CMP - Interim / Quarterly Report 2019

Stock Code:1532

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

with Independent Auditors’ Review Report For the Six Months Ended June 30, 2019 and 2018

Address: 4F, NO.85, SEC.4, REN' AI RD, TAIPEI, TAIWAN, R.O.C. Telephone: 886-2-2711-2831

The independent auditors’ review report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ review report and consolidated financial statements, the Chinese version shall prevail.

		Contents	Page
1.	Cover Page		1
2.	Table of Contents		2
3.	Independent Auditors’ Review Report		3
4.	Consolidated Balance Sheets		4
5.	Consolidated Statements of Comprehensive Income		5
6.	Consolidated Statements of Changes in Equity		6
7.	Consolidated Statements of Cash Flows		7
8.	Notes to the Consolidated Financial Statements
	(1)	Company history	8
	(2)	Approval date and procedures of the consolidated financial statements	8
	(3)	New standards, amendments and interpretations adopted	8`～`11
	(4)	Summary of significant accounting policies	12`～`17
	(5)	Significant accounting assumptions and judgments, and major sources	18
		of estimation uncertainty
	(6)	Explanation of significant accounts	18`～`52
	(7)	Related-party transactions	52`～`58
	(8)	Pledged assets	58
	(9)	Significant commitments and contingencies	58`～`61
	(10)	Losses due to major disasters	61
	(11)	Subsequent events	61
	(12)	Other	62`～`63
	(13)	Other disclosures
		(a) Information on significant transactions	64`～`67
		(b) Information on investees	67`～`69
		(c) Information on investment in Mainland China	69`～`70
	(14)	Segment information	71

Independent Auditors’ Review Report

To the Board of Directors of China Metal Products Co., Ltd.:

Introduction

We have reviewed the accompanying consolidated balance sheets of China Metal Products Co., Ltd. and its subsidiaries as of June 30, 2019 and 2018, and the related consolidated statements of comprehensive income for the three months and six months ended June 30, 2019 and 2018, and the changes in equity and cash flows for the six months ended June 30, 2019 and 2018, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “ Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on the consolidated financial statements based on our reviews.

Scope of Review

Except as explained in the Basis for Qualified Conclusion paragraph, we conducted our reviews in accordance with Statement of Auditing Standard 65, “ Review of Financial Information Performed by the Independent Auditor of the Entity”. A review of the consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the generally accepted auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Basis for Qualified Conclusion

As stated in Note 4(b), the consolidated financial statements included the financial statements of certain nonsignificant subsidiaries, which were not reviewed by independent auditors. These financial statements reflect total assets amounting to $5,314,084 thousand and $5,270,137 thousand, constituting 13.43% and 13.38% of consolidated total assets as of June 30, 2019 and 2018, respectively, total liabilities amounting to $3,276,638 thousand and $3,245,596 thousand, constituting 13.93% and 13.74% of consolidated total liabilities as of June 30, 2019 and 2018, respectively, and total comprehensive income (loss) amounting to $15,898 thousand, $19,546 thousand, $42,916 thousand and $13,127 thousand, constituting 15.81%, 23.58%, 7.21% and 1.73% of consolidated total comprehensive income (loss) for the three months and six months ended June 30, 2019 and 2018, respectively.

Furthermore, as stated in Note 6(g), the other equity accounted investments of the China Metal Products Co., Ltd. and its subsidiaries in its investee companies of $840,829 thousand and $822,493 thousand as of June 30, 2019 and 2018, respectively, and its equity in net earnings on these investee companies of $(15,887) thousand, $(5,818) thousand, $(21,805) thousand and $(24,272) thousand for the three months and six months ended June 30, 2019 and 2018, respectively, were recognized solely on the financial statements prepared by these investee companies, but not reviewed by independent auditors.

3-1

Qualified Conclusion

Except for the adjustments, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and equity accounted investee companies described in the Basis for Qualified Conclusion paragraph above been reviewed by independent auditors, based on our reviews, nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of China Metal Products Co., Ltd. and its subsidiaries as of June 30, 2019 and 2018, and of its consolidated financial performance for the three months and six months ended June 30, 2019 and 2018, and its consolidated cash flows for the six months ended June 30, 2019 and 2018 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

The engagement partners on the reviews resulting in this independent auditors’ review report are Kuo-Yang Tseng and Shih-Chin Chih.

KPMG

Taipei, Taiwan (Republic of China) August 13, 2019

Notes to Readers

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

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2019 and 2018

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2019, December 31, 2018, and June 30, 2018 (Expressed in Thousands of New Taiwan Dollars)

June 30, 2019	December 31, 2018	December 31, 2018	June 30, 2018
Amount % $ 8,084,880 20 614,898 2 2,446,366 6 45,983 - 1,917,092 5 24 - 121,014 - 190,706 1 637,799 2 1,389 - 166,686 - 14,226,837 36 6,193,176 15 646,541 2 2,084,916 5 324,609 1 53,928 - 9,303,170 23 23,530,007 59 3,852,521 10 1,522,961 4 6,420,624 16 307,957 1 12,104,063 31 3,949,145 10 16,053,208 41 $ 39,583,215 100	Amount 6,620,573 547,626 2,536,699 19,921 1,073,350 10,109 56,813 - 1,062,662 1,389 123,241	%	Amount % 8,606,834 22 1,780,364 5 2,127,261 5 25,797 - 1,534,809 4 8,907 - 163,891 - - - 989,256 2 1,389 - 252,298 1 15,490,806 39 7,160,792 18 620,248 2 - - 268,865 1 79,655 - 8,129,560 21 23,620,366 60 3,852,521 10 1,523,521 4 6,031,166 15 430,544 1 11,837,752 30 3,942,880 10 15,780,632 40 39,400,998 100
		17 1 7 - 3 - - - 3 - - 31 21 2 - 1 - 24 55 10 4 19 1 34 11 45 100
	12,052,383
	7,963,236 646,449 - 329,581 73,343
	9,012,609
	21,064,992
	3,852,521 1,525,666 7,159,640 206,070
	12,743,897
	4,199,268
	16,943,165
	38,008,157

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)

For the three months ended June	For the three months ended June	For the three months ended June	For the six months ended June 30 2019 2018 Amount % Amount % 7,444,781 100 7,235,326 100 (5,611,751) (75) (5,531,426) (76) 1,833,030 25 1,703,900 24 (352,981) (5) (338,796) (5) (779,808) (11) (788,735) (11) (4,801) - (3,339) - (2,295) - 342 - (1,139,885) (16) (1,130,528) (16) 2,256 - 3,520 - 695,401 9 576,892 8 91,416 1 94,037 1 271 - 54,433 1 (146,057) (2) (118,113) (2) (21,805) - (24,272) - (76,175) (1) 6,085 - 619,226 8 582,977 8 (147,127) (2) (177,001) (2) 472,099 6 405,976 6 - - 360,545 5 472,099 6 766,521 11 17,862 - - - 105,436 2 (8,631) - 123,298 2 (8,631) - 595,397 8 757,890 11 361,827 5 699,745 10 110,272 1 66,776 1 472,099 6 766,521 11 463,714 6 684,529 10 131,683 2 73,361 1 595,397 8 757,890 11 0.94 0.88 - 0.94 0.94 1.82 0.94 0.88 - 0.93 0.94 1.81	For the six months ended June 30 2019 2018 Amount % Amount % 7,444,781 100 7,235,326 100 (5,611,751) (75) (5,531,426) (76) 1,833,030 25 1,703,900 24 (352,981) (5) (338,796) (5) (779,808) (11) (788,735) (11) (4,801) - (3,339) - (2,295) - 342 - (1,139,885) (16) (1,130,528) (16) 2,256 - 3,520 - 695,401 9 576,892 8 91,416 1 94,037 1 271 - 54,433 1 (146,057) (2) (118,113) (2) (21,805) - (24,272) - (76,175) (1) 6,085 - 619,226 8 582,977 8 (147,127) (2) (177,001) (2) 472,099 6 405,976 6 - - 360,545 5 472,099 6 766,521 11 17,862 - - - 105,436 2 (8,631) - 123,298 2 (8,631) - 595,397 8 757,890 11 361,827 5 699,745 10 110,272 1 66,776 1 472,099 6 766,521 11 463,714 6 684,529 10 131,683 2 73,361 1 595,397 8 757,890 11 0.94 0.88 - 0.94 0.94 1.82 0.94 0.88 - 0.93 0.94 1.81
2019	% 100 (75) 25 (5) (11) - - (16) - 9 2 - (2) - - 9 (2) 7 - 7 - (4) (4) 3 5 2 7 2 1 3 0.50 0.50 0.50 0.50	2018	2019	% 100 (75) 25 (5) (11) - - (16) - 9 1 - (2) - (1) 8 (2) 6 - 6 - 2 2 8 5 1 6 6 2 8 0.94 0.94 0.94 0.94
Amount $ 3,657,710 (2,746,350) 911,360 (178,751) (396,412) (2,363) (3,171) (580,697) 1,186 331,849 63,395 18,988 (71,198) (15,887) (4,702) 327,147 (83,228) 243,919 - 243,919 - (143,339) (143,339) $ 100,580 $ 192,370 51,549 $ 243,919 $ 71,959 28,621 $ 100,580 $ - $ $ - $		Amount 3,727,248 (2,831,276) 895,972 (177,228) (386,068) (1,562) 5,221 (559,637) 1,559 337,894 63,713 109,531 (61,418) (5,818) 106,008 443,902 (147,349) 296,553 (3,548) 293,005 - (210,110) (210,110) 82,895 251,249 41,756 293,005 63,344 19,551 82,895	Amount 7,444,781 (5,611,751) 1,833,030 (352,981) (779,808) (4,801) (2,295) (1,139,885) 2,256 695,401 91,416 271 (146,057) (21,805) (76,175) 619,226 (147,127) 472,099 - 472,099 17,862 105,436 123,298 595,397 361,827 110,272 472,099 463,714 131,683 595,397 -

			-

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the six months ended June 30, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

		Equity Attributable to Owners of Parent	Equity Attributable to Owners of Parent	Equity Attributable to Owners of Parent	Equity Attributable to Owners of Parent	Equity Attributable to Owners of Parent
Share Capital	Capital Surplus	Retained Earnings				Other Equity			Total Equity Attributable to Owners of Parent
						Unrealized Gains (Losses) from Financial Assets Measured at Fair Value Through Other Comprehensive Income	Unrealized Gains (Losses) on Available- For-Sale Financial Assets
Ordinary Shares		Legal Reserve	Special Reserve
$ 3,852,521 - 3,852,521 - - - - - - - - - $ 3,852,521 $ 3,852,521 - 3,852,521 - - - - - - - - $ 3,852,521	1,522,961 -	1,511,647 -	49,081 -	4,317,361 66,678 4,384,039 699,745 - 699,745 (60,943) (577,878) (35,468) - - - 4,409,495 5,537,969 (58,290) 5,479,679 361,827 - 361,827 (183,557) (1,040,181) (2,372) - - 4,615,396	392,282 -	- 53,478		187 (187) - - - - - - - - - - - - - - - - - - - - - - -		11,646,040 119,969
	1,522,961	1,511,647	49,081		392,282	53,478				11,766,009
	- -	- -	- -			- -
	-	-	-			-
	- - - 560 - -	60,943 - - - - -	- - - - - -			- - - - - -
	1,523,521	1,572,590	49,081			53,478
	1,525,666 -	1,572,590 -	49,081 -			69,779 -
	1,525,666	1,572,590	49,081			69,779
	- -	- -	- -			- 17,862
	-	-	-			17,862
		183,557 - - - -	- - - - -			- - - - -
		1,756,147	49,081			87,641

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities:
Profit from continuing operations before tax
Profit from discontinued operations before tax
Profit before tax
Adjustments:
Adjustments to reconcile profit (loss):
Depreciation expense
Amortization expense
Expected credit loss (gain)
Net gain on financial assets or liabilities at fair value through profit or loss
Interest expense
Interest income
Dividend income
Share of loss of associates and joint ventures accounted for using equity method
Loss on disposal of property, plant and equipment
Property, plant and equipment transferred to expenses
Gain on disposal of discontinued operations and non-current assets held for sale
Impairment loss
Other gains
Total adjustments to reconcile profit
Changes in operating assets and liabilities:
Changes in operating assets:
Current financial assets at fair value through profit or loss
Notes and accounts receivable, net
Accounts receivable due from related parties
Other receivables
Inventories
Prepayments
Other current assets
Other financial assets
Total changes in operating assets
Changes in operating liabilities:
Notes and accounts payable (including related parties)
Other payables
Current contract liabilities
Other current liabilities
Other non-current liabilities
Total changes in operating liabilities
Total changes in operating assets and liabilities
Total adjustments
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income taxes paid
Net cash flows generated from operating activities
Cash flows from investing activities:
Proceeds from disposal of investments accounted for using equity method
Proceeds from capital reduction of investments accounted for using equity method
Proceeds from disposal of non-current assets held for sale
Acquisition of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Increase in receipts in advance due to disposal of assets
Proceeds from capital reduction of financial assets at fair value through other comprehensive income
Acquisition of intangible assets
(Increase) decrease in other financial assets
Increase in other non-current assets
Net cash flows from loss of control of subsidiary
Net cash flows (used in) generated from investing activities
Cash flows from financing activities:
Increase in short-term borrowings
Decrease in short-term borrowings
Increase in short-term notes and bills payable
Proceeds from long-term borrowings
Repayments of long-term borrowings
Increase (decrease) in other non-current liabilities
Payment of lease liabilities
Cash dividends paid to non-controlling interests
Change in non-controlling interests
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

For the six months ended June 30
2019
2018
$ 619,226
582,977
-
371,620
619,226
954,597
499,685
391,712
14,209
22,601
2,295
(342)
(2,167)
(14,048)
146,057
118,113
(34,076)
(30,010)
(28,174)
(38,481)
21,805
24,272
3,534
3,011
152
-
-
(375,854)
447
-
(2,713)
-
621,054
100,974
(12,258)
58,372
281,676
59,758
53,159
(172,032)
15,177
25,344
56,536
(361,855)
(93,113)
93,339
(42,666)
(42,316)
219,203
52,310
477,714
(287,080)
(91,154)
10,454
(140,552)
28,511
71,958
236,070
2,361
43,212
(789)
1,339
(158,176)
319,586
319,538
32,506
940,592
133,480
1,559,818
1,088,077
27,347
22,805
28,218
39,113
(142,834)
(159,760)
(56,580)
(162,960)
1,415,969
827,275
-
1,990
-
36,516
-
616,480
(342,454)
(418,854)
13,255
11,635
-
30,502
8,000
-
(1,277)
(5,660)
(68,148)
116,106
(161,272)
(224,718)
-
(7,210)
(551,896)
156,787
3,644,270
9,056,986
(2,191,699)
(8,317,598)
202
214,923
1,530,000
1,689,869
(3,755,559)
(3,591,500)
9,503
(225)
(109,991)
-
(371,423)
(48,460)
(10,000)
(66,959)
(1,254,697)
(1,062,964)
39,019
27,887
(351,605)
(51,015)
3,896,690
3,630,012
$
3,545,085
3,578,997

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the six months ended June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars, unless otherwise specified)

(1) Company history

CHINA METAL PRODUCTS CO., LTD. (the “Company”) was established on September 9, 1972, via Ministry of Economic Affairs’ authorization. The registered office is located at 4F, No. 85, Section 4, Ren’ai Road, Taipei. The major business activities of the Company and its subsidiaries (the “Group”) are iron hardware manufacturing and casting, residents and commercial buildings developing, leasing and selling, international hotel servicing and department store retailing. Please refer to Note 14, for the aforementioned information.

(2) Approval date and procedures of the consolidated financial statements:

The accompanying consolidated financial statements were authorized for issuance by the Board of Directors on August 13, 2019.

(3) New standards, amendments and interpretations adopted

(a) The impact of the International Financial Reporting Standards (“IFRSs”) endorsed by the Financial Supervisory Commission, R.O.C. (“FSC”) which have already been adopted.

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2019.

are effective for annual periods beginning on or after January 1, 2019.
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
IFRS 16 “Leases”	January 1, 2019
IFRIC 23 “Uncertainty over Income Tax Treatments”	January 1, 2019
Amendments to IFRS 9 “Prepayment features with negative compensation”	January 1, 2019
Amendments to IAS 19 “Plan Amendment, Curtailment or Settlement”	January 1, 2019
Amendments to IAS 28 “Long-term interests in associates and joint ventures”	January 1, 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle	January 1, 2019

Except for the following items, the Group believes that the adoption of the above IFRSs would not have any material impact on its consolidated financial statements. The extent and impact of signification changes are as follows:

(i) IFRS 16 “Leases”

IFRS 16 replaces the existing leases guidance, including IAS 17 "Leases," IFRIC 4 "Determining whether an Arrangement contains a Lease, "SIC-15" Operating Leases – Incentives" and SIC-27 "Evaluating the Substance of Transactions Involving the Legal Form of a Lease."

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group applied IFRS 16 using the modified retrospective approach, under which the cumulative effect of initial application is recognized in retained earnings on January 1, 2019. The details of the changes in accounting policies are disclosed below:

1) Definition of a lease

Previously, the Group determined at contract inception whether an arrangement is or contains a lease under IFRIC 4. Under IFRS 16, the Group assesses whether a contract is or contains a lease based on the definition of a lease, as explained in Note 4(c).

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which transactions are leases. The Group applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC 4 were not reassessed for whether there is a lease. Therefore, the definition of a lease under IFRS 16 was applied only to contracts entered into or changed on or after January 1, 2019.

2) As a lessee

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment of whether the lease transferred significantly all of the risks and rewards incidental to ownership of the underlying asset to the Group. Under IFRS 16, the Group recognizes right-of-use assets and lease liabilities for most leases – i.e. these leases are on-balance sheet.

The Group decided to apply recognition exemptions to short-term leases of machinery, office, office facilities, dormitory and company cars.

