	$ 164,312 - $ 164,312 $ 2,673,196 109,064 225,960 ) ( $ 2,556,300 $ 26,382 5,151 1,932) ( $ 29,601	$ 223,334 - $ 223,334 $ 2,040,929 133,182 225,960 ) $ 1,948,151 $ 20,691 2,777 1,932 ) $ 21,536

(I) Accounts receivable and notes receivable

2018

The company’s average credit period on goods sold falls between 30-90 days, with no interest calculated on accounts receivable, and if exceeding the credit term of 30 days, the unpaid balance has the interest calculated at the annual interest rate of 3%. The company has adopted of policy pertains to merely conducting transactions with subjects surpassing company internal credit check, and would cease to ship the goods or obtain a guarantee check under necessary circumstances, through which to mitigate the risk of financial loss incurred due to overdue payment. The Company will use other publicly available financial information and historical transaction records to rate major customers. The company would continue to monitor credit exposure and the transaction opponents’ credit rating, and would also spread transaction amounts to varied customers with satisfactory credit rating; in addition, company management would manage credit exposure per approved empowerment on revalidation and approving the transaction opponents’ line of credit.

To mitigate credit risk, company management has assigned designated personnel to be responsible for determining the line of credit, credit approval and other monitoring procedures, through which to ascertain that adequate action has been taken on recalling overdue payments receivable. In

addition, the 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 Company’s credit risk is significantly reduced.

The Company’s allowance for loss of receivables is determined according to the preparation matrix as follows: December 31, 2018

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Overdue
Overdue 1 to 30 Overdue 31 Overdue 61 over 120
Not overdue days to 60 days to 120 days days Total
Expected
credit loss
rate 0%~5% 13%~17% 65%~75% 75%~100% 100% -
Total Book
Value $ 1,907,223 $ 793,945 $ 81,092 $ - $ - $ 2,782,260
Allowance
for loss
(expected
credit loss of
the given
duration) ( 70,574) ( 102,701 ) ( 52,685 ) - - ( 225,960)
Cost after
amortization $1,836,649 $ 691,244 $ 28,407 $ - $ - $2,556,300
Loss allowance of receivables as follows: 2018
Beginning balance (IAS 39) $ 230,830
-
Retroactive application of IFRS 9 adjustments
Beginning balance (IFRS 9) 230,830
-
Add: Impairment loss appropriated in current period
Balance - ending $ 230,830
----- End of picture text -----

The foresaid receivables’ loss reserve includes loss reserve for notes receivable, accounts receivable, other receivables and collection. 2017

The company’s average credit period on goods sold falls between 30~90 days, and since history experience indicates accounts receivable exceeding 360 days is deemed unrecallable, the company reserves a 100% bad debt reserve on the account age of accounts receivable exceeding 360 days, and on accounts receivable with an account age between 60 days to 360 days, the bad debt reserve pertains to estimating an unrecallable amount by referencing the transaction opponent’s past overdue record and by analyzing its current financial standing.

For the overdue accounts receivable on the balance sheet date that is without the allowance for bad debts appropriated by the Company, since the credit quality has not been materially changed, the Company’s management believes that the amount can be recovered; therefore, the Company does not have any collateral or other credit enhancements collected for the protection of the accounts receivable.

The age analysis of accounts receivables is as follows: 0 to 60 days 61 to 90 days 91 to 180 days Total	December 31, 2017	December 31, 2017
		$ 1,750,830 316,514 106,767 $ 2,174,111

The information above is the aging analysis on the basis of date of account establishment. The company has no overdue but unimpaired accounts receivable.

(II) Information on change to accounts receivable, other receivables and collection’s bad debt reserve is as follows:

Balance, beginning of year Add: Currently appropriated bad debts expense Balance, end of year		2017
		$ 230,830 - $ 230,830

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XIII. Inventory
December 31, 2018 December 31, 2017
Merchandise $ 1,143,706 $ 1,024,857
----- End of picture text -----

Finished goods Work in process Raw materials Supplies	566,855 148,893 406,275 37,623 $ 2,303,352	231,900 70,948 320,227 28,515 $ 1,676,447

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

(II) The company’s building/land available for sale in 2018 and as of Dec. 31, 2017 are both at $65,775 thousand, which pertains to the He Ti codevelopment case located in Sanchung District, New Taipei City, in a three-way joint collaboration among the company, Hung Chou Fiber Industrial Co., Ltd. and San Feng Construction Co., Ltd., which has been completed in 2000 and the properties turned over successively. As of Dec. 31, 2018, upon evaluation, the net conversion value is at zero.
(III) The company’s inventory-related cost of goods sold in 2018 and 2017 is at $19,258,689 thousand and $16,208,924 thousand respectively; the cost of goods sold includes loss on inventory price fall, which is both at $0; the work suspension loss is at $344,918 thousand and $510,487 thousand respectively.
(IV) As of Dec. 31, 2018 and 2017, the inventive price fall reserve is both at $358,488 thousand. XIV. Prepayment

XIV. Prepayment	XIV. Prepayment
Pre-paid expenses Pre-paid material purchases Tax credit XV. Available-for-sale noncurr Land for sale		en	December 31, 2018 $ 540,017 54,911 202,902 $ 797,830 t assets December 31, 2018 $ 769,610	December 31, 2017
			t asse	$ 601,868 103,052 234,759 $ 939,679 December 31, 2017 $ -
	Land for sale

(I) The company has had a resolution voted before the Aug. 9, 2016 board meeting, proposing to sell part of its investment-based real estate of the land in Yunlin Silk and Filament Weaving Industrial Zone, thus has reclassified said land as nonliquid asset available for sale, and later since it does not meet nonliquid asset conditions available for sale in 2017, it is reclassed to investment-based real estate item. The company has had a resolution voted before a 2018 board meeting reformulating a sales plan and is also actively seeking buyers, thus the land proposing for sale is reclassified as nonliquid asset available for sale. Please refer to Note 18.
(II) For information on mortgaged nonliquid asset available for sale, refer to Note 34.
XVI. Investment under the equity method

Investment in subsidiaries Investments in the affiliated company		December 31, 2018 $ 13,315,663 $ 1,228,959		December 31, 2017 $ 11,974,588 $ 1,216,290

(I) Investment in subsidiaries

Listed (OTC) company Taichung Commercial Bank Co. Pan Asia Chemical Corporation Non-listed (OTC) company Deh Hsing Investment Co., Ltd. Chou Chin Industrial Co., Ltd. Reliance Securities Investment Trust Co., Ltd. EUREKA INVESTMENT COMPANY LIMIT ED Melasse	December 31, 2018 $ 10,688,164 968,868 1,299,536 297,468 11,767 35,410 14,450 $ 13,315,663	December 31, 2017	December 31, 2017
			$ 9,719,925 872,845 1,088,194 246,415 9,825 23,264 14,120 $ 11,974,588

The Company’s ownership and voting rights in the equity of the subsidiary at the balance sheet date is as follows:	The Company’s ownership and voting rights in the equity of the subsidiary at the balance sheet date is as follows:	The Company’s ownership and voting rights in the equity of the subsidiary at the balance sheet date is as follows:	The Company’s ownership and voting rights in the equity of the subsidiary at the balance sheet date is as follows:
	December 31, 2018	December 31, 2017
Taichung Commercial
Bank Co.	22%		22%
Pan Asia Chemical
Corporation	44%		44%
Deh Hsing Investment
Co., Ltd.	100%	100%
Chou Chin Industrial
Co., Ltd.	46%		46%

Reliance Securities
Investment Trust
Co., Ltd.	3%	3%
EUREKA
INVESTMENT
COMPANY LIMITED	100%	100%
Melasse	50%	50%

The above ratio is indicated by individual shareholding percentage.
The company has in 2018 participated in Taichung Commercial Bank Co.’s cash reinvestment, where the company newly investing 32,246,000 shares, with newly increased cost at $328,914 thousand.
The company has in 2018 participated in De Hsing Investment Co.’s cash reinvestment, by newly investing 20,000,000 shares, with investment cost at $200,000 thousand.
The company has in 2018 participated in Ruei Jia Investment Co.’s cash reinvestment, by newly investing 1,250,000 shares, with investment cost at $12,500,000.
The 2018 and 2017 profit or loss and other comprehensive profit or loss of the subsidiary under the equity method was recognized in accordance with the audited financial statements during the same period of the subsidiary.
For subsidiaries the company invests in by designated mortgage lien as the loan guarantee, please refer to Note 34.
(II) Investments in the affiliated company
The balance the company investing in affiliated enterprises is as follows:

vestments in the affiliated company The balance the company investing in affiliated enterprises is	as follows:	as follows:
December 31, 2018 A major affiliated company Nan Chung Petroche mical Corp. $ 1,228,959 A major affiliated company Company name Nature of the operation Main places of business operations Nan Chung Petrochemica l Corp. Petrochemical business Yunlin County	December 31, 2017 $ 1,216,290 Shareholding and voting right ratio
	December 31, 2018 50%	December 31, 2017
		50%

A major affiliated company

Summary financial information of Nan-Chung Petrochemical:

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December 31, 2018 December 31, 2017
Total assets $ 3,263,392 $ 3,502,729
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Total assets		$ 3,263,392		$ 3,502,729
Total Liabilitie s Equity The company’s shareholding ratio Book value of investment Operating income - current Net income Current period other comprehensive income		805,473 2,457,919 50% $ 1,228,959 2018 8,510,067 176,872 -		1,070,150 2,432,579 50% $ 1,216,290 2017
	$		$	8,033,324 164,900 -
	$		$
	$		$

The 2018 and 2017 profit or loss and other comprehensive profit or loss of the affiliated company under the equity method was recognized in accordance with the audited financial statements during the same period of the affiliated company.

For the share amount on affiliated enterprises the company designating mortgage lien as the loan guarantee, please refer to Note 34. XVII. Property, plant and equipment

Property, plant and equipment
The book amount of each category Land House and Building Machine and Equipment Transportation Equipment Office Equipment	December 31, 2018 $ 2,926,476 1,149,328 3,950,208 4,523 50,915	December 31, 2017
		$ 2,926,476 1,218,581 4,294,786 3,780 56,168

Construction in process and prepayment for machinery purchase

House and		3,204,688 11,286,138 Machine and Equipment Transportatio n Equipment $ 9,567,742 $ 24,723 35,782 - 7,833 ) ( 5,320 ) ( 15,462 788 $ 9,611,153 $ 20,191 $ 4,533,974 $ 18,853 463,759 1,263 7,284 ) ( 4,718 ) ( 23) - $ 4,990,426 $ 15,398 $ 326,023 $ 1,013 - - 82 ) -	3,204,688 11,286,138 Machine and Equipment Transportatio n Equipment $ 9,567,742 $ 24,723 35,782 - 7,833 ) ( 5,320 ) ( 15,462 788 $ 9,611,153 $ 20,191 $ 4,533,974 $ 18,853 463,759 1,263 7,284 ) ( 4,718 ) ( 23) - $ 4,990,426 $ 15,398 $ 326,023 $ 1,013 - - 82 ) -
	$
	( ( ( (	Machine and
Building $ 2,088,392 - - 4,724		Equipment $ 9,567,742 35,782 7,833 ) 15,462 $ 9,611,153 $ 4,533,974 463,759 7,284 ) 23) $ 4,990,426 $ 326,023 - 82 )	n
			( (
$ 2,093,116
$ 635,190 70,543 - -
$ 705,733
$ 168,802 - -

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Reclassification in
current period - - - - - - -
Balance as of
December 31,
2017 $ - $ 168,802 $ 325,941 $ 1,013 $ 1,791 $ - $ 497,547
Net amount -
January 1, 2017 $ 2,926,476 $ 1,284,400 $ 4,707,745 $ 4,857 $ 59,472 $ 2,507,174 $11,490,124
Net amount -
December 31,
2017 $ 2,926,476 $ 1,218,581 $ 4,294,786 $ 3,780 $ 56,168 $ 2,857,525 $11,357,316
----- End of picture text -----

