CMFC — Audit Report / Information 2019

Nov 14, 2019

China Man-Made Fiber Corporation and Subsidiaries

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

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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, 2019 and 2018, 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, 2019 and 2018, 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.

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 2019. 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 2019 included:

Authenticity of specific sales revenue Notes to key audit matters

In 2019, the sales revenue of specific products of the Chemical Fibers of China Man-Made Fiber is NT$2,261,053 thousand, revenue of the Chemical Department to specific customers is NT$1,807,228 thousand, accounting for 30% of the standalone net sales. The gross profit of the specific products and customers is relatively high. Therefore, the authenticity of sales revenue of specific products from the Chemical Fibers and Chemical Departments 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

1. Understand and test the design and operating effectiveness of the internal control system of specified departments and sales revenue to customers.

2. Sampling inspection of the abovementioned sales revenue of specified departments and customers, including the shipping, custom and collection documents, in order to test the authenticity of sales.

3. 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 14 of the standalone financial statements, the amount of investment in Taichung Commercial Bank by China Man-Made Fiber adopting the equity method was NT$11,465,093 thousand, accounting for 31% of the total assets as of December 31, 2019. 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 2019, the balance of discounting and advance and the expected credit loss from Taichung Commercial Bank are NT$435,398,334 thousand and NT$509,127 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

1. 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.

2. 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.

3. 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.

4. Review of conformity of appropriated amounts with requirements set forth in relevant decrees and ordinances of the competent authority

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, 2019 and 2018 are NT$1,170,017 thousand and NT$1,228,959 thousand, respectively. The gains and losses from subsidiaries, affiliates and joint ventures and other sources adopting the equity method in the other auditors’ reports for 2019 and 2018 are NT$17,337 thousand and NT$88,436 thousand, respectively. The information on investees in Note 34 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 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 Man-Made 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:

1. 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.

2. 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..

3. Evaluate the appropriateness of accounting policies used and the reasonability of accounting estimates and related disclosures made by the management.

4. 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.

5. 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.

6. Obtain sufficient and appropriate audit evidence on the financial information of business entities within the China Man-Made 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 ManMade 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 2019 and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communications.

Deloitte & Touche

CPA: Hsu Wen-Ya

CPA: Oscar Shih

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

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

March 16, 2020

CHINA MAN-MADE FIBER CORPORATION Individual Balance Sheets

December 31, 2019 and 2018

Unit: NTD thousand

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December 31, 2019 December 31, 2018
Code Assets Amount ％ Amount ％
Current assets
1100 Cash and cash equivalents (Note 4, 6 and 30) $ 1,902,997 5 $ 2,218,749 6
1110 Financial assets through profit and/or loss with measuring for the faire
values-current (Note 4 and 7) 600,725 2 988,569 3
1150 Notes receivable (Note 4 and 10) 46,787 - 164,312 1
1170 Accounts receivable - non-related parties (Note 4 and 10) 1,594,045 4 2,447,236 6
1180 Accounts receivable - non-related parties (Note 4, 10 and 30) 170,057 1 109,064 -
1200 Other receivable (Note 4, 10 and 30) 13,833 - 29,601 -
1220 Current income tax asset (Notes 4 and 26) 4,160 - 2,958 -
130X Inventory (Note 4 and 11) 1,169,176 3 2,303,352 6
1410 Prepaid (Note 12) 609,816 2 797,830 2
1460 Non-current Assets Held for Sale - net (Note 4, 13 and 31) 769,610 2 769,610 2
1470 Other current assets (Note 19 and 31) 112,975 - 162,928 -
11XX Total current assets 6,994,181 19 9,994,209 26
Non-Current assets
1517 Financial assets at fair value through other comprehensive income- non-
current (Note 3, 8 and 31) 2,087,867 5 1,677,531 4
1550 Investment by equity method (Note 4, 14 and 31) 15,683,072 42 14,544,622 37
1600 Real estates, plant and equipment - net (Notes 4, 15 and 31) 10,917,846 29 11,286,138 29
1755 Right-of-use assets (Note 3, 4 and 16) 20,413 - - -
1760 Real estate investments - net (Note 4, 17 and 31) 1,112,465 3 990,778 3
1780 Intangible assets – net (Note 4 and 18) - - 9 -
1840 Deferred income tax assets – net (Notes 4 and 26) 648,812 2 273,168 1
1990 Other assets (Note 19) 118,185 - 118,155 -
15XX Total non-current assets 30,588,660 81 28,890,401 74
1XXX Total assets $ 37,582,841 100 $ 38,884,610 100
Code Liabilities and equity
Current liabilities
2100 Short-term loans (Note 20 and 31) $ 6,441,013 17 $ 6,806,669 17
2110 Short-term bills payable (Note 20) 648,285 2 449,507 1
2150 Payable notes 21,104 - 36,420 -
2170 Accounts payable - non-related parties 738,751 2 1,538,390 4
2180 Accounts payable - related parties (Note 30) 307,149 1 343,210 1
2219 Other accounts payable (Note 21) 299,966 1 342,738 1
2280 Lease liabilities – current (Note 3, 4 and 16) 11,983 - - -
2320 Long-term liability due in one year or one business cycle (Note 20 and
31) 2,091,505 5 1,036,138 3
2399 Other current liabilities 33,081 - 44,533 -
21XX Total of current liabilities 10,592,837 28 10,597,605 27
Non-current liabilities
2540 Long-term loans (Note 20 and 31) 3,926,318 11 4,827,723 13
2550 Liability reserve (Note 4 and 22) 162,402 - 158,605 -
2570 Deferred tax liabilities (Note 4 and 26) 866,019 2 866,019 2
2580 Lease liabilities – non-current (Note 3, 4 and 16) 8,598 - - -
2670 Other liabilities (Note 4 and 23) 22,904 - 21,150 -
25XX Total non-current liability 4,986,241 13 5,873,497 15
2XXX Total liabilities 15,579,078 41 16,471,102 42
Equity (Note 24)
3110 Common stock capital 16,213,672 43 15,224,105 39
3200 Capital surplus 1,710,808 5 1,694,875 4
Retained earnings
3310 Legal reserve 855,476 2 718,272 2
3320 Special reserve 1,936,126 5 1,956,409 5
3350 Undistributed earnings 2,220,569 6 4,231,450 11
Other equity
3410 Exchange differences from the translation of financial statements of
- -
foreign operations ( 86,995 ) ( 54,591 )
3420 Unrealized gain or loss on financial assets at fair value through other
comprehensive profit or loss 382,016 1 ( 129,103 ) -
3500 Treasury stock ( 1,227,909 ) ( 3 ) ( 1,227,909 ) ( 3 )
3XXX Total equity 22,003,763 59 22,413,508 58
Total Liabilities and Equity $ 37,582,841 100 $ 38,884,610 100
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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 16, 2020)

Chairman: Kuei-Hsien Wang

Manager: Ming-Shang Chuang

Accounting Supervisor: Kuo Hua Lin

CHINA MAN-MADE FIBER CORPORATION

Individual Income Statement

January 1 to December 31, 2019 and 2018

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Unit: NTD Thousand, except for earnings (losses) per share in NTD
2019 2018
Code Amount ％ Amount ％
4000 Operating income (Note 4 and 30) $ 13,591,338 100 $ 20,064,863 100
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5000 Operating expenses (Note 4, 11, 25 and 30) 5900 Gross (loss) profit ( 5910 Realized gain on the subsidiary, affiliated company and joint ventures (Note 4) 5950 Realized gross profits (losses) ( Operating expenses (Note 4 and 25) 6100 Marketing expenses ( 6200 Administrative and general affairs expenses ( 6450 Expected credit reversal benefit 6000 Total operating expenses ( 6900 Operating gains (losses) ( 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 30) 7130 Dividend income (Note 4) 7190 Other gains and losses (Note 25 and 30) 7230 Foreign exchange gain (loss) – net ( 7235 Gain (loss) on financial assets and liabilities at fair value through profit and loss (Note 4 and 25) 7610 Losses from disposal of property or equipment 7510 Financial cost (Note 4 and 25) ( 7000 Total non-operating revenues and expenses 7900 Income (loss) before tax from continuing operations ( 7950 Income tax gains (Note 4 and 26) 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 22) ( 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 26) 8310 Items that may be re-classified subsequently under profit or loss 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 (losses) per share (Note 27) 9750 Basic earnings per share (losses) ( 9850 Diluted earnings per share (losses) (	15,268,683 1,677,345 ) ( 7,243 1,670,102 ) ( 493,022 ) ( 223,098 ) ( 6,035 710,085 ) ( 2,380,187 ) ( 1,174,256 13,989 43,892 22,728 32,300 ) 240,108 - 186,589 ) ( 1,276,084 1,104,103 ) ( 374,339 729,764 ) ( 6,527 ) 388,914 92,563 1,305 476,255 19,928 ) 19,928 ) 456,327 $ 273,437 ) ( $ 0.57 ) $ 0.57 )	112 12 ) - 12 ) 3 ) ( 2 ) ( - 5 ) ( 17 ) 9 - - - - 2 - ( 2 ) ( 9 8 ) 3 5 ) - ( 3 - ( - 3 - ( - ( 3 ( 2 )	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 $ 1.06 $ 1.06	96 4 - 4 3 ) 1 ) - 4 ) - 6 - - - 1 1 - 1 ) 7 7 - 7 - - - - - - - - 7

The notes attached shall constitute an integral part of this individual financial statement.

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

Chairman: Kuei-Hsien Wang

Manager: Ming-Shang Chuang

Accounting Supervisor: Kuo Hua Lin

CHINA MAN-MADE FIBER CORPORATION

Individual Statements of Changes in Shareholders’ Equity

January 1 to December 31, 2019 and 2018

Unit: NTD thousand

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Other equity
Exchange Unrealized gain or
differences from the loss on financial
Capital stock Retained earnings translation of assets at fair value Unrealized gain
financial statements through other (loss) on available-
Undistributed of foreign comprehensive for-sale financial
Code Common stock Capital surplus Legal reserve Special reserve earnings operations profit or loss assets Treasury stock Total equity
A1 Balance as of January 1, 2018 $ 14,294,934 $ 1,677,818 $ 638,873 $ 2,481,347 $ 3,274,719 ( $ 41,611 ) $ - ( $ 169,191 ) ( $ 1,227,909 ) $ 20,928,980
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A3 Effect of retroactive applicability A5 Balance on January, 1 2018 after adjustment The 2017 appropriation and distribution of earnings B1 Legal reserve appropriated B5 Cash dividends B9 Stock dividends B17 Reversal of special reserve C7 Changes in shareholdings in the subsidiaries, affiliated companies and joint ventures under the equity method D1 2018 Profit D3 Other comprehensive net income in 2018 (after tax) M1 Dividends distributed to the subsidiaries adjusted to the additional paid-in capital M7 Changes in the ownership equity on a subsidiary Q1 Disposal of equity instrument investments measured at fair value through other comprehensive income: Z1 Balance at December 31, 2018 The 2018 appropriation and distribution of earnings B1 Legal reserve appropriated B5 Cash dividends B9 Stock dividends B17 Reversal of special reserve D1 Net income (loss) in 2019 D3 Other comprehensive net income in 2019 (after tax) M1 Dividends distributed to the subsidiaries adjusted to the additional paid-in capital Q1 Disposal of equity instrument investments measured at fair value through other comprehensive income: Z1 Balance as of December 31, 2019	- 14,294,934 - - 929,171 - - - - - - ( - 15,224,105 - - 989,567 - - - - - $ 16,213,672	- - 1,677,818 638,873 - 79,399 - - - - - - ( 5,532 - - - - - 14,954 - 3,429 ) - - - 1,694,875 718,272 - 137,204 - - - - - - ( - - - - 15,933 - - - $ 1,710,808 $ 855,476 The notes attached shall	- 286,131 - ( 2,481,347 3,560,850 ( 41,611 ) ( - ( 79,399 ) - - ( 142,949 ) - - ( 929,171 ) - 524,938 ) 524,938 - - ( 6,483 ) - ( - 1,372,035 - - ( 25,235 ) ( 12,980 ) - - - - 199 - - ( 43,335 ) - 1,956,409 4,231,450 ( 54,591 ) ( - ( 137,204 ) - - ( 152,241 ) - - ( 989,567 ) - 20,283 ) 20,283 - - ( 729,764 ) - - ( 33,250 ) ( 32,404 ) - - - - 10,862 - ( $ 1,936,126 $ 2,220,569 ( $ 86,995 ) constitute an integral part of this individual financial statement.	203,678 ) 203,678 ) - - - - 226 ) - 31,466 - - 43,335 129,103 ) - - - - - 521,981 - 10,862 ) $ 382,016	169,191 - ( - - - - - - - - - - - ( - - - - - - - - $ - (	- 1,227,909 ) - - ( - - - ( - - ( - - ( - 1,227,909 ) - - ( - - - ( - - - $ 1,227,909 )	251,644 21,180,624 - 142,949 ) - - 1,177 ) 1,372,035 6,749 ) 14,954 3,230 ) - 22,413,508 - 152,241 ) - - 729,764 ) 456,327 15,933 - $ 22,003,763