Leases classified as operating leases under IAS 17

At transition, lease liabilities were measured at the present value of the remaining lease payments, discounted at the Group’s incremental borrowing rate as at January 1, 2019. Right-of-use assets are measured at either:

－ their carrying amount as if IFRS 16 had been applied since the commencement date, discounted using the lessee’ s incremental borrowing rate at the date of initial application – the Group applied this approach to its largest property leases; or
－ an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments – the Group applied this approach to all other lease.

In addition, the Group used the following practical expedients when applying IFRS 16 to leases.

－ Applied a single discount rate to a portfolio of leases with similar characteristics.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

－ Adjusted the right-of-use assets by the amount of IAS 37 onerous contract provision immediately before the date of initial application, as an alternative to an impairment review.
－ Applied the exemption not to recognize right-of-use assets and liabilities for leases with less than 12 months of lease term.
－ Excluded initial direct costs from measuring the right-of-use asset at the date of initial application.
－ Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.
Leases previously classified as finance leases

For leases that were classified as finance leases under IAS 17, the carrying amount of the right-of-use asset and the lease liability at January 1, 2019 are determined at the carrying amount of the lease asset and lease liability under IAS 17 immediately before that date.

3) As a lessor

The Group is not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor, except for a sub-lease. The Group accounted for its leases in accordance with IFRS 16 from the date of initial application.

Under IFRS 16, the Group is required to assess the classification of a sub-lease by reference to the right-of-use asset, not the underlying asset. On transition, the Group reassessed the classification of a sub-lease contract previously classified as an operating lease under IAS 17. The Group concluded that the sub-lease is a finance lease under IFRS 16.

4)
Impacts on financial statements

On transition to IFRS 16, the Group recognized the right-of-use assets, other non-current assets, other payables, and the lease liabilities to increase by $2,640,130 thousand, decrease by $384,690 thousand, decrease by $56,916 thousand, and increase by $2,370,978 thousand, respectively, as well as the retained earnings and non-controlling interests to decrease by $58,290 thousand and $332 thousand , respectively, on January 1, 2019. When measuring lease liabilities, the Group discounted lease payments using its incremental borrowing rate at January 1, 2019. The weighted-average rate applied is 1.38%.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The explanation of differences between operating lease commitments disclosed at the end of the annual reporting period immediately preceding the date of initial application, and lease liabilities recognized in the statement of financial position at the date of initial application disclosed as follows:

Operating lease commitment at December 31, 2018 as disclosed in the Group’s consolidated financial statements Recognition exemption for: Short-term and low-value assets leases Discounted using the incremental borrowing rate at January 1, 2019 Finance lease liabilities recognized as at December 31, 2018 Lease liabilities recognized at January 1, 2019	January 1, 2019 $ 2,911,878 (286,176) 2,625,702 2,370,978 - $ 2,370,978

(b) The impact of IFRS endorsed by FSC but not yet effective

The following new standards, interpretations and amendments have been endorsed by the FSC and are effective for annual periods beginning on or after January 1, 2020 in accordance with Ruling No. 1080323028 issued by the FSC on July 29, 2019:

	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 3 “Definition of a Business”	January 1, 2020
Amendments to IAS 1 and IAS 8 “Definition of Material”	January 1, 2020

The Group assesses that the adoption of the abovementioned standards would not have any material impact on its consolidated financial statements.

As of the date, the following IFRSs that have been issued by the International Accounting Standards Board (IASB), but have yet to be endorsed by the FSC:

Board (IASB), but have yet to be endorsed by the FSC:
	Effective date
New, Revised or Amended Standards and Interpretations	per IASB
Amendments to IFRS 10 and IAS 28 “Sale or Contribution of Assets Between	Effective date to
an Investor and Its Associate or Joint Venture”	be determined
	by IASB
IFRS 17 “Insurance Contracts”	January 1, 2021

The Group is evaluating the impact of its initial adoption of the abovementioned standards or interpretations on its consolidated financial position and consolidated financial performance. The results thereof will be disclosed when the Group completes its evaluation.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies

The accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language consolidated financial statements, the Chinese version shall prevail.

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with the preparation and guidelines of IAS 34 “Interim Financial Reporting” which are endorsed and issued into effect by FSC, and do not include all of the information required by the Regulations and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations and SIC Interpretations endorsed and issued into effect by the FSC (hereinafter referred to IFRS endorsed by the FSC) for a complete set of the annual consolidated financial statements.

Except the following accounting policies mentioned below, the significant accounting policies adopted in the consolidated financial statements are the same as those in the consolidated financial statement for the year ended December 31, 2018. For the related information, please refer to Note 4 of the consolidated financial statements for the year ended December 31, 2018.

(b) Basis of consolidation

Principles of preparation of the consolidated financial statements are the same as those of the consolidated financial statements for the year ended December 31, 2018. For the related information, please refer to Note 4(c) of the consolidated financial statements for the year ended December 31, 2018.

(i) List of subsidiaries in the consolidated financial statements

Investor	Name of Subsidiary	Principal Activity		Percentage Ownership June 30, 2019 December 31, 2018 June 30, 2018 Note % 100.00 % 100.00 % 100.00 Note 2 % 83.58 % 83.58 % 75.92 Note 1 % 99.00 % 99.00 % 99.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 94.00 % 94.00 % 94.00 Note 1 % 83.33 % 83.33 % 83.33 Note 1	Percentage Ownership June 30, 2019 December 31, 2018 June 30, 2018 Note % 100.00 % 100.00 % 100.00 Note 2 % 83.58 % 83.58 % 75.92 Note 1 % 99.00 % 99.00 % 99.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 94.00 % 94.00 % 94.00 Note 1 % 83.33 % 83.33 % 83.33 Note 1
				June 30, 2019	December 31, 2018
The Company The Company and Sunflower Investment The Company The Company The Company The Company	United Elite Agents Limited (UEA) Atrans Precision Industries Co., Ltd. (Atrans Precision) Sunflower Investment Co., Ltd. (Sunflower Investment) The Hotel National Co., Ltd. (The Hotel National) CHINA METAL AUTOMOTIVE INTERNATIONAL CO., LTD. (CMAI) CHINA METAL JAPAN COMPANY LIMITED (CMJ)	Investing Vehicle parts processing Investing International tourist hotel services and other hotel business approved by the Ministry of Transportation and Communications Vehicle parts retailing Cast iron product retailing		% 100.00 % 83.58 % 99.00 % 100.00 % 94.00 % 83.33	% 100.00 % 83.58 % 99.00 % 100.00 % 94.00 % 83.33

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Investor	Name of Subsidiary	Principal Activity		Percentage Ownership June 30, 2019 December 31, 2018 June 30, 2018 Note % 100.00 % 100.00 % 100.00 Note 1 % 71.72 % 71.72 % 71.47 Note 2 % 50.00 % 50.00 % 50.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 82.55 % 82.55 % 82.55 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % - Note 2 and 4 % 100.00 % 100.00 % 100.00 Note 1	Percentage Ownership June 30, 2019 December 31, 2018 June 30, 2018 Note % 100.00 % 100.00 % 100.00 Note 1 % 71.72 % 71.72 % 71.47 Note 2 % 50.00 % 50.00 % 50.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 82.55 % 82.55 % 82.55 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % 100.00 Note 2 % 100.00 % 100.00 % - Note 2 and 4 % 100.00 % 100.00 % 100.00 Note 1
				June 30, 2019	December 31, 2018
The Company The Company and Sunflower Investment The company and PUJEN Land Development The company and PUJEN Land Development UEA CMI CMI CMI CMB (H.K.) CMI (BVI) CMP (H.K.) CMP (H.K.) CMW (C.I.) CMW (C.I.) CMJ	National Management Co., Ltd. (National Management) PUJEN Land Development Co., Ltd. (PUJEN Land Development) Pu Sheng Construction Co., Ltd. (Pu Sheng Construction) Shangrila Tourism Co., Ltd. (Shangrila Tourism) China Metal International Holdings Inc. (CMI) China Metal International (BVI) Limited (CMI (BVI)) CMW (Cayman Islands) Co., Ltd. (CMW (C.I.)) CMB (H.K.) Co., Ltd. (CMB (H.K.)) Suzhou CMB Machinery Co., Ltd. (Suzhou CMB) CMP (H.K.) Industry Co., Ltd. (CMP (H.K.)) Tianjin CMT Industry Co., Ltd. (Tianjin CMT) Suzhou CMS Machinery Co., Ltd. (Suzhou CMS) CMW (Tianjin) Industry Co., Ltd. (CMW (Tianjin)) CMI (Wu Han) Precision Machinery Co., Ltd. (CMH) Qingdao Sourcing Specialists Trading Co., Ltd. (Qingdao Sourcing Specialists)	Management and consulting services Residents, commercial buildings and factories leasing and developing Residents, commercial buildings and factories leasing and developing Amusement park and hotel services Investing and cast iron product retailing Investing Investing Investing Cast iron product designing, manufacturing and retailing Investing Cast iron products, machine parts and vehicle parts designing, developing, manufacturing and selling Vehicle parts, E&M as-casting and finished product developing, manufacturing and selling Vehicle parts, E&M as-casting and finished product developing, manufacturing and selling Vehicle parts, farm wagon parts, industrial wagon parts, household appliances parts and E&M as- casting and molds developing, manufacturing, selling and the after sales services Cast iron product retailing		% 100.00 % 71.72 % 50.00 % 100.00 % 82.55 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00	% 100.00 % 71.72 % 50.00 % 100.00 % 82.55 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00 % 100.00

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Investor	Name of Subsidiary	Principal Activity		Percentage Ownership June 30, 2019 December 31, 2018 June 30, 2018 Note % 100.00 % 100.00 % 100.00 Note 1 % 21.23 % 21.23 % 21.23 Note 3 % 50.00 % 50.00 % 50.00 Note 1 % 70.00 % 70.00 % 70.00 Note 1 % 50.00 % 50.00 % 50.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1	Percentage Ownership June 30, 2019 December 31, 2018 June 30, 2018 Note % 100.00 % 100.00 % 100.00 Note 1 % 21.23 % 21.23 % 21.23 Note 3 % 50.00 % 50.00 % 50.00 Note 1 % 70.00 % 70.00 % 70.00 Note 1 % 50.00 % 50.00 % 50.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1 % 100.00 % 100.00 % 100.00 Note 1
				June 30, 2019	December 31, 2018
Atrans Precision Atrans Precision PUJEN Land Development PUJEN Land Development PUJEN Land Development CMAI CMAI CMAI Holding Pilot	FAR HSING (SAMOA) ENTERPRISE CO., LTD. (FAR HSING (SAMOA)) Acore Material Technology Co., Ltd. (Acore Material) CHINGENG Land Development Co., Ltd. (CHINGENG Land Development) PUJEN CHENGMEI Land Development Co., Ltd. (PUJEN CHENGMEI Land Development) PUCHIA Land Development Co., Ltd. (PUCHIA Land Development) Qinxin Trade Co., Ltd. (Qinxin Trade) CMAI Holding, Inc. (CMAI Holding) Pilot Drive LLC (Pilot) CMAI INDUSTRIES, INC. (CMAI N.A.)	Investing Mechanical equipment, electronic parts and other equipment manufacturing Residents, commercial buildings and factories leasing and developing Residents, commercial buildings and factories leasing and developing Residents, commercial buildings and factories leasing and developing Vehicle parts retailing Investing Assets leasing Vehicle parts retailing		% 100.00 % 21.23 % 50.00 % 70.00 % 50.00 % 100.00 % 100.00 % 100.00 % 100.00	% 100.00 % 21.23 % 50.00 % 70.00 % 50.00 % 100.00 % 100.00 % 100.00 % 100.00

Note 1: An non-significant subsidiary, its financial statements have not been reviewed.

Note 2: The financial statements have been reviewed.

Note 3: The group lost the control of Acore Material since they reselected their board members on April 30th, 2018 at the shareholders’ meeting. As a result, Acore Material has not been included in the consolidated financial statements of the Groups since the day the group lost its control. Please refer to Note 6(h).

Note 4: Set up in the 4[th] quarter of 2018.

(ii) Subsidiaries excluded from the consolidated financial statements: None.

(c) Leases (applicable from January 1, 2019)
(i) Identifying a lease

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

1) the contract involves the use of an identified asset – this may be specified explicitly or implicitly, and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; and

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and
3) the Group has the right to direct the use of the asset. The Group has the right to direct the use of the asset when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of an asset if either:
–the Group has the right to operate the asset; or
–the Group designed the asset in a way that predetermines how and for what purpose it will be used.

At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and nonlease components as a single lease component.

(ii) As a leasee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be reliably determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

1) fixed payments;
2) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;
3) amounts expected to be payable under a residual value guarantee; and
4) payments for purchase or termination options that are reasonably certain to be exercised.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The lease liability is measured at amortized cost using the effective interest method. It is remeasured when:

1) there is a change in future lease payments arising from the change in an index or rate; or
2) there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee; or
3) there is a change of its assessment on whether it will exercise a purchase option; or
4) there is a change of its assessment of lease period on whether it will exercise a extension or termination option; or
5) there is any lease modifications

When the lease liability is remeasured, other than lease modifications, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or in profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

When the lease liability is remeasured to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease, the Group accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognize in profit or loss any gain or loss relating to the partial or full termination of the lease.

The Group presents right-of-use assets that do not meet the definition of investment and lease liabilities as a separate line item respectively in the balance sheet.

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets, including partial offices, office facilities, dormitory and company cars. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

For sale-and-leaseback transactions, the Group applies the requirements for determining when a performance obligation is satisfied in IFRS15 to determine whether the transfer of an asset is accounted for as a sale of the asset. If the transfer of an asset satisfies the requirement of IFRS15 to be accounted for as a sale of the asset, the Group measures the right-of-use asset arising from the leaseback at the proportion of the previous carrying amount of the asset that relates to the right of use retained. Accordingly, the Group recognizes only the amount of any gain or loss that relates to the rights transferred to the buyer-lessor. If the transfer of an asset does not satisfy the requirement of IFRS15 to be accounted for as a sale of the asset, the Group will continue to recognize the transferred asset and shall recognize the financial liability equal to the transfer proceeds.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) As a lessor

When the Group acts as a lessor, it determines at lease commencement whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then the lease is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, the Group applies IFRS15 to allocate the consideration in the contract.

The lessor recognizes a finance lease receivable at an amount equal to its net investment in the lease. Initial direct costs, such as lessors to negotiate and arrange a lease, are included in the measurement of the net investment. The lessor recognizes the interest income over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor’ s net investment in the lease. The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘rental revenue’.

(d) Income taxes

The income tax expenses have been prepared and disclosed in accordance with paragraph B12 of International Financial Reporting Standards 34, Interim Reporting.

Income tax expenses for the period are best estimated by multiplying pre-tax income for the interim reporting period by the effective annual tax rate as forecasted by the management. This should be recognized fully as tax expense for the current period.

Temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases shall be measured based on the tax rates that have been enacted or substantively enacted at the time of the asset or liability is recovered or settled, and be recognized directly in equity or other comprehensive income as tax expense.

(e) Employee benefits

The pension cost in the interim period was calculated and disclosed on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior fiscal year, and be adjusted by the significant market flotation, significant curtailment, settlement or other significant single occasion.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

The preparation of the consolidated financial statements in conformity with the Regulations and IFRSs (in accordance with IAS 34 “Interim Financial Reporting” and endorsed by the FSC) requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The preparation of the consolidated interim financial statements, estimates and underlying assumptions are reviewed on an ongoing basis which are in conformity with the consolidated financial statements for the year ended December 31, 2018. For the related information, please refer to Note 5 of the consolidated financial statements for the year ended December 31, 2018.

(6) Explanation of significant accounts:

Except for the following disclosures, there is no significant difference as compared with those disclosed in the consolidated financial statements for the year ended December 31, 2018. Please refer to Note 6 of the 2018 annual consolidated financial statements.

(a) Cash and cash equivalents

Cash on hand Cash in banks Time deposits Cash and cash equivalents	June 30, 2019 $ 10,432 2,439,529 1,095,124 $ 3,545,085	December 31, 2018 June 30, 2018 11,826 11,163 2,300,291 2,235,965 1,584,573 1,331,869 3,896,690 3,578,997

(b) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss Stocks listed on domestic markets	June 30, 2019 $ 17,385	December 31, 2018 June 30, 2018 2,960 648

(i) The Group holds financial assets designated as at FVTPL, which recognizes gain or loss on valuation of financial assets. Please refer to Note 6(27) for the recognized gains or losses.

