CST — Interim / Quarterly Report 2018

Dec 22, 2018

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

MARCH 31, 2018 AND 2017

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

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS TRANSLATED FROM CHINESE

PWCR 18000296 To the Board of Directors and Shareholders of CHENG SHIN RUBBER IND. CO., LTD.

Introduction

We have reviewed the accompanying consolidated balance sheets of Cheng Shin Rubber Ind. Co., Ltd. and subsidiaries as at March 31, 2018 and 2017, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the three-month periods then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

Scope of Review

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

Basis for Qualified Conclusion

As explained in Notes 4(3) and 6(6), the financial statements of certain insignificant consolidated subsidiaries and investments accounted for using equity method were not reviewed by independent accountants. Those statements reflect total assets of NT$26,296,988 thousand and NT$24,248,685 thousand, constituting 15% and 14% of the consolidated total assets, and total liabilities of NT$16,192,131 thousand and NT$13,355,164 thousand, constituting 17% and 16% of the consolidated total liabilities as at March 31, 2018 and 2017, and total comprehensive income of NT$365,199 thousand and NT$17,861 thousand, constituting 17% and 1% of the consolidated total comprehensive income for the three-month periods then ended.

~1~

Qualified Conclusion

Except for the adjustments to the consolidated financial statements, if any, as might have been determined to be necessary had the financial statements of certain consolidated subsidiaries and investments accounted for using equity method been reviewed by independent accountants, that we might have become aware of had it not been for the situation described above, 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 the Group as at March 31, 2018 and 2017, and of its consolidated financial performance and its consolidated cash flows for the three-month periods then ended in accordance with “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and International Accounting Standard 34, “Interim Financial Reporting” as endorsed by the Financial Supervisory Commission.

Hung, Shu-Hua

[Wu, Der Feng ]

For and on behalf of PricewaterhouseCoopers, Taiwan May 10, 2018

------------------------------------------------------------------------------------------------------------------------------------------------The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of China, and their applications in practice.

As the financial statements are the responsibility of the management, PricewaterhouseCoopers cannot accept any liability for the use of, or reliance on, the English translation or for any errors or misunderstandings that may derive from the translation.

~2~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of March 31, 2018 and 2017 are reviewed, not audited) March31,2018 December31,2017 Assets Notes AMOUNT % AMOUNT % Current assets 1100 Cash and cash equivalents 6(1) $ 29,553,195 16 $ 30,918,463 17 1110 Financial assets at fair value through profit or loss - current 6(2) 315 - - - 1120 Financial assets at fair value through other comprehensive income - current 6(3) 21,435 - - - 1125 Available-for-sale financial assets - current 12(4) - - 69,188 - 1150 Notes receivable, net 6(4) 2,699,560 2 2,298,485 1 1170 Accounts receivable, net 6(4) and 12(4) 11,381,124 6 9,852,585 6 1180 Accounts receivable - related parties 7 99,843 - 119,288 - 130X Inventories, net 6(5) 19,375,594 11 19,184,340 11 1410 Prepayments 1,857,112 1 2,400,926 1 1470 Other current assets 8 1,552,423 1 1,820,349 1 11XX Current Assets 66,540,601 37 66,663,624 37 Non-current assets 1517 Financial assets at fair value through other comprehensive income - noncurrent 6(3) 58,187 - - - 1523 Available-for-sale financial assets - noncurrent 12(4) - - 58,187 - 1550 Investments accounted for under equity method 6(6) 167,771 - 171,020 - 1600 Property, plant and equipment, net 6(7) 105,771,583 59 105,007,683 59 1760 Investment property, net 6(8) 613,565 - 612,656 - 1840 Deferred income tax assets 1,109,728 1 1,076,959 1 1900 Other non-current assets 6(9) and 8 6,117,923 3 5,494,126 3 15XX Non-current assets 113,838,757 63 112,420,631 63 1XXX Total assets $ 180,379,358 100 $ 179,084,255 100	(Expressed in thousands of New Taiwan dollars) (The balance sheets as of March 31, 2018 and 2017 are reviewed, not audited) March31,2018 December31,2017 Assets Notes AMOUNT % AMOUNT % Current assets 1100 Cash and cash equivalents 6(1) $ 29,553,195 16 $ 30,918,463 17 1110 Financial assets at fair value through profit or loss - current 6(2) 315 - - - 1120 Financial assets at fair value through other comprehensive income - current 6(3) 21,435 - - - 1125 Available-for-sale financial assets - current 12(4) - - 69,188 - 1150 Notes receivable, net 6(4) 2,699,560 2 2,298,485 1 1170 Accounts receivable, net 6(4) and 12(4) 11,381,124 6 9,852,585 6 1180 Accounts receivable - related parties 7 99,843 - 119,288 - 130X Inventories, net 6(5) 19,375,594 11 19,184,340 11 1410 Prepayments 1,857,112 1 2,400,926 1 1470 Other current assets 8 1,552,423 1 1,820,349 1 11XX Current Assets 66,540,601 37 66,663,624 37 Non-current assets 1517 Financial assets at fair value through other comprehensive income - noncurrent 6(3) 58,187 - - - 1523 Available-for-sale financial assets - noncurrent 12(4) - - 58,187 - 1550 Investments accounted for under equity method 6(6) 167,771 - 171,020 - 1600 Property, plant and equipment, net 6(7) 105,771,583 59 105,007,683 59 1760 Investment property, net 6(8) 613,565 - 612,656 - 1840 Deferred income tax assets 1,109,728 1 1,076,959 1 1900 Other non-current assets 6(9) and 8 6,117,923 3 5,494,126 3 15XX Non-current assets 113,838,757 63 112,420,631 63 1XXX Total assets $ 180,379,358 100 $ 179,084,255 100	(Expressed in thousands of New Taiwan dollars) (The balance sheets as of March 31, 2018 and 2017 are reviewed, not audited) March31,2018 December31,2017 Assets Notes AMOUNT % AMOUNT % Current assets 1100 Cash and cash equivalents 6(1) $ 29,553,195 16 $ 30,918,463 17 1110 Financial assets at fair value through profit or loss - current 6(2) 315 - - - 1120 Financial assets at fair value through other comprehensive income - current 6(3) 21,435 - - - 1125 Available-for-sale financial assets - current 12(4) - - 69,188 - 1150 Notes receivable, net 6(4) 2,699,560 2 2,298,485 1 1170 Accounts receivable, net 6(4) and 12(4) 11,381,124 6 9,852,585 6 1180 Accounts receivable - related parties 7 99,843 - 119,288 - 130X Inventories, net 6(5) 19,375,594 11 19,184,340 11 1410 Prepayments 1,857,112 1 2,400,926 1 1470 Other current assets 8 1,552,423 1 1,820,349 1 11XX Current Assets 66,540,601 37 66,663,624 37 Non-current assets 1517 Financial assets at fair value through other comprehensive income - noncurrent 6(3) 58,187 - - - 1523 Available-for-sale financial assets - noncurrent 12(4) - - 58,187 - 1550 Investments accounted for under equity method 6(6) 167,771 - 171,020 - 1600 Property, plant and equipment, net 6(7) 105,771,583 59 105,007,683 59 1760 Investment property, net 6(8) 613,565 - 612,656 - 1840 Deferred income tax assets 1,109,728 1 1,076,959 1 1900 Other non-current assets 6(9) and 8 6,117,923 3 5,494,126 3 15XX Non-current assets 113,838,757 63 112,420,631 63 1XXX Total assets $ 180,379,358 100 $ 179,084,255 100	March31,2017
		AMOUNT $ 29,553,195 315 21,435 - 2,699,560 11,381,124 99,843 19,375,594 1,857,112 1,552,423 66,540,601 58,187 - 167,771 105,771,583 613,565 1,109,728 6,117,923 113,838,757 $ 180,379,358	AMOUNT $ 30,578,697 - - 150,760 1,217,198 10,812,065 141,130 15,558,765 2,690,029 1,626,162 62,774,806 - 58,187 179,025 100,706,952 291,632 1,541,801 5,258,270 108,035,867 $ 170,810,673	%
Current assets 1100 Cash and cash equivalents 1110 Financial assets at fair value through profit or loss - current 1120 Financial assets at fair value through other comprehensive income - current 1125 Available-for-sale financial assets - current 1150 Notes receivable, net 1170 Accounts receivable, net 1180 Accounts receivable - related parties 130X Inventories, net 1410 Prepayments 1470 Other current assets 11XX Current Assets Non-current assets 1517 Financial assets at fair value through other comprehensive income - noncurrent 1523 Available-for-sale financial assets - noncurrent 1550 Investments accounted for under equity method 1600 Property, plant and equipment, net 1760 Investment property, net 1840 Deferred income tax assets 1900 Other non-current assets 15XX Non-current assets 1XXX Total assets	6(1) 6(2) 6(3) 12(4) 6(4) 6(4) and 12(4) 7 6(5) 8 6(3) 12(4) 6(6) 6(7) 6(8) 6(9) and 8			18 - - - 1 6 - 9 2 1
				37
				- - - 59 - 1 3
				63
				100