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

Chairman: Kuei-Hsien Wang

Manager: Ming-Shang Chuang

Accounting Supervisor: Kuo Hua Lin

CHINA MAN-MADE FIBER CORPORATION Individual Statements of Cash Flow

January 1 to December 31, 2019 and 2018

Unit: NTD thousand

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Code 2019 2018
Cash flow from operating activities
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Code	Cash flow from operating activities		2019		2018
A10000	Current year net profit before taxation	($	1,104,103)	$	1,349,476
A20100	Depreciation expenses		641,719		491,588
A20200	Amortization expenses		9		36
A20300	Expected credit reversal benefit	(	6,035)		-
A20400	Gain (loss) on financial assets and liabilities at fair value
	through profit and loss	(	240,108)	(	99,562)
A20900	Financial costs		186,589		166,852
A21200	Interest revenue	(	13,989)	(	18,667)
A21300	Dividend income	(	43,892)	(	40,481)
A22400	Shareholding in profit of subsidiaries, affiliated company and
	joint ventures under the equity method	(	1,174,256)	(	1,143,227)
A22500	Loss on disposal and scrapping of property, plant and
	equipment		-		9,265
A23200	Gains from disposal of investment accounted for using equity
	method		-	(	27)
A23700	Non-financial assets impairment loss (reversal gain)	(	108,397)		-
A24000	Realized gain on the subsidiary, affiliated company and joint
	ventures	(	7,243)	(	1,947)
	Net change in operating assets and liabilities
A31115	Financial assets mandatorily measured at fair value
	through profit or loss		619,885	(	21,647)
A31180	Accounts receivable		930,292	(	559,140)
A31200	Inventory		1,242,573	(	626,905)
A31230	Prepayments		188,014		141,849
A31240	Other current assets		5,547		9,370
A32180	Payables	(	894,614)		179,687
A32230	Other current liabilities	(	4,209)		5,529
A32200	Employee benefit liabilities reserve	(	2,730)	(	11,294)
A33000	Cash generated from operating activities		215,052	(	169,245)
A33100	Interest received		15,223		20,615
A33200	Dividends received		387,195		482,754
A33300	Interest payment	(	185,763)	(	164,936)
A33500	Income tax payment	(	1,202)	(	4,414)
AAAA	Net cash inflow from operating activities		430,505		164,774
	Cash flow from investing activities
B00010	Acquisition of financial assets at fair value through other
	comprehensive profit or loss	(	32,284)	(	398,192)
B00020	Disposal of financial assets at fair value through other
	comprehensive profit or loss		-		4,123
B00030	De-capitalization refunded monies of financial assets at fair
	value through other comprehensive profit or loss (decrease)		-		2,922
B01800	Acquisition of investment under the equity method	(	200,000)	(	541,414)
B02700	Acquisition of property, plant and equipment	(	260,484)	(	420,675)
B02800	Disposal of property, plant and equipment		-		77
B03700	Increase in refundable deposits	(	30)	(	13,680)
B05400	Acquisition of investment property	(	121,786)	(	80,657)
B06800	Increase (decrease) in other assets		44,406	(	24)
BBBB	Net cash outflow from investing activities	(	570,178)	(	1,447,520)
	Cash flow from financing activities
C00100	Increase of short-term loans		-		2,408,160
C00200	Decrease in short-term loans	(	365,656)		-
C00500	Increase in short-term notes payable		198,778		150,028
C01600	Proceeds from long-term loan		4,400,000		3,440,000
C01700	Re-payments of long-term borrowings	(	4,246,038)	(	4,968,638)
C03000	Increase in deposits received		1,754		-
C03100	Decrease in guarantee deposits		-	(	1,840)
C04020	Repayment of rental principal	(	12,676)		-
C04500	Cash dividend released	(	152,241)	(	142,949)
CCCC	Net cash inflow (outflow) from financing activities	(	176,079)		884,761
EEEE	Net decrease in cash and cash equivalents	(	315,752)	(	397,985)
E00100	Cash and cash equivalents balance – beginning of year		2,218,749		2,616,734
E00200	Cash and cash equivalents balance – end of year	$	1,902,997	$	2,218,749
	The notes attached shall constitute an integral part of this individual		financial statement.
	(Refer to Auditor’s Report presented by Deloitte & Touche dated		March 16, 2020)
Chairman:	Kuei-Hsien Wang Manager: Ming-Shang Chuang		Accounting Supervisor:		Kuo Hua Lin

Notes to the Individual Financial Statements

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

1. Company Profile

• (1) 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, 2019 is NT$16,213,672 thousand.

• (2) The Company is primarily engaged in the following business lines:

   1. Manufacturing, processing and buying and selling of man-made fiber, cellophane, polyamine fiber, polyester fiber, chemicals and the raw materials.
  
   2. Development, manufacturing and buying and selling of machinery used for the above products.
  
   3. Manufacturing and buying and selling of ethylene glycol, ethylene oxide, nonylphenol, ethylene, liquefied petroleum gas and the related petrochemical industry products.
  
   4. Lease and sale of national housing and commercial buildings constructed by commissioned contractors;
  
   5. Distribution, sorting and storage of various products.
  
   6. Management of supermarkets, trading of fresh foods, vegetables, fish, dried merchandise and various seasonings;
  
   7. Manufacturing and sales of steam and industrial and commercial electricity by cogeneration (electricity shall not be sold to energy users).
  
   8. Agency, distribution and contract bidding for installation of cogeneration and pollution control equipment.
  
   9. Manufacturing and sales of oxygen, liquid oxygen, nitrogen, liquid nitrogen, air argon, liquid argon, carbon dioxide and compressed air.
  
   10. Gas station.
  

• (3) This parent company only financial statement is denominated in NT Dollar, the functional currency of the Bank.

• Financial reporting date and procedures The individual financial statements were approved for publication by the board of directors on March 16, 2020.

• Application of new and revised standards and interpretation

• (1) 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 16 “Leases”

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

Definition of lease

The 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.

All leases were recognized in the individual balance sheet as right-of-use assets and leasehold liability except low value target of leases and short-term leases of which the expenses incurred were recognized under the straight-line method. 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 straight-line method. The difference from the amount paid due to the leveling rent is recognized as Payable expenses. Cash flows from operation lease were presented as operating activities in the individual statement of cash flows.

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

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

The following expedient methods are 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 shall 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, shall be treated from hindsight.

On January 1, 2019, the Company recognized a weighted average incremental borrowing rate of interest of 1.60% applicable to lease liabilities. The difference between said lease liability amounts and future minimum lease payment amounts of non-cancellable operating leases as of December 31, 2018 are explained as follows:

Future minimum lease payment amounts of non-cancellable operating leases as of December 31, 2018 Less: Applicable short-term lease exemption ( Less: Low-value asset leases applying to exemption Non-discounted total value on January 1, 2019 Based on the present value upon discounting at incremental borrowing rate of interest on January 1, 2019 Add: Adjustment due to differences in handling of the lease extension and lease termination options Lease liability balance on January 1, 2019

$ 36,952 35,960 ) - $ 992 $ 976 32,281 $ 33,257

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.

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

Right-of-use assets Effect of assets Lease liabilities – current Lease liabilities – noncurrent Effect of liabilities	Balance on January, 1 2019 before adjustment $ - $ - $ - - $ -	Adjustments arising from initial application $ 33,257 $ 33,257 $ 12,677 20,580 $ 33,257	Balance on January, 1 2019 after adjustment $ 33,257 $ 33,257 $ 12,677 20,580 $ 33,257

(2) Applicable FSC-approved IFRSs as of 2020

IASB publication effective The new / amended / revised standards or interpretation date (Note 1) Amendment to “Definition of a business” in IFRS 3 01.01.20 (Note 1) Amendments to IFRS 9, IAS 39, and IFRS 7 “interest rate 01.01.20 (Note 2) benchmark reform” Amendments to IAS 1 and IAS 8 “Definition of 01.01.20 (Note 3) Materiality”

• Note 1: The amendment should be applied to the acquisition day in the reporting period for corporate mergers after January 1, 2020 and the acquisition of assets beyond that date.

• Note 2: This amendment is with prospective application for the annual reporting period starting after January 1, 2020.

• Note 3: This amendment is with prospective application for the annual reporting period starting after January 1, 2020.

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

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

Further to the above effects, as of the release date of the individual financial report, the company continues to evaluate the impact on the financial position and performance from the other standards and interpretations, and the relevant impacts will be disclosed when the evaluation is completed.

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

Effective Date per The new / amended / revised standards or interpretation IASB Amendment to IFRS 10 and IAS 28, “Sale or Contribution of Assets Undefined between an Investor and its Associate or Joint Venture and Investment in Associates”. IFRS 17 “Insurance Contracts” January 1, 2021 Amendments to IAS 1 “Classification of Liabilities as Current or January 1, 2022 Non-current”

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

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.

1. Summary of important accounting policies

2. (1) Statement of Compliance

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

• (2) Basis of Preparation

Except for the financial instruments on the basis of fair value and the recognition of net defined benefit liabilities on the basis of the present value of net defined benefit obligation net of the fair value of planned assets, this 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:

1. Level 1 input value: refers to the quotation of the same asset or liability in an active market as of the evaluation (before adjustment).

2. Level 2 input: Referred to as those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

3. 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.

• (3) Current and non-current assets and liabilities Current assets including:

• Assets held mainly for trading purpose:

• Assets expected to be realized within 12 months after the balance sheet date; and

• Cash and cash equivalents (not including those that are limited to exchange or repay liabilities exceeding 12 months after the balance sheet date). Current liabilities include:

• Liabilities held for trading purposes;

• The liabilities to be liquidated upon due within 12 months after the balance sheet date (those with long-term refinancing or payment term rearrangement completed from the balance sheet date to the financial reports approved and published date are also classified as current liabilities), and

• Liabilities with the repayment deadline that cannot be unconditionally deferred to at least 12 months after the balance sheet date. Where the liabilities might be paid off at the discretion of the other party through the tools of the issuance equity, the classification would remain unaffected.

• For those that are not current assets or liabilities above are classified as non-current assets or

• liabilities.

• (4) 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.

(5) 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-forsale 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.

(6) Investment under the equity method

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

1. 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.

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, nevertheless, the amount of other comprehensive income so recognized was reclassified pro rata to the decrease ratio in the associate. The accounting management was on the grounds same as the grounds the associate must comply with if it directly disposed assets or liabilities. If the aforementioned adjustment must be debited into

capital reserve where the balance of capital reserve yielded by the investment in equity method, the difference was debited as retained earnings.

In the event that the 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.

• (7) 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.

• (8) 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.

• (9) 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.

1. Derecognition

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

• (10) 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 cash-generating unit is less than its book amount, the book amount of the asset or cash-generating unit should be reduced to its recoverable amount. The impairment loss is recognized in the profit or loss.

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

• (11) 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. (12) 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.

1. Financial Assets

The customary transaction of financial assets is recognized and de-recognized in accordance with the trade date accounting.

Classification of measurement

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 29 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.

The term “credit-impaired financial assets” refers to financial assets whose active market has disappeared due to significant financial difficulty or breach of contract of the issuer or borrower, possible declaration of bankruptcy or other financial reorganization of the borrower, or any other financial difficulty.

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 consolidated 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.