(ii) The Group disclosed the relative risk of financial instruments in Note 6(28).
(iii) As of June 30, 2019, December 31 and June 30, 2018, the financial assets were not pledged as collateral.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Equity investments at fair value through other comprehensive income Stocks unlisted on domestic markets—MEITA Industrial Co., Ltd. Stocks unlisted on domestic markets—YUHUA Venture Capital Co., Ltd. Stocks unlisted on domestic markets—FUHUA Venture Capital Co., Ltd. Stocks unlisted on domestic markets—GUANGYUAN Investment Co., Ltd. Stocks unlisted on domestic markets—DEVELOPMENT Venture Capital Co., Ltd. Total	June 30, 2019 $ 135,300 830 1,920 44,080 33,935 $ 216,065	December 31, 2018 June 30, 2018 128,063 112,132 1,473 2,482 2,868 2,986 40,308 39,966 35,106 35,890 207,818 193,456

(i) The Group intends to hold the equity investments for long-term strategic purposes, rather than transaction purposes. Therefore, the investments are measured at FVOCI.
(ii) The Group did not dispose the strategic investments during the first two quarters of 2019 and 2018. Therefore, the accumulated income and loss was not transferred in equity.
(iii) Please refer to Note 6(ab) for the information of credit risk (including the impairment of debt instrument investments) and market risk.
(iv) As of June 30, 2019, December 31 and June 30, 2018, the financial assets were not pledged as collateral.
(d) Notes and accounts receivable

Notes receivable from operating activities Accounts receivable-measured as amortized cost Subtotal Less: Loss allowance Total	June 30, 2019 $ 361,519 3,734,293 4,095,812 24,338 $ 4,071,474	December 31, 2018 June 30, 2018 252,172 296,059 4,076,523 4,389,357 4,328,695 4,685,416 21,874 79,402 4,306,821 4,606,014

The Group applies the simplified approach to provide for the loss allowance used for expected credit losses, which permit the use of lifetime expected loss provision for all receivables. To measure the expected credit losses, notes and accounts receivable have been grouped based on shared credit risk characteristics and the days past due, as well as forward-looking information. The loss allowance provision as of June 30, 2019 is determined as follows:

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Current 1 to 30 days past due 31 to 90 days past due 91 to 120 days past due 121 days to a year past due Over a year past due Current 1 to 30 days past due 31 to 90 days past due 91 to 120 days past due 121 days to a year past due Over a year past due Current 1 to 30 days past due 31 to 90 days past due 91 to 120 days past due 121 days to a year past due Over a year past due		June 30, 2019
	Gross Carrying Amount Weighted Average Loss Rate Loss Allowance Provision $ 3,771,851 0% - 209,539 0% - 60,984 0~6% 1,798 25,837 3.34~11.82% 2,035 11,227 24.73~62.68% 4,131 16,374 100% 16,374 $ 4,095,812 24,338 December 31, 2018
	Gross Carrying Amount $ 4,006,785 234,726 44,072 13,484 24,928 4,700 $ 4,328,695	Weighted Average Loss Rate Loss Allowance Provision 0% - 0% - 0~6% 495 3.34~11.82% 1,554 24.73~62.68% 15,125 100% 4,700 21,874 June 30, 2018
	Gross Carrying Amount $ 4,239,884 281,810 43,734 25,387 30,960 63,641 $ 4,685,416	Weighted Average Loss Rate Loss Allowance Provision 0% - 0% - 0~11.73% 4,465 0~52.34% 5,045 11.19~84.07% 6,251 100% 63,641 79,402

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The movements in the allowance for notes and accounts receivable is as follows:

Balance on January 1 Impairment losses (reversed) recognized Foreign exchange losses Balance on June 30	For the Six Months Ended June 30 2019 2018 $ 21,874 79,202 2,295 (342) 169 542 $ 24,338 79,402

The financial assets mentioned above were not pledged as collateral.

The Group and the financial institutions entered into a non-recourse factoring contract. According to the contract, the Group need not assume the risks of unrecoverable losses, but the losses arising from unpaid advance payments and business disputes, which meet the requirements of derecognition of financial assets.

As of December 31, and June 30, 2018, the information of the sale of non-recourse receivables is as follows:

follows:
Purchaser Entie Commercial Bank Purchaser Entie Commercial Bank		December 31, 2018
	Derecognized Amount $ 21,306	Factoring Line Advanced Amount 61,440 - June 30, 2018		Range of Interest Rate Collateral 0.38% -
		Factoring Line 60,920	Advanced Amount -	Range of Interest Rate Collateral 0.40% -

The factoring receivables mentioned above were deemed as a sale at the time of transferring the rights and obligations to the buyer. As of December 31, 2018 and June 30, 2018, the Group’ s factoring receivables amounted to $21,306 thousand and $29,096 thousand, respectively. The aforementioned factoring amounts included the retained amount arising from business disputes and unpaid advance payments, which amounted to $21,306 thousand and $29,096 thousand under other current financial assets, as of December 31, and June 30, 2018, respectively.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Inventories

Raw materials Work in process Semi-finished goods Finished goods Merchandise Land held for development Properties and land held for sale Construction-in-progress Prepayments for land Other inventories	June 30, 2019 $ 103,747 312,708 131,541 820,280 66,908 3,698,790 3,978,886 4,787,186 10,788 356,939 $ 14,267,773	December 31, 2018 June 30, 2018 141,654 158,227 156,961 242,845 202,095 147,708 933,550 821,595 65,758 58,685 3,956,001 5,135,509 4,594,464 899,876 3,910,113 7,724,841 10,788 23,911 320,188 183,802 14,291,572 15,396,999

For the three months and six months ended June 30, 2019 and 2018, the cost of goods sold and expenses amounted to $2,746,350 thousand, $2,831,276 thousand, $5,611,751 thousand and $5,531,426 thousand, respectively. For the three months and six months ended June 30, 2019 and 2018, the reversal gain from the sale of the beginning inventories and the loss for inventory obsolescence from the inventories write-down amounted to $4,546 thousand, $(7,298) thousand, $11,032 thousand and $17,567 thousand, respectively.

For the information of inventories pledged as collateral, as of June 30, 2019, December 31 and June 30, 2018, please refer to Note 8.

(f) Non-current assets held for sale

For the efficient usage and operation of assets, the Company resolved to sale the equipment in Tianjin, China, and the land, factory, and equipment of the steel product segment in the 1[st] and 4[th] quarter of 2017. In the 1[st] quarter of 2018, the Group sold all of the land and factory and most of the equipment in the steel product segment. The disposal gain $375,854 thousand arose from measuring at the selling price less costs to sell and the book value shall be presented in the line item of profit from discontinued operations in the statement of comprehensive income for the six months ended June 30, 2018. As of June 30, 2018, non-current assets held for sale amounted to $42,052 thousand. For the information of disposal gain or loss, please refer to Note 12(d).

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(g) Investments accounted for using equity method

The components of investments accounted for using the equity method at the reporting date is as follows:

Associates Joint ventures	June 30, 2019 $ 448,110 392,719 $ 840,829	December 31, 2018 June 30, 2018 458,920 469,441 405,237 353,052 864,157 822,493

(i) Associates

Due to the fact that the Group does not have the obligation of assuming the excess losses, it ceased the recognition of the losses from the investment of Amida Trustlink Assets Management Co., Ltd. (Amida Trustlink Assets). For the three months and six months ended June 30, 2019 and 2018, the unrealized investment losses amounted to $84 thousand, $74 thousand, $162 thousand and $148 thousand, respectively; and the accumulated unrealized investment losses, as of June 30, 2019 and 2018, amounted to $56,895 thousand and $56,582 thousand, respectively.

The Group’s financial information for investments accounted for using the equity method that were individually insignificant is as follows:

				June 30,		December 31,	December 31,	June 30,
				2019		2018		2018
Carry amount of individually			$	448,110		458,920		469,441
insignificant	associates' equity
		For	the Three Months Ended June		30	For the Six Months		Ended June 30
			2019	2018		2019		2018
Attributable to the	Group:
Net (loss) profit		$	(4,128)		538		(7,496)	(7,366)
Other comprehensive			-	-		-		-
income
Comprehensive	income	$	(4,128)		538		(7,496)	(7,366)

(ii) Joint ventures

The Group’s financial information for joint ventures accounted for using the equity method that were individually insignificant is as follows:

Carry amount of individually insignificant joint ventures' equity	June 30, 2019 $ 392,719	December 31, 2018 June 30, 2018 405,237 353,052

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Attributable to the Group: Net loss Other comprehensive income Comprehensive income	For the Three Months Ended June 30 2019 2018 $ (11,759) (6,356) - - $ (11,759) (6,356)	For the Six Months Ended June 30 2019 2018 (14,309) (16,906) - - (14,309) (16,906)
	2019 $ (11,759) - $ (11,759)

(iii) Pledge to secure

As of June 30, 2019, December 31 and June 30, 2018, the investments accounted for using equity method were not pledged as collateral.

(iv) The unreviewed financial statements of investments accounted for using equity method

The investments were accounted for by the equity method, and the share of profit or loss and other comprehensive income of those investments were calculated based on the financial statements that have not been reviewed.

(h) Changes in a parent's ownership interest in a subsidiary
(i) Acquisition of subsidiary

During the six months ended of June 30, 2018, Sunflower Investment invested Atrans Precision in cash by the amount of $31,775 thousand, which increased the equity investment of the Group from 70.47% to 75.92%.

The information of the influence of subsidiaries’ equities variation to the Group’s equity is as follows:

Book value of acquisition of non-controlling interests Cash paid to non-controlling interests Capital surplus	For the Six Months Ended June 30 2018
	Atrans Precision $ 31,206 (31,775) $ (569)

The capital surplus resulting from changes in ownership is not sufficient as of June 30, 2018, the remaining difference was debited to retained earnings.

(ii) Loss control of subsidiaries

The Group lost the actual control of Acore Material but still had significant influence, due to the re-election of the members of the Board of Directors at shareholders meeting on April 30, 2018. The Group derecognized the consolidation of the subsidiary on the day of losing control, and measured the residual investment at fair value.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Property, plant and equipment

The cost and accumulated depreciation of the property, plant and equipment of the Group for the six months ended June 30, 2019 and 2018 is as follows:

Land $ 3,748,835 - - - 93	Buildings	Transportation Equipment 64,673 84 (2,916) 2,340 561	Other Equipment 843,898 7,838 (10,815) 22,245 4,567
	3,456,414 150 (9,682) (4,239) 27,033 3,469,676 3,548,424 2,667 (59,468) (18,560) (3,750) 11,600 3,480,913 1,268,502 53,656 - (9,682) (7,952) 8,307 1,312,831 1,231,336 52,517 (59,403) (14,265) (996) 2,575 1,211,764 2,187,912 2,156,845 2,317,088 2,269,149
$ 3,748,928		64,742	867,733
$ 3,418,874 - (5,690) 226,446 - 191		64,960 2,924 (13) (940) - 261	637,410 18,235 (25,334) 134,412 (1,109) 1,954
$ 3,639,821		67,192	765,568
$ - - - - - -		49,251 2,143 - (2,736) (17) 460	533,493 38,005 - (9,858) 7,986 2,982
$ -		49,101	572,608
$ - - - - - -		48,411 2,657 (12) (876) - 223	394,126 36,789 (23,375) 111,035 (352) 1,089
$ -		50,403	519,312
$ 3,748,835		15,422	310,405
$ 3,748,928		15,641	295,125
$ 3,418,874		16,549	243,284
$ 3,639,821		16,789	246,256

(i) As of June 30, 2019, December 31 and June 30, 2018, please refer to Note 8 for the details of plant, property and equipment pledged as collateral for the Group’s long-term borrowing and financing guarantee.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) The land held by the Group is located at Xinfeng Tounship Kengzikou and Zaoqiao Towhship Niclan Lake. According to the laws and regulations, companies cannot be registered as landowners, due to the usage of the land is registered for farming, graveyard and conservation. Therefore, the ownership of the land was passed to individuals and was registered as private personal property. For obtaining the right of land, the Group held the land certificate and entered into an agreement with the registered owner, which specified that the Group retain all rights and obligations of the land, and pledged the land as collateral for the Group. The information of the land mentioned above, which is presented in the line item of other noncurrent assets, is as follows:

Land	June 30, 2019 $ 44,299	December 31, 2018 June 30, 2018 44,299 44,299

(j) Right-of-use assets

The Group leases many assets including land, buildings, machinery and transportation equipment. Information about leases for which the Group as a lessee is presented below:

Cost: Balance on January 1, 2019 After application of IFRS 16 adjustments Additions Reclassification Reduction for expiration Influence from exchange rates Balance on June 30, 2019 Accumulated depreciation and impairment losses: Balance at January 1, 2019 After application of IFRS 16 adjustments Depreciation Reclassification Reduction for expiration Influence from exchange rates Balance on June 30, 2019 Carrying value: Balance on June 30, 2019	Land $ - 1,017,511 - 3,192 - 3,913 $ 1,024,616 $ - 115,406 11,911 - - 778 $ 128,095 $ 896,521	Buildings - 2,394,192 1,404 (578) - 1,532 2,396,550 - 837,173 80,925 323 - 271 918,692 1,477,858	Machinery - 58,966 - (3,192) - 549 56,323 - 9,813 8,011 - - 31 17,855 38,468	Transportation Equipment - 22,155 - - - 983 23,138 - 6,670 4,124 - - 183 10,977 12,161	Office Equipment - 1,658 73 578 (13) 1 2,297 - 421 303 77 (13) 1 789 1,508	Other Equipment Total - - 122,607 3,617,089 - 1,477 - - - (13) - 6,978 122,607 3,625,531 - - 7,476 976,959 1,761 107,035 - 400 - (13) - 1,264 9,237 1,085,645 113,370 2,539,886

The Group leases offices, buildings, development land, equipment and company cars under the finance lease for the six months ended June 30, 2018, please refer to note 6(s).

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(k) Investment property

The movements in the investment property is as follows:

Cost:
Balance on January 1, 2019
Balance on June 30, 2019
Balance on January 1, 2018
Reclassification to property, plant and equipment
Balance on June 30, 2018
Depreciation and impairment loss:
Balance on January 1, 2019
Depreciation
Balance on June 30, 2019
Balance on January 1, 2018
Depreciation
Reclassification to property, plant and equipment
Balance on June 30, 2018
Carrying value:
Balance on January 1, 2019
Balance on June 30, 2019
Balance on January 1, 2018
Balance at June 30, 2018
Fair value:
Balance on January 1, 2019
Balance on June 30, 2019
Balance on January 1, 2018
Balance on June 30, 2018

Owned Property
Land
Buildings
Total
$ 528,019
113,617
641,636
$
528,019
113,617
641,636
$ 820,742
105,811
926,553
(226,446)
(23,109)
(249,555)
$
594,296
82,702
676,998
$ -
37,379
37,379
-
2,707
2,707
$
-
40,086
40,086
$ -
55,476
55,476
-
3,666
3,666
-
(16,597)
(16,597)
$
-
42,545
42,545
$
528,019
76,238
604,257
$
528,019
73,531
601,550
$
820,742
50,335
871,077
$
594,296
40,157
634,453
$
956,008
$
806,965
$
938,704
$
684,762

Investment properties comprise a number of commercial properties that are leased to third parties. Each leasing contact includes an original non-cancelable lease term of one to three years, and the lease term of the renewal is available for discussion with the lessee. The contingent rent is not charged in the contract. Please refer to Note 6(s) for the regarding information.

In formation on depreciation for the three months and six months ended June 30, 2019 and 2018 is discussed in Note 12(c), and for the information of rental revenue and other direct operating expense, please refer to Note 6(s).

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The fair value of investment properties is based on recent transaction price of similar location and areas on the website of Department of Land Administration M.O.I. and the website of real estate trading. Under the valuation techniques for financial instruments measured at fair value, the inputs are categorized at level 3.

As of June 30, 2019, December 31 and June 30, 2018, the details of investment properties pledged as collateral, please refer to Note 8.

(l)

Intangible assets

The movements in the costs of intangible assets, amortization, and impairment loss of the Group are as follows:

Costs: Balance on January 1, 2019 Acquisitions Reclassification Influence from exchange rates Balance on June 30, 2019 Balance on January 1, 2018 Acquisitions Influence from exchange rates Balance on June 30, 2018 Accumulated amortization and impairment loss: Balance on January 1, 2019 Amortization Reclassification Influence from exchange rates Balance on June 30, 2019 Balance on January 1, 2018 Amortization Influence from exchange rates Balance on June 30, 2018 Carrying value: Balance on January 1, 2019 Balance on June 30, 2019 Balance on January 1, 2018 Balance on June 30, 2018	Goodwill $ 405,342 - - 4,148 $ 409,490 $ 405,697 - 4,939 $ 410,636 $ - - - - $ - $ - - - $ - $ 405,342 $ 409,490 $ 405,697 $ 410,636	Patent 64,974 - - 730 65,704 66,207 - 520 66,727 64,974 - - 730 65,704 60,958 4,054 435 65,447 - - 5,249 1,280	Client Relationship 234,560 - - 2,636 237,196 239,007 - 1,880 240,887 203,022 11,965 - 2,177 217,164 182,970 12,177 1,307 196,454 31,538 20,032 56,037 44,433	Computer Software Total 24,333 729,209 1,402 1,402 (192) (192) - 7,514 25,543 737,933 28,750 739,661 5,660 5,660 - 7,339 34,410 752,660 9,926 277,922 2,244 14,209 (4) (4) - 2,907 12,166 295,034 17,397 261,325 2,036 18,267 - 1,742 19,433 281,334 14,407 451,287 13,377 442,899 11,353 478,336 14,977 471,326

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Prepayment for long-term land lease

The Group’s long-term land lease is the usage rights of lands located in Taichung and China area, which is recognized under other non-current assets. The amortization period of the contracts is 40 to 50 years, it depends on each contract. The amount was transferred to the right-of-use asset when the application of IFRS 16 on January 1, 2019.

Payment for long-term land lease	June 30, 2019 $ -	December 31, 2018 June 30, 2018 384,690 321,311

As of December 31, 2018 and June 30, 2018, there were no prepayments for long-term land lease pledged as collateral for the Group.

(n) Other non-current financial assets

Debt obligation receivable`－`The Splendor Hospitality International Co., Ltd. Debt obligation receivable`－`Chin Ling Steel Co., Ltd.`－`non-guaranteed Less: Accumulated impairment`－`Debt obligation receivable`－`Chin Ling Steel Co., Ltd. Refundable deposits	June 30, 2019 $ 575,000 23,250 (23,250) 107,935 $ 682,935	December 31, 2018 June 30, 2018 575,000 575,000 23,250 23,250 (23,250) (23,250) 107,985 107,392 682,985 682,392

(i) In June, 2006, the Group and Prince Housing and Development Co., Ltd. (Prince Housing and Development) entered into assignment of debt agreement with Amida Trustlink Assets which the Group and Prince Housing and Development each owned half of the obligation. The Group and Prince Housing and Development each injected 50% and obtained the major mortgages, collateral, and the appurtenant rights of Taichung Port Splendor Hospitality International Co., Ltd. (Taichung Port Splendor). The Group and Prince Housing and Development agreed to pay Amida Trustlink Assets the residual debt in the agreement, the related costs and returns when the real right of the underlying is completed. The Group and Prince Housing and Development each injected 50% and cofounded The Splendor Hospitality International Co., Ltd. (The Splendor Hospitality International). In November 2006, The Splendor Hospitality International and Taichung Port Splendor entered into specific asset transfer agreement and obtained the specific assets of Taichung Port Splendor by assuming its debts. The Group’ s right of receivables transferred from Taichung Port Splendor to The Splendor Hospitality International. In December 2006, the Group and Prince Housing and Development signed supplementary agreement with Amida Trustlink Assets which increased the selling price of all debt obligations and canceled the payment of the related cost and return. The verdinglichung obligatorischer rechte was assumed by the Group and Prince Housing and Development equally. The details of total debt obligation receivable and obligation cost after deducted the received amount in 2007 is as follows:

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Underlying
	Obligation Cost		Obligation Principal
The Splendor Hospitality International Underlying	$ 575,000		796,845
		Obligation Cost	Obligation Principal
The Splendor Hospitality International Underlying	$ 575,000		796,845
		Obligation Cost	Obligation Principal
The Splendor Hospitality International	$ 575,000		796,845

(ii) As of June 30, 2019, December 31 and June 30, 2018, the costs and principal of debt obligation from Chin Ling Steel were $23,250 thousand and $118,561 thousand, respectively.