Cost Balance as of January 1, 2018 Increase in current period Decrease in current period Reclassification in current period Balance at December 31, 2018 Accumulated depreciation Balance as of January 1, 2018 Increase in current period Decrease in current period Reclassification in current period Balance at December 31, 2018 Accumulated impairment Balance as of January 1, 2018 Increase in current period Decrease in current period	$ 2,926,476 - - ( - $ 2,926,476 $ - - - ( - $ - $ - - - (	$ 2,093,116 318 291 ) ( - $ 2,093,143 $ 705,733 69,571 248 ) ( - $ 775,056 $ 168,802 - 43 ) (	$ 9,611,153 9,134 1,627,837 ) ( 60,405 $ 8,052,855 $ 4,990,426 413,703 1,401,606 ) ( - $ 4,002,523 $ 325,941 - 225,817 ) (	$ 20,191 1,843 2,113 ) ( - $ 19,921 $ 15,398 1,067 2,003 ) ( - $ 14,462 $ 1,013 - 77 ) (	$133,282 1,632 24,691 ) ( 180 ( $110,403 $ 75,323 7,064 23,447 ) - $ 58,940 $ 1,791 - 1,243 )	$ 2,857,525 407,748 8,894 ) ( 51,691) $ 3,204,688 $ - - - ( - $ - $ - - - (	$17,641,743 420,675 1,663,826 ) 8,894 $16,407,486 $ 5,786,880 491,405 1,427,304 ) - $ 4,850,981 $ 497,547 - 227,180 )

Reclassification in current period - - - - - - - Balance at December 31, 2018 $ - $ 168,759 $ 100,124 $ 936 $ 548 $ - $ 270,367 Net amount as of Jan. 1, 2018 $ 2,926,476 $ 1,218,581 $ 4,294,786 $ 3,780 $ 56,168 $ 2,857,525 $11,357,316 Net amount as of Dec. 31, 2018 $ 2,926,476 $ 1,149,328 $ 3,950,208 $ 4,523 $ 50,915 $ 3,204,688 $11,286,138

(I) Property, plant and equipment are depreciated in accordance with the straight-line method over the following respective useful years: House and Building

Buildings 20 to 60 years Renovation engineering 8 to 29 years Machine and Equipment 2 to 47 years Transportation Equipment 5 to 15 years Miscellaneous equipment 3 to 30 years

(II) The company’s uncomplete project and equipment pending inspection payments primarily pertain to cost injection on the newly built turbine power plant, which have yet been reached an operable condition.
(III) The company’s 2018 and 2017 capitalized finance cost at $184,517 thousand and $191,554 thousand respectively, and tis real estate, plant and equipment’s capitalized financial cost amounts are at $17,665 thousand and $24,450 thousand respectively, with the yearly capitalization interest rates at 1.85% and 1.94% respectively.
(IV) For the state of real estate, plant and equipment pledged as collateral guarantee, please refer to Note 34.

XVIII. Investment property

Investment property
Cost Balance as of January 1, 2017 Increase in current period Decrease in current period	Land at Chihsing Section, Wanhua, Taipei City $ 130,015 - -	Land in Yunlin Spinning Industrial Park $ 419,748 - -	Real estate at Toulou Section, Yunlin $ 18,094 - -	House and land at Erh Chung Pu Section, Sanchung District, New Taipei City $ 793,826 - -	Total
					$1,361,683 - -

Reclassification in current period Balance as of December 31, 2017 Accumulated depreciation Balance as of January 1, 2017 Increase in current period Decrease in current period Balance as of December 31, 2017 Accumulated impairment Balance as of January 1, 2017 Increase in current period Decrease in current period Balance as of December 31, 2017 Net amount - January 1, 2017 Net amount - December 31, 2017 Cost Balance as of January 1, 2018		Land at Chihsing Section, Wanhua, Taipei City - $ 130,015 $ - - - $ - $ - - - $ - $ 130,015 $ 130,015 $ 130,015		Land in Yunlin Spinning Industrial Park 384,805 $ 804,553 $ - - - $ - $ - - - $ - $ 419,748 $ 804,533 $ 804,553		Real estate at Toulou Section, Yunlin - $ 18,094 $ - - - $ - $ 18,094 - - $ 18,094 $ - $ - $ 18,094	a (	House and land t Erh Chung Pu Section, Sanchung District, New Taipei City 37,576 ) $ 756,250 $ 1,708 302 - $ 2,010 $ - - - $ - $ 792,118 $ 754,240 $ 756,250		Total 347,229 $1,708,912 $ 1,708 302 - $ 2,010 $ 18,094 - - $ 18,094 $1,341,881 $1,688,808 $1,708,912

Increase in current period Reclassification in current period Balance at December 31, 2018 Accumulated depreciation Balance as of January 1, 2018 Increase in current period Reclassification in current period Balance at December 31, 2018 Accumulated impairment Balance as of January 1, 2018 Increase in current period Decrease in current period Balance at December 31, 2018 Net amount as of Jan. 1, 2018 Net amount as of Dec. 31, 2018		Land at Chihsing Section, Wanhua, Taipei City 26,697 - $ 156,712 $ - - - $ - $ - - - $ - $ 130,015 $ 156,712		Land in Yunlin Spinning Industrial Park - 769,610 ) $ 34,943 $ - - - $ - $ - - - $ - $ 804,553 $ 34,943		Real estate at Toulou Section, Yunlin - - $ 18,094 $ - - - $ - $ 18,094 - - $ 18,094 $ - $ -	a	House and land t Erh Chung Pu Section, Sanchung District, New Taipei City 53,960 10,328 ) $ 799,882 $ 2,010 183 1,434 ) $ 759 $ - - - $ - $ 754,240 $ 799,123		Total
			(				( (		( (	80,657 779,938 ) $1,009,631 $ 2,010 183 1,434 ) $ 759 $ 18,094 - - $ 18,094 $1,688,808 $ 990,778

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

(I) Investment-based real estate’s fair value has been appraised by independent appraisement co. Bao Yuan Real Estate Appraiser’s Office appraiser Yeh Che Guang on Dec. 31, 2018 and 2017. The appraisal was based on the market evidence from the transaction prices of similar real estates, and the important assumptions and the fair value of the appraisal are as follows:

Fair value Asset earning power The overall capital interest rate during development	December 31, 2018 $ 1,116,524 18% 2.09%	December 31, 2017 $ 3,094,066 18% 2.02%

(II) The company has in 2017 reclassified a portion of the building and land at Erchungpu Section, Sanchung District, New Taipei City into real estate, plant and equipment, which please refer to Note 17.
(III) For circumstances of reclassification on company investment-based real estate and nonliquid assets, please refer to Note 15.
(IV) All investment properties of the Company are self-owned equities. For the amounts of the Company’’s investment in real estate, which had been pledged by the Consolidated Company’ to collateralize loans, please refer to Note 34.
XIX. Intangible asset

tangible asset
Computer software Shell Royalty Cost Balance, beginning of year Increase in current period Amortized in current period		December 31, 2018			December 31, 2017
			$ 9 - $ 9 2018 Royalties $ 159,052 - ) ( - )			$ 45 - $ 45 2017 Royalties $ 167,938 - ) ( 8,886 )
	Computer software		)	Computer software
	$ 45 - ( 36			$ 81 - ( 36		)

Reclassification Balance, end of year Accumulated impairment Balance, beginning of year Appropriated for the year Balance, end of year Balance - net	- 9 - ( - - ( $ 9	- 159,052 159,052 ) - 159,052 ) $ -	- 45 - ( - - ( $ 45	- 159,052 159,052 ) - 159,052 ) $ -

Royalties pertain to relevant patented technology the company has acquired for building the ethylene plant, by signing an EO/EG production method patent utilization right agreement with Shell Research Limited to secure relevant technology, where said patent’s utilization period spans 5 years effective from the agreement execution date, and later due to environmental issues on the anticipated development site, resulting in a severe lagging of building the ethylene plant, although said patent can still be used continually per the content of the agreement with Shell Research Limited, but through assessment, the entire amount has been classified as impairment; subsequently the company has, per the amended cash reinvestment plan, plan to build a new ethylene plant separately, and has thus signed with Shell Research Limited of an EO/EG production method patent utilization right agreement (where said EO/EG production method patent right varies from the foresaid initially signed processing technology), and per contractual terms agreement, pays royalties on technical service rendered fee totaling at US$5,323 thousand.

XX. Other assets

her assets
Restricted assets Refundable deposit Others Collection – net amount Current Non-current	December 31, 2018 $ 155,307 118,155 7,622 - $ 281,084 $ 162,929 118,155 $ 281,084	December 31, 2017
			$ 155,283 104,475 16,992 - $ 276,750 $ 172,275 104,475 $ 276,750

The collection detail is as follows:

The collection detail is as follows:
December 31, 2018 Delinquent Accounts $ 2,938 Less:loss reserve – collection ( 2,938 ) $ - For loss reserve, please refer to Note 12. XXI. Borrowing (I) Shot-term borrowings December 31, 2018 Secured loans - Bank loans $ 1,250,000 Unsecured loans - Credit loan 850,000 - Material procurement loan 4,706,669 5,556,669 $ 6,806,669	December 31, 2017
	$ 2,938 ( 2,938 ) $ - December 31, 2017 $ 700,000 750,000 2,948,509 3,698,509 $ 4,398,509

The bank loan interest rate in 2017 and 2016 is at between 1.20%~1.35% and 1.20%~1.34% respectively.
For the foresaid loan collateral information, please refer to Note 34
(II) Short-term notes payable

hort-term notes payable
Payable commercial paper Less: Discount of short-term notes and bills payable	December 31, 2018 $ 450,000 ( 493 ) $ 449,507	December 31, 2017
	(	(	$ 300,000 521 ) $ 299,479

The commercial notes payable’s interest rate as of Dec. 31, 2018 and 2017 are both between 1.20%~1.21%.

(III) Long-term borrowings

Long-term borrowings
Secured loans Bank loan Less: Amount due in one year Long-term borrowings	December 31, 2018		December 31, 2017
	(	$ 5,863,861 1,036,138 ) $ 4,827,723	(	$ 7,392,499 918,938 ) $ 6,473,561

The company’s Taiwan Cooperative Bank-led syndicated long-term borrowing in 2018 and as of Dec. 31, 2017 is at $2,699,500 thousand and $4,004,900 thousand respectively, with loan interest rate currently at 1.85%, which the company has in Jan. and Jul. 2018 repay the loan principal early by $400, thousand,000, with repayment by period per the loan contract in each year, and with $905,400,000 thousand becoming due in the future one year, where said loan pertains to posting company Kaohsiung plant and related land and building as the collateral.
The company’s Taiwan Business Bank mid- to long-term borrowing in 2018 and as of Dec. 31, 2017 is both at $250,000,000, with loan interest rate currently at 1.37%, and with repayment by period per the contract in each year starting in Mar. 2019, and with $17,20 thousand becoming due in the future one year, where said loan pertains to posting company headquarters and related land and building as the collateral.
The company’s long-term borrowing with Mizuho Bank in 2018 and as of Dec. 31, 2017 is both at $300,000 thousand, with loan interest rate currently at 1.30%, with onetime repayment initially due in Dec. 2019, and later extended to a onetime repayment in Dec. 2020.
The company’s Taiwan Land bank long-term loan in 2018 and as of Dec. 31, 2017 are at $74,461 thousand and $87,999, thousand respectively, with loan interest rate currently at 1.50%, with repayment by period per the loan contact in each year, with $13,538,000 becoming due in the future one year, where said loan pertains to posting company headquarters and related land and building as the collateral.
The company’s Union Bank long-term borrowing in 2018 and as of Dec. 31, 2017 are at $349,900 thousand and $499,600 thousand respectively, with loan interest rate currently at between 1.56%~1.59%, with repayment initially scheduled to start in May 2019 yearly per the loan contract, and later extended to May 2020 yearly for repayment by period per the loan contract, where said loan pertains to posting 106,000,000 Taichung Bank shares as the collateral.
The company’s Banhsin Bank long-term borrowing in 2018 and as of Dec. 31, 2017 are both at $500,000 thousand, with loan interest rate currently at 1.55%, with onetime repayment initially expiring in May 2019, and later extended to a onetime repayment expiring in June 2020, where said loan pertains to posting the New Taiwan City Sanchung District construction site and building as the collateral.
The company’s Sunny Bank long-term borrowing in 2018 and as of Dec. 31, 2017 are both at $600,000 thousand, with interest rate currently at 1.50%, with onetime repayment initially expiring in Aug. 2019, and later extended to a onetime repayment in Aug. 2020, where said loan pertains to posting 95,000, thousand Taichung Bank shares as the collateral.
The company’s Jihsun Bank long-term borrowing in 2018 and as of Dec. 31, 2017 is at $340,000 thousand and $500,000, thousandrespectively, with loan interest rate currently at 1.50%, for onetime repayment initially expiring in Oct. 2019, later extended to a onetime repayment in Oct. 2020, where said loan pertains to posting 93,000,000 Taichung Bank shares as the collateral.
The company’s Taiwan Cooperative Bank’s long-term borrowing in 2017 and as of Dec. 31, 2017 are both at $650,000,000, with loan interest rate currently at 1.50%, and repayment by schedule per the contract is to begin yearly starting in Feb. 2010, where said loan pertains to posting company Yunlin Douliu land and building as the collateral.