• (2) Impairment of financial assets

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.

For internal credit risk management purpose, the Company, without considering the collateral, determines the following circumstances indicating that a default has occurred on the financial instrument:

• A. There is internal or external information indicating that the debtor is no longer able to pay off a debt.

• B. Payments are overdue for more than 90 days, unless there are reasonable and supporting information showing that the delayed default benchmark is more appropriate.

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

• (3) The de-recognition of financial assets

The 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.

Derecognition of 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.

1. Financial Liabilities

2. (1) Subsequent measurement

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

   • method.

3. (2) De-recognition of financial liabilities

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

• (13) Treasury stock

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

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

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

(14) Recognition of revenue

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.

1. Revenue through sale 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.

1. Interest revenue

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.

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.

1. Labor revenue

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.

1. Dividend income

Dividend income from investments is recognized when the shareholders’ right to receive payment is established; however, it is under the pre-conditions 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.

• (15) Leasing

2019

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

1. The Company is the lessor

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

Lease payments for operating leases upon deduction of lease incentives are recognized as income on a straight-line basis in relevant lease periods.

When leases include both land and building elements, the Company assesses whether different element categories are finance or operating leases based on whether almost all risks and returns associated with the ownership rights pertaining to each element have been transferred to the lessee. Lease payments are allocated proportionally to land and buildings based on the fair value of lease rights for land and buildings on the date of contract conclusion. If lease payments can be allocated to these two elements in a reliable manner, each element shall be handled in accordance with the applicable lease category. If lease payments cannot be allocated to these two elements in a reliable manner, the entire lease shall be classified as a finance lease. However, if it is evident that these two elements meet the operating lease standards, the entire lease shall be classified as an operating lease.

1. The Company is the lessee.

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

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

remeasurement of the lease liability. Right-of-use assets are separately expressed on the individual balance sheet.

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

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

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

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

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.

1. 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.

1. 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.

• (16) 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.

• (17) 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.

2. 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.

(18) Income tax

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

1. 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.

1. 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.

1. 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.

1. 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. Estimates and assumptions with regard to the main source of uncertainty Real estate, plant and equipment, and investment-based real estate’s residual cycle

As described in Note 4 (7) and (8), 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 toNote 15 and 17.

6. Cash and cash equivalents

Cash and cash equivalents
Cash on hand Bank checks and demand deposits	December 31, 2019 $ 603 1,827,444	December 31, 2018
		$ 603 1,864,923

Bank time deposits (maturity of less than three months)

74,950 353,223 $ 1,902,997 $ 2,218,749

The market interest rate interval of bank deposit on the balance sheet date was as follows: December 31, 2019 December 31, 2018 Bank deposits 0%～1.95% 0%～3.45%

7. Financial instrument at fair value through profit and loss

December 31, 2019 December 31, 2018

Financial assets - current

Measured at fair value through income under compulsion

Non-derivative financial assets

al assets-current ed at fair value through income ompulsion on-derivative financial assets
- Shares traded on the Taiwan Stock Exchange or OTC exchange - Foreign TSEC/GTSM listed shares - Beneficiary certificate	$ 189,876 98,199 312,650 $ 600,725	$ 654,932 65,560 268,077
		$ 988,569

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

December 31, 2019	December 31, 2019	December 31, 2018	December 31, 2018
Non-current
Equity investment $	1,977,867	$	1,567,531
Debt instrument	110,000		110,000
$	2,087,867	$	1,677,531
1) Equity investment
	December 31, 2019		December 31, 2018
Non-current
Domestic investment
Listed stocks and emerging stock
Hua Nan Financial Holding Company
common shares		$ 1,421,905	$ 1,060,161
Taiwan Tea Corp. common shares		266,079	231,750
Maxigen Biotech Inc. common	shares	14,373	13,178
JMicron Technology Corporation
common shares		4,918	3,482
Unlisted/OTC
Sunny Commercial Bank Co.
common shares		24,533	21,792
WK Technology Fund Co. common
shares		11,283	7,174
WK Technology Fund Co. common
shares		6,253	3,683
Common stock of Minchali Metal
Industrial Co., Ltd.		87,968	91,348
Taiwan Silk & Filament Weaving
Development Co. common shares		31,394	33,472
Common stock of TWSE		97,247	89,500
Everterminal Co. common shares		3,530	3,118
		1,969,483	1,558,658

(1) Equity investment

Foreign investments Unlisted/OTC Common stock of UNFON CONSTRUCTION CO., LTD (Hong Kong) 8,384 8,873 $ 1,977,867 $ 1,567,531

1. The Company invested in the aforementioned common shares of companies in line with its longterm 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.

2. For circumstances of equity instruments posting for mortgaging guarantee under other general loss or gain measured by fair value, please refer to Note 31.

3. (2) Debt instrument

Debt instrument
Non-current Domestic investment Bank debentures of Taichung Commercial Bank	December 31, 2019 $ 110,000	December 31, 2018
			$ 110,000

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.

1. Credit risk management for investment in debt instruments

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

Total Book Value Loss allowance Cost after amortization Fair value adjustment	December 31, 2019 $ 110,000 - 110,000 - $ 110,000	December 31, 2018	December 31, 2018
			$ 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 Credit rating	Definition The debtors’ credit risk is low and also has sufficient capability to pay off contractual cash flows. Definition	Basis for recognizing expected credit losses Anticipated credit loss in 12 months Basis for recognizing expected credit losses	Expected credit loss rate 0%~0.5% Expected credit loss rate	Total book value of December 31, 2019 $ 110,000 Total book value of December 31, 2018

Normal The debtors’ credit risk is low Anticipated 0%~0.5% $ 110,000 and also has sufficient credit loss in capability to pay off 12 months contractual cash flows.

10. Notes receivable, accounts receivable and other receivables

December 31, 2019 December 31, 2018

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 (	$ 46,787 - $ 46,787 $ 1,813,970 170,057 219,925 ) ( $ 1,764,102 $ 11,651 4,114 1,932 ) ( $ 13,833	$ 164,312 - $ 164,312 $ 2,673,196 109,064 225,960 ) $ 2,556,300 $ 26,382 5,151 1,932 ) $ 29,601

(1) Accounts receivable and notes receivable

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, 2019

Expected credit loss rate Total Book Value Allowance for loss (expected credit loss of the given duration)		Not overdue		Overdue 1 to 30 days		Overdue 31~60 days		Overdue 61~120 days 75%~100% $ - -	Overdue over 120 days		Total
	(	0%~5% $ 1,416,520 70,266)	(	13%~17% $ 475,331 78,169)	(	50%~75% $ 138,963 71,490)			100% $ - -	(	- $2,030,814 219,925)

Cost after amortization December 31, 2018 Expected credit loss rate Total Book Value Allowance for loss (expected credit loss of the given duration) Cost after amortization		$ 1,346,254 Not overdue 0%~5% $ 1,907,223 70,574) $ 1,836,649		Ove 3	$ 397,162	O	ve 6	$ 67,473	O	ver 12	$ - due 61 to 0 days ~100% - - -	$ Overdue over 120 days	$	-		$1,810,889 Total
					rdue 1 to 0 days			rdue 31 to 0 days
	(		(	13%~17% $ 793,945 102,701) $ 691,244		(	65 $	%~75% 81,092 52,685 ) 28,407		75% $		100% $ - - $ -		(	$	- 2,782,260 225,960 ) 2,556,300
							$			$					$

Loss allowance of receivables as follows:

Balance - beginning Deduction: Reversal impairment losses in this fiscal year Balance - ending		2019 $ 230,830 6,035 ) $ 224,795		2018
	(			$ 230,830 - $ 230,830

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

1. Inventory

nventory
Merchandise Finished goods Work in process Raw materials Supplies	December 31, 2019 $ 416,548 479,200 92,277 153,941 27,210 $ 1,169,176	December 31, 2018
			$ 1,143,706 566,855 148,893 406,275 37,623 $ 2,303,352

• (1) The inventories of finished goods included the finished goods, by-products, supplies in transit 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.

• (2) The company’s building/land available for sale on December 31, 2019 and 2018 are both are NT$65,775 thousand, which pertains to the He Ti co-development 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 December 31, 2019, upon evaluation, the net conversion value is at zero.

• (3) The Company's cost of goods sold related to inventory in 2019 and 2018 were NT$15,268,683 thousand and NT$19,254,167 thousand, respectively. Cost of goods sold include inventory losses (revaluation gains) of NT$(108,397) thousand and NT$0 thousand, respectively, and the loss from work stoppage were NT$614,6778 thousand and NT$344,918 thousand, respectively.

• (4) As of December 31, 2019 and 2018, the allowance for inventory losses was NT$250,091 thousand and NT$358,488 thousand, respectively.

12. Prepayments

repayments
Pre-paid expenses Pre-paid material purchases Tax credit	December 31, 2019 $ 463,117 39,689 107,010 $ 609,816	December 31, 2018
			$ 540,017 54,911 202,902 $ 797,830

13.	Available-for-sale noncurrent ass	ets December 31, 2019 $ 769,610	December 31, 2018 $ 769,610
	Land for sale

• (1) The Company has approved a land sale plan as per board resolution in 2018 and is currently actively searching for buyers. The land in question has therefore been reclassified as a non-current asset held for sale. When the Company committed to the land sale plan, it already reasonably anticipated that actions by other parties regarding added transfer conditions and response to said conditions can only be initiated upon acquisition of a firm purchase commitment. However, it is likely that such a firm purchase commitment can be acquired within the upcoming year. Said land is therefore still classified as a non-current asset held for sale.

• (2) Upon remeasurement of the carrying amount and fair value less costs to sell of the disposal group held for sale, it has been determined that no impairment loss is present.

• (3) For information on mortgaged nonliquid asset available for sale, refer to Note 31.

• Investment under the equity method

nvestment under the equity method	nvestment under the equity method	nvestment under the equity method
December 31, 2019 Investment in subsidiaries $ 14,513,055 Investments in the affiliated company $ 1,170,017 (1) Investment in subsidiaries December 31, 2019 Listed (OTC) company Taichung Commercial Bank Co. $ 11,465,093 Pan Asia Chemical Corporation 1,088,318 Non-listed (OTC) company Deh Hsing Investment Co., Ltd. 1,495,098 Chou Chin Industrial Co., Ltd. 404,039 Taichung Securities Investment Trust Co., Ltd. 12,025 EUREKAINVESTMENT COMPANY LIMITED 35,265 Melasse 13,217 $ 14,513,055				December 31, 2018 $ 13,315,663 $ 1,228,959 December 31, 2018
		$ 11,465,093 1,088,318 1,495,098 404,039 12,025 35,265 13,217 $ 14,513,055			$ 10,688,164 968,868 1,299,536 297,468 11,767 35,410 14,450 $ 13,315,663

The Company’s ownership and voting rights in the equity of the subsidiary at the balance sheet date is as follows:

sheet date is as follows:
Taichung Commercial Bank Co. Pan Asia Chemical Corporation Deh Hsing Investment Co., Ltd. Chou Chin Industrial Co., Ltd. Taichung Securities Investment Trust Co., Ltd. EUREKAINVESTMENT COMPANY LIMITED Melasse	December 31, 2019 22% 44% 100% 46% 3% 100% 50%	December 31, 2018
		22% 44% 100% 46% 3% 100% 50%

1. The above ratio is indicated by individual shareholding percentage.

2. The company has in 2019 participated in De Hsing Investment Co.’s cash reinvestment, by newly investing 20,000,000 shares, with investment cost at NT$200,000 thousand.

3. Reliance Securities Investment Trust Co., Ltd. registered a name change in December 2018 to Taichung Bank Securities Investment Trust Co., Ltd.

4. The 2019 and 2018 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.

5. For subsidiaries the company invests in by designated mortgage lien as the loan guarantee, please refer to Note 31.

6. (2) Investments in the affiliated company

7. The balance the company investing in affiliated enterprises is as follows:

A major affiliated company Nan Chung Petrochemical Corp.		December 31, 2019 $ 1,170,017		December 31, 2018
				$ 1,228,959

1. A major affiliated company

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

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

The 2019 and 2018 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.

1. For the share amount on affiliated enterprises the company designating mortgage lien as the loan guarantee, please refer to Note 31.