(o) Short-term borrowings

Unsecured bank borrowings Secured bank borrowings Notes and bills payable Total Unused credit limit Range of interest rates	June 30, 2019 $ 1,256,695 6,393,531 434,654 $ 8,084,880 $ 9,587,270 0.91%~3.15%	December 31, 2018 June 30, 2018 892,507 1,348,896 5,293,613 6,828,176 434,453 429,762 6,620,573 8,606,834 8,392,251 3,934,760 0.91%~3.50% 0.91%~2.85%

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Borrowing and repayment

For the six months ended June 30, 2019 and 2018, the Group obtained from short-term borrowings amounting to $3,644,270 thousand and $9,056,986 thousand with an interest rate of 0.90% ～ 3.12% and 0.50% ～ 3.68%; the repayment amounted to $2,191,699 thousand and $8,317,598 thousand, respectively. Please refer to Note 6(27) for details of the interest expense.

(ii) Collateral for bank borrowings

Please refer to Note 8 for details of the related assets pledged as collateral.

(p) Long-term borrowings

Unsecured bank borrowings Secured bank borrowings Less: Current portion Unamortized long-term borrowings costs Total Unused credit limit Interest rate range	June 30, 2019 $ 1,343,957 5,487,060 (637,799) (42) $ 6,193,176 $ 6,126,478 1.00%~3.79%	December 31, 2018 June 30, 2018 2,261,183 1,999,308 6,764,916 6,151,049 (1,062,662) (989,256) (201) (309) 7,963,236 7,160,792 2,088,619 1,986,330 1.00%~3.75% 1.00%~3.70%

(i) Borrowing and repayment

For the six months ended June 30, 2019 and 2018, the Group obtained from long-term borrowings amounting to $1,530,000 thousand and $1,689,869 thousand with an interest rate of 1.00% ～ 1.30% and 1.00% ～ 2.53%; the repayment amounted to $3,755,559 thousand and $3,591,500 thousand, respectively. Please refer to Note 6(27) for details of the interest expense.

(ii) Collateral for bank borrowings

Please refer to Note 8 for details of the related assets pledged as collateral.

(iii) Borrowing covenants

The Group entered into a loan contract in a total credit of $3,150,000 thousand with a financial institution on April 23, 2019. According to the contract, during the borrowing repayment periods the Company should file annual and semi-annual consolidated financial statements which were audited and reviewed by CPA and must comply with certain financial covenants, such as the current ratio shall be greater than or equal to 100%, the debt ratio shall be less than or equal to 200%, the interest coverage ratio shall be greater than or equal to 5 times, and the tangible net value shall be greater than or equal to $14,000,000 thousand. The compliance with the aforementioned covenants will be examined semi-annually. As of June 30, 2019, the Group was in compliance with the above borrowing covenants.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Group entered into a loan contract in a total credit of USD104,000 thousand with one financial institution on July 27, 2017. According to the contract, during the loan repayment periods the Company should file UEA annual non-consolidated and CMI annual consolidated financial statements which were audited by CPA and must comply with certain financial covenants. The financial covenants based on the years of 2018 and 2017 CMI annual consolidated financial statements is EBITDA/(CPLTD+1), which shall be greater than or equal to 1, and of which based on UEA annual non-consolidated and CMI annual consolidated financial statements is debt ratio, which shall be less than or equal to 80%. The compliance with the aforementioned covenants will be examined annually. As of December 31, 2018, the Group was in compliance with the above loan covenants.

(q) Lease liabilities

The details of the lease liabilities is as follows:

Less than one year Between one and five years More than five years Current Non-current		June 30, 2019
	Future Minimum Lease Payments $ 219,283 802,014 1,546,213 $ 2,567,510 $ 219,283 $ 2,348,227	Interest Present Value of Minimum Lease Payments 28,577 190,706 87,573 714,441 175,738 1,370,475 291,888 2,275,622 28,577 190,706 263,311 2,084,916

For the six month ended June 30, 2019, the Group recognized its lease liability amounted to $1,477 thousand, with an interest rate of 1.56%. The lease liabilities are due in January, 2021 to April, 2023.

The amounts recognized in profit or loss are as follows:

Interest on lease liabilities Expenses relating to leases short-term assets	For the Three Months Ended June 30 For the Six Months Ended June 30 2019 2019 $ 7,147 13,158 $ 3,099 5,565

The amounts recognized in the statement of cash flows are as follows:

The amounts recognized in the statement of cash flows are as follows:
Total cash outflow for leases	For the Six Months Ended June 30
	2019
	$ 109,991

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Real estate leases

As of June 30, 2019, the Group leases land and buildings for its offices, retail stores and future project development. The leases of offices, typically run for a period of 2 years, retail stores for a period of 15 years, and the land use rights leased for future project development for 40 to 50 years. Some leases include an option to renew the lease for an additional period of the same duration after the end of the contract term.

Some leases provide for additional rent payments that are based on changes in local price indices, or sales that the Group makes at the leased store in the period. Some also require the Group to make payments that relate to the property taxes levied on the lessor and insurance payments made by the lessor; these amounts are generally determined annually.

Some leases of equipment contain extension or cancellation options exercisable by the Group up to one year before the end of the non-cancellable contract period. These leases are negotiated and monitored by local management, and accordingly, contain a wide range of different terms and conditions. The extension options held are exercisable only by the Group and not by the lessors. In which leasee is not reasonably certain to use an optional extended lease term, payments associated with the optional period are not included within lease liabilities.

(ii) Other leases

The Group leases equipment and transportation, with lease terms of 2 to 6 years. In some cases, the Group has options to purchase the assets at the end of the contract term; in other cases, it guarantees the residual value of the leased assets at the end of the contract term.

The Group also leases equipment and machinery, dormitory and company cars with contract term of one year. These leases are short-term or low-value items which the Group has elected not to recognize right-of-use assets and lease liabilities.

(r) Provisions

Current: Warranties Legal Subtotal Non-current: Financial guarantee contracts Legal Subtotal Total	June 30, 2019 $ 3 - 3 51,065 236,052 287,117 $ 287,120	December 31, 2018 June 30, 2018 50 79 - 13,000 50 13,079 55,958 4,633 236,052 236,052 292,010 240,685 292,060 253,764

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Warranties

The Group’ s warranties are mainly related to the sales of construction projects. They are estimated based on the historical data and the expectation to occur after 3 to 5 years of selling the construction projects.

(ii) Financial guarantee contracts

The Group assisted the joint venture to obtain the endorsement guarantee of credit limit borrowing from the financial institutions. According to IFRS 9 “ Financial Instruments”, the financial guarantee contracts are measured at fair value.

(iii) Legal

Please refer to Note 9(b) for the information of estimated legal provisions and losses.

The withholding tax administrative remedy of the subsidiary, Sunflower Investment, has been affirmed on June 28, 2018, which the final assessment of tax and penalty amounted to the total of $29,468 thousand. The subsidiary has paid the remaining penalty amounted to $11,700 thousand.

(s) Operating leases

(i) Lessee

The future minimum lease payments of the non-cancellable operating lease are as follows:

		December 31,	June 30,
		2018	2018
Less than five year	$	1,094,658	1,078,278
More than five years		1,817,220	1,911,049
	$	2,911,878	2,989,327

The Group leased land and buildings under operating lease. The term of the lease usually is 2 to 40 years. When renew the lease, the rental payments will be adjusted to reflect the market. Parts of the lease contracts are adjusted in the year of eleventh. There will be additional rental payments for the Group when the annual consumer price index (CPI) is greater than the rental adjustments in the first five years.

For the three months and six months ended June 30, 2018, the operating lease expenses amounted to $57,259 thousand and $113,435 thousand.

(ii) Lessor

The Group leases out investment properties under operating lease which was based on the assessment of the lease transfers to the lessee substantially all of the risks and rewards of ownership incidental to ownership of the underlying asset. Please refer to Note 6(k) for the regarding information of investment properties.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

A maturity analysis of lease payments, showing the undiscounted lease payments to be received after the reporting date are as follows:

Less than one year One to two years Two to three years Three to four years Four to five years More than five years Total undiscounted lease payments	June 30, 2019
	$ 42,196 30,118 6,557 6,233 6,358 24,725 $ 116,187

The receivables from future minimum lease payments of the non-cancellable leases are as follows:

follows:
		December 31,	June 30,
		2018	2018
Less than one year	$	10,154	11,188
One to five years		2,576	6,816
	$	12,730	18,004

For the three months and six months ended June 30, 2019 and 2018, rental revenues from investment properties amounted to $5,320 thousand, $2,983 thousand, $6,813 thousand and $5,712 thousand, respectively. The equipment and maintenance costs arising from the investment properties (recognized under "Operating costs") are as follows:

Lease-out property	For the Three Months Ended June 30 2019 2018 $ 2 2	For the Six Months Ended June 30
	2019 $ 2	2019 2018 4 4

(t) Employee benefits

(i) Defined benefit plans

Management believes that there was no material volatility of the market, no material reimbursement and settlement or other material onetime events since prior fiscal year. As a result, the pension cost in the accompanying interim period was measured and disclosed according to the actuarial report as of December 31, 2018 and 2017.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The expenses recognized in profit or loss for the Group are as follows:

Operating cost Selling expenses Administration expenses Research and development expenses Total	For the Three Months Ended June 30 2019 2018 $ 248 323 37 31 203 175 14 12 $ 502 541	For the Six Months Ended June 30
	2019 $ 248 37 203 14 $ 502	2019 2018 494 669 77 55 406 360 44 26 1,021 1,110

For the three months and six months ended June 30, 2019 and 2018, the Group’s employee benefits retirement expenses amounted to $0, $0, $228 thousand and $0, respectively.

(ii) Defined contribution plans

The Group’s expenses under the pension plan cost to the Bureau of Labor Insurance are as follows:

Operating cost Selling expenses Administration expenses Research and development expenses Total	For the Three Months Ended June 30 2019 2018 $ 11,931 13,363 655 625 6,724 4,123 146 140 $ 19,456 18,251	For the Six Months Ended June 30
	2019 $ 11,931 655 6,724 146 $ 19,456	2019 2018 25,209 26,137 1,353 1,234 11,541 8,646 277 294 38,380 36,311

(iii) Short-term employee benefits

Paid leave and other liabilities	June 30, 2019 $ 23,520	December 31, 2018 June 30, 2018 33,089 18,958

(u) Income tax

(i) The income tax expense are as follows:

For the Three Months Ended June 30 2019 2018 $ 51,884 145,343 9,805 590 40,834 536 (19,295) 880 $ 83,228 147,349	For the Three Months Ended June 30 2019 2018 $ 51,884 145,343 9,805 590 40,834 536 (19,295) 880 $ 83,228 147,349	For the Six Months Ended June 30
2019 $ 51,884 9,805 40,834 (19,295) $ 83,228		2019 2018 101,356 173,208 24,422 2,437 40,834 536 (19,485) 820 147,127 177,001
	145,343 590 536 880
	147,349

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Under income tax return filing of the Group, the income tax returns of the Company and its subsidiaries had been assessed and approved by the Tax Authority through 2017. The Company and Sunflower Investment did not agree on the proposed tax adjustments from the Tax Authority, and filed the petition of administration. Please refer to Note 9(b) for the details of the petition.

(v) Share capital and other equity

Except for the following disclosure, there was no significant change for capital and other equity for the six months ended June 30, 2019 and 2018. For the related information, please refer to Note 6(21) of the consolidated financial statements for the year ended December 31, 2018.

(i) Capital surplus

The components of the capital surplus are as follows:

June 30, 2019 From issuance of share capital $ 626,110 Employee stock option of subsidiaries 33,352 From conversion of convertible bonds 863,499 Difference between consideration and carrying amount of subsidiaries acquired or disposed of - Changes in equity of associates and joint ventures accounted for using equity method - $ 1,522,961	December 31, 2018 June 30, 2018 626,110 626,110 33,352 33,352 863,499 863,499 426 - 2,279 560 1,525,666 1,523,521

(ii) Retained earnings

The Company’s Articles of Incorporation require that after-tax earnings shall first be offset against any deficit, and 10% of the balance shall be set aside as legal reserve. The appropriation for legal reserve is discontinued when the balance of the legal reserve equals the total authorized capital. Aside from the aforesaid legal reserve, the Company may, under its Articles of Incorporation or as required by the government, appropriate for special reserve. The remaining balance of the earnings, if any, may be appropriated according to the distribution plan proposed by the Board of Directors and submitted to the shareholders’ meeting for approval. If all or part of the aforementioned employees’ compensation is distributed in cash, the resolution will be approved by a majority vote at a meeting of Board of Directors attended by two-thirds of the total number of directors, and the distribution shall be submitted to the shareholders’ meeting.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The Company is in the growth stage of business cycle and the annual earnings and future cash flow is maintained stable. Considering the Company’ s significant investment plan for the future, the Company applied “ Residual dividend policy” for long-term operating plan and funding needs. The dividend distribution of cash and stock is correlated with annual earning. The Company's stock dividends cannot be higher than 70% of the total dividend.

1) Earnings distribution

The Company appropriated the 2018 and 2017 earnings, which was resolved by the shareholder’s meeting on June 24, 2019 and June 21, 2018, respectively. These earnings were appropriated or distributed as follows:

Common stock dividends per share Cash	2018 Allotment (NTD) Amount $ 2.70 1,040,181	2017
	Allotment (NTD) $ 2.70	Allotment (NTD) Amount 1.50 577,878

(iii) Other equity (net of tax)

Balance on January 1, 2019 Effects of retrospective application Balance on January 1, 2019, after adjustments Profit attributable to non-controlling interests Exchange differences on foreign operations Unrealized gain on financial assets measured at FVOCI Changes in equity of associates and joint ventures accounted for using equity method Changes in non-controlling interest Cash dividends paid to non-controlling interests Balance on June 30, 2019	Exchange Differences on Translation of Foreign Financial Statements $ 136,291 - 136,291 - 84,025 - - - - $ 220,316	Unrealized Gains (Losses) from Financial Assets Measured at FVOCI 69,779 - 69,779 - - 17,862 - - - 87,641	Unrealized Gains (Losses) on Available- for-sale Financial Assets - - - - - - - - - -	Non-controlling Interest Total 4,199,268 4,405,338 (332) (332) 4,198,936 4,405,006 110,272 110,272 21,411 105,436 - 17,862 (51) (51) (10,000) (10,000) (371,423) (371,423) 3,949,145 4,257,102

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Balance on January 1, 2018 Effects of retrospective application Balance on January 1, 2018, after adjustments Profit attributable to non-controlling interests Exchange differences on foreign operations Difference between consideration and carrying amount of subsidiaries disposed of Changes in equity of associates and joint ventures accounted for using equity method Changes in non-controlling interest Cash dividends paid to non-controlling interests Balance on June 30, 2018	Exchange Differences on Translation of Foreign Financial Statements $ 392,282 - 392,282 - (15,216) - - - - $ 377,066	Unrealized Gains (Losses) from Financial Assets Measured at FVOCI - 53,478 53,478 - - - - - - 53,478	Unrealized Gains (Losses) on Available- for-sale Financial Assets 187 (187) - - - - - - - -	Non-controlling Interest Total 3,923,408 4,315,877 32,519 85,810 3,955,927 4,401,687 66,776 66,776 6,585 (8,631) 28,337 28,337 674 674 (66,959) (66,959) (48,460) (48,460) 3,942,880 4,373,424

(w) Earnings per share

The Group’s earnings per share are calculated as follows:

For the Three Mont 2019 Basic earnings per share Profit from continuing operation attributable to the Company $ 192,370 (Loss) profit from discontinued operation attributable to the Company - Profit attributable to owners of the parent $ 192,370 Weighted average number of ordinary shares 385,252 Basic earnings per share Profit from continuing operation $ 0.50 (Loss) profit from discontinued operation - $ 0.50 Diluted earnings per share Profit from continuing operation attributable to the Company $ 192,370 (Loss) profit from discontinuing operation attributable to the Company - Profit attributable to owners of the parent (after the adjustment of diluted ordinary shares) $ 192,370 Weighted average number of ordinary shares 385,252 Effect of potential diluted ordinary shares Employee stock option 183 Weighted average number of ordinary shares (after the adjustment of diluted ordinary shares) 385,435 Diluted earnings per share Profit from continuing operation $ 0.50 (Loss) profit from discontinued operation - $ 0.50	For the Three Mont	hs Ended June 30 2018 254,797 (3,548) 251,249 385,252 0.66 (0.01) 0.65 254,797 (3,548) 251,249 385,252 266 385,518 0.66 (0.01) 0.65	For the Six Months Ended June 30
			2019 2018 361,827 339,200 - 360,545 361,827 699,745 385,252 385,252 0.94 0.88 - 0.94 0.94 1.82 361,827 339,200 - 360,545 361,827 699,745 385,252 385,252 956 991 386,208 386,243 0.94 0.88 - 0.93 0.94 1.81

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(x) Revenue from contracts with customers