The company’s Kaohsiung Bank borrowing as of Dec. 31, 2018 is at $100 thousand ,000, with loan interest rate currently at 1.50%, and is to be repaid in one lump sum at $100,000,000 at expiry in Nov. 2019 in the future one year.
Please refer to Note 34 for the collateral of the long-term borrowings:

XXII. Other payables

Other payables
Payable salary & bonus Equipment accounts payable Payable repair and maintenance expense Payable utilities expense Payable export expense Payable pension Payable insurance premium Others Provision for liabilities Net determined benefit liability	December 31, 2018 $ 146,606 42,715 40,708 10,632 8,979 4,895 8,518 79,685 $ 342,738 December 31, 2018 $ 158,605	December 31, 2017
		$ 140,394 35,628 31,110 13,675 11,380 4,773 9,189 60,701 $ 306,850 December 31, 2017 $ 148,934

XXIII. Provision for liabilities

(I) Defined contribution plan

The pension system of the “Labor Pension Act” that is applicable to the 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.

(II) Defined benefit plan

The company within the Company has a pension plan arranged in accordance with the “Labor Standard Law” of the Republic of China that was 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 company has a pension appropriated for an amount equivalent to 2% of the monthly salary and the proceeds are deposited in the designated account with Taiwan Bank in the name of the Labor Pension Reserve Commission. If the account balance before yearend is expected to be insufficient for paying the retiring employees of the year, the amount of difference should be appropriated in a lump sum before the

end of March in the following 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 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 individual balance sheet is shown below:

Present value of the defined benefit obligations The fair value of plan assets Appropriation shortage Net determined benefit liability	December 31, 2018 $ 278,395 ( 119,790 ) 158,605 $ 158,605	December 31, 2017	December 31, 2017
	(	(	$ 248,923 99,989 ) 148,934 $ 148,934

Change in net determined benefit liability is shown below

January 1, 2017 Service cost Current service cost Interest expenses (revenues) Recognized in the profit or loss Reevaluation Return on plan assets Actuarial loss – change in the assumption of the census Actuarial loss – change in financial assumptions Actuarial loss – adjustment through experience	P the	resent value of defined benefit obligations $ 234,375 2,588 3,222 5,810 - 586 2,931 13,393	Th ( ( (	e fair value of plan assets $ 89,388 ) - 1,274 ) 1,274 ) 412 - - -			Net determined benefit liability $ 144,987 2,588 1,948 4,536 412 586 2,931 13,393

Recognized in the other comprehensive profit of loss Employer appropriation Planned asset payment ( December 31, 2017 Service cost Current service cost Interest expenses (revenues) Recognized in the profit or loss Reevaluation Return on plan assets 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 December 31, 2018	16,910 - ( 8,172 ) 248,923 ( 2,617 3,111 ( 5,728 ( - ( 604 3,021 20,119 23,744 ( - ( - $ 278,395 (	412 16,303 ) 6,564 99,989 ) - 1,291 ) 1,291 ) 2,779 ) - - - 2,779 ) 15,731 ) - $ 119,790 )	( (	17,322 16,303 ) 1,608 ) 148,934 2,617 1,820 4,437 2,779 ) 604 3,021 20,119 20,965 15,731 ) - $ 158,605

			( (

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

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 Company contained in the financial statements 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.
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.
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 financial statements is based on the actuarial calculation of the actuary and the major assumption as of the evaluation day is shown below:

December 31, 2018

December 31, 2017

Discount rate	1.13%	1.25%
The expected rate of
increase in salaries	2.25%	2.25%

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:

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, 2018 ( $ 6,146 ) $ 6,360 $ 6,109 ( $ 5,936 )	December 31, 2017	December 31, 2017
	( (	( (	$ 5,953 ) $ 6,170 $ 5,942 $ 5,764 )

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.

Amount projected for appropriation in 1 year Average maturity of determined benefit obligation her liabilities Deferred loan item Deposits received		December 31, 2018 $ 15,728 11 years December 31, 2018 $ 19,210 1,940 $ 21,150		December 31, 2017 $ 6,637 12 years December 31, 2017 $ 19,210 3,780 $ 22,990

XXIV. Other liabilities

Deferred loan item pertains to the company and its second subsidiary company’s downstream trading’s deferred unearned profit, with relevant details as follows:

December 31, 2018 December 31, 2017

Jin-Bang-Ge Industry XXV. Equity (I) Paid-in capital Authorized number of shares (thousand shares) Authorized capital Number of shares issued with fully paid-in capital (thousand shares) Outstanding capital		$	19,210 December 31, 2018 1,680,000 $ 16,800,000 1,522,410 15,224,105		$ 19,210 December 31, 2017 1,470,000 $ 14,700,000 1,429,493 14,294,934

Common stock shares issued at NTD 10 Par and each share is entitled to one voting right and dividends. The Company’s paid-in capital was NTD14,294,934 thousand on January 1, 2011, divided into 1,429,493 thousand shares at NTD 10 per share and offered as common stock in whole. The company has had a resolution voted before the June 12, 2018 shareholders’ meeting for a reinvestment on undistributed earnings at $929,171 thousand dividing into 92,917,000 shares, with each share at $10 par value, and all in common shares, and as of Dec. 31, 2018, the company’s paidcapital has increased to $15,224,105,000, dividing into 1,522,410,000 shares, with each share at $10 par value, and all in common shares.

(II) Capital surplus For covering loss carried forward, payment in cash or capitalization as equity shares (1) 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, 2018	December 31, 2018	December 31, 2017	December 31, 2017
		$ 590,001 6,270 2,129 772,194 184,238 137,443 2,600 $1,694,875		$ 590,001 6,270 2,129 772,194 182,135 122,489 2,600 $1,677,818

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.

(III) Retained earnings and Dividend Policy

According to the Articles of Incorporation, 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. The policy of remuneration to employees and Directors and Supervisors to the Articles of Incorporation is elaborated in Note 26 (6) to the financial statement, on Remuneration to Employees and 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.

The Company 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.

The company’s 2016 after-tax deficit, as voted before the June 8, 2017 shareholders’ meeting, has forgone earning distribution, in addition to a resolution on 2017 earnings distribution proposal voted before the June 12, 2018 scheduled shareholders’ meeting, which is as follows:

		Earnings
	Distribution Proposal Dividend Per Share (NTD)
Legal reserve		$ 79,399 $	-
Special reserve	(	524,938)	-
Cash dividends		142,949	0.10
Stock dividends		929,171	0.65
The Company had resolved in the board meeting the earnings distribution of 2018 on March 18, 2019 as follows:
		Earnings
	Distribution Proposal Dividend Per Share (NTD)
Legal reserve		$ 137,204 $	-
Special reserve	(	20,283 )	-
Cash dividends		152,241	0.10
Stock dividends		989,567	0.65

The proposal for the distribution of earnings in 2018 is pending on the resolution of the General Meeting of shareholders scheduled to be held in June 2019.

With regard to earnings distribution proposal voted before company shareholders’ meeting, please log in to Taiwan Stock Exchange’s “public information observatory” to inquire.

(IV) Other equity

Exchange differences from the translation of financial statements of foreign operations

Balance, beginning of year Share amount on the subsidiaries’ conversion differential amount adopting the equity method		2018 $ 41,611 ) 12,980 )		2017
	( (		54 ( (	$ 25,319 ) 16,292 )

Balance, end of year ( $ 54,591 ) ( $ 41,611 )

Unrealized gain or loss on financial assets at fair value through other comprehensive profit or loss

Beginning balance (IAS 39) Effect of retroactive applicability IFRS 9 Beginning balance (IFRS 9) Accrued in current year Unrealized gain or loss Equity instruments Share of subsidiaries using the equity method Reclassification adjustment Subsidiaries’ share liquidated adopting the equity method The accumulated gain/loss from the disposition of equity instruments will be transferred to retained earnings. Balance - ending		*2018*
	( ( ( (	$ - 203,678 ) 203,678 ) 23,639 7,827 226 ) 43,335 $ 129,103 )

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

3. Unrealized gain (loss) on available-for-sale financial assets
Balance as of January 1, 2017 Accrued in current year Unrealized gain or loss Share of subsidiaries using the equity method Balance as of December 31, 2017 Balance as of January 1, 2018 (IAS 39) Effect of retroactive applicability IFRS 9 Balance as of January 1, 2018 (IFRS 9)		2017
	( (	$ 284,967 ) 67,520 48,256 $ 169,191 ) 2018
	(	$ 169,191 ) 169,191 $ -

(V) Treasury stock

The statement and changes of the Company’s treasury stock in 2018 and 2017:

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Shares of parent
Transferring stocks company held by
to employees subsidiaries (in Total
Cause (Thousand Shares) thousand shares) (thousand shares)
Number of shares
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as of January 1, 2017 Increase in current period Decrease in current period ( Number of shares as of December 31, 2017 Number of shares on January 1, 2018	5,689 - 5,689) - -	291,815 - - ( 291,815 291,815	297,504 - 5,689) 291,815 291,815

Increase in current period Decrease in current period Number of shares on December 31, 2018	- - -	18,969 - 310,784	18,969 -
			310,784

The company has in 2017 transferred 5,689,000 shares held in vault to its employees, with shares held in vault’s transfer cost at $45,677 thousand.
The company has in 2018 issued its shares to its subsidiaries totals to 18,969,000 shares.
as of 2018 and Dec. 31, 2017, relevant information on company shares held by its subsidiaries is as follows:

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Number of
shares held
Name of Subsidiary (thousand shares) Book Value Market Value
December 31, 2018
Pan Asia Chemical Corporation 236,096 $ 971,926 $ 1,180,972
Deh Hsing Investment Co., Ltd. 10,491 25,787 107,005
Chou Chin Industrial Co., Ltd. 55,514 195,060 275,479
Chou Chang Corporation
(subsidiary of Chou Chin
Industrial CO., LTD.) 8,683 35,136 33,656
$ 1,227,909 $ 1,597,112
December 31, 2017
Pan Asia Chemical Corporation 221,686 $ 971,926 $ 1,103,456
Deh Hsing Investment Co., Ltd. 9,850 25,787 99,982
Chou Chin Industrial Co., Ltd. 52,126 195,060 247,504
Chou Chang Corporation
(subsidiary of Chou Chin
Industrial CO., LTD.) 8,153 35,136 31,447
$ 1,227,909 $ 1,482,389
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The company’s Treasury stock may not be pledged in accordance with the Security and Exchange Law; moreover, it is without the privilege of dividend and voting right. Company shares held by its subsidiaries are deemed as shares held in vault in processing, and besides regulations set forth under the Corporate Law article 167 and article 179, the rest of which are the same as general shareholders’ entitlements.

XXVI. Business units in continuing operation income

Income from continuing operations department includes the following items

(I) Other income and earnings and expense and loss

Rent income (Note 33) Income derived from sales of substandard goods and scraps Others		2018 $ 5,500 3,366 14,109 $ 22,975		2017
				$ 5,399 - 14,301 $ 19,700

(II) Gain (loss) on financial assets and The realized gain (loss) of financial assets and liabilities measured at fair value through profit or loss Stock Bonds Beneficiary certificate The valuation gain (loss) of financial assets and liabilities measured at fair value through profit or loss Stock Bonds Beneficiary certificate	liabilities at fair value through profit and loss 2018 2017 $ 20,481 $ 13,968 ( 27 ) ( 34 ) 46 411 20,500 14,345 107,160 47,159 ( 15 ) 96 ( 28,083 ) 26,344 79,062 73,599 $ 99,562 $ 87,944	liabilities at fair value through profit and loss 2018 2017 $ 20,481 $ 13,968 ( 27 ) ( 34 ) 46 411 20,500 14,345 107,160 47,159 ( 15 ) 96 ( 28,083 ) 26,344 79,062 73,599 $ 99,562 $ 87,944	liabilities at fair value through profit and loss 2018 2017 $ 20,481 $ 13,968 ( 27 ) ( 34 ) 46 411 20,500 14,345 107,160 47,159 ( 15 ) 96 ( 28,083 ) 26,344 79,062 73,599 $ 99,562 $ 87,944
	( ( (	(	$ 13,968 34 ) 411 14,345 47,159 96 26,344 73,599 $ 87,944

(III) Financial costs

(III) Financial costs
Interest from bank borrowings Less: classified real estate, plant and equipment (Note 17) Interest from bank borrowings (VI) Depreciation and amortization Property, plant, and equipment expenses Depreciations of Investment Property Intangible assets amortization expenses Consolidation of depreciation expenses based on functions Operating cost Operating expenses Consolidation of amortization expenses based on functions Operating cost Operating expenses		2018 $ 184,517 17,665 ) $ 166,852 2018 $ 491,405 183 36 $ 491,624 $ 484,351 7,237 $ 491,588 $ - 36 $ 36		2017
	(		(	$ 191,554 24,450 ) $ 167,104 2017
				$ 543,119 302 8,922 $ 552,343 $ 535,907 7,514 $ 543,421 $ 8,886 36 $ 8,922

(V) Employee benefits expenses 2018

Operating cost Short-term employee benefits Salary & wage $ 370,048 Labor insurance and national health insurance 36,993 Remuneration to Directors - Other employee benefits expenses 26,617 433,658 Pension expenses Defined contribution pension plan 14,190 Defined benefit plan (Note 23) 3,414 17,604 Total employee benefits expenses $ 451,262 2017 *Operating cos* Short-term employee benefits Salary & wage $ 377,141 Labor insurance and national health insurance 35,695 Remuneration to Directors - Other employee benefits expenses 25,107 437,943 Pension expenses		Operating expenses $ 101,895 6,994 6,788 16,946 132,623 3,371 1,023 4,394 $ 137,017 Operating expenses	Operating expenses $ 101,895 6,994 6,788 16,946 132,623 3,371 1,023 4,394 $ 137,017 Operating expenses	Total $ 471,943 43,987 6,788 43,563 566,281 17,561 4,437 21,998 $ 588,279 Total	Total $ 471,943 43,987 6,788 43,563 566,281 17,561 4,437 21,998 $ 588,279 Total
	t	$		$



		$		$

$ 377,141 35,695 - 25,107 437,943			$ 97,370 6,098 6,404 13,218 123,090		$ 474,511 41,793 6,404 38,325 561,033

Defined contribution pension plan Defined benefit plan (Note 23) Total employee benefits expenses	13,415 3,524 16,939 $ 454,882	3,016 1,012 4,028 $ 127,118	16,431 4,536
			20,967
			$ 582,000

As of 2018 and Dec. 31, 2017, the company employee count is at 738 persons and 744 persons respectively, and among them the director count doubling as employees is all at 7 persons.