15. Property, plant and equipment

roperty, plant and equipment
The book amount of each category Land House and Building Machine and Equipment Transportation Equipment Office Equipment Construction in process and prepayment for machinery purchase Land House and Building		December 31, 2019			Office Equ	December 31, 2018
		Mac	$ 2,926,476 1,321,274 6,348,849 4,559 150,596 166,092 $ 10,917,846 hine and uipment Transportation Equipment			ipment	$ 2,926,476 1,149,328 3,950,208 4,523 50,915 3,204,688 $ 11,286,138 Uncompleted construction and Total
			hine and uipment	T
		Eq

Co	st lance as of January 1, 2018 crease in current period crease in current period classification in current period lance at December 31, 2018 cumulated depreciation lance as of January 1, 2018 crease in current period crease in current period classification in current period lance at December 31, 2018 cumulated impairment lance as of January 1, 2018 crease in current period crease in current period classification in current period lance at December 31, 2018 t amount as of Jan. 1, 2018 t amount as of Dec. 31, 2018 st lance as of January 1, 2019 crease in current period crease in current period classification in current period lance as of December 31, 2019 cumulated depreciation lance as of January 1, 2019 crease in current period crease in current period classification in current period lance as of December 31, 2019 cumulated impairment lance as of January 1, 2019 crease in current period crease in current period classification in current period lance as of December 31, 2019 t amount as of January 1, 2019 t amount - December 31, 2019	$ 2,926,476 - - ( - $ 2,926,476 $ - - - ( - $ - $ - - - ( - $ - $ 2,926,476 $ 2,926,476 $ 2,926,476 - - - $ 2,926,476 $ - - - - $ - $ - - - - $ - $ 2,926,476 $ 2,926,476	$ 2,093,116 318 291 ) ( - $ 2,093,143 $ 705,733 69,571 248 ) ( - $ 775,056 $ 168,802 - 43 ) ( - $ 168,759 $ 1,218,581 $ 1,149,328 $ 2,093,143 - - ( 246,732 $ 2,339,875 $ 775,056 74,786 - ( - $ 849,842 $ 168,759 - - ( - $ 168,759 $ 1,149,328 $ 1,321,274	$ 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 ) ( - $ 100,124 $ 4,294,786 $ 3,950,208 $ 8,052,855 161,389 2,829 ) ( 2,780,503 $ 10,991,918 $ 4,002,523 543,251 2,814 ) ( - $ 4,542,960 $ 100,124 - 15 ) ( - $ 100,109 $ 3,950,208 $ 6,348,849	$ 20,191 1,843 2,113 ) ( - $ 19,921 $ 15,398 1,067 2,003 ) ( - $ 14,462 $ 1,013 - 77 ) ( - $ 936 $ 3,780 $ 4,523 $ 19,921 920 130 ) ( - $ 20,711 $ 14,462 884 107 ) ( $ 15,239 $ 936 - 23 ) - $ 913 $ 4,523 $ 4,559	$ 133,282 1,632 24,691 ) 180 $ 110,403 $ 75,323 7,064 23,447 ) - $ 58,940 $ 1,791 - 1,243 ) - $ 548 $ 56,168 $ 50,915 $ 110,403 2,775 28,990 ) 106,761 $ 190,949 $ 58,940 9,855 28,990 ) $ 39,805 $ 548 - - - $ 548 $ 50,915 $ 150,596	e	qu	ipment pending inspection 2,857,525 407,748 8,894 ) ( 51,691 ) 3,204,688 - - - ( - - - - - ( - - 2,857,525 3,204,688 3,204,688 95,400 - ( 3,133,996 ) 166,092 - - - ( - - - - - ( - - 3,204,688 166,092	$ 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 ) - $ 270,367 $ 11,357,316 $ 11,286,138 $ 16,407,486 260,484 31,949 ) - $ 16,636,021 $ 4,850,981 628,776 31,911 ) $ 5,447,846 $ 270,367 - 38 ) - $ 270,329 $ 11,286,138 $ 10,917,846
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(1) 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
Miscellaneousequipment	3 to 30 years

• (2) Unfinished construction and equipment pending acceptance amounts as of December 31, 2019 mainly refers to costs associated with equipment improvements or replacement and purchase of land in the Xiaogang District, Kaohsiung. Relevant projects and land ownership transfer are currently still in progress.

• (3) The Company’s 2019and 2018 capitalized finance cost at NT$188,861 thousand and NT$184,517 thousand respectively, and tis real estate, plant and equipment’s capitalized financial cost amounts are at NT$2,272 thousand and NT$17,665 thousand respectively, with the yearly capitalization interest rates at 1.85%.

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

First year Second year

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

December 31, 2019 December 31, 2018
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	$ 860 133 $ 993	$ 178 - $ 178

• (5) For the state of real estate, plant and equipment pledged as collateral guarantee, please refer to Note 31.

• 1. Lease Agreements

• (1) Right-of-use assets-2019

Lease Agreements (1) Right-of-use assets-2019	Lease Agreements (1) Right-of-use assets-2019
Carrying amount of the right-of-use asset Land Transportation Equipment Addition of right-of-use assets Depreciation expense of the right-of-use asset Land Transportation Equipment (2) Lease liabilities-2018 Carrying amount of the lease liabilities Current Non-current The range of discount rates for lease liabilities is as follows: December 31, 2019 Land 1.53% Transportation Equipment 1.65%			December 31, 2019
			$ 742 19,671 $ 20,413 2019 $ - $ 361 12,483 $ 12,844 December 31, 2019
			$ 11,983 $ 8,598
	1.53% 1.65%

(3) Main lease activities and provisions

The Company has leased different types of transportation equipment for production and operations for an original period of 2–3 years. The lease agreement does not stipulate renewal of the lease or purchase options at the time of expiry of the lease.

The Company has leased several plots of land as storage sites for an original period of 5–7 years. When the leasing period ends, the company does not have the priority purchasing right on the leased land.

(4) Other lease-related information

For more details on operating lease agreements for self-owned buildings and investment property of the Company, please refer to Note 15 and 17. 2019

Short-term lease expense Low-value asset lease expense Total cash of leases outflow	(	2019 $ 55,831 $ 245 $ 69,186 )

The Company chose the machinery and transportation equipment qualifying for short-term lease and office equipment qualifying for low-value asset lease to apply the recognition exemption, and did not recognize such leases as related right-of-use assets and lease liabilities.

2018

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

Less than 1 year 1 to 5 years	December 31, 2018	December 31, 2018
		$ 36,329 623 $ 36,952

17. Investment property

Investment property
Cost Balance as of January 1, 2018 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 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 $ 130,015 26,697 - $ 156,712 $ - - - $ - $ - - $ - $ 130,015 $ 156,712		Land in Yunlin Spinning Industrial Park $ 804,553 - 769,610 ) $ 34,943 $ - - - $ - $ - - $ - $ 804,553 $ 34,943	T	Real estate at oulou Section, Yunlin $ 18,094 - - $ 18,094 $ - - - $ - $ 18,094 - $ 18,094 $ - $ -	a	House and land t Erh Chung Pu Section, Sanchung District, New Taipei City $ 756,250 53,960 10,328 ) $ 799,882 $ 2,010 183 1,434 ) $ 759 $ - - $ - $ 754,240 $ 799,123		Total
		(				( (		( (	$ 1,708,912 80,657 779,938) $ 1,009,631 $ 2,010 183 1,434 ) $ 759 $ 18,094 - $ 18,094 $ 1,688,808 $ 990,778

Cost Balance as of January 1, 2019 Increase in current period Balance as of December 31, 2019 Accumulated depreciation Balance as of January 1, 2019 Increase in current period Balance as of December 31, 2019 Accumulated impairment Balance as of January 1, 2019 Increase in current period Balance as of December 31, 2019 Net amount as of January 1, 2019 Net amount - December 31, 2019	Land at Chihsing Section, Wanhua, Taipei City $ 156,712 - $ 156,712 $ - - $ - $ - - $ - $ 156,712 $ 156,712		Land in Yunlin Spinning Industrial Park $ 34,943 - $ 34,943 $ - - $ - $ - - $ - $ 34,943 $ 34,943	T	Real estate at oulou Section, Yunlin $ 18,094 - $ 18,094 $ - - $ - $ 18,094 - $ 18,094 $ - $ -	a	House and land t Erh Chung Pu Section, Sanchung District, New Taipei City $ 799,882 121,786 $ 921,668 $ 759 99 $ 858 $ - - $ - $ 799,123 $ 920,810		Total
									$ 1,009,631 121,786 $ 1,131,417 $ 759 99 $ 858 $ 18,094 - $ 18,094 $ 990,778 $ 1,112,465

Investment property is leased out for a period of 1–2 years. Upon closure of the leasehold duration, the lessee was not entitled to preferential leasehold power over the real estate.

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

as follows:
December 31, 2019 First year $ 3,881 Second year 482 $ 4,363 As of December 31, 2018, total receivables for non-cancellable operating leases are as follows: December 31, 2018 Less than 1 year $ 3,679 1 to 5 years 57 $ 3,736	December 31, 2019
		$ 3,679 57 $ 3,736

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

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

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

(1) The fair value of investment property was classified by an independent appraisal company as Level 3 inputs on December 31, 2018 and 2019, respectively; valuations were carried out with reference to market evidence of similar real property transaction prices. Key assumptions and valuated fair values are as follows:

Fair value Asset earning power The overall capital interest rate during development	December 31, 2019 $ 1,316,466 15%~19% 1.91%	December 31, 2018 $ 1,116,524 18% 2.09%

• (2) Please refer to Note 13 for the re-classification of the Company's investment property and non-current assets available for sale in 2018 and 2017.

• (3) 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 31.

18. Intangible asset

ntangible asset
Computer software Shell Royalty Cost Balance, beginning of year Increase in current period Amortized in current period Balance, end of year Accumulated impairment Balance, beginning of year Appropriated for the year Balance, end of year Balance - net			December 31, 2019 $ - - $ - 2019 Computer software Royalties $ 9 $ 159,052 - - 9 ) - - 159,052 - ( 159,052 ) - - - ( 159,052 ) $ - $ -				December 31,			2018 9 - 9
				$				$
				$				$
				2019				2018
			Computer software $ 9 - 9 ) - - - - $ -				Computer software $ 45 - 36 ) 9 - - - $ 9			Royalties
		(			( (	(			( (	$ 159,052 - - 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.

19. Other assets

Other assets
December 31, 2019 Restricted assets $ 110,901 Refundable deposit 118,185 Others 2,074 Collections - Net - $ 231,160 Current $ 112,975 Non-current 118,185 $ 231,160 The collection detail is as follows: December 31, 2019 Delinquent Accounts $ 2,938 Less:loss reserve – collection ( 2,938) $ -	December 31, 2018
	$ 155,307 118,155 7,621 - $ 281,083 $ 162,928 118,155 $ 281,083 December 31, 2018
	(	$ 2,938 2,938) $ -

• (1) Restricted current assets are earmarked for Customs Office clearance procedures and pledged collateral for short-term loans – please refer to Note 31.

• (2) For loss allowances for non-accrual loans, please refer to Note 10.

• Borrowing

• (1) Shot-term borrowings

Borrowing 1) Shot-term borrowings
Secured loans Bank loan Unsecured loans Credit loan Material procurement loan	December 31, 2019 $ 1,800,000 2,425,000 2,216,013 4,641,013 $ 6,441,013	December 31, 2018
			$ 1,250,000 850,000 4,706,669 5,556,669 $ 6,806,669

1. The bank loan interest rate in 2019 and 2018 are at between 1.20%~1.50% and 1.20%~1.35% respectively.

2. For the foresaid loan collateral information, please refer to Note 31.

3. (2) Short-term notes payable

Short-term notes payable
Payable commercial paper Less: Discount of short-term notes and bills payable	December 31, 2019 $ 650,000 ( 1,715 ) $ 648,285	December 31, 2018
		(	$ 450,000 493 ) $ 449,507

The commercial notes payable’s interest rate as of December 31, 2019 and 2018 are at between 1.20%~1.23% and 1.20%~1.21% respectively.