(i) Disaggregation of revenue

Major geographic markets: Taiwan United States Japan China Europe South America Others Major product/service lines: Iron casting hardware Construction Counter commissions Others Major geographic markets: Taiwan United States Japan China Europe South America Others	For the Three Months Ended June 30, 2019	For the Three Months Ended June 30, 2019	For the Three Months Ended June 30, 2019
	Metal Manufacturing Segment Real Estate Development Segment Lifestyle Hospitality Segment Total $ 98,852 397,376 180,047 676,275 626,151 - - 626,151 489,434 - - 489,434 1,708,785 - - 1,708,785 60,131 - - 60,131 8,888 - - 8,888 88,046 - - 88,046 $ 3,080,287 397,376 180,047 3,657,710 $ 3,057,591 - - 3,057,591 - 392,629 - 392,629 - - 84,568 84,568 22,696 4,747 95,479 122,922 $ 3,080,287 397,376 180,047 3,657,710 For the Three Months Ended June 30, 2018
	Metal Manufacturing Segment $ 151,587 754,788 314,835 2,040,802 93,745 422 68,994 $ 3,425,173	Real Estate Development Segment 120,470 - - - - - - 120,470	Lifestyle Hospitality Segment Total 181,605 453,662 - 754,788 - 314,835 - 2,040,802 - 93,745 - 422 - 68,994 181,605 3,727,248

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Major product/service lines: Iron casting hardware Construction Counter commissions Others	For the Three Months Ended June 30, 2018	For the Three Months Ended June 30, 2018	For the Three Months Ended June 30, 2018
	Metal Manufacturing Segment $ 3,408,782 - - 16,391 $ 3,425,173	Real Estate Development Segment - 70,509 - 49,961 120,470	Lifestyle Hospitality Segment Total - 3,408,782 - 70,509 84,249 84,249 97,356 163,708 181,605 3,727,248

Major geographic markets: Taiwan United States Japan China Europe South America Others Major product/service lines: Iron casting hardware Construction Counter commissions Others	For the Six Months Ended June 30, 2019	For the Six Months Ended June 30, 2019	For the Six Months Ended June 30, 2019
	Metal Manufacturing Segment $ 219,453 1,242,472 897,702 3,350,137 131,529 11,333 187,574 $ 6,040,200 $ 5,998,062 - - 42,138 $ 6,040,200	Real Estate Development Segment 1,038,327 - - - - - - 1,038,327 - 1,028,930 - 9,397 1,038,327	Lifestyle Hospitality Segment Total 366,254 1,624,034 - 1,242,472 - 897,702 - 3,350,137 - 131,529 - 11,333 - 187,574 366,254 7,444,781 - 5,998,062 - 1,028,930 168,826 168,826 197,428 248,963 366,254 7,444,781

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Major geographic markets: Taiwan United States Japan China Europe South America Others Major product/service lines: Iron casting hardware Construction Counter commissions Others	For the Six Months Ended June 30, 2018	For the Six Months Ended June 30, 2018	For the Six Months Ended June 30, 2018
	Metal Manufacturing Segment $ 274,688 1,514,079 613,011 3,777,230 168,722 4,148 187,896 $ 6,539,774 $ 6,510,166 - - 29,608 $ 6,539,774	Real Estate Development Segment 320,277 - - - - - - 320,277 - 265,623 - 54,654 320,277	Lifestyle Hospitality Segment Total 375,275 970,240 - 1,514,079 - 613,011 - 3,777,230 - 168,722 - 4,148 - 187,896 375,275 7,235,326 - 6,510,166 - 265,623 168,938 168,938 206,337 290,599 375,275 7,235,326

For the six months ended June 30, 2018 the operating revenue from steel products of discontinued operation in Taiwan amounted to $23,496 thousand.

(ii) Contract balances

Notes and accounts receivable Less: Loss allowance Total Contract assets Contract liabilities–Advance real estate receipts Contract liabilities–Advance receipts	June 30, 2019 $ 4,095,812 (24,338) $ 4,071,474 $ - $ 596,416 $ 18,482	December 31, 2018 June 30, 2018 4,328,695 4,685,416 (21,874) (79,402) 4,306,821 4,606,014 - - 502,930 1,780,364 44,696 -

The amount of revenue recognized for six months ended June 30, 2019 and 2018, that was included in the contract liability balance at the beginning of the period was $94,180 thousand, and $104,980 thousand.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The major change in the balance of contract assets and contract liabilities is the difference between the time frame in the performance obligation to be satisfied by transferring ownership to the customer and the payment to be received.

(y) Employees' compensation and remuneration of directors

Based on the amended Company's Articles of Incorporation, employees’ compensation is appropriated at the rate of at least 2.5% and remuneration of directors is appropriated no more than 2.5% of profit before tax, respectively. Prior years’ accumulated deficit is first offset before any appropriation of profit, then calculate the employees’ compensation and remuneration of directors by the appropriate ratio stipulated in the bylaws. The employees to whom the Company distributes employees’ compensation, or issued new restricted employee shares, employee stock option certificates, preemptive right of new shares, and transfer of shares include the employees of subsidiaries which are qualified with the requirements stipulated by the Board of Directors.

For the three months and six months ended June 30, 2019 and 2018, appropriated employees’ compensation by $6,568 thousand, $7,647 thousand, $11,666 thousand and $20,113 thousand, respectively, and appropriated remuneration of directors by $6,315 thousand, $7,352 thousand, $11,217 thousand and $19,339 thousand, respectively, which were estimated on the basis of the Company’ s net profit before tax, excluding employees’ compensation and the remuneration of directors of each period, then multiplied by the percentage of remuneration of employees and directors as specified in the Company's Articles of Incorporation. Such amounts were recognized as operating cost or operating expense for the six months ended June 30, 2019 and 2018. The number of shares to be distributed were calculated based on the closing price of the Company’ s ordinary shares, one day prior to Board of Directors meeting. Management is expecting that the differences, if any, between the actual distributed amounts and estimated amounts will be treated as changes in accounting estimates and charged to profit or loss.

There were no significant difference between employees' compensation and remuneration of directors approved by the Board of Directors meeting and the estimated amount for the years of 2018 and 2017.

Information on the employees' compensation and remuneration of directors approved by the Board of Directors meeting is available on the Market Observation Post System website of the Taiwan Stock Exchange.

(z) Net other income and expenses

The information of net other income and expenses is listed as follows:

Rental revenue	For the Three Months Ended June 30 2019 2018 $ 1,186 1,559	For the Six Months Ended June 30
	2019 $ 1,186	2019 2018 2,256 3,520

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(aa) Non-operating income and expenses
(i) Other income

The information of other income is listed as follows:

Interest income Interest income from bank deposits Interest income from financial assets measured at amortized cost Total interest income Dividend income Others Total other income	For the Three Months Ended June 30 2019 2018 $ 12,946 10,814 3,406 3,613 16,352 14,427 28,174 38,481 18,869 10,805 $ 63,395 63,713	For the Six Months Ended June 30 2019 2018 27,347 22,804 6,729 7,206 34,076 30,010 28,174 38,481 29,166 25,546 91,416 94,037
	2019 $ 12,946 3,406 16,352 28,174 18,869 $ 63,395

(ii) Other gains and losses

The information of other gains and losses is listed as follows:

Loss on disposal of property, plant and equipment Foreign exchange gains Gains on financial assets at FVTPL Impairment loss Other gains (losses) Net amount of other gains and losses	For the Three Months Ended June 30 2019 2018 $ (1,532) (1,646) 17,591 97,830 1,379 13,530 - - 1,550 (183) $ 18,988 109,531	For the Six Months Ended June 30 2019 2018 (3,534) (3,011) 546 43,586 2,167 14,048 (447) - 1,539 (190) 271 54,433
	2019 $ (1,532) 17,591 1,379 - 1,550 $ 18,988

(iii) Finance costs

The information of interest costs is listed as follows:

Interest expense Other finance costs Net amount of finance costs	For the Three Months Ended June 30 2019 2018 $ 70,849 61,175 349 243 $ 71,198 61,418	For the Six Months Ended June 30 2019 2018 145,330 117,443 727 670 146,057 118,113
	2019 $ 70,849 349 $ 71,198

For the three months and six months ended June 30, 2019 and 2018, the capitalized interest costs amounted to $5,228 thousand, $17,469 thousand, $9,983 thousand and $40,947 thousand, respectively.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ab) Financial instruments

Except for the contention mentioned below, there was no significant change in the fair value of the Group’s financial instruments and degree of exposure to credit risk, liquidity risk and market risk arising from financial instruments. For the related information, please refer to Note 6(29) of the consolidated financial statements for the year ended December 31, 2018.

(i) Credit risk

1) Credit risk exposure

The carrying amounts of financial assets and contract assets represent the maximum amount exposed to credit risk.

2) Concentration of credit risk

Since the Group had a large number of unrelated customers, the concentration of the credit risk is limited.

3) Credit risks of receivables and debt securities

For the information of credit risk exposure of note and trade receivables, please refer to Note 6(d). Other financial assets at amortized cost include other receivables and time deposits.

All of these financial assets mentioned above are considered to be low risk, therefore, the impairment provision recognized during the period was limited to 12 months expected losses. For the allowance of impairment on financial assets for the six months ended June 30, 2019 and 2018, please refer to Note 6(d).

(ii) Liquidity risk

The following table shows the contractual maturities of financial liabilities, including estimated interest payments, but not the impact of netting agreements.

Contractual Cash Flow June 30, 2019 Non-derivative financial liabilities Bank borrowings $ 15,375,417 Lease liabilities 2,567,510 Notes and accounts payables (including related parties) 2,492,349 Other payables (including related parties) 1,699,696 $ 22,134,972	Within 6 Months 4,092,037 109,666 2,492,349 1,699,696 8,393,748	6-12 Months 1,273,704 109,617 - - 1,383,321	1-2 Years 5,355,988 214,842 - - 5,570,830	2-5 Years Over 5 Years 4,573,146 80,542 587,172 1,546,213 - - - - 5,160,318 1,626,755

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Contractual Cash Flow December 31, 2018 Non-derivative financial liabilities Bank borrowings $ 16,676,375 Notes and accounts payables (including related parties) 2,556,620 Other payables (including related parties) 778,027 $ 20,011,022 June 30, 2018 Non-derivative financial liabilities Bank borrowings $ 18,282,814 Notes and accounts payables (including related parties) 2,153,058 Other payables (including related parties) 1,354,776 $ 21,790,648	Within 6 Months 3,028,214 2,556,620 778,027 6,362,861 7,528,375 2,153,058 1,354,776 11,036,209	6-12 Months 2,110,393 - - 2,110,393 2,186,491 - - 2,186,491	1-2 Years 6,045,199 - - 6,045,199 3,772,297 - - 3,772,297	2-5 Years Over 5 Years 5,395,124 97,445 - - - - 5,395,124 97,445 4,127,776 667,875 - - - - 4,127,776 667,875

The Group does not expect the cash flows included in the maturity analysis to occur significantly earlier or at significantly different amounts.

(iii) Currency risk

The Group’s significant exposure to foreign currency risk is as follows:

June 30, 2019 Foreign Currency Exchange Rate NTD Financial assets Monetary items USD:NTD $ 29,639 31.06 920,594 USD:CNY 116,743 6.87 3,626,033 USD:JPY 454 107.62 14,110 EUR:NTD 1,457 35.38 51,540 EUR:CNY 1,993 7.83 70,510 JPY:NTD 78,605 0.29 22,685 JPY:CNY 50,493 0.06 14,572 HKD:USD 16,514 0.13 65,726 Financial liabilities Monetary items USD:CNY 106,060 6.87 3,294,220 EUR:CNY 10,243 7.83 362,408 HKD:USD 390,880 0.13 1,555,702	December 31, 2018 Foreign Currency Exchange Rate NTD 39,633 30.72 1,217,524 95,929 6.87 2,946,939 553 110.42 16,994 596 35.20 20,975 1,834 7.87 64,567 95,615 0.28 26,600 24,849 0.06 6,913 6,357 0.13 24,918 117,735 6.87 3,616,810 975 7.87 34,330 502,560 0.13 1,970,035	June 30, 2018	June 30, 2018
	Foreign Currency 39,633 95,929 553 596 1,834 95,615 24,849 6,357 117,735 975 502,560	Foreign Currency 34,852 146,989 789 1,550 1,626 159,091 19,902 5,813 107,493 614 558,400	Exchange Rate NTD 30.46 1,061,591 6.64 4,477,286 110.60 24,024 35.40 54,874 7.71 57,564 0.28 43,814 0.06 5,481 0.13 22,554 6.64 3,274,251 7.71 21,720 0.13 2,166,592

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

1) Sensitivity analysis

The Group’s exposure to foreign currency risk arises from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, accounts receivable, other receivables, borrowings, accounts payable and other payables that are denominated in foreign currency. A 1% of appreciation or depreciation of each major foreign currency against the Group’ s functional currency as of June 30, 2019 and 2018 would have increased (decreased) the after-tax net income for the three months and six months ended June 30, 2019 and 2018 by $(2,853) thousand, $(4,397) thousand, $(1,706) thousand and $1,139 thousand, respectively. The analysis assumes that all other variables remain constant and was performed on the same basis for both periods.

As the Group deals in diverse foreign currencies, gains or losses on foreign exchange were summarized as a single amount. For the three months and six months ended June 30, 2019 and 2018, the foreign exchange gains (losses), including both realized and unrealized, amounted to $17,591 thousand, $97,830 thousand, $546 thousand and $43,586 thousand, respectively.

(iv) Interest rate analysis

The interest risk exposure from financial assets and liabilities has been disclosed in the note of liquidity risk management.

The following sensitivity analysis is based on the risk exposure to interest rates on the derivative and non-derivative financial instruments at the reporting date. For variable rate instruments, the sensitivity analysis assumes the variable rate liabilities are outstanding for the whole year at the reporting date.

If the interest rate increases or decreases by 1% the Group’s net income will decrease /increase by $25,111 thousand, $32,341 thousand, $57,211 thousand and $53,111 thousand for the three months and six months ended June 30, 2019 and 2018, respectively, assuming all other variable factors remain constant. This is mainly due to the Group’ s variable rate bank borrowings.

(v) Other market price risk

If the equity price changes, the impact of equity price change to other comprehensive income will be as follows, assuming the analysis were based on the same basis, and other variables considered in the analysis remain the same:

Increase 10% Decrease 10%	For the Six Months Ended June 30 2019 2018 Other Comprehensive Income (net of tax) Net Income (Loss) (net of tax) Other Comprehensive Income (net of tax) Net Income (Loss) (net of tax) $ 21,607 1,739 19,346 65 $ (21,607) (1,739) (19,346) (65)
	2019 Other Comprehensive Income (net of tax) Net Income (Loss) (net of tax) $ 21,607 1,739 $ (21,607) (1,739)
	Other Comprehensive Income (net of tax) $ 21,607 $ (21,607)

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vi) Fair value of financial instruments

1) Fair value hierarchy

The Group measured its financial assets and liabilities at FVTPL and financial assets at FVOCI on a recurring basis. The carrying amount and fair value of the Group’s financial assets and liabilities, including the information on fair value hierarchy are as follows; however, except as described in the following paragraphs, for financial instruments not measured at fair value whose carrying amount is reasonably close to the fair value, and lease liabilities, disclosure of fair value information is not required:

	June 30, 2019	June 30, 2019	June 30, 2019
Book Value $ 17,385 $ 216,065 $ 8,043,368 $ 19,107,900		Fair Value
	Level 1 Level 2 Level 3 Total 17,385 - - 17,385 - - 216,065 216,065 - - - - - - - - December 31, 2018
Book Value $ 2,960 $ 207,818 $ 8,665,476 $ 18,981,118		Fair Value
	Level 1 Level 2 2,960 - - - - - - - June 30, 2018		Level 3 Total - 2,960 207,818 207,818 - - - -
Book Value $ 648 $ 193,456 $ 8,558,932 $ 20,264,716		Fair Value
	Level 1 648 - - -	Level 2 - - - -	Level 3 Total - 648 193,456 193,456 - - - -

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) Valuation techniques for financial instruments measured at fair value

Financial instruments traded in active markets are based on quoted market prices. Market prices quoted from main exchanges and over-the-counter are the basis of fair value of equity instruments and credit instrument traded in active markets.

If the quoted price of a financial instrument can be obtained in time and often from exchanges, brokers, underwriters, industrial union, pricing institute, or authorities and such price can reflect those actual trading and frequently happen in the market, then the financial instrument is considered to have a quoted price in an active market. If a financial instrument does not accord with the definition aforementioned, then it is considered to be without a quoted price in an active market. In general, market with low trading volume or high bid-ask spreads is an indication of non-active market.

If the financial instruments held by the Group have active market, the measurements of fair value are categorized as follows:

The listed redeemable bonds, listed stocks, drafts and bonds are recognized as financial assets and liabilities traded in active markets by the standards and nature. The fair value is measured at the market quoted price.

Measurements of fair value of financial instruments without an active market are based on valuation technique or quoted price from a competitor. Fair value, measured by using valuation technique that can be extrapolated from either similar financial instruments or discounted cash flow method or other valuation techniques, including models, is calculated based on available market data at the reporting date.

If the financial instruments held by the Group have no active market, the measurements of fair value are categorized as follows:

Equity instruments without quoted price: The fair value is measured at discounted cash flow model. The assumption is discounted investees’ expected future cash flows by using the discounting rate which reflects the time value of money and the return of the investment.
3) Transfers between Level 1 and Level 2

There were no transfers in either direction for the six months ended June 30, 2019 and 2018.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) Reconciliation of Level 3 instruments

Reconciliation of Level 3 instruments
		Noncurrent Financial
		Assets at FVOCI
		Equity Instrument
		without Quoted Price
Balance on January 1, 2019	$	207,818
Total gains recognized as other comprehensive income		17,862
Capital reduction		(9,615)
Balance on June 30, 2019	$	216,065
Balance on January 1, 2018	$	193,456
Total gains recognized as other comprehensive income		-
Balance on June 30, 2018	$	193,456

The total gains or losses is listed under “unrealized gain on financial assets at FVOCI”. The information of assets held as of June 30, 2019 and 2018 is as follows:

Total gains or losses Recognized as other comprehensive income (which is listed under "unrealized gain on financial assets of FVOCI")	For the Three Months Ended June 30	For the Three Months Ended June 30	For the Six Months Ended June 30
	2019 $ -	2018 -	2019 2018 17,862 -

5) Quantified information on significant unobservable inputs (Level 3) used in fair value measurement

The Group’s major financial instruments that use Level 3 inputs to measure fair value is “financial assets measured at FVOCI – equity investments”.