(Continued)

~3~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

			(Expressed in thousands of New Taiwan	(Expressed in thousands of New Taiwan	(Expressed in thousands of New Taiwan	(Expressed in thousands of New Taiwan	(Expressed in thousands of New Taiwan	dollars)
	(The	balance sheets as		of March 31, 2018 and	2017 are			reviewed, not audited)
				March31,2018				December31,2017				March31,2017
	Liabilities andEquity	Notes		AMOUNT	%			AMOUNT	%			AMOUNT	%
	Current liabilities
2100	Short-term borrowings	6(10)(28)	$	19,197,377	11		$	18,508,493	10		$	15,685,137		9
2120	Financial liabilities at fair	12(4)
	value through profit or loss -
	current			-		-		408		-		-		-
2130	Contract liabilities - current	6(20)		568,786		-		-		-		-		-
2150	Notes payable			817,784		-		822,160		1		314,544		-
2170	Accounts payable			7,859,432		4		8,511,030		5		9,227,979		6
2200	Other payables	6(11)		6,062,529		3		7,022,033		4		6,394,260		4
2230	Current income tax liabilities	6(25)		1,261,967		1		1,277,640		1		1,484,276		1
2300	Other current liabilities	6(12)(13)(14
		)(28) and	7	6,285,260		4		5,936,600		3		9,148,554		5
21XX	Current Liabilities			42,053,135	23			42,078,364	24			42,254,750	25
	Non-current liabilities
2530	Corporate bonds payable	6(13)(28)		16,800,000		9		16,800,000		9		11,700,000		7
2540	Long-term borrowings	6(14)(28)
		and 7		31,484,022	18			32,659,178	18			24,282,344	14
2550	Provisions for liabilities -
	noncurrent			118,550		-		122,071		-		115,659		-
2570	Deferred income tax liabilities	6(25)		1,723,003		1		1,348,631		1		2,117,558		1
2600	Other non-current liabilities	6(15)		3,176,801		2		3,184,708		2		3,396,096		2
25XX	Non-current liabilities			53,302,376	30			54,114,588	30			41,611,657	24
2XXX	Total Liabilities			95,355,511	53			96,192,952	54			83,866,407	49
	Equity
	Equity attributable to owners of
	parent
	Share capital	6(16)
3110	Share capital - common stock			32,414,155	18			32,414,155	18			32,414,155	19
	Capital surplus	6(17)
3200	Capital surplus			52,576		-		52,576		-		52,576		-
	Retained earnings	6(18)
3310	Legal reserve			14,280,767		8		14,280,767		8		12,955,677		8
3320	Special reserve			3,307,822		2		3,307,822		2		2,604,163		2
3350	Unappropriated retained
	earnings			37,843,457	21			36,580,033	20			44,695,058	26
	Other equity interest	6(19)
3400	Other equity interest		(	3,510,108) (		2) (		4,430,061) (		2) (		6,538,228 ) (		4)
31XX	Equity attributable to
	owners of the parent			84,388,669	47			82,205,292	46			86,183,401	51
36XX	Non-controlling interest			635,178		-		686,011		-		760,865		-
3XXX	Total equity			85,023,847	47			82,891,303	46			86,944,266	51
	Significant contingent liabilities	9
	and unrecognised contract
	commitments
	Significant events after the	11
	balance sheet date
3X2X	Total liabilities and equity		$	180,379,358	100		$	179,084,255	100		$	170,810,673	100

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

~4~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts) (UNAUDITED)

Items

Threemonths endedMarch31 2018 2017 Notes AMOUNT % AMOUNT % 6(20) and 7 $ 27,687,137 100 $ 28,641,252 100 6(5) ( 21,123,018) ( 76) ( 21,290,672 ) ( 74) 6,564,119 24 7,350,580 26 7 ( 1,966,024) ( 7) ( 2,158,146 ) ( 8) ( 798,156) ( 3) ( 812,383 ) ( 3) ( 1,341,926) ( 5) ( 1,188,097 ) ( 4) ( 4,106,106) ( 15) ( 4,158,626 ) ( 15) 2,458,013 9 3,191,954 11 6(21) 192,898 1 259,434 1 6(22) ( 295,787) ( 1) ( 544,081 ) ( 2) 6(23) ( 424,455) ( 2) ( 229,491 ) ( 1) 6(6) ( 3,388) - 2,246 - ( 530,732) ( 2) ( 511,892 ) ( 2) 1,927,281 7 2,680,062 9 6(25) ( 704,815) ( 2) ( 735,785 ) ( 2) $ 1,222,466 5 $ 1,944,277 7