• (3) Long-term borrowings

Long-term borrowings
Secured loans Bank loan Unsecured loans Credit loan Less: Amount due in one year Long-term borrowings	December 31, 2019 $ 5,617,823 400,000 ( 2,091,505 ) $ 3,926,318	December 31, 2018
	(	(	$ 5,463,861 400,000 1,036,138 ) $ 4,827,723

1. The company’s Taiwan Cooperative Bank-led syndicated long-term borrowing as of December 31, 2019 and 2018 are at NT$1,694,100 thousand and NT$2,699,500 thousand respectively, with loan interest rate currently at 1.85%, which the company has March 2019 repay the loan principal early by NT$100,000 thousand with repayment by period per the loan contract in each year, and with NT$1,694,100 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.

2. As of December 31, 2019 and 2018, CMFC had intermediate- and long-term borrowings from Taiwan Business Bank at NT$232,800 thousand and NT$250,000 thousand, for both year, with the borrowing rate currently at 1.7%. Starting March 2019, CMFC will repay the borrowings periodically based on the loan agreement and a total of $17,200 thousand will be due in the next year. The land and buildings are used as the collateral for the borrowing.

3. The Company’s long-term borrowing with Mizuho Bank as of December31, 2019 and 2018 is both at NT$300,000 thousand, with loan interest rate currently at 1.30%, with onetime repayment initially due in December 2019, and later extended to a onetime repayment in December 2021.

4. The company’s Taiwan Land bank long-term loan as of December 31, 2019 and 2018 are at NT$60,923 thousand and NT$74,461 thousand respectively, with loan interest rate currently at 1.50%, with repayment by period per the loan contact in each year, with NT$13,538 thousand becoming due in the future one year, where said loan pertains to posting company and related land and building as the collateral.

5. As of 2019 and December 31, 2018, the Company’s long-term loans with Union Bank of Taiwan amounted to NT$ 650 million and 349.9 million, respectively, with a borrowing rate of interest of 1.58%–1.61%. The original loan payment start date of May 2019 was extended to November 2020. Loan payments will be made in a timely manner as prescribed in the loan agreements. In the upcoming year, a loan of NT$ 50 million will reach maturity. Said loans serve as collateral for 106 million shares of Taichung Bank.

6. As of 2019 and December 31, 2018, the Company’s long-term loans with Bank of Panhsin amounted to NT$ 500 million, with a borrowing rate of interest of 1.55%. The deadline for bullet repayment which was originally due in June 2020 has been extended to June 2022. Said loans serve as collateral for the construction site and buildings in Sanchong District, New Taipei City.

7. As of December 31, 2019 and 2018, CMFC had long-term borrowings from Sunny Bank at NT$600,000 thousand, for both year, with the borrowing rate currently at 1.50%. CMFC originally planned to make repayments in one payment in August 2020, and now it has postponed the onetime payment to August 2022. 95,000 thousand shares of Taichung Commercial Bank's stocks are used as the collateral for the borrowing.

8. As of 2019 and December 31, 2018, the Company’s long-term loans with Jih Sun International Bank amounted to NT$ 1.03 billion and 340 million, respectively, with a borrowing rate of interest of 1.50%. The deadline for bullet repayment which was originally due in October 2019 has been extended to June 2022. Said loans serve as collateral for 130 million shares of Taichung Bank and 15 million shares of Taiwan Tea Corporation.

9. As of December 31, 2019 and 2018, CMFC had long-term borrowings from Taiwan Cooperative Bank at NT$650,000 thousand, with the borrowing rate currently between 1.50%. CMFC will repay the borrowings periodically, starting February 2020, based on the loan agreement and a total of $216,667 thousand will be due in the next year. The land and buildings in Yunlin are used as the collateral for the borrowing.

10. As of December 31, 2019 and 2018, CMFC had taken a loan from Bank of Kaohsiung at NT$100,000 thousand, with the borrowing rate currently at 1.50%. A total of $100,000 thousand will be due in the next year, which will be repaid in one payment in December 2020.

11. As of December 31, 2019, the Company’s loan with Shanghai Commercial Bank amounted to NT$ 200 million, with a borrowing rate of interest of 1.50%. Starting in March 2021, loan payments will be made in a timely manner. Said loan serves as collateral for 33.4 million shares of Taichung Bank acquired by the Company.

12. Please refer to Note 31 for the collateral of the long-term borrowings:

13. Other payables

Other payables
Payable salary & bonus	December 31, 2019 $ 116,101	December 31, 2018
		$ 146,606

Payable repair and maintenance expense Payable unloading fee Payable export expense Payable insurance premium Payable utilities expense Payable pension Others Provision for liabilities Net determined benefit liability	36,435 33,367 15,266 8,893 6,069 5,399 78,166 $ 299,966 December 31, 2019 $ 162,402	40,708 38,062 8,979 8,518 10,632 4,895 84,339 $ 342,738 December 31, 2018 $ 158,605

22. Provision for liabilities

(1) 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.

(2) 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.

nvestment management strategy.	nvestment management strategy.
The amount of determined benefit plan		recognized in the individual balance		sheet is shown below:
	December 31, 2019		December 31, 2018
Present value of the defined
benefit obligations	$	253,985	$	278,395
The fair value of plan assets	(	91,583 )	(	119,790 )
Appropriation shortage		162,402		158,605
Net determined benefit
liability	$	162,402	$	158,605

Change in net determined benefit liability is shown below

January 1, 2018 Service cost Current service cost Interest expenses (revenues) Recognized in the profit or loss Reevaluation 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 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, 2019	Pr (	esent value of the defined benefit obligations $ 248,923 2,617 3,111 5,728 - 604 3,021 20,119 23,744 - - 278,395 2,705 3,132 5,837 - 1,432 7,160 1,590 10,182 - 40,429 ) $ 253,985	Th ( ( ( ( ( ( ( ( ( ( ( ( (	e fair value of plan assets $ 99,989 ) - 1,291 ) 1,291 ) 2,779 ) - - - 2,779 ) 15,731 ) - 119,790 ) - 1,436 ) 1,436 ) 3,655 ) - - - 3,655 ) 7,131 ) 40,429 $ 91,583 )	( ( ( (	Net determined benefit liability $ 148,934 2,617 1,820 4,437 2,779 ) 604 3,021 20,119 20,965 15,731 ) - 158,605 2,705 1,696 4,401 3,655 ) 1,432 7,160 1,590 6,527 7,131 ) - $ 162,402

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

1. Investment risk: The Bureau of Labor Fund of the Ministry of Labor Affairs uses the labor pension fund for investment in domestic and foreign equity securities and debt securities, and as bank deposits through proprietary trade or commissioned third parties. However, the amount attributable to the planned asset of the 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.

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

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

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

Discount rate The expected rate of increase in salaries	December 31, 2019 0.80% 2.25%	December 31, 2018
		1.13% 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, 2019 ( $ 5,601 ) $ 5,798 $ 5,549 ( $ 5,390 )	December 31, 2018	December 31, 2018
	( (	( (	$ 6,146 ) $ 6,360 $ 6,109 $ 5,936 )

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.

determined benefit obligation.
	December 31, 2019			December 31, 2018
Amount projected for appropriation in 1 year		$	7,131		$	15,728
Average maturity of determined
benefit obligation			11 years			11 years
23.Other liabilities
	December 31, 2019			December 31, 2018
Deferred loan item		$	19,210		$	19,210
Deposits received			3,694			1,940
		$	22,904		$	21,150
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, 2019			December 31, 2018
Jin-Bang-Ge Industry		$	19,210		$	19,210
24.Equity
(1) Paid-in capital
	December 31, 2019			December 31, 2018
Authorized number of shares (thousand shares)			1,680,000			1,680,000
Authorized capital	$		16,800,000	$		16,800,000
Number of shares issued with
fully paid-in capital
(thousand shares)			1,621,367			1,522,410
Outstanding capital			16,213,672			15,224,105

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

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

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

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

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

• (3) Retained earnings and Dividend Policy

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 25 (7) 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.

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

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

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

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

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

• (4) Other equity

• Exchange differences from the translation of financial statements of foreign operations

		2019				2018	2018
Balance, beginning of
year	( $	54,591 )			( $		41,611 )
Share amount on the
subsidiaries’
conversion
differential amount
adopting the equity
method	(	32,404 )			(		12,980 )
Balance, end of year	( $	86,995 )			( $		54,591 )
2. Unrealized gain or loss on financial assets			at fair value through other comprehensive profit or loss
				2019			2018
Balance - beginning			( $	129,103)		( $	203,678)
Accrued in current year
Unrealized gain or loss
Equity instruments				388,914			23,639
Share of subsidiaries using	the
equity method				133,067			7,827
Reclassification adjustment
Subsidiaries’ share liquidated
adopting the equity method				-	(			226	)
The accumulated gain/loss from the
disposition of equity instruments
will be transferred to retained
earnings.			(	10,862	)		43,335
Balance - ending			$	382,016	(	$	129,103		)

• (5) Treasury stock

The statement and changes of the Company’s treasury stock in 2019 and 2018:

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

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

Increase in current period Number of shares on

18,969

December 31, 2018 310,784

1. The Company issued 20,201,000 and 18,696,000 shares to its subsidiaries in 2019 and 2018, respectively.

2. As of December 31, 2019 and 2018, relevant information on company shares held by its subsidiaries is as follows:

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

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

1. 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.

2. Business units in continuing operation income

Income from continuing operations department includes the following items

• (1) Other income and earnings and expense and loss

Rent income (Note 30) Income derived from sales of substandard goods and scraps Others		2019 $ 5,477 2,664 14,587 $ 22,728		2018
				$ 5,500 3,366 14,109 $ 22,975

2019 2018

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

2019		2018
The realized gain (loss) of financial assets and liabilities measured at fair value through profit or loss Stock $ 15,621 Bonds ( 2,580 ) Beneficiary certificate - 13,041 2019 The valuation gain (loss) of financial assets and liabilities measured at fair value through profit or loss Stock $ 166,385 Bonds - Beneficiary certificate 60,682 227,067 $ 240,108 (3) Financial costs 2019 Interest from bank borrowings $ 188,427 Lease liability interest expenses 434 Less: Classified real estate, plant and equipment (Note 15) ( 2,272) $ 186,589 (4) Financial assets impairment loss (reversal gain) 2019 Accounts receivable (included in operating expenses) $ 6,035 (5) Depreciation and amortization 2019 Property, plant and equipment $ 628,776 Investment property 99 Intangible assets 9 Right-of-use assets 12,844 $ 641,728 Consolidation of depreciation expenses based on functions Operating cost $ 621,947 Operating expenses 19,772 $ 641,719 Consolidation of amortization expenses based on functions Operating cost $ - Operating expenses 9 $ 9	(	$ 20,481 27 ) 46 20,500 2018
	( (	$ 107,160 15 ) 28,083 ) 79,062 $ 99,562 2018
	(	$ 184,517 - 17,665) $ 166,852 2018 $ - 2018
		$ 491,405 183 36 - $ 491,624 $ 484,351 7,237 $ 491,588 $ - 36 $ 36

(6) Employee benefits expenses 2019

) Employee benefits expenses 2019
Short-term employee benefits Salary & wage Labor insurance and national health insurance Remuneration to Directors Other employee benefits expenses Pension expenses Defined contribution pension plan Defined benefit plan (Note 22) Total employee benefits expenses 2018 Short-term employee benefits Salary & wage Labor insurance and national health insurance Short-term employee benefits Remuneration to Directors Other employee benefits expenses Pension expenses Defined contribution pension plan Defined benefit plan (Note 22) Total employee benefits expenses		Operating cost $ 401,984 39,568 - 24,158 465,710 17,562 3,331 20,893 $ 486,603 Operating cost $ 370,048 36,993 - 26,617 433,658 14,190 3,414 17,604 $ 451,262						Total 475,902 45,705 6,328 41,566 569,501 20,439 4,401 24,840 594,341 Total
							$
							$
				$ 101,895 6,994 6,788 16,946 132,623 3,371 1,023 4,394 $ 137,017				$ 471,943 43,987 6,788 43,563 566,281 17,561 4,437 21,998 $ 588,279

As of December 31, 2019 and 2018, the Company employee count is at 741 persons persons respectively, and among them the director count doubling as employees is all at 7 persons.