(VI) Remuneration to employees, Directors and Supervisors

According to the Articles of Incorporation, 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. The Company’s profit sharing bonus to employees and compensation to directors for 2018 and 2017, respectively, had been approved by the Board of Directors of the Company held on March 18, 2019 and March 23, 2018, respectively.

Estimate on ratio

March 23, 2018, respectively. Estimate on ratio
Remuneration to employees Remuneration to directors/supervisors Amount Remuneration to employees Remuneration to directors/supervisors		2018 1.0% 0.3% 2018 $ 13,673 $ 4,102		2017
				1.0% 0.3% 2017 $ 8,185 $ 2,456

If there are still changes in the amount specified in the financial statement after announcement, proceed to the accounting of change and adjusted for booking in the next fiscal year.

The actual amount for remuneration to employees, Directors and Supervisors in 2017 and 2016 did not vary from the amount recognized in the individual financial statements of 2017 and 2016.

For further information on the appropriation of remuneration to the employees and Directors and Supervisors by the Board of Taichung Commercial Bank in 2019 and 2018, visit the “MOPS” website of Taiwan Stock Exchange Corporation.

XXVII.	(VII) Impairment loss 2018 2017 Net profit of financial assets measured at cost $ - $ 10,954 Continuing department income tax (I) Main components of income tax expense (profit) recognized in profit or loss: 2018 2017 Income tax expenses in the current period Prior years adjustment $ 6,351 $ 11,728 Deferred tax Accrued in current year 12,990 2,174 Change in tax rate ( 41,900 ) - ( 28,910 ) 2,174 Income tax expense (income) recognized in profit and loss ( $ 22,559 ) $ 13,902 Adjustment of accounting income and income tax expense (gains) is as follows: 2018 2017 Income before tax from continuing operations $ 1,349,476 $ 807,889 The reconciliation of imputed income taxes on pretax income at statutory tax rate to income tax expense. (adopted tax rates of 20% and 17% for 2018 and 2017, respectively). $ 269,895 $ 137,341 Non-deductible expenses and losses for tax purposes 3,358 1,982 Non-taxable income ( 253,489 ) ( 189,843 ) Unrecognized deductible temporary differences ( 6,774 ) 52,694	r loss:	r loss:	2017 $ 10,954 2017
			$


			$

Change in tax rate ( 41,900 ) Income tax expense of prior years adjusted in the current year 6,351 Income tax expense (income) recognized in profit and loss ( $ 22,559 )	- 11,728 $ 13,902

The Company is subject to 17% tax. In February, 2018, the Income Tax Law in the R.O.C. was amended and, starting from 2018, the corporate income tax rate was adjusted from 17% to 20%. In addition, the applicable tax rate to undistributed earnings in 2018 was reduced from 10% to 5%. As the earnings distribution to be resolved in the 2019 shareholders’ meeting remains uncertain, the potential income tax consequence of levying an additional 5% income tax on the 2018 undistributed earnings cannot be reliably determined.

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

Deferred tax Accrued in current year - Re-evaluation of determined benefit plan (III) Current income tax asset Current income tax asset Tax refund receivable		2018	2018			2017 $ 2,945 ) December 31, 2017	2017 $ 2,945 ) December 31, 2017
	(	$ 6,824 ) December 31, 2018			(
			$ 2,958				$ 4,895

(IV) Deferred income tax assets and liabilities

Changes in the deferred income tax assets and liabilities are as follows: 2018

Deferred income tax assets Temporary difference Property, plant and equipment Inventory Loss allowance Others Loss credit Deferred tax liabilities Temporary difference Allowance for land increment value tax		Balance, beginning of year $ 34,141 9,484 34,832 35,270 113,727 123,707 $ 237,434 $ 866,019	Recognized in the profit or loss ( $ 2,996) 1,674 5,049 53,534 57,261 ( 28,351) $ 28,910 $ -	Recognized in the other comprehensiv e profit of loss $ - - - 6,824 6,824 - $ 6,824 $ -	Balance, end of year	Balance, end of year
						$ 31,145 11,158 39,881 95,628 177,812 95,356 $ 273,168 $ 866,019

2017

2017
Deferred income tax assets Temporary difference Property, plant and equipment Inventory Allowance for bad debt Others Loss credit Deferred tax liabilities Temporary difference Allowance for land increment value tax	Balance, beginning of year $ 34,141 9,484 35,597 33,734 112,956 123,707 $ 236,663 $ 866,019	Recognized in the profit or loss $ - - ( 765) ( 1,409) ( 2,174) - ($ 2,174) $ -	Recognized in the other comprehensiv e profit of loss $ - - - 2,945 2,945 - $ 2,945 $ -	Balance, end of year
					$ 34,141 9,484 34,832 35,270 113,727 123,707 $ 237,434 $ 866,019

(V) The deductible temporary differences of deferred income tax assets not recognized on the balance sheet

Deductible temporary differences Defined benefits plan Allowance to reduce inventory to market	December 31, 2018 $ - 282,592 $ 282,592	December 31, 2017	December 31, 2017
			$ 148,582 282,592 $ 431,174

(VI) Unused losses credit related information Loss deduction as at December 31, 2018:

Uncredited balance

Uncredited balance Last year of credit $ 476,968 2026

(VII) Income tax audit

The Company's filings of profit-seeking enterprise business income tax returns had been certified by the tax authority up till 2017.

XXVIII. Earnings per share

Basic earnings per share Diluted earnings per share		2018 $ 1.13 $ 1.13		Unit: NTD per share 2017 $ 0.66 $ 0.66

When calculating earnings per share, the impact of the stock dividend had been retroactively adjusted. The payment date of bonus shares is on September 4, 2018. Due to retrospective adjustment, the 2017 basic and diluted earnings per share changes are as follows:

Basic earnings per share Diluted earnings per share		Cum-dividend $ 0.70 $ 0.70		Unit: NTD per share Ex-dividend $ 0.66 $ 0.66

The earnings and weighted average common stock shares used in calculating the earnings per share are as follows:

Net profits of the current year Net profits of the current year Quantity Weighted average common stock shares used to calculate basic earnings per share		2018 $ 1,372,035 2018 1,211,626		2017 $ 793,987 Unit: Thousand Shares 2017 1,206,324

Effect of dilutive potential common stock: Remuneration to employees Weighted average common stock shares used to calculate diluted earnings per share	1,508 1,213,134	806
		1,207,130

If the Company may choose to have the employee compensation distributed via a stock or cash dividend, calculate the diluted earnings 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 diluted EPS is calculated in the next year resolves the number of share distribution for employee compensation, the dilution effect is also considered for such potential common shares.

XXIX. Shares Agreement on basis of payout Employee stock option plan

The company has in Nov. 217 followed three employee share-pledging plans to assign its employees with share pledging rights of 900 units, 2,743 units and 2,046 units respectively, where each unit is eligible to pledge for one thousand shares of common shares. It is granted to employees who meet the Company’s specific conditions. With the share-pledging right’s sustaining period being 1 day, the certificate holder may exercise the assigned sharepledging right throughout the share-pledging right’s sustaining period, with the share-pledging exercising price at $8.18, $8.17 and $7.78 respectively. Employee stock option information is as below:

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2017
Employees’ stock options Unit
Outstanding stock options –
----- End of picture text -----

Outstanding stock options –
beginning		-
Vested this year		5,689
Waived during the year		-
Implemented this current
year	(	5,689 )
Overdue in the current year		-
Outstanding stock options –
ending		-
Executable at end of year		-
The median fair value on
the weighed share-pledging
rights assigned in the
current year (yuan/per
share)	$	0.74
	67

The company’s employee share-pledging rights assigned to its employees in Nov. 2017 have all adopted the Black-Scholes pricing model, with input figures adopted by the pricing model as follows:

Grant-date price Exercise price Expected fluctuation rate Duration Expected dividend rate Risk-free interest rate	November 2017 NT$ 8.86 NT$ 8.18 22.288% 1 day 0% 0%	November 2017 NT$ 8.86 NT$ 8.17 22.288% 1 day 0% 0%	November 2017
			NT$ 8.86 NT$ 7.78 22.288% 1 day 0% 0%

Recognized remuneration cost for NT$4,232 thousand in 2017.

XXX. Operating lease contract

(I) The Company is the lessee.

Business leasing pertains to leasing land and aircraft, with the lease period being 1 ~ 5 years When the leasing period ends, the company does not have the priority purchasing right on the leased land and aircraft.

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

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December 31, 2018 December 31, 2017
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Less than 1 year 1 to 5 years More than 5 year	$ 36,329 623 - $ 36,952	$ 41,320 1,785 - $ 43,105

(II) The Company is the lessor.

The business lease pertains to leasing out company-owned real estate, plant and equipment, with leasing periods fall between 5~10 years. The total future minimum lease payments of the non-cancelable operating leases are as follows:

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December 31, 2018 December 31, 2017
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Less than 1 year 1 to 5 years More than 5 year	$ 3,858 57 -	$ 4,591 280 -

3,915

4,871

XXXI. Capital risk management

Under the premise of capital management for assuring sustainable operation, the Company seeks to maximize return to shareholders through the optimization of debts and equity balance. There are no change to the company’s overall strategy.

The company capital structure is made up of company net debt (meaning the borrowing minus cash and cash equivalent) and those belonging to company owner’s equity (meaning its capitalization, capital reserve, retained earnings and other equity items).

The Company’s management reviews the capital structure yearly, and the reviews include taking into consideration the cost of capital and the risks associated with each class of capital. The 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.