4000 Sales revenue 5000 Operating costs 5900 Net operating margin Operating expenses 6100 Selling expenses 6200 General and administrative expenses 6300 Research and development expenses 6000 Total operating expenses 6900 Operating profit Non-operating income and expenses 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Share of (loss)/profit of associates and joint ventures accounted for under equity method 7000 Total non-operating income and expenses 7900 Profit before income tax 7950 Income tax expense 8200 Profit for the period

(Continued)

~5~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts) (UNAUDITED)

Items

Threemonths endedMarch31 2018 2017 Notes AMOUNT % AMOUNT % ($ 6,083) - $ - - 6(25) 25,893 - - - 19,810 - - - 6(19) and 12(4) 925,290 3 ( 3,941,755 ) ( 14) - - 9,356 - 6(19) 139 - ( 534 ) - 6(19)(25) ( 35,161) - 663,534 2 890,268 3 ( 3,269,399 ) ( 12) $ 910,078 3 ( $ 3,269,399 ) ( 12) $ 2,132,544 8 ( $ 1,325,122 ) ( 5) $ 1,214,791 5 $ 1,920,556 7 7,675 - 23,721 - $ 1,222,466 5 $ 1,944,277 7 $ 2,183,377 8 ( $ 1,309,850 ) ( 5) ( 50,833) - ( 15,272 ) - $ 2,132,544 8 ( $ 1,325,122 ) ( 5) 6(26) $ 0.37 $ 0.59 6(26) $ 0.37 $ 0.59

Other comprehensive income Components of other comprehensive income that will not be reclassified to profit or loss 8316 Unrealized loss on valuation of equity instruments at fair value through profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8310 Components of other comprehensive income that will not be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8361 Financial statements translation differences of foreign operations 8362 Unrealized gain on valuation of available-for-sale financial assets 8370 Total share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax relating to the components of other comprehensive income 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8300 Other comprehensive income (loss) for the period 8500 Total comprehensive income (loss) for the period Profit, attributable to: 8610 Owners of the parent 8620 Non-controlling interest Comprehensive income loss, attributable to: 8710 Owners of the parent 8720 Non-controlling interest Earnings per share (in dollars) 9750 Basic earnings per share 9850 Diluted earnings per share

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

~6~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2018 AND 2017 (Expressed in thousands of New Taiwan dollars, except as otherwise indicated)

(UNAUDITED)

Three-month period ended March 31, 2017 Balance at January 1, 2017 Profit for the period Other comprehensive loss for the period Total comprehensive income Balance at March 31, 2017 Three-month period ended March 31, 2018 Balance at January 1, 2018 Effect of retrospective application and retrospective restatement Balance after restatement on January 1, 2018 Profit for the period Other comprehensive income (loss) for the period Total comprehensive income Balance at March 31, 2018	Notes	Equityattributable to o	Equityattributable to o	wners of theparent	wners of theparent	wners of theparent	wners of theparent																Non-controlling interest		Total equity
			Share capital - common stock	Capital Reserves						RetainedEarnings							Otherequityinterest				Total
				Treasury stock transactions			Gain on sale of assets		Legal reserve	Special reserve		Total unappropriated retained earnings (accumulated deficit)		d	Financial statements translation ifferences of foreign operations		Total Unrealised gains (losses) from financial assets measured at fair value through other comprehensive income	l	Unrealized gain or oss on available-for- sale financial assets
	6(19)		$ 32,414,155 - - - $ 32,414,155 $ 32,414,155 - 32,414,155 - - - $ 32,414,155		$ 9,772 - - - $ 9,772 $ 9,772 - 9,772 - - - $ 9,772		$ 42,804 - - - $ 42,804 $ 42,804 - 42,804 - - - $ 42,804		$ 12,955, 677 - - - $ 12,955, 677 $ 14,280, 767 - 14,280,7 67 - - - $ 14,280, 767		$ 2,604,1 63 - - - $ 2,604,1 63 $ 3,307,8 22 - 3,307,82 2 - - - $ 3,307,8 22		$ 42,774,502 1,920,556 - 1,920,556 $ 44,695,058 $ 36,580,033 22,740 36,602,773 1,214,791 25,893 1,240,684 $ 37,843,457		($ 3,358,274 ) - ( 3,239,605 ) ( 3,239,605 ) ($ 6,597,879 ) ($ 4,471,654 ) - ( 4,471,654 ) - 948,776 948,776 ($ 3,522,878 )		$ - - - - $ - $ - 18,853 18,853 - ( 6,083 ) ( 6,083 ) $ 12,770		$ 50,452 - 9,199 9,199 $ 59,651 $ 41,593 ( 41,593 ) - - - - $ -		$ 87,493,251 1,920,556 ( 3,230,406 ) ( 1,309,850 ) $ 86,183,401 $ 82,205,292 - 82,205,292 1,214,791 968,586 2,183,377 $ 84,388,669		$ 776,137 23,721 ( 38,993 ) ( 15,272 ) $ 760,865 $ 686,011 - 686,011 7,675 ( 58,508 ) ( 50,833 ) $ 635,178		$ 88,269,388 1,944,277 ( 3,269,399 ) ( 1,325,122 ) $ 86,944,266 $ 82,891,303 - 82,891,303 1,222,466 910,078 2,132,544 $ 85,023,847

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

~7~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES Profit before tax Adjustments Adjustments to reconcile profit (loss) Depreciation Depreciation on investment property Amortization expense Rental expenses for land use right Expected reversal of credit impairment loss recognised in profit or loss Provision for bad debt expense Share of profit of associates and joint ventures accounted for using equity method Net gain on financial assets or liabilities at fair value through profit or loss Loss on disposal of property, plant and equipment Interest expense Interest income Deferred government grants revenue Changes in operating assets and liabilities Changes in operating assets Financial assets mandatorily measured at fair value through profit or loss Notes receivable, net Accounts receivable Accounts receivable - related parties Inventories Prepayments Other current assets Other non-current assets Changes in operating liabilities Contract liabilities- current Notes payable Accounts payable Other payables Other current liabilities Accrued pension liabilities Other current liabilities Cash inflow generated from operations Interest received Interest paid Income tax paid Net cash flows from operating activities	Notes 6(7)(24) 6(8)(24) 6(24) 6(9) ( 12(4) 6(6) 6(22) ( 6(7)(22) 6(7)(23) 6(21) ( ( ( ( ( ( ( ( ( ( ( ( ( (		Three-month periods ended March 31 2018 2017 $ 1,927,281 $ 2,680,062 2,974,143 2,892,680 6,137 153 10,982 1,408 21,637 21,368 762 ) - - 93 3,388 ( 2,246 ) 750 ) - 23,218 5,044 424,455 229,491 82,248 ) ( 80,329 ) 34,833 ) ( 36,782 ) 41,698 - 401,075 ) 228,141 1,527,654 ) ( 481,697 ) 19,445 ( 11,397 ) 191,254 ) ( 1,598,559 ) 159,497 ) ( 789,940 ) 275,865 ( 168,509 ) 4,780 ( 7,442 ) 294,160 ) - 4,376 ) ( 169,101 ) 651,598 ) 967,587 480,306 ) ( 672,019 ) 58,883 43,904 579 ) ( 2,014 ) 11,732 ) - 1,951,088 3,049,896 74,309 85,819 342,551 ) ( 198,806 ) 555,687 ) ( 452,543 ) 1,127,159 2,484,366