In 2019 and 2018 average employee benefit expenses amounted to NT$ 801,000 and 792,000, respectively; employee salary expenses amounted to NT$ 648,000 and 643,000, which represents an adjustment by 0.78%.

(7) 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. Since the Company recorded a loss in 2019, no employee and

director/supervisor compensations were estimated. Estimated employee and director/supervisor compensations in 2018 are as follows: Estimate on ratio

Estimate on ratio
Remuneration to employees Remuneration to directors/supervisors Amount Remuneration to employees Remuneration to directors/supervisors		2019 - - 2019 $ - $ -		2018
				1.0% 0.3% 2018 $ 13,673 $ 4,102

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.

China Man-Made Fiber Corporation held board meetings on March 18, 2019 and March 23, 2018, which adopted resolutions to approve the 2018 and 2017 employee and director/supervisor compensations as follows:

Amount

compensations as follows: Amount
Amount resolved by the Board of Directors for release Amount recognized in financial statements of respective years	2018 Remunerati on to employees Remuneration to directors/ supervisors $ 13,673 $ 4,102 $ 13,673 $ 4,102	2017
	Remunerati on to employees $ 13,673 $ 13,673	Remunerati on to employees $ 8,185 $ 8,185	Remuneration to directors/ supervisors $ 2,456 $ 2,456

The actual amount for remuneration to employees, Directors and Supervisors in 2018 and 2017 did not vary from the amount recognized in the individual financial statements of 2018 and 2017.

For further information on the appropriation of remuneration to the employees and Directors and Supervisors by the Board of Taichung Commercial Bank in 2020 and 2019, visit the “MOPS” website of Taiwan Stock Exchange Corporation.

(8) Non-financial assets impairment loss (reversal gain)

	of Taiwan Stock Exchange Corporation. (8) Non-financial assets impairment loss (reversal gain)
26.	2019 Inventory (included in the operating costs) $ 108,397 Continuing department income tax (1) Main components of income tax expense (profit) recognized in profit o 2019 Income tax expenses in the current period Accrued in current year $ - Prior years adjustment - - Deferred tax Accrued in current year ( 374,339 ) Change in tax rate - ( 374,339 ) Income tax gain recognized in the profit or loss ( $ 374,339 )	$ r loss:	2018 - 2018
		( ( (	$ - 6,351 6,351 12,990 41,900 ) 28,910 ) $ 22,559 )

Adjustment of accounting income and income tax expense (gains) is as follows:

Income (loss) before tax from continuing operations Income tax (gain) expense of net income before tax at the statutory tax rate (20%) Non-deductible expenses and losses for tax purposes Non-taxable income Unrecognized deductible temporary differences Change in tax rate Income tax expense of prior years adjusted in the current year Income tax gain recognized in the profit or loss	( ( ( ( (	2019 $1,104,103 ) $ 220,821 ) 2,372 119,273 ) 36,617 ) - - $ 374,339 )	( ( ( (	2018 $1,349,476 $ 269,895 3,358 253,489 ) 6,774 ) 41,900 ) 6,351 $ 22,559 )

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

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

			2019		2018
	Deferred tax
	Accrued in current year
	- Re-evaluation of
	determined benefit plan	( $	1,305 )	( $	6,824 )
(3)	Current income tax asset
		December 31, 2019		December 31, 2018
	Current income tax asset
	Tax refund receivable	$	4,160	$	2,958

• (4) Deferred income tax assets and liabilities

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

Deferredincometaxassets Temporary difference Property, plant and equipment Inventory Loss allowance Others Loss credit Deferredtax liabilities Temporary difference Allowance for land increment value tax 2018		Balance, beginning of year	Recognized in the profit or loss	Recognized in the other comprehensive profit of loss	Balance, end of year
	$ 31,145 11,158 39,881 95,628 177,812 95,356 $ 273,168 $ 866,019 Balance, beginning of year		( $ 12,827 ) 11,976 ( 625 ) 2,766 1,290 373,049 $ 374,339 $ - Recognized in the profit or loss	$ - - - 1,305 1,305 - $ 1,305 $ - Recognized in the other	$ 18,318 23,134 39,256 99,699 180,407 468,405 $ 648,812 $ 866,019 Balance, end of year

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

(5) The deductible temporary differences of deferred income tax assets December 31, 2019 Deductible temporary differences Allowance to reduce inventory to market $ 114,314 Defined benefit pension plans 7,550 Loss credit 98,010 $ 219,874	not recognized on the balance sheet December 31, 2018 $ 282,592 - - $ 282,592

• (6) Unused losses credit related information Loss deduction as at December 31, 2019:

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Uncredited balance Last year of credit
$ 58,648 111 years
505,260 115 years
1,876,127 118 years
$ 2,440,035
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• (7) 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.

1. Earnings per share

Basic earnings per share Diluted earnings per share	( (	2019 $ 0.57 ) $ 0.57 )		Unit: NTD per share 2018 $ 1.06 $ 1.06

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

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

The 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	(	2019 $ 729,764 )		2018 $ 1,372,035

Quantity

Quantity
Weighted average common stock shares used to calculate basic earnings per share Effect of dilutive potential common stock: Remuneration to employees Weighted average common stock shares used to calculate diluted earnings per share		2019 1,290,382 - 1,290,382	Unit: Thousand Shares 2018
				1,290,382 1,537 1,291,919

If the Company may choose to have the employee compensation distributed via a stock or cash dividend, calculate the diluted earnings (deficit) per share, assuming that the bonus to employees is with a stock dividend distributed, with the weighted average number of shares outstanding included when the potential common stock has a diluted effect. When the Company estimated diluted earnings (losses) per share prior to the adoption of a resolution regarding the number of shares issued as employee compensations by the shareholders meeting in the following year, it also considered potential common share dilution effects. 28. 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.

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.

29. Financial instruments

• (1) 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.

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

• Fair-value hierarchy

December 31, 2019

Financial assets at fair value through profit and loss Shares traded on the Taiwan Stock Exchange or OTC exchange Shares traded on foreign exchange or OTC exchange Beneficiary certificates of funds 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	Level 1 $ 189,876 98,199 312,650 1,707,275 - -	Level 2 $ - - - - - -	Level 3 - - - - 262,208 8,384	Total
				$ 189,876 98,199 312,650 1,707,275 262,208 8,384

Debt instrument - Domestic corporate bonds

110,000

• • 110,000

December 31, 2018

December 31, 2018
Financial assets at fair value through profit and loss Shares traded on the Taiwan Stock Exchange or OTC exchange Shares traded on foreign exchange or OTC exchange Beneficiary certificates of funds 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	Level 1 $ 654,932 65,560 268,077 $ 1,308,572 - - 110,000	Level 2 $ - - - $ - - - -	Level 3 - - - $ - 250,086 8,873 -	Total
				$ 654,932 65,560 268,077 $ 1,308,572 250,086 8,873 110,000

The transfer between Level 1 and Level 2 fair value did not occur in 2019 and 2018. 2. Financial instruments are adjusted according to Level 3 fair value.

2019

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Financial assets at fair value through
other comprehensive profit or loss
Financial Assets Equity instruments Debt instruments Total
Balance, beginning of year $ 258,959 $ - $ 258,959
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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) - Purchase Balance, end of year	10,813 820 $ 270,592	- - $ -	10,813 820 $ 270,592

2018

Financial Assets Balance, beginning of year Recognized in the other comprehensive income (Unrealized gain or loss on	Financial assets at fair value through other comprehensive profit or loss Equity instruments Debt instruments $ 282,908 $ - ( 21,852 ) -	Total
	Equity instruments $ 282,908 ( 21,852 )
		$ 282,908 ( 21,852 )

financial assets at fair value through other comprehensive profit or loss) - Purchase - Capital reduction and return of share capital ( Balance, end of year	825 2,922 ) $ 258,959	- - ( $ -	825 2,922 ) $ 258,959

1. Techniques and input value for measurement of Level 3 fair value Categories of financial

instruments Evaluation techniques and input values Investment equity not listed Market multiple method: The fair value of the subject matter may at TWSE (TPEx) 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.

1. 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
		( $ 11,455 )

• (3) Categories of financial instruments

3) Categories of financial instruments
Financial Assets Measured at fair values through profit and/or loss Measured at fair value through income under compulsion Financial assets on the basis of cost after amortization (Note 1) Financial assets at fair value through other comprehensive profit or loss Equity investment Debt instrument Financial Liabilities Measured at cost after amortization (Note 2)	December 31, 2019 $ 600,725 3,956,805 1,977,867 110,000 14,474,091	December 31, 2018
		$ 988,569 5,242,424 1,567,531 110,000 15,380,795

• 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 financial assets measured by cost.

• Note 2: 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 postamortization costs.

• (4) Purpose and policy of financial risk management

The main financial tools of the Company include equity and debt investments, accounts receivable, other receivables, accounts payable, loans and other payables. 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.

1. 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 currencypriced sales transactions. Approximately 43% 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.

Profit and loss	The impact of the U.S. dollar	The impact of the U.S. dollar
	2019 $ 33,000	2018
		$ 42,724

• (2) Interest rate risk

Interest rate risk exposure is due to 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	December 31, 2019 $ 110,901 7,089,298 110,000 6,017,823	December 31, 2018
		$ 155,307 7,256,176 110,000 5,863,861

Sensitivity analysis

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 2019 and 2018 will also be decreased/increased by NT$131,088 thousand and NT$131,205 thousand. (3) Other price oriented risks.

The company has incurred equity pricing exposure for investing in OTC equity securities investment and beneficiary certificates. The equity investments (except for financial assets at fair value through profit or loss) are not held for trading and are considered strategic. The Company has not actively traded such investments. 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 equity prices rise/fall by 15%, pre-tax profits/losses of the Company in 2019 and 2018 will increase/decrease by NT$ 88,801,000 and 144,605,00, while equity will increase/decrease by 255,354,000 and 160,738,000, respectively.

2. Credit risk

Credit risk refers to the risk that the customer or 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 2019 and 2018 are at 5% and 2% respectively to the total monetary-based assets; state of other transaction opponents’ credit risk concentration in 2019 and 2018 are at 37% and 42% to the total monetary-based assets respectively.

1. 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, 2019 and 2018. (1) Liquidity risk table for 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, 2019

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181 days to 1 More than 1 Total
0~30 days 31~90 days 91~180 days year year
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Non-derivative
financial
liabilities
Shot-term
borrowings	$ 751,157	$ 2,297,474	$ 1,370,955	$2,021,426	$	-	$ 6,441,013
Short-term notes
payable	350,000	150,000	150,000	-		-	650,000
Long-term
borrowings	-	342,368	234,035	1,515,103	3,926,318		6,017,823

Payables 1,197,763 Deposits received - Lease liabilities 1,093 December 31, 2018 0~30 days Non-derivative financial liabilities Shot-term borrowings $ 706,000 Short-term notes payable 300,000 Long-term borrowings - Payables 1,994,207 Deposits received - (2) Financing amou Bank loan amount (renewal mu with the mutual agreement) - The loan quota used - The loan quota not yet use	100,053 - 21,085 31~90 days	100,053 - 21,085 31~90 days		54,454 - 3,125 91~180 days	14,700 - 5,809 181 days to 1 year		M	- 3,694 8,648 ore than 1 year	1,366,970 3,694 20,860 Total
	$ 3,135,099 150,000 234,035 183,680 - nt st be d			$2,615,570 - 234,035 68,198 - December 31, 20				$ - - 4,827,723 - 1,940 Decembe	$ 6,806,669 450,000 5,863,861 2,260,758 1,940 r 31, 2018
								$ 13,120,037 2,594,636 $ 15,714,673

30. Related Party Transactions

• (1) Name and affilation of related parties

Name Taichung Commercial Bank Pan Asia Chemical Corporation Deh Hsing Investment Co., Ltd. Taichung Securities Investment Trust Co., Ltd. Chou Chin Industrial Co., Ltd. EUREKA INVESTMENT COMPANY LIMITED Melasse Xiang-Feng Development Tou-Ming Industry Jin-Bang-Ge Industry IOLITE COMPANY LTD. Precious Wealth International Limited Hammock (Hong Kong) Company Limited Hebei Hanoshi Contact Lens Co., Ltd. Taichung Bank Insurance Agency Co., Ltd. Taichung Commercial Bank Lease Enterprise Taichung Commercial Bank Securities Co., Ltd. TCCBL Co., Ltd. Taichung Commercial Bank Lease Enterprise (Suzhou) Ltd GREENWORLD FOOD CO., LTD. Chou Chang Corporation Bomy Enterprise Bomy Shanghai Pan-Feng Industry Yuju Universal Corporation Noble House Glory Chung Chien Investment Co., Ltd.