Most of the Group’s financial assets in Level 3 have only one significant unobservable input, while its equity investments without an active market have more than one significant unobservable inputs. The significant unobservable inputs of equity investments without an active market are individually independent, and there is no correlation between them.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Quantified information of significant unobservable inputs are as follows:

Item Financial assets at FVOCI equity investments without active market Financial assets at FVOCI equity investments without active market	Valuation Technique Dividend discount model Dividend discount model	Significant Unobservable Inputs Inter-relationship between Significant Unobservable Inputs and Fair Value Measurement ‧Average expected future dividend income of 5 years (As of June 30, 2019 was $0~30,176 thousand, December 31, 2018, was $0~31,752 thousand ;June 30, 2018, was $0~27,023 thousand, respectively.) ‧The estimated fair value would increase, if the 5- year average expected future dividend income is increased. ‧Weighted average capital cost (As of June 30, 2019, December 31, 2018 and June 30, 2018, were 4.27%, 5.79% and 5.46%, respectively.) ‧Discounting rate without market liquidity (As of June 30, 2019 , December 31, 2018 and June 30, 2018, were all 15%) ‧The estimated fair value would decrease, if the weighted average capital cost is increased. ‧The estimated fair value would decrease, if the discounting rate without market liquidity is increased.

6) Fair value measurements in Level 3-sensitivity analysis of reasonably possible alternative assumptions

The Group’ s measurement on the fair value of financial instruments is deemed reasonable despite different valuation models or assumptions may lead to different results. For fair value measurements in Level 3, changing one or more of the assumptions would have the following effects on profit or loss and other comprehensive income:

June 30, 2019 Financial assets at FVOCI Equity investments without an active market December 31, 2018 Financial assets at FVTPL Equity investments without an active market June 30, 2018 Financial assets at FVTPL Equity investments without an active market	Inputs % 4.27 % 5.79 % 5.46	Fluctuation in Inputs 1% 1% 1%	Other Comprehensive Income Favorable Unfavorable 7,825 (7,431) 7,567 (7,193) 7,239 (6,877)

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The favorable and unfavorable effects represent the changes in fair value, and fair value is based on a variety of unobservable inputs calculated using a valuation technique. The analysis above only reflects the effects of changes in a single input, and it does not include the interrelationships with another input.

(ac) Financial risk management

There were no significant changes in the Group’ s financial risk management and policies as disclosed in Note 6(ad) of the consolidated financial statements for the year ended December 31, 2018.

(ad) Capital management

Management believes that the objectives, policies and processes of capital management of the Group has been applied consistently with those described in the consolidated financial statements for the year ended December 31, 2018. Also, management believes that there were no significant changes in the Group’s capital management information as disclosed for the year ended December 31, 2018. Please refer to Note6 (ae) of the consolidated financial statements for the year ended December 31, 2018 for further details.

(7) Related-party transactions:

(a) The ultimate parent company

The company is both the parent company and the ultimate controlling party of the Group.

(b) Names and relationship with related parties

The followings are entities that have had transactions with related parties during the periods covered in the consolidated financial statements.

in the consolidated financial statements.
Name of Related Party	Relationship with the Group
The Splendor Hospitality International Co., Ltd.	Joint ventures
(The Splendor Hospitality)
CMAAN Health Co., Ltd. (CMAAN Health)	Joint ventures
Amida Trustlink Assets Management Co., Ltd.	Associates
(Amida Trustlink Assets)
Hua-Pu Development Co., Ltd. (Hua-Pu Development)	Joint venture of subsidiaries
Keng-Hsin Urban Renewal Co., Ltd.	Associate of subsidiaries
(Keng-Hsin Urban Renewal)
ADVANCISION (CAYMAN) Industries Co., Ltd.	Associate of subsidiaries
(ADVANCISION (CAYMAN))
Beyond Fitness Co., Ltd. (Beyond Fitness)	Associate of subsidiaries
Acore Material Technology Co., Ltd.	Associate of subsidiaries
(Acore Material Technology)
Fuzhou Aprec Mechanical and Electrical Co., Ltd.	Subsidiaries of subsidiaries' associates
(Fuzhou Aprec)

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Related Party

Advancision Corporation (Advancision)

Chain-Yuan Investment Co., Ltd. (Chain-Yuan Investment)

San Lien Technology Corp. (San Lien Technology) Kemitek Industrial Corp. (Kemitek Industrial) CMP PUJEN Foundation for Arts and Culture (Foundation)

San Lien Educational Foundation (San Lien Foundation) Pu Yuan Construction Co., Ltd. (Pu Yuan Construction) LEESCO Development Co., Ltd. (LEESCO Development)

Yu-Tai Investment Co ., Ltd. (Yu-Tai Investment) Hao Bao Investment Co., Ltd. (Hao Bao Investment) Rui Hua Investment Co., Ltd. (Rui Hua Investment) Mr. Ming Shiann, Ho Mr. Cheng Ta, Wu

Relationship with the Group

Subsidiaries of subsidiaries' associates Other related parties

Other related parties Other related parties Other related parties

Other related parties Other related parties Other related parties Other related parties Other related parties

(c) Significant transactions with related parties
(i) Sales to related parties

The amounts of significant sales transactions and outstanding balance between the Group and related parties are as follows:

Sales For the Three Months Ended June 30 For the Six Months ended June 30 2019 2018 2019 2018 $ 622 663 2,318 1,289 - 35 - 65 89 814 212 1,564 $ 711 1,512 2,530 2,918	Sales For the Three Months Ended June 30 For the Six Months ended June 30 2019 2018 2019 2018 $ 622 663 2,318 1,289 - 35 - 65 89 814 212 1,564 $ 711 1,512 2,530 2,918	Notes and Accounts Receivable June 30, 2019 December 31, 2018 June 30, 2018 1,188 1,252 1,263 - 12 26 25 12 9 1,213 1,276 1,298
For the Three Months Ended June 30 2019 2018 $ 622 663 - 35 89 814 $ 711 1,512		December 31, 2018 June 30, 2018 1,252 1,263 12 26 12 9 1,276 1,298
2019	2018 1,289 65 1,564 2,918
$ 622 - 89 $ 711

The sales between the Group and related parties approximated the market price.

(ii) Purchases from related parties

The amounts of significant purchases transactions and outstanding balances between the Group and related parties are as follows:

Purchases For the Three Months Ended June 30 For the Six Months ended June 30 2019 2018 2019 2018 $ 32,353 24,912 45,853 40,009	Purchases For the Three Months Ended June 30 For the Six Months ended June 30 2019 2018 2019 2018 $ 32,353 24,912 45,853 40,009	Notes and Accounts Payable	Notes and Accounts Payable
For the Three Months Ended June 30 2019 2018 $ 32,353 24,912		June 30, 2019 45,983	December 31, 2018 June 30, 2018 19,921 25,797
2019	2018 40,009
$ 32,353

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

The purchases mentioned above could not compare to the market because the Group did not purchase the same items from non-related parties. The payment terms with related parties are not significantly different from those with third parties.

(iii) Leases
1) Rental expenses

The information of office leased by the Group is as follows:

Associates Other related parties Mr. Ming Shiann, Ho Other Other related parties Other related parties	Rental Expenses	Rental Expenses	Rental Expenses
	For the Three Months Ended June 30 For the Six Months Ended June 30 2019 2018 2019 2018 $ - 12 12 24 578 608 1,156 1,216 15 164 30 219 $ 593 784 1,198 1,459 Guarantee Deposit Paid (Recognized under other current and non-current financial assets) June 30, 2019 December 31, 2018 June 30, 2018 $ 452 452 452 Prepayments June 30, 2019 December 31, 2018 June 30, 2018 $ - - 265		For the Six Months Ended June 30
	$ - $

2) Rental revenues

The information of office leased to related parties is as follows:

Associates: Advancision Beyond Fitness Acore Material Technology Others Other related parties: Foundation Others	Rental Revenues For the Three Months Ended June 30 For the Six Months Ended June 30 2019 2018 2019 2018 $ 142 142 285 285 480 360 863 720 - - 383 - 8 196 17 205 535 735 611 1,469 30 - 30 - $ 1,195 1,433 2,189 2,679	Rental Revenues For the Three Months Ended June 30 For the Six Months Ended June 30 2019 2018 2019 2018 $ 142 142 285 285 480 360 863 720 - - 383 - 8 196 17 205 535 735 611 1,469 30 - 30 - $ 1,195 1,433 2,189 2,679
	For the Three Months Ended June 30 2019 2018 $ 142 142 480 360 - - 8 196 535 735 30 - $ 1,195 1,433
	2019 $ 142 480 - 8 535 30 $ 1,195	2019 2018 285 285 863 720 383 - 17 205 611 1,469 30 - 2,189 2,679

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Associates $	Guarantee Deposit Received (Recognized under other current liabilities)	Guarantee Deposit Received (Recognized under other current liabilities)
	June 30, 2019 240	December 31, 2018 June 30, 2018 240 240

(iv) Providing services to related party

The information of providing management consulting and application services to related parties is as follows:

Associates Joint ventures	Service Revenues	Service Revenues
	For the Three Months Ended June 30 2019 2018 $ - 258 1,482 1,354 $ 1,482 1,612	For the Six Months Ended June 30
	2019 $ - 1,482 $ 1,482	2019 2018 - 516 2,920 2,713 2,920 3,229

(v) Non-performing receivables

Joint ventures: The Splendor Hospitality Joint ventures: The Splendor Hospitality		Total Claims
	June 30, 2019 $ 796,845	December 31, 2018 June 30, 2018 796,845 796,845 Costs of Claims
	June 30, 2019 $ 575,000	December 31, 2018 June 30, 2018 575,000 575,000

The claims mentioned above was recognized in other non-current financial assets, please refer to Note 6(14).

(vi) Guarantees and endorsements

The information of guarantees and endorsements of financing quotas and actual usage is as follows:

Joint ventures: The Splendor Hospitality Others	Borrowing Limits	Borrowing Limits
	June 30, 2019 $ 2,050,000 45,680 $ 2,095,680	December 31, 2018 June 30, 2018 2,000,000 1,902,727 62,500 50,000 2,062,500 1,952,727

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Joint ventures: The Splendor Hospitality Others	Actual Usage Amount June 30, 2019 December 31, 2018 June 30, 2018 $ 1,670,000 1,674,500 1,708,859 45,680 55,681 43,181 $ 1,715,680 1,730,181 1,752,040
	June 30, 2019 $ 1,670,000 45,680 $ 1,715,680

(vii) Guarantee for bank loans

The Group didn’t pay any guarantee fee to related parties as a guarantor.

(viii) Property transaction

The information of acquisitions of assets and subsidiaries investments from related parties is as follows:

Other related parties	For the Three Months Ended June 30 2019 2018 $ - 32,675	For the Six Months Ended June 30 2019 2018 - 32,675
	2019 $ -

(ix) Other transactions
1) The information of donation to related parties is as follows:

Other related parties: Foundation	Donation	Donation
	For the Three Months Ended June 30 2019 2018 $ 60 810	For the Six Months Ended June 30 2019 2018 185 1,560
	2019
	$ 60

2) The information of advertising provided by related parties is as follows:

Joint ventures	Advertising	Expenses
	For the Three Months Ended June 30 2019 2018 $ - 103	For the Six Months Ended June 30 2019 2018 - 136
	2019
	$ -

3) The information of management services provided by related parties is as follows:

			Management Service Expenses	Management Service Expenses
		For the Three Months Ended June 30		For the Six Months	Ended June 30
		2019	2018	2019	2018
Other related parties:
Foundation	$	-	3,952	600	7,905

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

4) The information of other services or transactions provided by related parties is as follows:

Associates Joint ventures Other related parties		Other Expenses	Other Expenses
			For the Six Months Ended June 30 2019 2018 5 40 37 362 44 2,085 86 2,487
	2019 $ - - 8 $ 8

5) The amounts of revenues from providing guarantees and endorsements to related parties is as follows:

Joint ventures: The Splendor Hospitality Others	Interest Revenues	Interest Revenues
	For the Three Months Ended June 30 2019 2018 $ 3,327 3,520 79 92 $ 3,406 3,612	For the Six Months Ended June 30 2019 2018 6,543 7,022 186 183 6,729 7,205
	2019 $ 3,327 79 $ 3,406

6) Other receivables and advance payments from related parties

Associates: Keng-Hsin Urban Renewal Others Joint ventures Other related parties	Other Receivables (including advance payments) June 30, 2019 December 31, 2018 June 30, 2018 $ 25,046 14,660 19,308 289 711 472 143 137 112 6 440 324 $ 25,484 15,948 20,216	Other Receivables (including advance payments) June 30, 2019 December 31, 2018 June 30, 2018 $ 25,046 14,660 19,308 289 711 472 143 137 112 6 440 324 $ 25,484 15,948 20,216
		December 31, 2018 June 30, 2018 14,660 19,308 711 472 137 112 440 324 15,948 20,216

7) Other payables and advance receipts from related parties

Associates Joint ventures Other related parties	Other Payables (including advance receipts)	Other Payables (including advance receipts)
	June 30, 2019 $ - 4 20 $ 24	December 31, 2018 June 30, 2018 9,835 84 69 52 205 8,771 10,109 8,907

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Key management transactions

The compensation of key management is as follows:

Short-term employee benefits Post-employment benefits	For the Three Months Ended June 30 2019 2018 $ 35,723 34,076 479 569 $ 36,202 34,645	For the Six Months Ended June 30
	2019 $ 35,723 479 $ 36,202	2019 2018 67,018 82,896 1,040 1,111 68,058 84,007

(8) Pledged assets

The information of pledged assets' carrying value is as follows:

Pledged Assets	Object	June 30, 2019 $ 1,412,440 407,939 601,550 3,591,718 2,847,031 3,915,706 40,465 137,775 $ 12,954,624	December 31, 2018 June 30, 2018 1,412,348 1,296,500 422,107 429,137 604,257 634,453 3,892,953 4,995,222 2,406,303 6,537,865 4,520,258 800,672 55,584 56,273 243,319 270,271 13,557,129 15,020,393
Land (including other non- current assets) Buildings Investment properties Inventories—land held for development Inventories—construction in progress Inventories—buildings and land held for sale Other current financial assets `〃`	The credit limits of long-term and short-term bank borrowings `〃` `〃` `〃` `〃` The credit limits of short-term borrowings Bank acceptance bills Trusts

(9) Significant commitments and contingencies

(a) The Group’s unrecognized contractual commitments are as follows:
(i) The unused standby letters of credit for purchasing machinery and equipment and raw material are as follows:

Unused standby letters of credit	June 30, 2019 $ 1,179	December 31, 2018 June 30, 2018 627 127

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) The unrecognized contractual commitment from contracts of buildings for future operational use, selling and purchasing of equipment, decorating constructions, and engineering constructions entered into by and between the Group and unconsolidated entities is as follows:

Total contract price Total amounts paid under contracts (Note)	June 30, 2019 $ 5,524,667 $ 1,541,339	December 31, 2018 June 30, 2018 2,544,415 3,276,029 824,843 1,846,444

Note: Recognized in “prepayments for equipment and construction in progress”, “other noncurrent assets”, “inventory- construction in progress” and “administrative expenses”.

(iii) The Group’s total selling price for presale construction projects is as follows:

Total contract price Total amounts received under contracts (recognized under current contract liabilities)	June 30, 2019 $ 4,767,354 $ 596,416	December 31, 2018 June 30, 2018 4,337,978 7,072,358 502,930 1,780,364

(iv) The Group’s purchase contracts of building capacity is as follows:

Total contract price Total amounts paid under contracts (recognized under prepayments)	June 30, 2019 $ 200,944 $ 116,570	December 31, 2018 June 30, 2018 503,029 200,944 207,195 116,570

(v) The Group’s security deposits paid to landlords for joint construction projects is as follows:

Security deposits of joint construction projects (recognized under other current and non-current financial assets)	June 30, 2019 $ 254,290	December 31, 2018 June 30, 2018 196,894 200,871

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(vi) The Group’s security deposits for renting real estates is as follows:

June 30, 2019 Security deposits (recognized under other current and non-current financial assets) $ 97,289	December 31, 2018 June 30, 2018 97,449 97,281

(vii) The Group’s unrecognized contractual commitments for purchasing land is as follows:

Total contract price Total amounts paid under contracts (recognized under inventories— prepayments for land)	June 30, 2019 $ 219,342 $ 10,788	December 31, 2018 June 30, 2018 219,342 22,886 10,788 3,353

(viii) The Group and The Presbyterian Church in Taiwan entered into an real estate leasing contract. The contract term was 40 years commenced on the next day of the signing date. For the development of the leasing real estates, the Group agreed to pay development royalty amounted to $126,000 thousand. As of June 30, 2019 and 2018, the accumulated royalties

paid amounted to $126,000 thousand, respectively, which was recognized under other noncurrent assets and transferred to right-of-use assets when the first application of IFRS16 on January1, 2019, and was depreciated by the contract term.

(b) Contingencies
(i) Please refer to Note 7 for the Group’s guarantees and endorsements for related parties' loans as of June 30, 2019 and 2018.
(ii) Contingencies for the Company and subsidiaries- the stages of Sunflower Investment Daguangsan tax petition for real estate transaction and non-performing receivables, and the petition stages of CMW (Tianjin) sales contract dispute is as follows:

Litigant
The
Company

Issue
Current Status
Filing a petition for the
administrative penalty of
the value-added tax in the
Daguangsan real estate
transaction which was
approved
by
National
Taxation
Bureau
of
Taipei
National Taxation Bureau of Taipei has approved the
additional value-added tax and the regarding penalty
amounted to $38,497 thousand, which the Company had
paid $25,665 thousand in 2012. The Company was
dissatisfied with the verdict from the original authority,
which has filed the administrative petition. According to the
ruling of the Taipei High Administrative Court, the lawsuit
has now been suspended.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Litigant Issue Current Status Sunflower Since 2011, Sunflower Investment Investment had received several administrative penalties approved by Daguangsan non-performing National Tax Bureau of Taipei which arose from the withholding tax, valueadded tax, enterprise income tax and undistributed earning tax of the Daguangsan nonperforming receivables. The Company has sought administrative remedy for the aforementioned verdict. refer to Note 6(r). CMW CMW (Tianjin) engaged (Tianjin) in a sales contract dispute with its customer and received the arbitration notice in February 2019, which the arbitration tribunal was formed in April 2019. The appeal is now in the trial of arbitration tribunal.