(Continued)

~8~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in thousands of New Taiwan dollars)

(UNAUDITED)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from disposal of property, plant and equipment Payment for capitalized interests Acquisition of property, plant and equipment Acquisition of investment properties Acquisition of intangible assets Decrease in refundable deposits Net cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Increase in short-term loans Decrease in short-term loans Increase in long-term loans Decrease in long-term loans Increase (decrease) in guarantee deposits received Increase in other payables to related parties Decrease in other non-current liabilities Net cash flows from financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	Notes 6(7)(23) ( 6(7)(27) ( 6(8) ( ( ( ( ( 7 ( ( 6(1) 6(1)		Three-month periods ended March 31 2018 2017 $ 36,758 $ 16,359 19,703 ) ( 3,846 ) 3,599,896 ) ( 3,647,138 ) 400 ) - 3,379 ) ( 1,896 ) 73,513 11,974 3,513,107 ) ( 3,624,547 ) 7,262,206 12,146,052 6,795,844 ) ( 8,502,615 ) 982,494 2,416,490 650,412 ) ( 1,133,275 ) 2,689 ( 17,563 ) - 47,556 79 ) ( 2,432 ) 801,054 4,954,213 219,626 ( 2,128,881 ) 1,365,268 ) 1,685,151 30,918,463 28,893,546 $ 29,553,195 $ 30,578,697

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

~9~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2018 AND 2017

(Expressed in thousands of New Taiwan Dollars, except as otherwise indicated)

(UNAUDITED)

1. HISTORY AND ORGANIZATION

Cheng Shin Rubber Ind. Co., Ltd. (the “Company”) was incorporated as a company limited by shares under the provisions of the Company Act of the Republic of China (R.O.C.). The Company and its subsidiaries (collectively referred herein as the “Group”) are primarily engaged in: (a) Processing, manufacturing and trading of bicycle tires, electrical vehicle tires, reclaimed rubber, various rubbers and resin and other rubber products; and (b) Manufacturing and trading of various rubber products and relevant rubber machinery. The Company has been listed on the Taiwan Stock Exchange starting December 1987.

2. THE DATE OF AUTHORIZATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORIZATION

These consolidated financial statements were authorized for issuance by the Board of Directors on May 10, 2018.

3. APPLICATION OF NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS

(1) Effect of the adoption of new issuances of or amendments to International Financial Reporting Standards (“IFRS”) as endorsed by the Financial Supervisory Commission (“FSC”)

New standards, interpretations and amendments endorsed by the FSC effective from 2018 are as follows:

follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Classification and measurement of share-based payment transactions (amendments to IFRS 2) Applying IFRS 9 ‘Financial instruments’ with IFRS 4‘Insurance contracts’ (amendments to IFRS 4) IFRS 9, ‘Financial instruments’ IFRS 15, ‘Revenue from contracts with customers’ Clarifications to IFRS 15, ‘Revenue from contracts with customers’ (amendments to IFRS 15) Disclosure initiative (amendments to IAS 7) Recognition of deferred tax assets for unrealised losses (amendments to IAS 12) Transfers of investment property (amendments to IAS 40) IFRIC 22, ‘Foreign currency transactions and advance consideration’	January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2018 January 1, 2017 January 1, 2017 January 1, 2018 January 1, 2018

~10~

New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Annual improvements to IFRSs 2014-2016 cycle- Amendments to IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ Annual improvements to IFRSs 2014-2016 cycle- Amendments to IFRS 12, ‘Disclosure of interests in other entities’ Annual improvements to IFRSs 2014-2016 cycle- Amendments to IAS 28, ‘Investments in associates and joint ventures’	January 1, 2018 January 1, 2017 January 1, 2018

Except for the following, the above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. The quantitative impact is detailed as follows:

A.IFRS 9, Financial instruments

• (a) Classification of debt instruments is driven by the entity’s business model and the contractual cash flow characteristics of the financial assets, which would be classified as financial asset at fair value through profit or loss, financial asset measured at fair value through other comprehensive income or financial asset measured at amortised cost. Equity instruments would be classified as financial asset at fair value through profit or loss, unless an entity makes an irrevocable election at inception to present in other comprehensive income subsequent changes in the fair value of an investment in an equity instrument that is not held for trading.

• (b) The impairment losses of debt instruments are assessed using an ‘expected credit loss’ approach. An entity assesses at each balance sheet date whether there has been a significant increase in credit risk on that instrument since initial recognition to recognise 12-month expected credit losses or lifetime expected credit losses (interest revenue would be calculated on the gross carrying amount of the asset before impairment losses occurred); or if the instrument that has objective evidence of impairment, interest revenue after the impairment would be calculated on the book value of net carrying amount (i.e. net of credit allowance). The Group shall always measure the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component.

• B. IFRS 15, ‘Revenue from contracts with customers’

• IFRS 15, ‘Revenue from contracts with customers’ replaces IAS 11 ‘Construction contracts’, IAS 18 ‘Revenue’ and relevant interpretations. According to IFRS 15, revenue is recognised when a customer obtains control of promised goods or services. A customer obtains control of goods or services when a customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.

• The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps: Step 1: Identify contracts with customer.

Step 2: Identify separate performance obligations in the contract(s).

~11~

Step 3: Determine the transaction price.

Step 4: Allocate the transaction price.

Step 5: Recognise revenue when the performance obligation is satisfied.

Further, IFRS 15 includes a set of comprehensive disclosure requirements that requires an entity

to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

• C. Amendments to IAS 7, ‘Disclosure initiative’

This amendment requires that an entity shall provide more disclosures related to changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The Group expects to provide additional disclosure to explain the changes in liabilities arising from financing activities.