Affiliation

Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company Subsidiary of the Company

Subsidiary of the Company

Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company

Indirect subsidiary of the Company Indirect subsidiary of the Company

Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Indirect subsidiary of the Company Investors with control

Name

Pan Asia Investment Co., Ltd. Nan Chung Petrochemical Corp. Wei-Kang International Storm Model Management BONWELL PRAISE Co., Ltd Qian Teng PR Planning (Shanghai), Co., Ltd. Shanghai Nianjia Cultural Diffusion Co., Ltd. Hua Nan Financial Holding Hua Nan Bank Hua Nan Insurance Hsu Tian Investment Co., Ltd TAIWAN FILAMENT WEAVING DEVELOPMENT CO., LTD. TA YI DEVELOPMENT CO., LTD. Midea Formosa Imperial Wineseller Corp. Formosawine Vintners Corporation Da Fa Investment Company Sheng Jen Knitted Textiles Co., Ltd. Tai Yi Investment Reliance Consolidated Securities Co., Ltd. Wang Wan Chin Education Foundation Sheng Yuan Cher Investment Company Chao-Qing Investment Peng Hsu Investment Company Jin Shih Chien Investment Company Shield Bright Investment Limited

Affiliation Investors with control Affiliated enterprises Affiliated enterprises Affiliated enterprises Affiliated enterprises Affiliated enterprises Affiliated enterprises

Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party

Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party Substantial related party

• (2) 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		2019 $ 836,909		2018 $ 972,682

• (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 2019 2018
Nan
----- End of picture text -----

Chung Petrochemical Corp. Pan Asia Chemical Corporation	$ 3,361,822 4,050 $ 3,365,872	$ 4,246,032 5,034 $ 4,251,066

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. 3. Bank deposits and interest revenue

Bank deposits and interest revenue	Bank deposits and interest revenue	Bank deposits and interest revenue	Bank deposits and interest revenue	Bank deposits and interest revenue
2019 Name Balance - ending Interest revenue Hua Nan Bank $ 132,779 $ 115 Taichung Commercial Bank 67,328 4,591 $ 200,107 $ 4,706 Receivable (payable) accounts from related parties Name December 31, 2019 Accounts receivable Pan Asia Chemical Corporation $ 170,057 Payable accounts and notes Nan Chung Petrochemical Corp. $ 307,149 Payable accounts and notes Subsidiaries - $ 307,149 Other payables Substantial related party $ - Other receivables Subsidiaries $ 463 Rental revenue Name 2019 Pan Asia Chemical Corporation $ 3,187 Others 227										2018
						Balance - ending				ece	Interest revenue
						$	111,807 47,136				mbe	$ 181 3,720 $ 3,901 r 31, 2018
						$	158,943
									D
Accounts receivable Pan Asia Chemical Corporation Payable accounts and notes Nan Chung Petrochemical Corp. Payable accounts and notes Subsidiaries Other payables Substantial related party Other receivables Subsidiaries Rental revenue Name Pan Asia Chemical Corporation Others				$ 170,057 $ 307,149 - $ 307,149 $ - $ 463 2019						$
										$
										$
										$
										$
			$	3,187 227					$	3,187 240

1. Receivable (payable) accounts from related parties

5. Rental revenue

$ 3,414

$

3,427

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 2019 2018
Hua Nan Bank $ 8,197 $ 6,799
----- End of picture text -----

Pan Asia Chemical Corporation TAIWAN FILAMENT WEAVING DEVELOPMENT CO., LTD. Chou Chin Industrial Co., Ltd.	3,590 96 - $ 11,883	3,847 96 240 $ 10,982

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

• (3) Lease agreements

Lease agreements
Name Interest expenses Pan Asia Chemical Corporation Rent expense Pan Asia Chemical Corporation Remuneration to the management Short-term employee benefits Retirement benefits		2019 $ 14 $ - 2019 $ 17,540 469 $ 18,009		2018
				$ - $ 369 2018
				$ 20,288 458 $ 20,746

• (4) Remuneration to the management

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:

• (5) Other related party transaction

The Company has in 2019 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.

31. 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):

Restricted assets-current-pledged time deposit Common share investment (financial asset classified in the account as other general loss or gain, measured by fair value – nonliquid) Investment under the equity method Nonliquid asset pending for sale – Yunlin Textile Industrial Zone land Investment in real estate-Land of Yunlin Spinning Industiral Park Investment-based real estate – the land and building at Erchungpu Section, Sanchung District Property, plant and equipment- Land Real estate, plant and equipment – property and building	December 31, 2019 $ 110,901 272,006 5,170,525 769,610 34,943 704,376 2,863,895 355,395	December 31, 2018
		$ 155,307 20,090 4,121,464 769,610 34,943 704,475 2,863,895 373,509

The fund and investment-common stock furnished as security is stated as following:

December 31, 2019 December 31, 2018 The financial assets measured for the fair values through other comprehensive income- non1,148 thousand 1,148 thousand current- Hua Nan Financial Holding shares shares The financial assets measured for the fair values through other comprehensive income- non15,000 thousand current- Taiwan Tea Corporation 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 364,400 thousand 294,000 thousand Company, Limited shares shares 32. 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:

• (1) The guarantee notes already issued by the Company are stated as following:

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

• (2) As of December 31, 2019 and 2018, the Company had opened unused credit line of letter of credit at NT$2,411,172 thousand and NT$1,952,154 thousand, respectively.

• (3) 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.

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

• 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, 2019

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Foreign Exchange
Foreign Currency Rate Book Value
----- End of picture text -----

Financial Assets
Monetary Items
USD	$84,739	29.98	$	2,540,463
EURO	1,113	33.59		37,386
JPY	41,611	0.28		11,485
Financial liabilities
Monetary item
USD	2,240	29.98		67,140

December 31, 2018

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

The merged company’s 2019 and 2018 foreign currency exchange loss or gain (loss) (including realized and unrealized) is at (NT$32,300) thousand and NT$144,290 thousand 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.

34. Disclosures

(1) Material transactions and (2) transfer investment information:

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

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

(1) Fill in 0 for the issuer.

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

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

Note 6: If it is necessary for short-term financing, specify the reasons and the beneficiary of financing and the use of the fund, such as: retirement of loans, procurement of equipment, and working capital.

• Note 7: Specify the Procedure for Financing Third Parties and the upper limit of financing in favor of particular beneficiary and the total limit of financing, and also the method for the calculation of the upper limit of financing in favor of particular beneficiary and the total limit of financing in the space provided in this field.

• Note 8: For public companies proposed the lending of funds before the Board for resolution case by case pursuant to Article 14-1 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies”, the amount approved by the Board but not yet being drawn shall still be included in the amount for announcement for the disclosure of risk being assumed. If the loans are being retired in the future, disclose the outstanding balance to reflect the adjustment of risk. For public companies proposed the lending of funds before the Board for resolution case by case pursuant to Article 14-2 of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” whereby the Board resolved to authorize the Chairman to effect the drawdown or in revolving credit in tranches within specific limit and in the year, the amount and the limit approved by the Board shall still be announced as the outstanding balance. In subsequent retirement of loans, repeated drawdown shall still be considered and the amount and the limit approved by the Board shall still be announced as the outstanding balance.

• Note 9: The loaning of TCB Leasing Co., Ltd. to a particular enterprise shall be up to 10% of the net worth of the Company. The total amount of loaning of funds shall not exceed 40% of the net worth of TCB Leasing Co., Ltd.

• Note 10: The loaning of TCCBL Co., Ltd. (B.V.I.) to a particular enterprise shall not exceed 10% of the net worth of TCCBL Co., Ltd. (B.V.I.) The total amount of loaning of funds shall not exceed 40% of the net worth of TCCBL Co., Ltd. (B.V.I.).

• Note 11: The loaning of TC Bank Financing and Leasing (Suzhou) Co., Ltd. to a particular enterprise shall be up to 40% of the net worth of the Company. The total amount of loaning of funds shall not exceed 40% of the net worth of Taichung Commercial Bank Finance Lease (Suzhou) Co., Ltd.

• Note 12: The total amount of funds lent by Chou Chin Industrial Co., Ltd. to a single enterprise must not exceed 20% of the net worth of Chou Chin. Total loan amounts must not exceed 40% of the net worth of Chou Chin.

2. Endorsements/guarantees to others:

										Unit: NTD thousand, unle	Unit: NTD thousand, unle	ss otherwi	senoted Guarantee and endorsement in Mainland China (Note 4) － － Y l statements. ndorsement . Taichung
		Endors	ed/Guaranteed						Accumulated amount f		Guarantee d	Guarantee and	Guarantee
Item No.	Name of Endorser/Guarantor	Company name	Affiliation	Limit of endorsement/guarantee to a single enterprise (Note 1)	Maximum balance in current period (Note 3)	Balance- ending	The actual amounts disbursed	Endorsement/guarantee with collateral	o endorsement/guarantee in proportion to the net worth stated in the financial statements of the most recent period	Upper limit of endorsement/guarantee (Note 2)	an endorsement of parent company to subsidiary (Note 4)	endorsement by subsidiary to parent company (Note4)
1 2	Chou Chin Industrial Co., Ltd. Taichung Commercial Bank Lease Enterprise	GREENWORLD FOOD CO., LTD. TCCBL Co., Ltd. （B.V.I.）	Subsidiary of Chou Chin Industrial Co., Ltd. 100% and directly owned subsidiary	$ 723,024 11,427,612	$ 15,000 1,221,512	$ 15,000 942,289	$ - 114,000	$ - -	1.04 49.48	$ 1,446,047 19,046,020	－ －	－ －
2	Taichung Commercial Bank Lease Enterprise	Taichung Commercial Bank Leasing (Suzhou)Ltd.	100% and indirectly owned subsidiary	11,427,612	2,083,830	1,841,251	1,663,922	-	96.68	19,046,020	－	－	Y
Note Note Note Note	1: Chou Chin Industrial stipulated in its Operating Procedures for Endors If the guarantee is for business transaction relationships, the amount sha Guarantee that its endorsement guarantee for an enterprise shall not ex 2: Chou Chin Industrial stipulated in its Operating Procedures for End Bank Leasing stipulated in its Operating Procedures for Endorsement 3: The highest balance of endorsements and/or guarantees in the current 4: For guarantee and endorsement from parent company to subsidiaries, f				ement Guara ll not exceed ceed six time orsement Gu Guarantee th year. rom subsidia	ntee that its e the total tran s the net val arantee that at its total en ries to paren	ndorsement saction in the ue of the late its total end dorsement gu t company, a	guarantee for an enterprise shall not exceed 50% of the net value of the lat most recent year. Taichung Bank Leasing stipulated in its Operating Proc st financial statements. orsement guarantee shall not exceed the net value of the latest financial arantee shall not exceed ten times the net value of the latest financial stat nd to Mainland China, as in the case of TWSE/GTSW-listed companies, f				est financia edures for E statements ements. ill in Y.