XXXII. Financial instruments

(I) Fair value information- Financial instruments that are not measured at fair value
The management of the Company believes that the carrying amount of financial assets and liabilities not measured by fair values approaches their fair values.
(II) Information on fair value – financial instruments at fair value on repetition.
Information on levels of fair value of financial instruments December 31, 2018

Financial assets at fair value through profit and loss Shares traded on the Taiwan Stock Exchange or OTC exchange Financial assets at fair value through profit and loss Shares traded on foreign exchange or OTC exchange Beneficiary certificates of funds	Level 1 $ 654,932 65,560 268,077	Level 2 $ - - -	Level 3 - - -	Total
				$ 654,932 65,560 268,077

Financial assets at fair value through other comprehensive profit or

Financial assets at fair value through other comprehensive profit or
loss Equity investment - Listed stocks – domestic and emerging stock - Domestic non- listed (OTC) stocks - Foreign TSEC/GTSM unlisted shares Debt instrument - Domestic corporate bonds December 31, 2017 Non-derivative financial instruments Assets Financial assets at fair value through profit and loss Stock investment Bond investment Others Available-for-sale financial assets Stock investment Bond investment	1,308,572 - - 110,000 Level 1 $ 595,634 10,700 279,033 957,897 40,000	- - - - Level 2 $ - - - - -	- 250,086 8,873 - Level 3 $ - - - - -	1,308,572 250,086 8,873 110,000 Total

				$ 595,634 10,700 279,033 957,897 40,000

Financial instruments are adjusted according to Level 3 fair value. 2018

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Financial assets at fair value
through other comprehensive
profit or loss
Financial Assets Equity Debt
instruments instruments Total
Balance, beginning of year $ 282,908 $ - $ 282,908
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Recognized in the other comprehensive income (Unrealized gain or loss on financial assets at fair value through other comprehensive profit or loss) ( 21,852) - Purchase 825 - Capital reduction and return of share capital ( 2,922) Balance, end of year $ 258,959 2017: None.	- ( 21,852) - 825 - ( 2,922) $ - $ 258,959

Techniques and input value for measurement of Level 3 fair value

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Categories of financial
instruments Evaluation techniques and input values
Investment equity not listed Market multiple method: The fair value of the
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Categories of financial instruments Investment equity not listed	Evaluation techniques and input values Market multiple method: The fair value of the
(OTC) at TWSE	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 company is the liquidity discount ratio. When the ratio increases, the fair value of the investment decreases. Sensitivity analysis is compiled as follows:

Risk factors Liquidity Discount Ratio	Changes 10%	Effects
		( $ 10,628 )

The transfer between Level 1 and Level 2 fair value did not occur in 2018 and 2017. (III) Categories of financial instruments

December 31, 2018 December 31, 2017

Financial Assets

Financial Assets
Measured at fair values through
profit and/or loss
Measured at fair value
through income under
compulsion	$	988,569	$	885,367
Loans and accounts receivable (Note
1)		-		5,048,822
Available-for-sale financial assets
(Note 2)		-		1,110,143
Financial assets on the basis of cost
after amortization (Note 3)		5,242,424		-
Financial assets at fair value through
other comprehensive profit or loss
Equity investment		1,567,531		-
Debt instrument		110,000		-
Financial Liabilities
Measured at cost after
amortization (Note 4)		15,380,795		14,169,643

Note 1: the balance includes cash and cash equivalent, notes receivable, accounts receivable, other receivables (excluding tax rebates receivable), withheld guarantee (classified as other asset in the account) and restricted asset – liquid (classified as other liquid asset in the account) and related loans and receivables measured by cost.
Note 2: The balance covers the balance of available-for-sale financial assets and financial assets on the basis of cost.
Note 3: the balance include cash and cash equivalent, notes receivable, accounts receivable, other receivables (excluding tax rebates receivable). Withheld guarantee (classified as other asset in the account) and restricted asset – liquid (classified as other liquid asset in the account) and related amortized financial asset measured by cost.
Note 4: The balances included short-term loans, short-term bills payable, notes payable, accounts payable, other payables, long-term loans and such financial liabilities measured at post-amortization costs.
(IV) Purpose and policy of financial risk management

The company’s primary financial instruments include equity and debt investment, accounts receivable, accounts payable and borrowing. The company’s financial management department shall provide services to each business unit, to plan and coordinate operations in the domestic financial markets, and to monitor and manage the 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.

Market risk

The company’s operating activities subjecting the company to shoulder key financial risks being the foreign exchange rate fluctuation risk, interest rate fluctuation risk and equity securities pricing fluctuation risk.

The exposure of market risk of the financial instruments of the Company and the management and measurement of this risk remained unchanged. (1) Exchange rate risk

The company incurs exchange rate fluctuation exposure for engaging in foreign currency-priced sales transactions. Approximately 40% of the company’s sales amount is priced by nonfunctional currency. The company’s exchange rate exposure management is within the permitted scope of the policies and with the use of forward foreign exchange contract to manage risk.

Sensitivity analysis

The company is mainly affected by the changes in the exchange rate of USD.

The Branch’s sensitivity analysis for the exchange rate of NT dollar (the functional currency) to each relevant foreign currency increased or decreased by 3% is detailed as follows. The 3% sensitivity rate is used for the Branch’s reporting exchange rate risk to management; also, it is management’s reasonable estimation of the possible fluctuation in exchange rates.

The sensitivity analysis includes only the outstanding foreign currency monetary items; also, the translation at yearend is adjusted with the change in exchange rate by 3%. The positive figures in the below table indicate that when various relevant currencies devaluating at 3%, which will affect the pretax net earnings’ amount; when NTD appreciating by 3% to various relevant currencies, its impact to the pretax net earnings will be at the same amount but in a negative figure.

The impact of the U.S. dollar

Profit and loss	2018 $ 42,724	2017
		$ 53,614

(2) Interest rate risk

Interest rate risk exposure is due to the entities within the company borrowing funds at floating interest rates.

The carrying amount of financial assets and liabilities of the Company under interest rate exposure on balance sheet date is as follows:

With fair value interest rate risk - Financial Assets - Financial Liabilities Contain cash flow interest rate risk - Financial Assets - Financial Liabilities Sensitivity analysis	December 31, 2018 $ 155,307 7,256,176 110,000 5,863,861	December 31, 2017
		$ 155,283 4,697,988 40,000 7,392,499

The following sensitivity analyses are based on the interest rate risk exposure of the derivative and non-derivative instruments on the balance sheet date. For liabilities with floating rate, it is analyzed by assuming the liabilities on the balance sheet date are outstanding throughout the reporting period. The fluctuation rate used on the interest rate in company internal report to key management level is at the interest rate

plus or minus 100 base points, which also represents company management’s assessment on rational probable fluctuation range on the interest rate.

If the interest rate increasing/decreasing by 100 base points, and under the circumstance that all other variables remain unchanged, the company’s pretax net earnings in 2018 and 2017 will also be decreased/increased by $131,205 thousand and $1209 thousand.

(3) Other price oriented risks.

The company has incurred equity pricing exposure for investing in OTC equity securities investment and beneficiary certificates. The company’s equity pricing risk primarily concentrates on equity instructions at Taiwan Stock Exchange. Sensitivity analysis

The below listed sensitivity analysis has been sought by equity pricing exposure on the balance sheet date.

If the equity price rising/falling by 15%, the company’s pretax general loss or gain in 2018 and 2017 will be increased/decreased by $305,343,000 thousand and $273,676,000 thousand respectively, due to fluctuations to the fair value of equity instruments/financial assets available for sale as measured by fair value.

2. Credit risk

Credit risk refers to the risk that the counter party delays the contractual obligation resulting in the financial loss of the Company. As of the balance sheet date, the Company’s maximum credit risk exposure of financial loss due to the counterparty’s failure in fulfilling contractual obligations is mainly derived from the book value of the financial assets recognized on the individual balance sheet.

To mitigate the credit risk, the company management has assigned designated personnel responsible for determining the line of credit cap, loan approval and adopting other adequate monitoring procedure, through which to ascertain that adequate action has been taken on recalling overdue receivables. In addition, the 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 Company’s credit risk is significantly reduced.

The 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 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 company has it defined as a counterparty with similar characteristics. State of credit risk concentration on Company A in 2018 and 2017 are at 10% and 10% respectively to the total monetary-based assets; state of other transaction opponents’ credit risk concentration in 2018 and 2017 are at 33% and 22% to the total monetary-based assets respectively.

3. Liquidity risk

The company has supported the Group’s business operation and mitigated the impact of changes in cash flow by managing and maintaining sufficient cash and cash equivalent position. The Company's management monitors the use of banking facilities and ensures the compliance of loan agreement.

Bank loan is a main source of liquidity to the company. Please refer to Note (2) “introduction of financing quota” for the Company’s unused financial quota as of December 31, 2018 and 2017.

(1) Liquidity and interest rate risk table of non-derivative financial liabilities
Non-derivative financial liabilities remaining contract maturity analysis is prepared in accordance with the consolidated company’s undiscounted cash flow of financial liabilities on the possible earliest repayment date upon request. The following table shows the earliest

times that the Company may be demanded to make immediate repayment of bank loans, without considering the likelihood of such demands. Maturity analysis of other non-derivative financial liabilities is prepared based on the agreed repayment date.

December 31, 2018

3	1~90 days $ 3,135,099 150,000 234,035 183,680 60 31~90 days	91~180 days	181 days to 1 year	More than 1 year	Total
		$ 2,615,570 - 234,035 68,198 40 91~180 days	$ 350,000 - 568,068 14,700 24 181 days to 1 year	$ - - 4,827,723 - 1,816 More than 1 year	$ 6,806,669 450,000 5,863,861 2,260,758 1,940 Total

t
	$ 13,120,037 2,594,636

$ 15,714,673 $ 15,622,572

XXXIII. Related Party Transactions

(I) Name and affilation of related parties

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Name Affiliation
Taichung Commercial Bank Subsidiary of the Company
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ted Party Transactions Name and affilation of related parties Name Taichung Commercial Bank	Affiliation Subsidiary of the Company
Pan Asia Chemical Corporation	Subsidiary of the Company
Deh Hsing Investment Co., Ltd.	Subsidiary of the Company
Reliance Securities Investment Trust	Subsidiary of the Company
Co., Ltd.
Chou Chin Industrial Co., Ltd.	Subsidiary of the Company
EUREKA INVESTMENT	Subsidiary of the Company
COMPANY LIMITED
Melasse	Subsidiary of the Company
Xiang-Feng Development	Indirect subsidiary of the
	Company
Tou-Ming Industry	Indirect subsidiary of the
	Company
Jin-Bang-Ge Industry	Indirect subsidiary of the
	Company
IOLITE COMPANY LTD.	Indirect subsidiary of the
	Company
Precious Wealth International Limited	Indirect subsidiary of the
	Company
Hammock (Hong Kong)	Indirect subsidiary of the
Company Limited	Company
Hebei Hanoshi Contact Lens Co., Ltd.	Indirect subsidiary of the
	Company
Taichung Bank Insurance Agency	Indirect subsidiary of the
Co., Ltd.	Company
Taichung Commercial Bank Lease	Indirect subsidiary of the
Enterprise	Company
Taichung Commercial Bank Securities	Indirect subsidiary of the
Co., Ltd.	Company
TCCBL Co., Ltd.	Indirect subsidiary of the
	Company

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Name Affiliation
Taichung Commercial Bank Lease Indirect subsidiary of the
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Name Taichung Commercial Bank Lease	Affiliation Indirect subsidiary of the
Enterprise (Suzhou) Ltd	Company
GREENWORLD FOOD CO., LTD.	Indirect subsidiary of the
	Company
Chou Chang Corporation	Indirect subsidiary of the
	Company
Bomy Enterprise	Indirect subsidiary of the
	Company
Bomy Shanghai	Indirect subsidiary of the
	Company
Pan-Feng Industry	Indirect subsidiary of the
	Company
Yuju Universal Corporation	Indirect subsidiary of the Company
Noble House Glory	Indirect subsidiary of the Company
Chung Chien Investment Co., Ltd.	Investors with control
Pan Asia Investment Co., Ltd.	Investors with control
Nan Chung Petrochemical Corp.	Affiliated enterprises
Wei-Kang International	Affiliated enterprises
Storm Model Management	Affiliated enterprises
BONWELL PRAISE Co., Ltd	Affiliated enterprises
Hua Nan Financial Holding	Substantial related party
Hua Nan Bank	Substantial related party
Hua Nan Insurance	Substantial related party
Hsu Tian Investment Co., Ltd	Substantial related party
TAIWAN FILAMENT WEAVING	Substantial related party
DEVELOPMENT CO., LTD.
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
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	Substantial related party
Co., Ltd.