When adopting the new standards endorsed by the FSC effective from 2018, the Group will apply the new rules under IFRS 9 retrospectively from January 1, 2018, with the practical expedients permitted under the statement. Further, the Group expects to adopt IFRS 15 using the modified retrospective approach. The significant effects of applying the new standards as of January 1, 2018 are summarized below:

• A. In accordance with IFRS 9, the Group expects to reclassify available-for-sale financial assets, in the amount of $85,705, respectively, and make an irrevocable election at initial recognition on equity instruments not held for dealing or trading purpose, by increasing financial assets at fair value through other comprehensive income in the amount of $85,705.

• B. In accordance with IFRS 9, the Group expects to reclassify available-for-sale financial assets in the amount of $41,670, by increasing financial assets at fair value through profit or loss and increasing retained earnings and decreasing other equity interest in the amounts of $41,670, $22,740 and $22,740, respectively.

• C. Please refer to Note 12(4) for disclosure in relation to the first application of IFRS 9.

• D. Presentation of contract assets and contract liabilities

• In line with IFRS 15 requirements, the Group changed the presentation of certain accounts in the balance sheet as follows:

• (a) Under IFRS 15, liabilities in relation to expected volume discounts and refunds to customers are recognised as contract liabilities (shown as other current liabilities), but were previously presented as other payables in the balance sheet. As of January 1, 2018, the balance amounted to $84,699.

• (b) Under IFRS 15, liabilities in relation to the customer loyalty programme are recognised as contract liabilities, but were previously presented as deferred revenue (shown as other current liabilities) in the balance sheet. As of January 1, 2018, the balance would amount to $51,432.

• (c) Under IFRS 15, the recognition of contract liabilities were previously presented as advance sales receipts (shown as ‘other current liabilities’) in the balance sheet. The balances would amount to $811,514 on January 1, 2018.

• E. Please refer to Note 12(5) for disclosures in relation to the first application of IFRS 15.

~12~

(2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by

the Group

None.

• (3) IFRSs issued by IASB but not yet endorsed by the FSC

New standards, interpretations and amendments issued by IASB but not yet included in the IFRSs endorsed by the FSC are as follows:

endorsed by the FSC are as follows:
New Standards,Interpretations and Amendments	Effective date by International Accounting Standards Board
Prepayment features with negative compensation (amendments to IFRS 9) Sale or contribution of assets between an investor and its associate or joint venture (amendments to IFRS 10 and IAS 28) IFRS 16, ‘Leases’ IFRS 17, ‘Insurance contracts’ Plan amendment, curtailment or settlement (amendments to IAS 19) Long-term interests in associates and joint ventures (amendments to IAS 28) IFRIC 23, ‘Uncertainty over income tax treatments’ Improvement to IFRSs 2015-2017	January 1, 2019 To be determined by International Accounting Standards Board January 1, 2019 January 1, 2021 January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Except for the compliance statement, basis of preparation and basis of consolidation described below, the other significant accounting policies of the Group are in agreement with Note 4 in the consolidated financial statements for the year ended December 31, 2017. These policies have been consistently applied to all the periods presented, unless otherwise stated.

(1) Compliance statement

• A. The consolidated financial statements of the Group have been prepared in accordance with the “Regulations Governing the Preparation of Financial Reports by Securities Issuers” and the International Accounting Standard 34, “Interim financial reporting” as endorsed by the FSC.

• B. The consolidated financial statements should be read together with the consolidated financial statements for the year ended December 31, 2017.

• (2) Basis of preparation

• A. Except for the following items, the consolidated financial statements have been prepared under the historical cost convention:

  • (a) Financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

  • (b) Financial assets at fair value through other comprehensive income/Available-for-sale financial assets measured at fair value.

  • (c) Defined benefit liabilities recognized based on the net amount of pension fund assets less

~13~

present value of defined benefit obligation.

• B. The preparation of financial statements in conformity with International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the FSC (collectively referred herein as the “IFRSs”) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

• C. In adopting IFRS 9 and IFRS 15 effective January 1, 2018, the Group has elected to apply modified retrospective approach whereby the cumulative impact of the adoption was recognised as retained earnings or other equity as of January 1, 2018 and the financial statements for the year ended December 31, 2017 and for the first quarter of 2017 was not restated. The financial statements for the year ended December 31, 2017 and for the first quarter of 2017 were prepared in compliance with International Accounting Standard 39 (‘IAS 39’), International Accounting Standard 11 (‘IAS 11’), International Accounting Standard 18 (‘IAS 18’) and related financial reporting interpretations. Please refer to Notes 12(4) and (5) for details of significant accounting policies.

• (3) Basis of consolidation

• A. Basis for preparation of consolidated financial statements: Basis for preparation of these consolidated financial statements is the same as that for the preparation of the consolidated financial statements as of and for the year ended December 31, 2017.

• B. Subsidiaries included in the consolidated financial statements:

Name of investor	Name of subsidiary	Main business activities		March 31, 2018 December 31,2017 March 31, 2017 100 100 100 100 100 100 100 100 100 100 100 100 - - 97 Ownership (%)	March 31, 2018 December 31,2017 March 31, 2017 100 100 100 100 100 100 100 100 100 100 100 100 - - 97 Ownership (%)	Description Note 7 Notes 5 , 8
				March 31, 2018	December 31,2017
CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD.	MAXXIS International Co., Ltd. CST Trading Ltd. MAXXIS Trading Ltd. CHENG SHIN RUBBER USA, INC. CIAO SHIN CO., LTD.	Holding company Holding company Holding company Import and export of tires Investment in various business		100 100 100 100 -	100 100 100 100 -

~14~

Name of investor	Name of subsidiary	Main business activities		March 31, 2018 December 31,2017 March 31, 2017 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 - 100 100 100 60 60 60 100 100 100 100 100 100 100 100 100 Ownership (%)	March 31, 2018 December 31,2017 March 31, 2017 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 - 100 100 100 60 60 60 100 100 100 100 100 100 100 100 100 Ownership (%)	Description Note 7 Note 7 Notes 7 Note 7 Note 8 Notes 6 , 9 Note 3
				March 31, 2018	December 31,2017
CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD. CHENG SHIN RUBBER IND. CO., LTD. MAXXIS International Co., Ltd. MAXXIS International Co., Ltd. MAXXIS International Co., Ltd. MAXXIS International (HK) Ltd. MAXXIS International (HK) Ltd.	CHENG SHIN RUBBER CANADA, INC. MAXXIS Tech Center Europe B.V. PT MAXXIS International Indonesia Maxxis Rubber India Private Limited MAXXIS (Taiwan) Trading CO., LTD. PT MAXXIS Trading INDONESIA TIANJIN TAFENG RUBBER IND CO., LTD. CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. MAXXIS International (HK) Ltd. CHENG SHIN RUBBER (XIAMEN) IND., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD.	Import and export of tires Technical center Production and sales of various types of tires Production and sales of various types of tires Wholesale and retail of tires Large-amount trading of vehicles parts and accessories Production and sales of various types of tires Production and sales of various types of tires Holding company Production and sales of various types of tires Production and sales of various types of tires		100 100 100 100 100 100 100 60 100 100 100	100 100 100 100 100 100 100 60 100 100 100