National Tax Bureau of Taipei reduced the approved valueadded tax and the regarding penalties to the total amount of $564,452 thousand on June 6, 2014, which arose from Daguangsan non-performing receivables. The aforementioned amount had been paid in the amount of $46,174 thousand. The Company was dissatisfied with the verdicts and filed the petitions of the review, appeal and administrative litigation, which are being processed by the authority. The administrative litigation was filed against Taipei High Administrative Court on December 24, 2013. In accordance with the Administrative Regulation Article 177, Section 1 and 2, Taipei High Administrative Court suspended the proceeding of the lawsuit on July 25, 2016. Considering the risk of losing the lawsuit in the future, the Company assessed the aforementioned possible losses based on the conservative principle and estimate the contingent liabilities. For details of regarding contingencies, please refer to Note 6(r).

The customer requested CMW (Tianjin) to compensate for the loss caused by the deficiency of the product quality. However, CMW (Tianjin) developed the product based on the technical criterion and specifications provided by the customer. During the development stage, CMW (Tianjin) found a problem within the design and reminded the customer to modify. Due to the pressure of supply, the customer did not agree the proposal of the design modification to its end customers. In addition, the customer failed to follow the schedule in the process of verifying and approving the materials CMW (Tianjin) used in the production, which was inappropriate to the supply chain quality assurance. CMW (Tianjin) believes that the arbitration request lacks the facts and conclusive evidence, which is not possible for CMW (Tianjin) to take the whole responsibility of the end customers’ loss. The case appointed lawyer stated that it is unlikely that all of the customers’ arbitration requests will be accepted. The arbitration tribunal of this case was formed, however, the court session for the trial has not been opened. The engagement attorney stated that the arbitration request raised by the customer is unlikely to be supported. This appeal is now in the trial of the arbitration tribunal.

(10) Losses due to major disasters: None.

(11) Subsequent events: None.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(12) Other:

(a) The Securities and Futures Investors Protection Center (SFIPC) filed a criminal incidental civil action on behalf of the Company against the former chairman of the Company, Mr. Ming Shiann, Ho. This case was partially dismissed by the Supreme Court on January 12, 2017, and partially remanded. On June 26, 2018, the remanded part was dismissed by the Civil Division of Tainan Branch of Taiwan High Court, and the appeal of the SFIPC was dismissed. However, the SFIPC was dissatisfied with the verdicts and filed an appeal on July 19, 2018, which was remanded by the Supreme Court and was waiting for the trial of Taiwan High Court by now.
(b) The SFIPC filed a lawsuit for damage remedy against the Company, the members of directors and supervisors, and the employees of both the Company and its subsidiaries. The case was passed by Taiwan High Court on February 13, 2018, and had been dismissed. The SFIPC was dissatisfied with the verdicts and filed an appeal. On March 27, 2019, the Civil Court of the Supreme Court vacated the original verdict and remanded to the Taiwan High Court. The appeal is now in its first trial in Taiwan High Court.
(c) Employee benefits, depreciation, and amortization are summarized as follows:

		For the Three Months Ended June 30	For the Three Months Ended June 30	For the Three Months Ended June 30	For the Three Months Ended June 30	For the Three Months Ended June 30
By function By item		2019		2018
	Operating Costs	Operating Expenses	Total	Operating Costs	Operating Expenses	Total
Employee benefits
Salary	184,659	152,209	336,868	199,944	140,269	340,213
Labor and health insurance	17,669	15,810	33,479	17,292	9,336	26,628
Pension	12,179	7,779	19,958	13,686	5,106	18,792
Others	16,979	17,462	34,441	18,894	9,383	28,277
Depreciation	169,876	78,748	248,624	182,210	16,106	198,316
Amortization	328	6,770	7,098	325	11,068	11,393

By function By item		For the Six Months Ended June 30
		2019		2018
	Operating Costs	Operating Expenses	Total	Operating Costs	Operating Expenses	Total
Employee benefits
Salary	359,722	319,942	679,664	387,994	308,942	696,936
Labor and health insurance	37,015	29,807	66,822	35,348	17,546	52,894
Pension	25,703	13,926	39,629	26,806	10,615	37,421
Others	29,780	28,740	58,520	36,272	19,171	55,443
Depreciation	342,996	156,689	499,685	354,513	37,199	391,712
Amortization	653	13,556	14,209	650	21,951	22,601

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(d) Discontinued operation:

For the higher efficiency of asset use and operation, the Board of Directors approved the steel product segment to be discontinued in December 2017, and sold all of the land, factories and equipment of the segment in the 1[st] quarter of 2018. The income and expenses of discontinued operation had been separated from the continuing operation.

Profit and loss, and cash flows generated from discontinued operations are summarized as follows:

Results from operating activities: Revenues Costs Operating expenses Other income and expenses Operating loss Non-operating income and expenses Income tax expense Loss Gain on disposal of non-current assets held for sale Gain (loss) on disposal of non-current assets held for sale Tax expense from disposal of non-current assets held for sale Profit Basic earnings per share Diluted earnings per share Cash flows from discontinued operation: Net cash generated from operating activities Net cash generated from investing activities Net cash generated from financing activities Net cash inflow		For the Three Months Ended June 30 For the Six Months Ended June 30 2018 2018 $ - 23,496 - (21,878) (3,207) (6,151) - 28 (3,207) (4,505) 2 271 - - (3,205) (4,234) (343) 375,854 - (11,075) $ (3,548) 360,545 $ (0.01) 0.94 $ (0.01) 0.93 $ 14,147 616,225 840 $ 631,212

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(13) Other disclosures:

(a) Information on significant transactions:

The following is the information on significant transactions for the six months ended June 30, 2019, required by the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” for the Group:

(i) Loans to other parties:

(In Thousands of NTD)

No.	Lender	Borrower	Financial Statement Account	Related Parties	Highest Balance During the Period	Ending Balance (Note 1)	Actual Borrowing Amount	Interest Rate	Nature for Financing (Note 2)	Transaction Amount for Business	Reasons for Short-term Financing	Allowance for Doubtful Accounts	Collateral	Collateral	Financing Limit for Each Borrower (Note 3)	Aggregate Financing Limit (Note 4)
													Item	Value
1	Tianjin CMT	Suzhou CMB	Accounts receivable due from related parties	Yes	230,000	226,000	226,000	0.75%	2	-	Operation requirements	-		-	349,446	465,928
1	Tianjin CMT	CMW (Tianjin)	Accounts receivable due from related parties	Yes	207,000	203,400	203,400	0.75%	2	-	Operation requirements	-		-	349,446	465,928
2	FAR HSING (SAMOA)	Atrans Precision	Accounts receivable due from related parties	Yes	31,600	31,060	31,060	1.00%	2	-	Operation requirements	-		-	51,178	68,238

Note 1: Balance of loan as of the reporting date was within the credit limits approved by the Board of Directors.

Note 2: 1. For business transactions.
For the necessity of short-term financing.
Note 3: The lender’s total amount available for lending shall not exceed 30% of its net worth.
Note 4: The lender’s total amount available for lending shall not exceed 40% of its net worth.
Note 5: Intra-group transactions have been eliminated in the consolidated financial statements.

(ii) Guarantees and endorsements for other parties:

(In Thousands of NTD)

No.	Name of Guarantor/ Endorse	Counter-party of Guarantee and Endorsement	Counter-party of Guarantee and Endorsement	Limitation on Amount of Guarantees and Endorsements for a Specific Enterprise (Note 4)	Highest Balance for Guarantees and Endorsements During the Period	Ending Balance (Note 2)	Actual Borrowing Amount	Property Pledged for Guarantees and Endorsements	Ratio of Accumulated Amounts of Guarantees and Endorsements to Net Worth of the Latest financial Statements	Maximum Amount for Guarantees and Endorsements (Note 5)	Parent Company Endorsements/ Guarantees to Third Parties on Behalf of Subsidiary (Note 3)	Subsidiary Endorsements/ Guarantees to Third Parties on Behalf of Parent Company (Note 3)	Endorsements/ Guarantees to Third Parties on Behalf of Companies in Mainland China (Note 3)
		Name	Relationship with the Company (Note 1)
0	The Company	Sunflower Investment	1	4,841,625	220,000	220,000	6,500	-	% 1.82	6,052,031	Y	N	N
0	The Company	The Hotel National	1	4,841,625	100,000	100,000	95,000	-	% 0.83	6,052,031	Y	N	N
0	The Company	Shangrila Tourism	1	4,841,625	702,500	652,500	425,500	-	% 5.39	6,052,031	Y	N	N
0	The Company	The Splendor Hospitality	2	4,841,625	2,100,000	2,050,000	1,670,000	-	% 16.94	6,052,031	N	N	N
0	The Company	CMAAN Health	2	4,841,625	95,680	45,680	45,680	-	% 0.38	6,052,031	N	N	N
1	CMAI N.A.	Pilot	4	64,551	59,900	58,877	57,055	-	% 91.21	64,551	N	N	N
2	CMI	UEA	3	4,049,253	1,975,061	1,555,702	1,555,702	-	% 15.37	5,061,567	N	N	N

Note 1: 1.The Company held directly or indirectly more than 50% of the shares with voting rights.

2.Due to the joint investment relationship, all of the shareholders of the Group endorse the company in accordance with their investment ratio.
3.The company held directly or indirectly more than 50% of the shares with voting rights.
4.The company held directly or indirectly more than 90% of the shares with voting rights.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Note 2: Balance of guarantees and endorsements as of the reporting date was within the credit limit approved by the Board of Directors.

Note 3: The following three situations are filled in Y: the endorsement of the subsidiary by the Company; the endorsement of the Company by the subsidiary and the endorsement to the company located in Mainland China.

Note 4: The guarantor’s total amount available for guarantee and endorsement shall not exceed the percentage mentioned below of its net worth: The Company 40%, CMAI N.A.100%, and CMI 40%.

Note 5: The guarantor’s total amount available for guarantee and endorsement shall not exceed the percentage mentioned below of its net worth: The Company 50%, CMAI N.A.100%, and CMI 50%.

(iii) Securities held as of June 30, 2019 (excluding investment in subsidiaries, associates and joint ventures):

(In Thousands of NTD)

				(In Thousands	(In Thousands	(In Thousands	(In Thousands	of NTD)
Name of Holder	Category and Name of Security	Relationship with Issued Company	Account	Ending Balance				Note
				Shares/Units	Carrying Value	Percentage of Ownership (%)	Fair Value
The Company	MEITA Industrial Co., Ltd.	The Company is the legal person	Non-current financial assets at FVOCI	1,351,164	135,300	% 3.12	135,300
The Company	YUHUA Venture Capital Co., Ltd.	-	Non-current financial assets at FVOCI	112,574	830	% 1.25	830
The Company	FUHUA Venture Capital Co., Ltd.	-	Non-current financial assets at FVOCI	86,625	1,920	% 1.67	1,920
The Company	GUANGYUAN Investment Co., Ltd.	-	Non-current financial assets at FVOCI	5,000,000	44,080	% 3.91	44,080
The Company	DEVELOPMENT Venture Capital Co., Ltd.	The Company is the legal person	Non-current financial assets at FVOCI	5,200,000	33,935	% 4.00	33,935
The Company	Pacific Electric Wire & Cable Co., Ltd.	-	Current financial assets at FVTPL	74,242	-	% 0.01	-
Sunflower Investment	YungTay Engineering Co., Ltd.	-	Current financial assets at FVTPL	248,000	17,385	% 0.06	17,385
Sunflower Investment	i1. COM, INC.	-	Non-current financial assets at FVOCI	100,000	-	% 0.52	-
The Hotel National	Century National Technology Co., Ltd.	-	Non-current financial assets at FVOCI	35,600	-	% 2.51	-

(iv) Individual securities acquired or disposed of with accumulated amount exceeding NT$300 million or 20% of the share capital: None.
(v) Information on the acquisition of real estate exceeding NT$300 million or 20% of the share capital: None.
(vi) Information on the disposal of real estate exceeding of NT$300 million or 20% of the share capital: None.
(vii) Information regarding related-party transactions for purchases and sales exceeding NT$300 million or 20% of the share capital:

(In Thousands of NTD)

									(In Thousands of	(In Thousands of	NTD)
Name of Company	Related Party	Nature of Relationship	Transaction Details				Transactions with Terms Different from Others		Notes/Accounts Receivable (Payable)		Note
			Purchase/Sale	Amount	Percentage of Total Purchases/Sales	Payment Terms	Unit Price	Payment Terms	Ending Balance	Percentage of Total Notes/Accounts Receivable (Payable)
uzhou CMS	CMI	Subsidiaries	Sale	604,979	% 34.30	120~180 days	-	-	1,492,043	68.39%
MW (Tianjin)	CMW (C.I.)	Subsidiaries	Sale	667,563	% 35.17	120~180 days	-	-	1,637,296	57.92%

Note : Intra-group transactions have been eliminated in the consolidated financial statements.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(viii) Receivables from related parties with amounts exceeding the lower of NT$100 million or 20% of the share capital:

(In Thousands of NTD/In CNY)

Name of Company	Counter-party	Nature of Relationship	Ending Balance	Turnover Rate	Overdue	Overdue	Amounts Received in Subsequent Period	Allowance for Bad debts
					Amount	Action Taken
CMI	CMB (H.K.)	Parent company	Accounts receivable due from related parties, other 232,492	-	-	-	-	-
CMW (C.I.)	CMW (Tianjin)	Parent company	Accounts receivable due from related parties, other 711,266	-	-	-	-	-
CMW (C.I.)	CMI	Subsidiaries	Accounts receivable due from related parties, other 2,200,484	-	-	-	-	-
CMP (H.K.)	CMI	Subsidiaries	Accounts receivable due from related parties, other 138,263	-	-	-	-	-
CMW (Tianjin)	CMW (C.I.)	Subsidiaries	Accounts receivable due from related parties 1,637,296	0.84	-	-	CNY 15,822,042	-
Tianjin CMT	CMI	Subsidiaries	Accounts receivable due from related parties 292,770	-	-	-	-	-
Tianjin CMT	CMW (Tianjin)	Affiliates	Accounts receivable due from related parties, other 203,411	-	-	-	-	-
Tianjin CMT	Suzhou CMB	Affiliates	Accounts receivable due from related parties, other 226,012	-	-	-	-	-
Suzhou CMS	CMI	Subsidiaries	Accounts receivable due from related parties 1,492,043	0.84	-	-	CNY 23,693,219	-

Note : Intra-group transactions have been eliminated in the consolidated financial statements.

(ix) Trading in derivative instruments: None.
(x) Business relationships and significant intercompany transactions:

(In Thousands of NTD)

No. (Note 1)	Name of Company	Name of Counter-party	Nature of Relationship (Note 2)	Intercompany Transactions (Note 3)	Intercompany Transactions (Note 3)	Intercompany Transactions (Note 3)	Intercompany Transactions (Note 3)
				Account	Amount	Trading Terms	Percentage of the Total Consolidated Revenue or Total Assets (Note 4)
0	China Metal Products	Atrans Precision	1	Operating revenue	43,946	60~90 days	0.59%
0	China Metal Products	CMJ	1	Operating revenue	11,179	90 days	0.15%
1	CMW (Tianjin)	CMW (C.I.)	2	Operating revenue	667,563	120~180 days	8.97%
3	Suzhou CMS	CMI	2	Operating revenue	604,979	120~180 days	8.13%
4	Suzhou CMB	CMB (H.K.)	2	Operating revenue	34,669	120~180 days	0.47%
4	Suzhou CMB	Suzhou CMS	3	Operating revenue	39,584	120~180 days	0.53%
6	National Management	China Metal Products	2	Operating revenue	31,041	OA 25 days	0.42%
11	CMAI	CMW(C.I.)	3	Operating revenue	13,305	90 days	0.18%
5	CMAI N.A.	CMW(C.I.)	3	Operating revenue	16,705	90 days	0.22%
5	CMAI N.A.	CMAI	2	Operating revenue	17,239	90~120 days	0.23%
8	CMW(C.I.)	CMAI	3	Operating revenue	10,245	120~180 days	0.14%
0	China Metal Products	Atrans Precision	1	Accounts receivable due from related parties	37,079	60~90 days	0.09%
1	CMW (Tianjin)	CMW (C.I.)	2	Accounts receivable due from related parties	1,637,296	120~180 days	4.14%
2	Tianjin CMT	CMI	2	Accounts receivable due from related parties	292,770	120~180 days	0.74%
2	Tianjin CMT	CMW (Tianjin)	3	Accounts receivable due from related parties	35,784	120~180 days	0.09%
3	Suzhou CMS	CMI	2	Accounts receivable due from related parties	1,492,043	120~180 days	3.77%
4	Suzhou CMB	Suzhou CMS	3	Accounts receivable due from related parties	95,734	120~180 days	0.24%
4	Suzhou CMB	CMB (H.K.)	2	Accounts receivable due from related parties	34,365	120~180 days	0.09%
2	Tianjin CMT	CMW (Tianjin)	3	Other receivables due from related parties	203,411	-	0.51%
2	Tianjin CMT	Suzhou CMS	3	Other receivables due from related parties	11,777	-	0.03%
2	Tianjin CMT	Suzhou CMB	3	Other receivables due from related parties	226,012	-	0.57%
7	CMI	CMB (H.K.)	1	Other receivables due from related parties	232,492	-	0.59%

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

No. (Note 1)	Name of Company	Name of Counter-party	Nature of Relationship (Note 2)	Intercompany Transactions (Note 3)	Intercompany Transactions (Note 3)	Intercompany Transactions (Note 3)	Intercompany Transactions (Note 3)
				Account	Amount	Trading Terms	Percentage of the Total Consolidated Revenue or Total Assets (Note 4)
8	CMW (C.I.)	CMW (Tianjin)	1	Other receivables due from related parties	711,266	-	1.80%
8	CMW (C.I.)	CMI	2	Other receivables due from related parties	2,200,484	-	5.56%
10	CMP (H.K.)	CMI	2	Other receivables due from related parties	138,263	-	0.35%
12	CHINGENG Land Development	Keng-Hsin Urban Renewal	2	Other receivables due from related parties	25,046	-	0.06%
11	CMAI	CMAI N.A.	1	Other receivables due from related parties	12,136	-	0.03%
11	CMAI	CMI	3	Other receivables due from related parties	14,368	-	0.04%
9	CMB (H.K.)	Suzhou CMB	1	Other long-term receivables due from related parties	27,034	-	0.07%

Note 1: For the inter-company business relationship and transaction condition in the “Number” column, the labeling method is as follows:

Parent company - 0.
Subsidiaries – In sequence from 1.
Note 2: Relationship is classified into three types:
Parent company to subsidiary.
Subsidiary to parent company.
Subsidiary to subsidiary.