Name Wang Wan Chin Education Foundation Sheng Yuan Cher Investment Company Chao-Qing Investment Peng Hsu Investment Company Jin Shih Chien Investment Company	Affiliation
	Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party

(II) Important transactions between the Company and related parties:
Except as disclosed in other notes, transactions between the Companies and related parties, are also as follows:
1. Goods sold

Name Pan Asia Chemical Corporation		2018 $ 972,682		2017 $ 659,156

(1) The terms and conditions of the Company’s sale to said related parties are as same as that to the general customers, other than some sales which no similar sales may be comparable to. The general customers apply the A/R settlement from 1 month ~2 months.
(2) The Company’s sales to Pan Asia Chemical Corporation primarily refer to the eto ethylene oxide and nonylphenol produced by the Company’s Kaohsiung Plant.
(3) The Company entered into the sale contract for the eto ethylene oxide, which is outlined as following:
- A. Contract period: from July 1, 2015 to June 30, 2020, subject to renegotiation upon expiry.
- B. Quantity: To be supplied based on the scheduled quantity requested by Pan Asia Chemical Corporation, provided that the Company may adjust the quantity subject to its production.
- C. Purchasing price: to be settled based on the pricing method agreed by both parties.
Purchases

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Name 2018 2017
NanChung Petrochemical
----- End of picture text -----

Corp. Pan Asia Chemical Corporation	$ 4,246,032 5,034 $ 4,251,066	$ 3,976,276 4,073 $ 3,980,349

The terms and conditions of the 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

2018 2017

Name Hua Nan Bank Taichung Commercial Bank		Balance - ending $ 111,807 47,136 $ 158,943	Interest revenue $ 181 3,720 $ 3,901		Balance - ending $ 106,293 61,454 $ 167,747	Interest revenue	Interest revenue
							$ 121 1,679 $ 1,800

Receivable (payable) accoun Name Accounts receivable Pan Asia Chemical Corporation Payable accounts and notes Nan Chung Petroch emical Corp. Pan Asia Chemical Corporation Other receivables Pan Asia Chemical Corporation Chou Chin Industrial Co., Ltd. Rental revenue Name Pan Asia Chemical Corporation Others	ts from related parties December 31, 2018	ts from related parties December 31, 2018	December 31, 2017	December 31, 2017
		$ 109,064 $ 342,359 851 $ 343,210 $ 204 252 $ 456 2018 3,187 240 3,427		$ 133,182 $ 468,898 1,191 $ 470,089 $ 204 210 $ 414 2017
Pan Asia Chemical Corporation Others	$		$ $	3,187 249 3,436
	$

The rental was negotiated and agreed based on the rental prevailing in the neighborhood, and payable per month.
1. Other income

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Name 2018 2017
Hua Nan Bank $ 6,799 $ 7,884
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Pan Asia Chemical Corporation Chou Chin Industrial Co., Ltd. TAIWAN FILAMENT WEAVING DEVELOPMENT CO., LTD. Midea	3,847 240 96 - $ 10,982	3,848 200 96 2 $ 12,030

The company’s 2018 and 2017 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.

(III) Remuneration to the management

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2018 2017
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Short-term employee benefits Retirement benefits	$ 20,288 458 $ 20,746	$ 14,231 566 $ 14,797

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:

(IV) Othe related party transaction
The company has in Nov. 2018 participated in Taichung Commercial Bank Co.’s cash reinvestment and has also increased the investment amount to $328,914 thousand, and since the pledged has not been made per the shareholding percentage, it reduces the shareholding percentage to 22.29% from 22.33%.
The company has in 2018 participated in De Hsing Investment Co.’s cash reinvestment, by newly investing in 20,000,000 shares, with investment cost at $200,000 thousand, and with the shareholding percentage remains unchanged.

The company as in 2018 participated in Ruei Jia Investment Co.’s cash reinvestment, by newly investing in 1,250,000 shares, with investment cost at $12,500 thousand, and with the shareholding percentage remains unchanged.

XXXIV. Pledged assets

The details of the company pledging its assets as bank loan’s mortgaging collateral, import duty guarantee payment, guarantee for hiring foreign workers is as follows (shown by book value):

is as follows (shown by book value):
	December 31, 2018		December 31, 2017
Restricted assets-current-pledged time
deposit	$	155,307	$	155,283
Common share investment (financial
asset classified in the account available
for sale)		-		19,229
Common share investment (financial
asset classified in the account as other
general loss or gain, measured by fair
value – nonliquid)		20,090		-
Investment under the equity method		4,121,464		4,008,361
Nonliquid asset pending for sale –
Yunlin Textile Industrial Zone land		769,610		-
Investment in real estate-Land of
Yunlin Spinning Industiral Park		34,943		804,553
Investment-based real estate – the land
and building at Erchungpu Section,
Sanchung District		704,475		713,552
Property, plant and equipment- Land		2,863,895		2,863,895
Real estate, plant and equipment –
property and building		373,509		391,689
The fund and investment-common stock	furnished as	security is stated as following:
	December 31, 2018		December 31, 2017
Available-for-sale financial assets-non-			1,148 thousand
current-Hua Nan Financial Holding		-	shares
The financial assets measured for the
fair values through other
comprehensive income- non-current-	1,148 thousand
Hua Nan Financial Holding	shares			-
Investment adopting the equity method	10,000 thousand		10,000 thousand
– Nan Chung Petrochemical Corp.	shares		shares

Investment adopting the equity method – Taichung Commercial Bank Company, Limited 294,000 thousand shares 294,000 thousand shares ificant contingent liabilities and unrecognized contractual commitments dition to those disclosed in other notes, the significant commitments and contingencies of the C The guarantee notes already issued by the Company are stated as following: December 31, 2018 December 31, 2017 Banking facility $ 14,676,846 $ 13,242,634 Advance payment and performance bond 320,000 320,000 $ 14,996,846 $ 13,562,634	Investment adopting the equity method – Taichung Commercial Bank Company, Limited 294,000 thousand shares 294,000 thousand shares ificant contingent liabilities and unrecognized contractual commitments dition to those disclosed in other notes, the significant commitments and contingencies of the C The guarantee notes already issued by the Company are stated as following: December 31, 2018 December 31, 2017 Banking facility $ 14,676,846 $ 13,242,634 Advance payment and performance bond 320,000 320,000 $ 14,996,846 $ 13,562,634	Investment adopting the equity method – Taichung Commercial Bank Company, Limited 294,000 thousand shares 294,000 thousand shares ificant contingent liabilities and unrecognized contractual commitments dition to those disclosed in other notes, the significant commitments and contingencies of the C The guarantee notes already issued by the Company are stated as following: December 31, 2018 December 31, 2017 Banking facility $ 14,676,846 $ 13,242,634 Advance payment and performance bond 320,000 320,000 $ 14,996,846 $ 13,562,634
		$ 13,242,634 320,000 $ 13,562,634

XXXV. Significant contingent liabilities and unrecognized contractual commitments
In addition to those disclosed in other notes, the significant commitments and contingencies of the Company as of balance sheet date were as follows: (I) The guarantee notes already issued by the Company are stated as following:
(II) As of December 31, 2018 and 2017, the company has issued but not used of letters of credit are at $1,952,154 thousand and $2,242,366 thousandrespectively.
(III) The company and Air Liquide Company have signed of gas purchasing contract, where the contract specifies a minimum purchasing volume for oxygen and nitrogen, with purchasing price, besides at monthly cost of approximately $13,800 thousand, which is subject to adjustment per wholesale price index in April every year, and is calculated at the contract price on oxygen and nitrogen purchasing volumes, with said purchasing contract period set to 240 months, and will be automatically extended for 36 months at contract expiry if the two parties made no contest, and if the contract needs to be terminated, a 24-month advance notice is required, with the two parties determining said contract’s starting date as July 1, 2014.

XXXVI. 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 Company: December 31, 2018

December 31, 2018
Financial Assets Monetary Items USD EURO JPY Financial Liabiliti es Monetary Items USD December 31, 2017	Foreign Currency $ 115,294 933 72,585 10,183	Foreign Exchange Rate 30.72 35.20 0.2782 30.72	Book Value
			$ 3,541,252 32,858 20,179 312,765

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Foreign Exchange
Foreign Currency Rate Book Value
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Financial Assets
Monetary
Items
USD	$	104,961	29.76	$	3,123,646
EURO		2,051	35.57		72,962
JPY		94,145	0.2642		24,873
Financial Liabiliti
es
Monetary Items
USD		7,332	29.76		218,186

The merged company’s 2018 and 2017 foreign currency exchange loss or gain (loss) (including realized and unrealized) is at $387 44,290 thousand and (314.609thousand) respectively, and since the foreign currency transaction types are innumerable, thus it is unable to disclose the impact of loss or gain by foreign currency type.

XXXVII. Disclosures

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1. Loans to others: Unit: NTD thousand, unless otherwise noted
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 CollarsRate Nature of Loan(Note 4) TransactiBusiness (Amount Noon of te 5) term loan (Note offering short-necessary for Reasons 6) for bad debtAmount of allowance Name Collateral Value Limit of loan to particular borrower (Note 7) Total limit of financing (Note 7) Remark
1 Taichung Mi Qi Ji, Ltd. Other No $ 170,000 $ - $ - 6.50% Necessary for $ - Working capital $ - Real estate $ 171,396 $ 185,896 $ 743,582 Note
Commercial receivables offering short- 9
Bank Lease term loan
Enterprise
2 Taichung Chang Hong 〃〃 50,000 21,989 21,989 4%-10% 〃 - 〃 226 Real estate 29,079 185,896 743,582 〃
Commercial International
Bank Lease Development
Enterprise Co., Ltd.
3 Taichung Yuan Mao 〃〃 100,000 - - 4%-10% 〃 - 〃 - Stock 63,180 185,896 743,582 〃
Commercial Construction Co., Ltd.
Bank Lease
Enterprise
4 Taichung Yan Xin Construction 〃〃 95,654 64,170 64,170 4%-10% 〃 - 〃 661 Real estate 58,613 185,896 743,582 〃
Commercial Co., Ltd.
Bank Lease
Enterprise
5 Taichung General Energy 〃〃 50,000 23,476 23,476 4%-10% 〃 - 〃 190 Refundabl 5,000 185,896 743,582 〃
Commercial Solutions e deposits
Bank Lease
Enterprise
6 Taichung Yi Lei Construction 〃〃 65,000 63,050 63,050 4%-10% 〃 - 〃 649 Real estate 65,161 185,896 743,582 〃
Commercial Co., Ltd.
Bank Lease
Enterprise
7 Taichung Huang Chao Golden 〃〃 30,000 16,696 16,696 4%-10% 〃 - 〃 110 Refundabl 6,000 185,896 743,582 〃
Commercial Hall Inc. e deposits
Bank Lease
Enterprise
8 Taichung Yuanli Engineering 〃〃 50,000 35,678 35,678 4%-10% 〃 - 〃 367 N/A - 185,896 743,582 〃
Commercial Co., Ltd.
Bank Lease
Enterprise
9 Taichung Kuang Ming Shipping 〃〃 100,000 100,000 - 4%-10% 〃 - 〃 - Refundabl 20,000 185,896 743,582 〃
Commercial e deposits
Bank Lease
Enterprise
10 TCCBL Co., Ltd. EVER MERIT 〃〃 73,704 18,426 18,426 5.25% 〃 - 〃 184 Stock 61,911 78,223 312,890 Note
(B.V.I.) TRADING LIMITED 10
11 TCCBL Co., Ltd. LEAGUE 〃〃 30,710 7,678 7,678 4%-10% 〃 - 〃 46 Refundabl 3,071 78,223 312,890 〃
(B.V.I.) INTERNATIONAL LI e deposits
MITED
12 TCCBL Co., Ltd. TCT CAPITAL 〃〃 49,136 - - 4%-10% 〃 - 〃 - Refundabl 4,914 78,223 312,890 〃
(B.V.I.) CO., LTD e deposits
13 TCCBL Co., Ltd. CROSS 〃〃 42,994 28,867 28,867 4%-10% 〃 - 〃 258 Refundabl 3,071 78,223 312,890 〃
(B.V.I.) BORDER PROFITS L e deposits
IMITED
14 TCCBL Co., Ltd. TCT CAPITAL 〃〃 49,136 49,136 49,136 4%-10% 〃 - 〃 442 Refundabl 4,914 78,223 312,890 〃
(B.V.I.) CO., LTD e deposits
15 Taichung Sanyuan Construction Loan by 〃 169,936 - - 10% 〃 - Capital - Real estate 1,783,693 291,216 291,216 Note
Commercial (Qingdao) mandate Expenditures 11
Bank Leasing Development
(Suzhou) Ltd. Co., Ltd.
16 Taichung Zhangjiajie Zhongjun 〃〃 26,832 26,832 26,832 9.6% 〃 - 〃 402 Real estate 241,086 291,216 291,216 〃
Commercial Real Estate
Bank Leasing
(Suzhou) Ltd.
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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.
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.
Endorsements/guarantees to others:

										Unit: NTD thousand, un	Unit: NTD thousand, un	less other	wisenoted
		Endorsed/	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	Chou Chin Industrial Co., Ltd.	GREENWORLD FOOD CO., LTD.	Subsidiary of Chou Chin Industrial Co., Ltd.	$ 654,029	$ 15,000	$ 15,000	$ -	$ -	1.15	$ 1,308,183	－	－	－
2	Taichung Commercial Bank Lease Enterprise	TCCBL Co., Ltd.	Subsidiaries of Taichung Commercial Bank	11,153,738	2,510,000	1,221,512	377,733	-	66.99	18,859,563	－	－	－
2	Taichung Commercial Bank Lease Enterprise	Taichung Commercial Bank Leasing (Suzhou) Ltd.	Subsidiaries of Taichung Commercial Bank	11,153,738	2,083,830	2,083,830	1,282,320	-	114.28	18,859,563	－	－	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.