~15~

Name of investor	Name of subsidiary	Main business activities		March 31, 2018 December 31,2017 March 31, 2017 100 100 100 25 25 25 100 100 100 100 100 100 50 50 50 30 30 30 70 70 70 100 100 100 Ownership (%)	March 31, 2018 December 31,2017 March 31, 2017 100 100 100 25 25 25 100 100 100 100 100 100 50 50 50 30 30 30 70 70 70 100 100 100 Ownership (%)	Description Note 2 Note 1 Note 1
				March 31, 2018	December 31,2017
MAXXIS International (HK) Ltd. MAXXIS International (HK) Ltd. CST Trading Ltd. Cheng Shin International (HK) Ltd. Cheng Shin International (HK) Ltd. Cheng Shin International (HK) Ltd. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD.	CHENG SHIN (XIAMEN) INTL AUTOMOBILE CULTURE CENTER CO., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. Cheng Shin International (HK) Ltd. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. CHENG SHIN TOYO (KUNSHAN) MACHINERY CO., LTD. CHENG SHIN TIRE & RUBBER (CHONGQING) CO., LTD. CHENG SHIN TIRE & RUBBER (CHONGQING) CO., LTD. KUNSHAN MAXXIS TIRE CO., LTD.	Research, development, testing and exhibition of tires and automobile accessory products and related products, and management of racing tracks Production and sales of various types of tires Holding company Production and sales of various types of tires Production, sales and maintenance of models Production and sales of various types of tires Production and sales of various types of tires Retail of accessories for rubber tires		100 25 100 100 50 30 70 100	100 25 100 100 50 30 70 100

~16~

Name of investor	Name of subsidiary	Main business activities		March 31, 2018 December 31,2017 March 31, 2017 100 100 100 95 95 95 40 40 40 49 49 49 75 75 75 - - 50 100 100 100 100 100 100 100 100 100 Ownership (%)	March 31, 2018 December 31,2017 March 31, 2017 100 100 100 95 95 95 40 40 40 49 49 49 75 75 75 - - 50 100 100 100 100 100 100 100 100 100 Ownership (%)	Description Note 3 Note 2 Note 4 Note 7
				March 31, 2018	December 31,2017
MAXXIS Trading Ltd. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. MAXXIS Holding (BVI) Co., Ltd. MAXXIS Holding (BVI) Co., Ltd.	MAXXIS Holding (BVI) Co., Ltd. CHIN CHOU CHENG SHIN ENTERPRISE CO., LTD. CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. CHENG SHIN LOGISTIC (XIAMEN) CO., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. CHENG SHIN (ZHANGZHOU) MECHANICAL & ELECTRICAL ENGINEERING CO., LTD. XIAMEN ESTATE CO., LTD. MAXXIS International (Thailand) Co., Ltd. Cheng Shin Rubber (Vietnam) IND Co., Ltd.	Holding company Retail of accessories for rubber tires Production and sales of various types of tires International container transportation business Production and sales of various types of tires Manufacturing and sales of equipment Construction and trading of employees’ housing Production and sales of various types of tires Production and sales of various types of tires		100 95 40 49 75 - 100 100 100	100 95 40 49 75 - 100 100 100

~17~

  - Note 1: Cheng Shin International (HK) Ltd. and Cheng Shin Tire & Rubber (China) Co., Ltd. collectively hold 100% equity interest in Cheng Shin Tire & Rubber (Chongqing) Co., Ltd.

  - Note 2: Maxxis International (HK) Ltd. and Cheng Shin Rubber (Xiamen) Ind., Ltd. collectively hold 100% equity interest in Cheng Shin Rubber (Zhangzhou) Ind. Co., Ltd.

  - Note 3: Maxxis International Co., Ltd. and Cheng Shin Rubber (Xiamen) Ind., Ltd. collectively hold 100% equity interest in Cheng Shin Petrel Tire (Xiamen) Co., Ltd.

  - Note 4: On January 1, 2016, the shareholders during their meeting resolved for the liquidation of the Group’s subsidiary, CHENG SHIN (ZHANGZHOU) MECHANICAL & ELECTRICAL ENGINEERING CO., LTD. As of September, 2017, the liquidation was completed.

  - Note 5: On December 21, 2016, the shareholders during their meeting resolved the liquidation of the Group’s subsidiary, CIAO SHIN CO., LTD. As of September, 2017, the liquidation was completed.

  - Note 6: In May 2017, the Group established subsidiary, PT. MAXXIS TRADING INDONESIA, in Indonesia, remitted out investment in the amount of USD 1,000 in October 2017, and acquired 100% equity interest. The subsidiary was included in the consolidated entities in 2017.

  - Note 7: The financial statements of the entity as of March 31, 2018 and 2017, were not reviewed by the independent accountants as the entity did not meet the definition of significant subsidiary.

  - Note 8: The financial statements of the entity as of March 31, 2017, were not reviewed by the independent accountants as the entity did not meet the definition of significant subsidiary.

  - Note 9: The financial statements of the entity as of March 31, 2018, were not reviewed by the independent accountants as the entity did not meet the definition of significant subsidiary.

• C. Subsidiaries not included in the consolidated financial statements: None.

• D. Adjustments for subsidiaries with different balance sheet dates:

  • None.

• E. Significant restrictions: None.

• F. Subsidiaries that have non-controlling interests that are material to the Group: None.

• (4) Financial assets at fair value through profit or loss

• A. Financial assets at fair value through profit or loss are financial assets that are not measured at amortised cost or fair value through other comprehensive income.

• B. On a regular way purchase or sale basis, financial assets at fair value through profit or loss are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value and recognises the transaction costs in profit or loss. The Group subsequently measures the financial assets at fair value, and recognises the gain or loss in profit or loss.

~18~

• D. The Group recognises the dividend income when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

• (5) Financial assets at fair value through other comprehensive income

• A. Financial assets at fair value through other comprehensive income comprise equity securities which are not held for trading, and for which the Group has made an irrevocable election at initial recognition to recognise changes in fair value in other comprehensive income and debt instruments which meet all of the following criteria:

  • (a) The objective of the Group’s business model is achieved both by collecting contractual cash flows and selling financial assets; and

  • (b) The assets’ contractual cash flows represent solely payments of principal and interest.

• B. On a regular way purchase or sale basis, financial assets at fair value through other comprehensive income are recognised and derecognised using trade date accounting.