Note 3: The Group only disclosed the information of sales and accounts receivable with subsidiary and did not give unnecessary details of opposite purchases and accounts payables in this part.

Note 4: The transaction amount is divided by the consolidated operating revenue or the consolidated total assets.
Note 5: Intra-group transactions have been eliminated in the consolidated financial statements.

(b) Information on investees:

The following is the information on investees for the six months ended June 30, 2019 (excluding information on investees in Mainland China):

(In Thousands of NTD/In USD and CNY)

Name of Investor	Name of Investee	Location	Main Businesses	Original Investment Amount	Original Investment Amount	Balance as of June 30, 2019	Balance as of June 30, 2019	Balance as of June 30, 2019	Net Income (Losses) of Investee	Share of Profits/Losses of Investee	Note
				June 30, 2019	December 31, 2018	Shares	Percentage of Ownership	Carrying Value
The Company	UEA	British Virgin Islands	Investing in CMI	865,286	865,286	667,820	% 100.00	7,021,859	296,678	296,678	Subsidiaries
The Company	Sunflower Investment	Taiwan	Investing	99,000	99,000	67,006,291	% 99.00	891,718	22,953	22,724	Subsidiaries
The Company	Atrans Precision	Taiwan	Vehicle parts processing	236,780	236,780	25,149,502	% 70.47	400,644	36,079	25,426	Subsidiaries
The Company	CMJ	Japan	Cast iron product retailing	4,887	4,887	500	% 83.33	63,433	22,490	18,741	Subsidiaries
The Company	CMAI	Hong Kong	Vehicle parts retailing	71,644	71,644	2,820,000	% 94.00	202,289	331	311	Subsidiaries
The Company	Pu Sheng Construction	Taiwan	Residents, commercial buildings and factories leasing and developing	30	30	3,000	% 30.00	10,121	(25)	(8)	Subsidiaries
The Company	PUJEN Land Development	Taiwan	Residents, commercial buildings and factories leasing and developing	2,003,067	2,003,067	158,877,643	% 56.65	3,980,924	112,386	63,887	Subsidiaries
The Company	Amida Trustlink Assets	Taiwan	Real estate developing, leasing and financial claims acquiring from financial institutions	44,576	44,576	16,763,726	% 35.21	(21,760)	(340)	-	Investees accounted for using equity method
The Company	The Hotel National	Taiwan	International tourist hotel services and other hotel business approved by the Ministry of Transportation and Communications	1,304,549	1,304,549	31,200,000	% 100.00	813,405	(17,144)	(18,089)	Subsidiaries
The Company	National Management	Taiwan	Management and consulting services	10,000	10,000	1,000,000	% 100.00	14,669	(285)	(285)	Subsidiaries

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor	Name of Investee	Location	Main Businesses	Original Investment Amount	Original Investment Amount	Balance as of June 30, 2019	Balance as of June 30, 2019	Balance as of June 30, 2019	Net Income (Losses) of Investee	Share of Profits/Losses of Investee	Note
				June 30, 2019	December 31, 2018	Shares	Percentage of Ownership	Carrying Value
The Company	The Splendor Hospitality	Taiwan	International tourist hotel services	975,000	975,000	97,500,000	% 50.00	340,160	(18,474)	(15,780)	Joint ventures accounted for using equity method
The Company	Shangrila Tourism	Taiwan	Amusement park and hotel services	359,470	359,470	18,131,840	% 80.00	209,236	(14,339)	(10,877)	Subsidiaries
The Company	CMAAN Health	Taiwan	Management and consulting services	50,000	50,000	5,000,000	% 50.00	47,497	3,341	1,484	Joint ventures accounted for using equity method
Sunflower Investment	PUJEN Land Development	Taiwan	Residents, commercial buildings and factories leasing and developing	280,768	280,768	42,269,213	% 15.07	1,023,879	112,386	Exempt from disclosure	Subsidiaries of the Company
Sunflower Investment	Atrans Precision	Taiwan	Vehicle parts processing	76,878	76,878	4,677,481	% 13.11	73,872	36,079	Exempt from disclosure	Subsidiaries of the Company
Sunflower Investment	Amida Trustlink Assets	Taiwan	Real estate developing, leasing and financial claims acquiring from financial institutions	-	-	5,951,619	% 12.50	(7,726)	(340)	Exempt from disclosure	Investees accounted for using equity method
Sunflower Investment	ADVANCISION (CAYMAN)	Cayman Islands	Investing and cast iron product retailing	29,154	29,154	1,871,288	% 4.46	32,463	216	Exempt from disclosure	Investee accounted for using equity method
UEA	CMI	Cayman Islands	Investing in CMI (BVI) and cast iron product retailing	USD 136,536,250	USD 136,536,250	823,281,475	% 82.55	USD 289,879,148	USD 12,712,930	Exempt from disclosure	Subsidiaries of UEA
CMI	CMI (BVI)	British Virgin Islands	Investing in CMP (H.K.)	USD 280,426	USD 280,426	161	% 100.00	CNY 1,023,134,920	CNY 46,169,076	Exempt from disclosure	Subsidiaries of CMI
CMI	CMW (C.I.)	Cayman Islands	Investing in CMW (Tianjin) and CMH	USD 75,156,500	USD 75,156,500	50,000,000	% 100.00	CNY 1,630,287,783	CNY 31,249,458	Exempt from disclosure	Subsidiaries of CMI
CMI	CMB (H.K.)	Hong Kong	Investing in Suzhou CMS	USD 85,820,000	USD 85,820,000	82,000,000	% 100.00	CNY 581,810,401	CNY 1,245,034	Exempt from disclosure	Subsidiaries of CMI
CMI(BVI)	CMP (H.K.)	Hong Kong	Investing in Tianjin CMT and Suzhou CMS	USD 21,000,000	USD 21,000,000	21,000,000	% 100.00	CNY 1,025,926,336	CNY 46,169,076	Exempt from disclosure	Subsidiaries of CMI(BVI)
CMAI	CMAI Holding	USA	Investing	USD 8,328,644	USD 8,328,644	8,328,644	% 100.00	USD 2,197,616	USD (362,113)	Exempt from disclosure	Subsidiaries of CMAI
CMAI Holding	Pilot	USA	Assets leasing	USD 8,328,644	USD 8,328,644	8,328,644	% 100.00	USD 2,366,184	USD (362,113)	Exempt from disclosure	Subsidiaries of CMAI (Holding)
Pilot	CMAI N.A.	USA	Vehicle parts retailing	USD 7,792,972	USD 7,792,972	7,792,972	% 100.00	USD 1,661,944	USD (416,159)	Exempt from disclosure	Subsidiaries of Pilot
Atrans Precision	FAR HSING (SAMOA)	SAMOA	Investing	USD 4,922,055	USD 4,922,055	4,922,055	% 100.00	165,848	USD 1,755	Exempt from disclosure	Subsidiaries of Atrans Precision
Atrans Precision	Acore Material	Taiwan	Mechanical equipment, electronic parts and other equipment manufacturing	31,000	31,000	775,000	% 21.23	-	(10,015)	Exempt from disclosure	Investees of Atrans Precision accounted for using equity method
FAR HSING (SAMOA)	ADVANCISION (CAYMAN)	Cayman Islands	Investing and cast iron product retailing	USD 4,959,029	USD 4,959,029	9,068,414	% 21.59	USD 4,219,820	USD 7,048	Exempt from disclosure	Investees of FAR HSING (SAMOA) accounted for using equity method
PUJEN Land Development	Pu Sheng Construction	Taiwan	Residents, commercial buildings and factories leasing and developing	20	20	2,000	% 20.00	6,747	(25)	Exempt from disclosure	Subsidiaries of the Company
PUJEN Land Development	Keng-Hsin Urban Renewal	Taiwan	Residents, commercial buildings and factories leasing and developing	250,928	250,928	32,864,188	% 30.00	312,093	(26,548)	Exempt from disclosure	Investees of PUJEN Land Development accounted for using equity method
PUJEN Land Development	CHINGENG Land Development	Taiwan	Residents, commercial buildings and factories leasing and developing	72,500	82,500	7,250,000	% 50.00	69,401	(176)	Exempt from disclosure	Subsidiaries of PUJEN Land Development
PUJEN Land Development	PUJEN CHENGMEI Land Development	Taiwan	Residents, commercial buildings and factories leasing and developing	59,500	59,500	5,950,000	% 70.00	47,279	(289)	Exempt from disclosure	Subsidiaries of PUJEN Land Development
PUJEN Land Development	PUCHIA Land Development	Taiwan	Residents, commercial buildings and factories leasing and developing	35,000	35,000	3,500,000	% 50.00	28,040	23	Exempt from disclosure	Subsidiaries of PUJEN Land Development
PUJEN Land Development	Shangrila Tourism	Taiwan	Amusement park and hotel services	89,867	89,867	4,532,960	% 20.00	52,309	(14,339)	Exempt from disclosure	Subsidiaries of the Company

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

Name of Investor	Name of Investee	Location	Main Businesses	Original Investment Amount	Original Investment Amount	Balance as of June 30, 2019	Balance as of June 30, 2019	Balance as of June 30, 2019	Net Income (Losses) of Investee	Share of Profits/Losses of Investee	Note
				June 30, 2019	December 31, 2018	Shares	Percentage of Ownership	Carrying Value
PUJEN Land Development	Hua-Pu Development	Taiwan	Residents, commercial buildings and factories leasing and developing	5,000	5,000	500,000	% 50.00	5,062	(25)	Exempt from disclosure J L a e	oint ventures of PUJEN and Development ccounted for using quity method
PUJEN Land Development	Beyond Fitness	Taiwan	Sport training and other consulting service	3,000	3,000	300,000	% 37.50	1,972	1,096	Exempt from disclosure I L a e	nvestees of PUJEN and Development ccounted for using quity method

(c) Information on investment in Mainland China:

(i) The names of investees in Mainland China, the main businesses and products, and other information:

(In Thousands of NTD, CNY, USD and JPY)

Name of Investee	Main Businesses	Total Amount of Paid-in Capital	Method of Investment (Note 1)	Accumulated Outflow of Investment from Taiwan as of January 1, 2019	Investment Flows	Investment Flows	Accumulated Outflow of Investment from Taiwan as of June 30, 2019	Net Income (Losses) of the Investee	Percentage of Ownership	Investment Income (Losses) (Notes 2,3)	Book Value (Note 3)	Accumulated Remittance of Earnings in Current Period (Note 5)
					Outflow	Inflow
Tianjin CMT	Cast iron products, machine parts and vehicle parts designing, developing, manufacturing and selling	931,800 (USD 30,000)	2	388,238	-	-	388,238	(3,073) (CNY (674))	82.55%	(2,535) (CNY (556))	1,164,822 (CNY 257,704)	82,542
Suzhou CMS	Cast iron products, machine parts and vehicle parts designing, developing, manufacturing and selling	745,440 (USD 24,000)	2	423,406	-	-	423,406	213,385 (CNY46,795)	82.55%	176,094 (CNY38,617)	3,331,778 (CNY 737,119)	14,601
Suzhou CMB	Cast iron product designing, manufacturing and retailing	2,546,920 (USD 82,000)	2	-	-	-	-	12,700 (CNY2,785)	82.55%	10,483 (CNY 2,299)	2,796,990 (CNY 618,803 )	-
CMW (Tianjin)	Vehicle parts, E&M as-casting and finished product developing, manufacturing and selling	993,920 (USD 32,000)	2	-	-	-	-	156,276 (CNY34,271)	82.55%	135,651 (CNY29,748 )	4,204,802 (CNY930,266)	-
CMH	Vehicle parts, farm wagon parts, industrial wagon parts household appliances parts and E&M as- casting and molds developing, manufacturing, selling and after sales services	341,256 (USD 10,987)	2	-	-	-	-	(406) (CNY(89))	82.55%	(333) (CNY(73))	342,187 (CNY75,705)	-
Qinxin Trade	Vehicle parts retailing	4,348 (USD 140 )	2	-	-	-	-	(31) (USD(1))	94.00%	(31) (USD(1))	4,442 (USD 143 )	-
Qingdao Sourcing Specialists	Cast iron product retailing	3,106 (USD 100)	2	-	-	-	-	10,455 (JPY37,115)	83.33%	8,712 (JPY 30,928)	31,599 (JPY109,491)	-

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(ii) Limitation on investment in Mainland China:

Limitation on investment in Mainland China:	Limitation on investment in Mainland China:	Limitation on investment in Mainland China:
(In Thousands of NTD and USD)
Accumulated Investment in Mainland China as of June 30, 2019	Investment Amount Authorized by the Investment Commission, MOEA	Upper Limit on Investment (Note 4)
811,644	6,479,768 (USD 208,621 )	-

Note 1: Method of investment is classified into three types:
1. Directly invested in Mainland China.
2. Indirectly invested in Mainland China through the third region.
3. Other methods.
Note 2: The recognition basis of the investment income and losses is the financial report audited by an international accounting firm which is in partnership with the accounting firm in the R.O.C.
Note 3: The amount stated is the investment income and losses and the book value of the investment at the end of the period which is recognized by the subsidiaries established through the investment in the third region.
Note 4: The Company complies with the amended Permit 9704604680 ‘ Investment or technical cooperation review principal in China’ which is numbered 9704604680, which obtained the certification documents of the operational scope of the operational headquarters from the Industrial Development Bureau, Ministry of Economic Affairs. The restriction on the cumulative investment amount or proportion in China is not applicable.
Note 5: As of June 30, 2019, the company had obtained a surplus of $1,974,381 thousand (USD63,955 thousand) from the investment companies set up in the third region. The surplus was remitted to the companies by the subsidiaries which was invested indirectly in China and then was remitted to Taiwan. It was impossible to distinguish the remittance from the company in China.
Note 6: The aforementioned investments have been eliminated in the consolidated financial statements.
Note 7: The amount in the table is translated by the spot rate on the financial reporting date.
(iii) Significant transactions: None.

(Continued)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(14) Segment information:

The Group’s operating segment information and reconciliation are as follows:

For the Three Months Ended June 30, 2019	Metal Manufacturing Segment	Steel Product Segment (Discontinued)
	$ 3,080,287 736,234 $ 3,816,521 $ 270,931 $ 3,425,173 991,240 $ 4,416,413 $ 472,764 $ 6,040,200 1,504,933 $ 7,545,133 $ 473,560 $ 6,539,774 1,868,416 $ 8,408,190 $ 693,309	- - - - - - - (3,548) - - - - 23,496 - 23,496 371,620
Revenue from external customers Intersegment revenues Total revenue Reportable segment profit or loss For the Three Months Ended June 30, 2018
Revenue from external customers Intersegment revenues Total revenue Reportable segment profit or loss For the Six Months Ended June 30, 2019
Revenue from external customers Intersegment revenues Total revenue Reportable segment profit or loss For the Six Months Ended June 30, 2018
Revenue from external customers Intersegment revenues Total revenue Reportable segment profit or loss

Note1: The amount of assets and liabilities of the Group’s reportable segments was not provided to the management. It is not required for disclosure.

Note2: The reportable segments of the Group are adjusted as follows: The original "Department store segment" and "Other segment" are adjusted and stated under "Lifestyle hospitality segment" and "Real estate development segment"; the original "Construction and Resident segment" is adjusted and stated under "Real estate development segment"; the original "Iron casting and manufacturing segment" is adjusted and stated under "Metal Manufacturing segment".

AI assistant

CMP — Interim / Quarterly Report 2019

51855_rns_2019-12-31_96c78392-8a22-4455-a677-644d9773a0d3.pdf

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Table of contents

Independent Auditors’ Review Report

Introduction

Scope of Review

Basis for Qualified Conclusion

Qualified Conclusion

KPMG

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with the generally accepted auditing standards as of June 30, 2019 and 2018

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the three months and six months ended June 30, 2019 and 2018

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity For the six months ended June 30, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) Reviewed only, not audited in accordance with generally accepted auditing standards

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the six months ended June 30, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

For the six months ended June 30, 2019 and 2018

(1) Company history

(2) Approval date and procedures of the consolidated financial statements:

(3) New standards, amendments and interpretations adopted

(i) IFRS 16 “Leases”

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

2) As a lessee

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(4) Summary of significant accounting policies

(a) Statement of compliance

(b) Basis of consolidation

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(iii) As a lessor

(d) Income taxes

(e) Employee benefits

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty:

(6) Explanation of significant accounts:

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(e) Inventories

(f) Non-current assets held for sale

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(g) Investments accounted for using equity method

(i) Associates

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Property, plant and equipment

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(k) Investment property

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(l)

Intangible assets

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(m) Prepayment for long-term land lease

(n) Other non-current financial assets

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

(i) Borrowing and repayment

(ii) Collateral for bank borrowings

(i) Borrowing and repayment

CHINA METAL PRODUCTS CO., LTD. AND SUBSIDIARIES Notes to the Consolidated Financial Statements

CMP Interim / Quarterly Report 2019