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3. Holding of marketable securities at the end of the period Unit: Thousand shares / NT$ in thousand
Holder of Ending
Securities Type and Name of Securities Affiliation with Securities Issuer Account Title Quantity Book Value Shareholding % Market Value Remark
China Man- Shares traded on the Taiwan
Made Fiber Stock Exchange or OTC
Corporation exchange
Taiwan Business Bank N/A Financial assets mandatorily 57,390 $ 593,987 1 $ 593,987
measured at fair value through profit
or loss- current
First Financial Holding Yung Shin Global Holding ″″ ″″ 1,853279 37,06610,979 -- 37,06610,979
Oriental Union Chemical ″ ″ 500 12,900 - 12,900
Corporation (OUCC)
Hua Nan Financial Holding CHINA MAN-MADE FIBER Equity instrument investments 60,581 1,060,161 1 1,060,161 1,148 thousand
CORPORATION is its corporate measured at fair value through other shares pledged
director. comprehensive income- non-current
Maxigen Biotech Inc.Taiwan Tea Corporation N/A″ ″″ 15,000569 231,75013,178 12 231,75013,178
Shares traded on foreign
exchange or OTC exchange
Citigroup Inc. N/A Financial assets mandatorily 41 65,560 - 65,560
measured at fair value through profit
or loss- current
Domestic Emerging Stock Board
JiMicron Technology N/A Equity instrument investments 270 3,482 - 3,482
measured at fair value through other
comprehensive income- non-current
Non listed (OTC) domestic stock
EVERSOL CORP. N/A Financial assets mandatorily 3,450 - 1 -
measured at fair value through profit
or loss- current
Sunny Bank N/A Equity instrument investments 2,309 21,792 - 21,792
measured at fair value through other
comprehensive income- non-current
Formosa Imperial Wineseller Affiliate ″ 1,900 - 10 -
Corp.
China Man- Non listed (OTC) domestic stock
Made Fiber
Corporation
TAIWAN FILAMENT CHINA MAN-MADE FIBER Equity instrument investments 11,542 $ 33,472 20 $ 33,472
WEAVING DEVELOPMENT CORPORATION is its corporate measured at fair value through other
CO., LTD. director. comprehensive income- non-current
WK Technology Fund N/A ″ 598 7,174 3 7,174
Pu Shih Joint Venture(??) ″ ″ 682 3,683 2 3,683
Minchali Metal Industrial ″ ″ 7,193 91,348 3 91,348
Co., Ltd.
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Holder of Ending Remark
Securities Type and Name of Securities Affiliation with Securities Issuer Account Title Quantity Book Value Shareholding % Market Value
TWSE ″ ″ 1,232 89,500 - 89,500
Everterminal Co., Ltd. ″ ″ 298 3,118 - 3,118
China Trade & Development ″ ″ 756 - 1 -
Corp.
Chia Hsin Food and Synthetic ″ ″ 103 - - -
Fiber Co., Ltd.
Taitung Business Bank ″ ″ 4,027 - 1 -
Non-listed (OTC) overseas stock
UNFON CONSTRUCTION Affiliate Equity instrument investments 3,250 8,873 18 8,873
CO., LTD (Hong Kong) measured at fair value through other
comprehensive income- non-current
Beneficiary certificate
Reliance Wealth Bond Fund Fund managed by Reliance Financial assets mandatorily 6,403 69,056 - 69,056
Securities Investment Trust Co., Ltd. measured at fair value through profit
or loss- current
Reliance emerging stock portfolio ″ ″ 4,531 45,669 - 45,669
fund
The RSIT First Digital Fund ″ ″ 1,842 47,911 - 47,911
Reliance Da-Fa Fund ″ ″ 1,505 38,284 - 38,284
Reliance Taiwan Main Stream ″ ″ 3,042 51,047 - 51,047
Small & Medium Cap Fund
Yuanta Shanghai and Shenzhen N/A ″ 1,500 16,110 - 16,110
China Man-Made Domestic corporate bonds
Fiber Corporation
Taichung Commercial Bank Subsidiar of China Man-Made Fiber Debt instrument investments 110,000 110,000 - 110,000
financial bonds Corporation measured at fair value through other
comprehensive income- non-current
Deh Hsing Shares traded on the Taiwan
Investment Stock Exchange or OTC
Co., Ltd. exchange
China Man-Made Fiber Parent company of Deh Hsing Equity instrument investments 10,491 $ 107,005 - $ 107,005
Corporation Investment Co., Ltd. measured at fair value through other
comprehensive income- current
Non listed (OTC) domestic stock
Unicon Vision Corp. N/A Equity instrument investments 1,293 15,196 - 15,196
measured at fair value through other
comprehensive income- current
Formosa Imperial Wineseller Affiliate ″ 2,000 - 10 -
Corp.
Wan Tai Lease Co., Ltd. N/A ″ 628 - 3 -
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Holder of Ending Remark
Securities Type and Name of Securities Affiliation with Securities Issuer Account Title Quantity Book Value Shareholding % Market Value
Beneficiary certificate
Reliance emerging stock portfolio Fund managed by Reliance Securities Financial assets mandatorily 2,004 20,196 - 20,196
fund Investment Trust Co., Ltd. measured at fair value through
profit or loss- current
Reliance Wealth Bond Fund ″ 〃 458 4,942 - 4,942
The RSIT First Digital Fund ″ 〃 67 1,746 - 1,746
Pan Asia Shares traded on the Taiwan Stock
Chemical Exchange or OTC exchange
Corporation
China Man-Made Fiber Corporation Parent company of Pan Asia Chemical Equity instrument investments 236,096 2,408,182 16 2,408,182 77,954 thousand
Corporation measured at fair value through other shares pledged
comprehensive income- non-current
Yuan Ji Solar Technology N/A 〃 2,322 15,096 1 15,096
Domestic Emerging Stock Board
JiMicron Technology N/A Equity instrument investments 440 5,738 1 5,738
measured at fair value through other
comprehensive income- non-current
Pan Asia Non listed (OTC) domestic stock
Chemical
Corporation
TWSE N/A Equity instrument investments 254 $ 18,509 - $ 18,509
measured at fair value through other
comprehensive income- non-current
Chung Chien Investment Co., Ltd. Affiliate 〃 12,000 25,440 18 25,440
Chung Shing Textile Co., Ltd. N/A 〃 120 - - -
Domestic corporate bonds
Taichung Commercial Bank financial Subsidiary of China Man-Made Fiber Debt instrument investments 200,000 200,000 - 200,000
bonds Corporation measured at fair value through other
comprehensive income- non-current
Reliance Non listed (OTC) domestic stock
Securities
Investment Trust
Co., Ltd.
Taiwan Futures Exchange N/A Equity instrument investments 1,169 89,803 - 89,803
measured at fair value through other
comprehensive income- non-current
Beneficiary certificate
THE RSIT ENHANCED MONEY Fund managed by Reliance Securities Financial assets mandatorily 1,023 12,221 - 12,221
MARKET FUND Investment Trust Co., Ltd. measured at fair value through
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 FundThe RSIT First Digital FundReliance Chinese Selected Growth Equity Fund ″″″ ″″″ 160205815 4,0735,3218,030 --- 4,0735,3218,030
Reliance Taiwan Main Stream Small & ″ ″ 262 4,400 - 4,400
Medium Cap Fund Reliance emerging stock portfolio fund ″ ″ 965 9,726 - 9,726
Yuanta S&P 500 single-day leveraged 1X N/A ″ 25 365 - 365
inverse
Shin Kong Multi-Asset ″ ″ 100 825 - 825
Chou Chin Shares traded on the Taiwan Stock Exchange or
Industrial Co., Ltd. OTC exchange
Taiwan Business Bank N/A Equity instrument investments 965 9,993 - 9,993
measured at fair value through
other comprehensive income-
current
Chou Chin Shares traded on the Taiwan Stock Exchange or
Industrial Co., Ltd. OTC exchange
Taichung Commercial Bank Co. China Man-Made Fiber Corporation Equity instrument investments 6,044 $ 61,649 - $ 61,649
measured at fair value through
other comprehensive income-
current
China Man-Made Fiber Corporation Parent of Chou Chin Industrial ″ 55,514 566,247 4 566,247 45,000 thousand shares
Co., Ltd. pledged
Hua Nan Financial Holding CHINA MAN-MADE FIBER ″ 18,430 322,528 - 322,528 9,530 thousand shares
CORPORATION is its corporate pledged
director.
Non listed (OTC) domestic stock
Sunny Bank N/A Equity instrument investments 1,154 10,413 - 10,413
measured at fair value through
other comprehensive income-
non-current
Beneficiary certificate
Reliance Wealth Bond Fund Fund managed by Reliance Securities Financial assets mandatorily 916 10,000 - 10,000
Investment Trust Co., Ltd. measured at fair value through
profit or loss- current
Reliance Taiwan Main Stream Small & ″ ″ 111 2,000 - 2,000
Medium Cap Fund
Domestic corporate bonds
Taichung Commercial Bank financial bonds Subsidiary of China Man-Made Debt instrument investments 850,000 850,000 - 850,000 750,000 thousand
Fiber Corporation measured at fair value through shares pledged
other comprehensive income-
current
Chou Chang Shares traded on the Taiwan Stock Exchange or
Corporation OTC exchange
Taichung Commercial Bank Co. Subsidiary of China Man-Made Equity instrument investments 12,073 123,142 - 123,142 10,000 thousand shares
Fiber Corporation measured at fair value through pledged
other comprehensive income-
non-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	China Man-Made Fiber Corporation Non listed (OTC) domestic stock Hsin Tung Yang Chou Chin Industrial Co., Ltd. Domestic corporate bonds	Ultimate parent of Chou Chin Industrial Co., Ltd. N/A The investor evaluating Chou Chang Corporation under equity method	″ 8,683 Equity instrument investments measured at fair value through other comprehensive income- non-current 64 ″ 404		88,569 $ 691 2,603	1 - 1	88,569 $ 691 2,603	4,000 thousand shares pledged
	Taichung Commercial Bank financial bonds	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	350,000 thousand shares pledged

Note: Taichung Commercial Bank and its subsidiaries are exempt from disclosure due to that they are in the financial, insurance and securities businesses.

Cumulative amount of the same marketable securities purchased or sold reaching NT$300 million or more than 20% of the Paid-in sharescapital. Unit: NTD thousand\ thousand shares

Buyer/Seller	Type and Name of Securities	Account Title	Trading Counterpart	Affiliatio n	Begi	nning	Bo	ught		Sold			End of	period (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 Corporation	Taichung Commercial Bank common stocks	Investments adopting the equity method / consolidated and individual	Subscriptio n of capital increase	Subsidiar ies	735,234	$ 9,719,925	32,246	$ 328,914	-	$ -	$ -	$ -	785,861	$10,688,164

Note 1: The number of shares at the end of period includes stock dividends allocated in the period. The amount at the end of period includes the profit and loss and the other comprehensive income of subsidiaries, associate companies and joint venture adopting the equity method.

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 Fiber Nan Chung Petrochemical China Man-Made Fiber Corporation Purchase $ 4,246,032 23% 30~60 days Not distinctive 30~90 days ( $ 342,359 ) ( 18% )
Corporation Corp. Investee valued under equity method for the
general
transactions
China Man-Made Fiber Pan Asia Chemical Subsidiary of China Man-Made Sale ( 972,682 ) 5% 30~60 days 〃〃 109,064 4%
Corporation Corporation Fiber Corporation
Pan Asia Chemical China Man-Made Fiber Parent company of Pan Asia Purchase 972,682 64% 30~60 days 〃〃 ( 109,064 ) 74%
Corporation Corporation Chemical Corporation
Chou Chin Industrial GREENWORLD FOOD Subsidiary of Chou Chin Industrial Sale ( 1,110,182 ) 44% A/C 120 days - - 172,591 59%
Co., Ltd. CO., LTD. Co., Ltd.
GREENWORLD Chou Chin Industrial Parent company of GREENWORLD Purchase 1,110,182 80% A/C 120 days - - ( 172,591 ) ( 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
Receivables with related
Company of receivables on book Counterpart Trading Affiliation Balance of receivables with related party Turnover Rate Amount related partMode y party after period collection Amount of allowance for bad debt
of Processing
China Man-Made Fiber Pan Asia Chemical Subsidiary of China Man-Made $ 109,064 8.03 $ - － $ 90,106 $ -
Corporation Corporation Fiber Corporation
Chou Chin Industrial GREENWORLD A subsidiary of Chou Chin Industrial 172,591 5.72 - － 129,561 -
Co., Ltd. FOOD CO., LTD. Co., Ltd.
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Transactions in engaging in derivative financial instruments. (None)