• C. At initial recognition, the Group measures the financial assets at fair value plus transaction costs. The Group subsequently measures the financial assets at fair value:

  • (a) The changes in fair value of equity investments that were recognised in other comprehensive income are reclassified to retained earnings and are not reclassified to profit or loss following the derecognition of the investment. Dividends are recognised as revenue when the right to receive payment is established, future economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

  • (b) Except for the recognition of impairment loss, interest income and gain or loss on foreign exchange which are recognised in profit or loss, the changes in fair value of debt instruments are taken through other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss.

• (6) Accounts and notes receivable

• A. Accounts and notes receivable entitle the Group a legal right to receive consideration in exchange for transferred goods or rendered services.

• B. The short-term accounts and notes receivable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (7) Impairment of financial assets

The Group measured the loss allowance at an amount equal to lifetime expected credit losses for trade receivables that do not contain a significant financing component on every balance sheet dates.

• (8) Borrowings

• Borrowings comprise long-term and short-term bank borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest method.

• (9) Notes and accounts payable

• A. Accounts payable are liabilities for purchases of raw materials, goods or services and notes payable are those resulting from operating and non-operating activities.

~19~

• B. The short-term notes and accounts payable without bearing interest are subsequently measured at initial invoice amount as the effect of discounting is immaterial.

• (10) Financial liabilities at fair value through profit or loss

• A. Financial liabilities are classified in this category of held for trading if acquired principally for the purpose of repurchasing in the short-term. Derivatives are also categorised as financial liabilities held for trading unless they are designated as hedges.

• B. At initial recognition, the Group measures the financial liabilities at fair value. All related transaction costs are recognised in profit or loss. The Group subsequently measures these financial liabilities at fair value with any gain or loss recognised in profit or loss.

• (11) Bonds payable

Ordinary corporate bonds issued by the Group are initially recognised at fair value less transaction costs. Any difference between the proceeds (net of transaction costs) and the redemption value is presented as an addition to or deduction from bonds payable, which is amortised to profit or loss over the period of bond circulation using the effective interest method as an adjustment to ‘finance costs’.

• (12) Non-hedging derivatives

Non-hedging derivatives are initially recognised at fair value on the date a derivative contract is entered into and recorded as financial assets or financial liabilities at fair value through profit or loss. They are subsequently remeasured at fair value and the gains or losses are recognised in profit or loss.

• (13) Derecognition of financial assets

The Group derecognises a financial asset when one of the following conditions is met:

• A. The contractual rights to receive the cash flows from the financial asset expire.

• B. The contractual rights to receive cash flows of the financial asset have been transferred and the Group has transferred substantially all risks and rewards of ownership of the financial asset.

• C. The contractual rights to receive cash flows of the financial asset have been transferred; however, the Group has not retained control of the financial asset.

• (14) Employee benefits

• Pension cost for the interim period is calculated on a year-to-date basis by using the pension cost rate derived from the actuarial valuation at the end of the prior financial year, adjusted for significant market fluctuations since that time and for significant curtailments, settlements, or other significant one-off events. Also, the related information is disclosed accordingly.

• (15) Income taxes

• A. The interim period income tax expense is recognized based on the estimated average annual effective income tax rate expected for the full financial year applied to the pretax income of the interim period, and the related information is disclosed accordingly.

• B. If a change in tax rate is enacted or substantively enacted in an interim period, the Group recognises the effect of the change immediately in the interim period in which the change occurs. The effect of the change on items recognised outside profit or loss is recognised in other comprehensive income or equity while the effect of the change on items recognised in profit or loss is recognised in profit or loss.

~20~

(16) Revenue recognition

• A. Sales of goods

• (a) The Group manufactures and sells various tire and rubber products. Sales are recognised when control of the products has transferred, being when the products are delivered to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer’s acceptance of the products. Delivery occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, or the Group has objective evidence that all criteria for acceptance have been satisfied.

• (b) Sales revenue that the Group sells various tire and rubber products was recognised based on the contract price net of sales discount and price break. Accumulated experience is used to estimate and provide for the sales discounts and allowances and price break, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. The estimation is subject to an assessment at each reporting date. A refund liability is recognised for expected sales discounts and allowances and price break payable to customers in relation to sales made until the end of the reporting period. No element of financing is deemed present as the sales are made with a credit term of 30 ~90 days, which is consistent with market practice.

• (c) A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

• B. Financing components

• The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF ASSUMPTION UNCERTAINTY

• There have been no significant changes as of March 31, 2018. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2017.

~21~

6. DETAILS OF SIGNIFICANT ACCOUNTS

(1) Cash and cash equivalents

Cash and cash equivalents
Cash on hand and petty cash (revolving funds) Checking deposit Demand deposits Time deposits Bonds sold under repurchase agreement Interest rate range Time deposits Bonds sold under repurchase agreement		March 31,2018 December 31,2017 $ 3,222 3,104 $ 1,320,189 1,776,577 17,216,963 17,646,021 11,012,821 11,492,761 - - $29,553,195 30,918,463 $ 1.60%~4.58% 0.01%~4.58% $- - $	March 31,2017
			3,197 $ 2,031,499 18,017,347 10,279,212 247,442
			30,578,697 $
			0.60%~4.28%
			1.15%~1.25%

• A. The Group transacts with a variety of financial institutions all with high credit quality to disperse credit risk, so it expects that the probability of counterparty default is remote.

• B. The Group has reclassified pledged time deposits to ‘other current assets’ and ‘other non-current assets’. Please refer to Note 8 for details.

(2) Financial assets and liabilities at fair value through profit or loss

Items March 31, 2018

Current items:

Financial assets mandatorily measured at fair value through profit or loss Derivative instruments $ 315

• A. Amounts recognised in profit or loss in relation to financial assets at fair value through profit or loss are listed below:

Financial assets mandatorily measured at fair value through profit or loss Equity instruments Derivative instruments Total	2018
	27 $ 723
	750 $

• B. The Group entered into contracts relating to derivative financial assets which were not accounted for under hedge accounting. The information is listed below:

~22~

March 31, 2018

Derivative instruments Current items: Forward foreign exchange contracts	Contract amount (Notionalprincipal) USD$3,000 Thousand	Contractperiod
		2018.3.16~2018.4.26

The Group entered into forward foreign exchange contracts to sell (buy) USD to hedge exchange rate risk of import (export) proceeds. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

• C. Information relating to credit risk is provided in Note 12(2).

• D. The information on the effects of initial application of IFRS 9, ‘Financial instruments’ and the adoption of IAS 39 for the three-month period ended March 31, 2017 is provided in Note 12(4).