3. Marketable securities held – end of year Unit: thousand shares/ NTD thousand

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

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

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

• Note 1: Distributed stock dividends. Note 2: Amount at end of period includes valuation amount at end of period. 5. 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)

• 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

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

2. Information about the investee’s name, location….. Unit: NTD thousand

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Investor Investor Location Major Business Lines Current period-endingInitial Investment Amount Previous period-ending Quantity Equity OwnershiPercentage % p by the ComBook Value pany Current period net gain (loss) of the investee Investment gain (loss) recognized in current period Remark
CHINA MAN-MADE Taichung Commercial Bank Taichung City Banking business $ 6,355,643 $ 6,355,643 826,726 22 $ 11,465,093 $ 4,319,883 $ 962,909 364,400
FIBER CORPORATION thousand
shares pledged
Pan Asia Chemical Corporation Taipei City Petrochemical business 968,472 968,472 127,242 44 1,088,318 290,294 117,365
Nan Chung Petrochemical Corp. Yunlin County Petrochemical business 1,000,002 1,000,002 100,000 50 1,170,017 34,675 17,337 10,000
thousand
shares pledged
Deh Hsing Investment Co., Ltd. Taipei City General investment business 1,550,000 1,350,000 155,000 100 1,495,098 27,642 26,593
Taichung Securities Investment Trust Taipei City Securities investment trust business 6,295 6,295 922 3 12,025 ( 7,804) ( 230 )
Co., Ltd.
Chou Chin Industrial Co., Ltd. New Taipei City Manufacturing and trading 176,430 176,430 31,071 46 404,039 117,452 51,660
EUREKA INVESTMENT Taipei City General investment business 37,500 37,500 3,750 100 35,265 ( 145) ( 145 )
COMPANY LIMITED
Melasse Taipei City Cosmetics and cleaning appliances 14,500 14,500 1,450 50 13,217 ( 2,466) ( 1,233 )
manufacturing
Pan Asia Chemical Taichung Commercial Bank Taichung City Banking business 1,347,834 1,347,834 212,466 6 2,940,018 4,319,883 247,529
Corporation
Taichung Securities Investment Trust Taipei City Securities investment trust business 15,738 15,738 979 3 12,800 ( 7,804) ( 245 )
Co., Ltd.
Melasse Taipei City Cosmetics and cleaning appliances 14,500 14,500 1,450 50 13,217 ( 2,466) ( 1,233 )
manufacturing
Taichung Commercial Bank Taichung Commercial Bank Lease Taichung City Leasing industry 1,800,000 1,800,000 189,729 100 1,904,602 74,928 74,928
Enterprise
Taichung Bank Insurance Agency Taichung City Insurance agency 6,000 6,000 128,600 100 2,204,588 471,300 471,300
Co., Ltd.
Taichung Commercial Bank Securities Taichung City Securities business 1,500,000 1,500,000 150,000 100 1,404,823 20,671 20,671
Co., Ltd.
Taichung Securities Investment Trust Taipei City Securities investment trust business 120,000 120,000 12,000 38 156,788 ( 7,804) ( 3,002 )
Co., Ltd.
Taichung Commercial TCCBL Co., Ltd. British Virgin Financing, leasing and investments. 893,373 893,373 30,000 100 786,508 33,564 33,564
Bank Lease Enterprise Islands
TCCBL Co., Ltd. Taichung Commercial Bank Leasing Suzhou Financing Leasing and investments 893,373 893,373 - 100 726,048 25,808 25,808
(Suzhou) Ltd.
Deh Hsing Investment Taichung Commercial Bank Taichung City Banking business 86,017 86,017 11,348 - 163,549 4,319,883 13,352 4,500 thousand
Co., Ltd. shares
pledged
Pan Asia Chemical Corporation Taipei City Petrochemical business 150,612 150,612 13,437 5 214,298 293,686 13,774
Taichung Securities Investment Trust Taipei City Securities investment trust business 20,162 20,162 1,716 6 22,421 ( 7,804) ( 429 )
Co., Ltd.
Chou Chang Corporation Taipei City Distribution and warehousing of beverages 44,000 44,000 4,000 15 41,782 14,003 2,029
Chou Chin Industrial Co., Ltd. New Taipei City Manufacturing and trading 10,243 10,243 1,482 3 36,151 117,452 2,937
Xiang-Feng Development Taipei City General investment business 283,000 283,000 28,300 100 264,655 ( 1,725) ( 1,725)
Wei-Kang International Taipei City Retail 5,000 5,000 300 30 3,710 1,373 412
IOLITE COMPANY Ltd. Samoa General investment business 595,750 502,579 19,005 100 519,836 ( 6,295) ( 6,295 )
Storm Model Management Taipei City General Advertising Services 8,000 8,000 200 40 6,616 ( 2,823) ( 1,129)
IOLITE COMPANY Ltd. Hammock (Hong Kong) Hong Kong General investment business 470,685 470,685 15,000 100 400,138 ( 6,301) ( 6,301 )
Company Limited
Precious Wealth International Limited Samoa General investment business 10,969 10,969 USD 375 100 10,988 ( 232) ( 232 )
Hammock (Hong Kong) Hebei Hanoshi Contact Lens Co., Ltd. Hebei Province Manufacturing and trading 470,685 470,685 15,000 100 400,790 ( 5,952) ( 5,952 )
Company Limited
Xiang-Feng Development Tou-Ming Industry Taipei City Real estate trading and leasing industry 221,900 221,900 22,190 99 204,253 ( 1,643) ( 1,643 )
Tou-Ming Industry Jin-Bang-Ge Industry Taipei City Real estate trading and leasing industry 172,000 152,000 17,200 99 157,035 ( 1,673) ( 1,663)
Chou Chin Industrial GREENWORLD FOOD CO., LTD. Taichung City Food manufacturing, and distribution and 233,463 233,348 17,531 90 79,324 57,039 52,210
Co., Ltd. warehousing of beverages
Chou Chang Corporation Taichung City Distribution and warehousing of beverages 308,796 307,977 13,142 49 137,293 14,003 6,847
Pan-Feng Industry Taipei City Restaurant industry 14,897 14,897 1,500 100 1,040 ( 809) ( 809)
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Investor Investor Location Major Business Lines Current period-endingInitial Investment Amount Previous period-ending Quantity Equity OwnershiPercentage % p by the ComBook Value pany Current period net gain (loss) of the investee Investment gain (loss) recognized in current period Remark
Chou Chin Industrial Bomy Enterprise British Virgin General investment business $ 223,248 $ 223,248 10,000 49 $ 134,596 $ 11,471 $ 5,459
Co., Ltd. Islands
Yuju Universal Corporation Samoa General investment business 24,573 24,573 810 90 20,154 ( 2,790 ) ( 2,490 )
BONWELL PARISE Co., Ltd. Samoa International trade 3,218 1,832 104 40 541 ( 6,555 ) ( 2,622 )
Yuju Universal Noble House Glory Japan Short-term accommodation service 24,345 24,345 1,800 100 19,954 ( 2,490 ) ( 2,490 )
Corporation
GREENWORLD FOOD Chou Chang Corporation Taichung City Distribution and warehousing of beverages 1,470 1,470 51 - 328 14,003 -
CO., LTD.
Bomy Enterprise British Virgin General investment business 52,306 52,306 2,650 13 35,681 11,471 1,477
Islands
Bomy Enterprise Bomy Shanghai Shanghai City OEM, production and marketing of canned 638,972 638,972 1,985 99 277,691 11,535 11,449
vegetable and fruit juice, and beverages
Chou Chang Corporation GREENWORLD FOOD CO., LTD. Taichung City Food manufacturing, and distribution and 11,224 11,224 1,133 6 9,435 57,039 3,239
warehousing of beverages
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(3) Information about investment in Mainland China:

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

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Investee Major Business Lines Paid-in capital Mode of investment Taiwan in accumulation Amount remitted from at beginning of the present term Investment Remittance or Regain during the current Remittance period Regain Taiwan in accumulation at ending of the present Amount remitted from term Net income Investee Holding Ratio Company’ s Investment Direct or Indirect The % Investment gain (loss) recognized in current period (Note 3) Investment at end of Book Value year remitted back Accumulated Investment to Taiwan amount income
Bomy Shanghai OEM, production and $ 645,000 Invested through the $ 638,972 $ - $ - $ 638,972 $ 11,535 62% $ 7,101 $ 170,947 $ -
marketing of canned ( USD 20,000 ) third area ( USD 19,850 ) ( USD 19,850 ) ( USD 373 ) (Note 1) ( USD 230 ) ( USD 5,702 )
vegetable and fruit juice, (2)C
and beverages
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 〃 470,685 - - 470,685 ( 5,952 ) 100% ( 5,952 ) 400,790 -
Contact Lens ( USD 15,000 ) ( USD 15,000 ) ( USD 15,000 ) ( RMB 1,331 ) ( RMB 1,331 ) ( RMB 93,099 )
Co., Ltd. (2)B
Qian Exhibition design, corporate 7,416 〃 - 3,147 - 3,147 ( 6,299 ) 40% ( 2,520 ) 1,285 -
Teng PR Plan marketing consultation, ( USD 250 ) ( USD 100) ( USD 100 ) ( RMB 1,409 ) (Note 3) ( RMB 564 ) ( RMB 299 )
ning and advertising copy (3)
(Shanghai), planning
Co., Ltd.
Taichung Finance lease business 893,373 〃 893,373 - - 893,373 25,808 29% 7,484 210,554 -
Bank Leasing ( RMB 186,329 ) ( RMB 186,329 ) ( RMB 186,329 ) ( RMB 5,774 ) (Note 4) ( RMB 1,675 ) ( RMB 48,886 )
(Suzhou) (2)B
Shanghai Nianjia Culture and art exchanges 431 Investment in the - - - - ( 192 ) 40% ( 77 ) 98 -
Cultural and PR activity planning ( USD 100 ) Chinese ( RMB 43 ) ( RMB 17 ) ( RMB 23 )
Diffusion company was (3)
Co., Ltd. made with Qian
Teng PR Plannin
g (Shanghai)’s
own funds
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Amount accumulated, remitted from Taiwan for investment in Mainland China at the end of the current term Investment Amount Approved by Investment Commission of MOEA	Amount accumulated, remitted from Taiwan for investment in Mainland China at the end of the current term Investment Amount Approved by Investment Commission of MOEA	Mainland China Investment Ceiling As Regulated by Investment Commission of MOEA(Note4)
$ 2,020,663 （US$ 35,400 and RMB$ 186,329）	$ 2,204,953 (US$ 41,400 and RMB$ 186,329)	$ 2,942,516

Note 1: The consolidated shareholding calculated based on the reinvestment by Chou Chin Industrial Co., Ltd. and GREENWORLD FOOD CO., LTD. through Bomy Enterprise. Note 2: The consolidated shareholding calculated based on the reinvestment by Chou Chin Industrial Co., Ltd. and Chou Chang Corporation through a third area. Note 3: Percentage of comprehensive cross holding of Chou Chin Industrial Co., Ltd. through investment in companies in the third region. Note 4: Percentage of comprehensive cross holding of Taichung Bank Leasing through investment in companies in the third region. Note 5: Recognized as gains or losses on investment in current period:

• (1) Please note if the investee is still under preparation and there was no investment gain or loss.

• (2) The basis of recognition of investment income is classified into following three types, which should be marked out:

  • A. Financial statements audited and audited and attested by an international accounting firm that has a cooperative relationship with a certified public accounting firm registered in the Republic of China.

  • B. Financial statements audited and attested by the independent accounts of the parent company.

  • C. Others: Shanghai Bomy Food conducts analytical procedures based on the provisions of the Standards on Auditing No. 20 regarding the determination of key composition.

• (3) Not audited by a CPA

• Note 6: The ceiling calculated by the applicant, Chou Chin Industrial Co., Ltd., Taichung Commercial Bank Lease Enterprise and Deh Hsing Investment Co., Ltd. according to the “Regulations Governing the Review of Investment or Technical Cooperation in Mainland China" of Investment Commission, MOEA.

• Note 7: The foreign currency, if any, has been translated into NTD (USD1=NT$29.98, USD1=NT$30.91, CNY1=NT$4.31, CNY1=$4.47) at the foreign exchange rate-ending and average foreign exchange rate prevailing on the date of the financial statement.

• With Mainland China, major transactions, and other prices, payment conditions, unrealized gains and losses that happened directly or indirectly through the third region by the investment company.

• (1) Input amounts, percentages, balance, & percentages of relevant payable at end of the term. (None)

• (2) Sales amounts, percentages, balance, & percentages of relevant receivables at end of the term. (None)

• (3) Amount of property transaction and amount of the profit and/or loss so incurred. (None)

• (4) Balance and purposes of endorsements/guarantees or collateral provided at end of the term. (See page 192 for details)

• (5) The highest balance of fund financing balance at end of the term, range of interest rates and total amount of interest in the current term. (None)

• (6) Other transactions having significant effect upon profit and/or loss or financial standing of the current term, e.g., provision or acceptance of services. (None)