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 Ownership by the Company Percentage % Book Value Current period net gain (loss) of the investee Investment gain (loss) recognized in current period Remark
China Man-Made Fiber Taichung Commercial Bank Co. Taichung City Banking business $ 6,355,643 $ 6,026,729 785,861 22 $ 10,688,164 $ 4,008,369 $ 894,873 294,000
Corporation thousand shares
pledged
Pan Asia Chemical Corporation Taipei City Petrochemical business 968,472 968,472 118,918 44 968,868 247,122 98,840
Nan Chung Petrochemical Corp. Yunlin County Petrochemical business 1,000,002 1,000,002 100,000 50 1,228,959 176,872 88,436 10,000 thousand
shares pledged
Deh Hsing Investment Co., Ltd. Taipei City General investment business 1,350,000 1,150,000 135,000 100 1,299,536 8,617 7,633
Reliance Securities Investment Trust Taipei City Securities investment trust business 6,295 6,295 922 3 11,767 ( 17,464 ) ( 515 )
Co., Ltd.
Chou Chin Industrial Co., Ltd. Changhua County Manufacturing and trading 176,430 176,430 27,742 46 297,468 122,295 53,985
EUREKA INVESTMENT Taipei City General investment business 37,500 25,000 3,750 100 35,410 ( 354 ) ( 354 )
COMPANY LIMITED
Melasse Taipei City Cosmetics and cleaning appliances 14,500 14,500 1,450 50 14,450 660 330
manufacturing
Pan Asia Chemical Taichung Commercial Bank Taichung City Banking business 1,347,834 1,281,391 201,964 6 2,740,295 4,008,369 231,891
Corporation
Reliance Securities Investment Trust Taipei City Securities investment trust business 15,738 15,738 979 3 12,525 ( 17,464 ) ( 548 )
Co., Ltd.
Melasse Taipei City Cosmetics and cleaning appliances 14,500 14,500 1,450 50 14,750 660 330
manufacturing
Taichung Commercial Bank Taichung Commercial Bank Lease Taichung City Leasing industry 1,800,000 1,800,000 185,000 100 1,858,956 81,821 81,821
Co. Enterprise
Taichung Bank Insurance Agency Taichung City Insurance agency 6,000 6,000 128,600 100 1,828,479 360,429 360,420
Co., Ltd.
Taichung Commercial Bank Taichung City Securities business 1,500,000 1,500,000 150,000 100 1,383,843 219 219
Securities Co., Ltd.
Reliance Securities Investment Trust Taipei City Securities investment trust business 120,000 120,000 12,000 38 153,423 ( 17,464 ) ( 6,716 )
Co., Ltd.
Taichung Commercial TCCBL Co., Ltd. British Virgin Financing, leasing and investments. 893,373 893,373 30,000 100 782,226 21,246 21,246
Bank Lease Enterprise Islands
TCCBL Co., Ltd. Taichung Bank Leasing (Suzhou) Suzhou Financing Leasing and investments 893,373 893,373 186,329 100 728,040 8,660 8,660
Deh Hsing Investment Taichung Commercial Bank Co. Taichung City Banking business 86,017 82,468 10,787 - 152,744 4,008,369 12,415 4,500 thousand
Co., Ltd. shares pledged
Pan Asia Chemical Corporation Taipei City Petrochemical business 150,612 150,612 12,558 5 216,592 247,122 11,590
Reliance Securities Investment Trust Taipei City Securities investment trust business 20,162 9,900 1,716 6 21,939 ( 17,464 ) ( 323 )
Co., Ltd.
Chou Chang Corporation Taichung City Distribution and warehousing of 44,000 44,000 4,000 15 37,161 16,136 2,277
beverages
Chou Chin Industrial Co., Ltd. Changhua County Manufacturing and trading 10,243 10,243 1,482 3 32,344 122,295 3,069
Xiang-Feng Development Taipei City General investment business 283,000 200,000 28,300 100 266,380 ( 3,496 ) ( 3,496 )
Wei-Kang International Taipei City Retail 5,000 5,000 300 30 3,298 ( 3,670 ) ( 1,101 )
IOLITE COMPANY Ltd.Storm Model Management SamoaTaipei City General investment businessGeneral Advertising Services 502,5798,000 410,104- 16,005200 10040 452,4377,747 (( 11,3152,544 )) (( 11,315254 ))
IOLITE COMPANY Ltd. Hammock (Hong Kong) Hong Kong General investment business 470,685 378,540 15,000 100 421,723 ( 11,277 ) ( 11,277 )
Company Limited
Hammock (Hong Kong) Hebei Hanoshi Contact Lens Hebei Province Manufacturing and trading 470,685 378,540 15,000 100 422,290 ( 11,014 ) ( 11,014 )
Company Limited Co., Ltd.
Precious Wealth Samoa General investment business 10,969 - 375 100 11,489 ( 14 ) ( 14 )
International imited
Hammock (Hong Kong) Hebei Hanoshi Contact Lens Hebei Province Manufacturing and trading 470,685 378,540 15,000 100 422,290 ( 11,014 ) ( 11,014 )
Company Limited Co., Ltd.
Xiang-Feng Development Tou-Ming Industry Taipei City Real estate trading and leasing industry 221,900 168,900 22,190 99 205,905 ( 3,289 ) ( 3,287 )
Tou-Ming Industry Jin-Bang-Ge Industry Taipei City Real estate trading and leasing industry 152,000 152,000 15,200 99 138,595 ( 2,917 ) ( 2,898 )
Chou Chin Industrial GREENWORLD FOOD CO., LTD. Taichung City Food manufacturing, and distribution and 233,348 233,348 17,508 90 29,226 54,514 49,864
Co., Ltd. warehousing of beverages
Chou Chang Corporation Taichung City Distribution and warehousing of 307,977 307,977 13,054 48 121,292 16,135 7,784
beverages
Pan-Feng Industry Taipei City Restaurant industry 14,897 14,897 1,500 100 1,849 ( 2,875 ) ( 2,875 )
Bomy Enterprise British Virgin General investment business 223,248 223,248 10,000 49 125,739 ( 24,173 ) ( 11,694 )
Islands
Yuju Universal CorporationBONWELL PARISE Co., Ltd. SamoaSamoa General investment businessInternational trade 24,5731,832 13,568- 81060 9040 23,1231,808 (( 1,91186 )) (( 1,72035 ))
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Investor	Investor	Location	Major Business Lines	Initial Invest	ment Amount	EquityO	wnershipbyt	he Company	Current period net gain (loss) of the investee	Investment gain (loss) recognized in current period Remark
				Current period-ending	Previous period-ending	Quantity	Percentage %	Book Value
Yuju Universal Corporation	Noble House Glory	Japan	Short-term accommodation service	24,345	8,193	1,800	100	23,175	( 1,773 )	( 1,773 )
GREENWORLD FOOD CO., LTD. Bomy Enterprise	Chou Chang Corporation Bomy Enterprise Bomy Shanghai	Taichung City British Virgin Islands Shanghai City	Distribution and warehousing of beverages General investment business OEM, production and marketing of canned vegetable and fruit juice, and beverages	1,470 52,306 638,972	1,470 52,306 638,972	51 2,650 1,985	- 13 99	328 33,333 277,014	16,135 ( 24,173 ) ( 24,355 )	- ( 3,100 ) ( 24,173 )
Chou Chang Corporation	GREENWORLD FOOD CO., LTD.	Taichung City	Food manufacturing, and distribution and warehousingof beverages	11,224	11,224	1,133	6	6,390	54,514	3,350

(II) Information about investment in Mainland China:

Names of investees in China, major business lines, paid-in capitals, method of investment, facts of outward and inward remittances, profit and/or loss in investments, shareholding percentages, book values of investment at end of the term, investment profit and/or loss having been remitted back, limits of investment in China

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Unit: NTD thousand and foreign currency thousand
Investment Remittance or The Accumulated
Investee Major Business Lines Paid-in capital investment Mode of Taiwan in accumulation Amount remitted from at beginning of the Regain during the current period accumulation at ending Amount remitted from Taiwan in Current period net gain (loss) of the investee Company’ s Investment Direct or Indirect current period (Note (loss) recognized in Investment gain Investment at end Book Value of year remitted amount back to Taiwan
present term Remittance Regain of the present term Holding 3) Investment
Ratio % income
Bomy Shanghai OEM, production and $ 645,000 Through a third $ 638,972 $ - $ - $ 638,972 ( $ 24,355 ) ( 62% ( $ 14,993 ) ( $ 170,530 $ -
marketing of canned ( USD 20,000 ) region ( USD 19,850 ) ( USD 19,850) USD 808 ) (Note 1) USD 497 ) ( USD 5,552)
vegetable and fruit juice, Investment to (Note 4) (2)C
and beverages establish
companies
Re-investment
Chou Chin Manufacturing, processing 30,746 〃 14,486 - - 14,486 - 49% - - -
Shanghai and sale of modem, PC, ( USD 1,001 ) ( USD 450 ) ( USD 450) (Note 2)
computer shell and related
metal stamping, interface,
main frame and fiber
optical system appliances
Hebei Hanoshi Manufacturing and trading 470,685 〃 378,540 92,145 - 470,685 ( 11,014 ) 100% ( 11,014 ) 422,290 -
Contact Lens ( USD 15,000 ) ( USD 12,000 ) ( USD3,000) ( USD 15,000) ( RMB2,363 ) ( RMB2,363 ) ( RMB 77,172)
Co., Ltd. (2)B
Taichung Financing Leasing and 893,373 〃 893,373 - - 893,373 8,600 29% 2,511 ( 211,106 -
Bank Leasing investments ( RMB 186,329 ) ( RMB 186,329 ) ( RMB186,329) ( RMB1,900 ) (Note 3) RMB 551 ) ( RMB 47,206)
(Suzhou) (2)B
Amount accumulated, remitted from Taiwan for investment Investment Amount Approved by Investment Mainland China Investment Ceiling As Regulated by
in Mainland China at the end of the current term Commission of MOEA Investment Commission of MOEA (Note 4)
$ 2,017,516 (US$35,300 and RMB186,329) $2,201,806（US$41,300 and RMB186,329） $ 2,719,775
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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 Taichung Bank Leasing through investment in companies in the third region.
Note 4: 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.
Note 5: 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 6: The foreign currency, if any, has been translated into NTD (USD1=NT$30.72, USD1=NT$30.15, CNY1=NT$4.47, CNY1=$4.56) 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 87 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)

AI assistant

CMFC — Audit Report / Information 2018

51899_rns_2018-11-14_bd459d87-6177-4908-b35d-74afb6fc9ba4.pdf

Independent Auditor’s Audit Report

To CHINA MAN-MADE FIBER CORPORATION:

Audit opinions

The basis for opinions

Key audit matter

Authenticity of specific sales revenue

Other information

Responsibilities of Management and Those in Charge with Governance of the Individual Financial Statements

Auditor’s Responsibilities for the Audit of the Individual Financial Statements

CHINA MAN-MADE FIBER CORPORATION Individual Balance Sheets

CHINA MAN-MADE FIBER CORPORATION

Individual Income Statement

January 1 to December 31, 2018 and 2017

CHINA MAN-MADE FIBER CORPORATION Individual Statements of Cash Flow

January 1 to December 31, 2018 and 2017

Notes to the Individual Financial Statements

I. Company Profile

II. Financial reporting date and procedures

2. IFRS 15 “Revenue from Contracts with Customers” and relating amendments

1. IFRS 16 “Leases”

Definition of lease

The Company is the lessee.

(I) Statement of Compliance

(II) Basis of Preparation

(IV) Corporate Merger

(V) Foreign currencies

2. Investments in the affiliated company

Proprietary land is not depreciated.

(IX) Investment property

(X) Intangible assets

2. Derecognition

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

2018

2017

2018

(XIV) Shares held in vault

2018

2017

(XIX) Income tax

VI. Cash and cash equivalents

IX. Credit risk management for investment in debt instruments – Year 2018

December 31, 2017

(I) Accounts receivable and notes receivable

2018

XX. Other assets

(III) Long-term borrowings

(I) Defined contribution plan

(II) Defined benefit plan

XXIV. Other liabilities

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

(V) Treasury stock

(I) Other income and earnings and expense and loss

(III) Financial costs

Estimate on ratio

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

(IV) Deferred income tax assets and liabilities

(VII) Income tax audit

XXIX. Shares Agreement on basis of payout Employee stock option plan

XXX. Operating lease contract

XXXI. Capital risk management

XXXII. Financial instruments

Financial assets at fair value through other comprehensive profit or

Financial Assets

The impact of the U.S. dollar

2. Credit risk

3. Liquidity risk

December 31, 2018

XXXIV. Pledged assets

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

XXXVII. Disclosures

(Continued from previous page)

(Continued from previous page)

(Continued from previous page)

(Continued from previous page)

(Continued from previous page)

(II) Information about investment in Mainland China:

More from CMFC

CMFC Audit Report / Information 2018