• (3) Financial assets at fair value through other comprehensive income

Items Current items: Equity instruments Listed stocks Valuation adjustment Total Non-current items: Equity instruments Unlisted stocks	March 31,2018
	8,665 12,770
	21,435 $
	58,187 $

• A. The Group has elected to classify equity instruments investments that are considered to be steady dividend income as financial assets at fair value through other comprehensive income. The fair value of such investments amounted to $79,622 thousand as at March 31, 2018.

• B. Amounts recognised in other comprehensive income in relation to the financial assets at fair value through other comprehensive income are listed below:

Year ended December 31, 2018 Equity instruments at fair value through other comprehensive income Fair value change recognised in other comprehensive income ($ 6,083)

• C. Information relating to credit risk is provided in Note 12(2).

• D. The information on the effects of initial application of IFRS 9, ‘Financial instruments’ and the adoption of IAS 39 for the three-month period ended March 31, 2017 is provided in Note 12(4).

~23~

(4) Notes and accounts receivables

Notes receivable Less: Loss allowance Accounts receivable Less: Loss allowance	March 31,2018 2,708,837 $ 9,277) (	December 31,2017 2,307,762 $ 9,277) (	March 31,2017 1,226,475 $ 9,277) (
	2,699,560 $ 11,397,790 $ 16,666) ( 11,381,124 $	2,298,485 $ 9,870,136 $ 17,551) ( 9,852,585 $	1,217,198 $ 10,825,026 $ 12,961) ( 10,812,065 $

A. The Group’s notes receivable are not past due nor impaired.

B. The ageing analysis of accounts receivable that were past due but not impaired is as follows:

Without past due Up to 30 days 31 -90 days 91 -180 days Over 181 days	March 31,2018 9,293,647 $ 1,225,713 462,410 347,579 68,441 11,397,790 $	December 31,2017 8,050,196 $ 1,297,167 377,313 102,816 42,644 9,870,136 $	March 31,2017
			9,540,785 $ 803,433 331,541 134,335 14,932
			10,825,026 $

The above ageing analysis was based on past due date.

C. Information relating to credit risk is provided in Note 12(2).

(5) Inventories

Inventories
Raw material Work in progress Finished goods Land in progress Construction in progress Inventory in transit	March 31,2018
	Allowance for valuation loss 6,451,978 $ - $ 3,358,903 - 6,326,272 30,668) ( 835,445 - 1,758,550 - 675,114 - 19,406,262 $ 30,668) ($ Cost	Book value
		6,451,978 $ 3,358,903 6,295,604 835,445 1,758,550 675,114
		19,375,594 $

~24~

Raw materials Work in process Finished goods Land in progress Construction in progress Inventory in transit Raw materials Work in process Finished goods Land in progress Construction in progress Inventory in transit		December 31,2017
	Cost 6,434,449 $ 2,852,070 6,452,472 820,703 1,388,861 1,269,340 19,217,895 $	Allowance for valuation loss - $ - 33,555) ( - - - 33,555) ($ March 31,2017	Book value
			6,434,449 $ 2,852,070 6,418,917 820,703 1,388,861 1,269,340
			19,184,340 $
	Cost 5,581,078 $ 2,314,049 5,232,796 792,298 793,636 881,327 15,595,184 $		Book value
			5,581,078 $ 2,314,049 5,196,377 792,298 793,636 881,327
			15,558,765 $

The cost of inventories recognized as expense for the period:

Cost of goods sold Loss on inventory retirement Loss gain on physical inventory Revenue from sale of scraps Gain on reversal of decline in market value	Three-month period ended March 31,2018	Three-month period ended March 31,2017
	21,161,997 $ 1,463 723 38,278) ( 2,887) ( 21,123,018 $	21,331,029 $ 2 753) ( 38,433) ( 1,173) ( 21,290,672 $

For the three months ended March 31, 2018 and 2017, the Group reversed a previous inventory writedown which was accounted for as reduction of cost of goods sold due to sale of scrap or inventories which were previously provided with allowance.

• (6) Investments accounted for using equity method

• A. The carrying amount of the Group’s interests in all individually immaterial joint ventures and the Group’s share of the operating results are summarized below:

As of March 31, 2018, December 31, 2017 and March 31, 2017 the carrying amount of the Group’s individually immaterial joint ventures amounted to $167,771, $171,020 and $179,025, respectively.

~25~

Share of profit of associates and joint ventures accounted for using equity method Other comprehensive income (loss) - net of tax Total comprehensive income (loss)	Three-month period ended March 31,2018
	3,388) ($ 111 3,277) ($

• B. The recognition of gain (loss) on investments accounted for using equity method was based on financial statements prepared by associates and were not reviewed by independent accountants.

~26~

(7) Property, plant and equipment, net

Cost Land Buildings and structures Machinery Testing equipment Transportation equipment Office equipment Other facilities Unfinished construction and equipment under acceptance Accumulated depreciation Buildings Machinery Testing equipment Transportation equipment Office equipment Other facilities Accumulated impairment Machinery Other facilities			Three-monthperiod ended March 31,2018	Three-monthperiod ended March 31,2018
				Exchange rate differences End ofperiod 8,535 $ 4,569,057 $ 511,053 46,632,309 1,543,364 98,541,806 39,872 3,539,030 17,491 1,336,903 5,931 909,561 439,553 29,378,704 223,388) ( 11,691,864 2,342,411 $ 196,599,234 $ 220,975) ($ 16,120,797) ($ 866,050) ( 50,304,975) ( 37,520) ( 2,483,164) ( 13,041) ( 971,842) ( 4,036) ( 520,930) ( 377,270) ( 20,411,366) ( 1,518,892) ($ 90,813,074) ($ - $ 12,651) ($ - 1,926) ( - $ 14,577) ($ 105,771,583 $	End ofperiod
					4,569,057 $ 46,632,309 98,541,806 3,539,030 1,336,903 909,561 29,378,704 11,691,864
					196,599,234 $

~27~

Cost Land Buildings and structures Machinery Testing equipment Transportation equipment Office equipment Other facilities Unfinished construction and equipment under acceptance Accumulated depreciation Buildings Machinery Testing equipment Transportation equipment Office equipment Other facilities Accumulated impairment Machinery Other facilities				Three-monthperiod ended March 31,2017	Three-monthperiod ended March 31,2017	Three-monthperiod ended March 31,2017	Three-monthperiod ended March 31,2017		End ofperiod
		Beginningofperiod		Additions	Disposals	Transfer	Exchange rate differences
	4,563,758 $ 43,974,977 92,000,594 3,376,518 1,230,488 658,072 24,829,823 9,590,929 180,225,159 $ 13,721,288) ($ 42,652,343) ( 2,331,843) ( 846,860) ( 402,920) ( 17,099,044) ( 77,054,298) ($ 12,651) ($ 1,926) ( 14,577) ($ 103,156,284 $		- $ 19,551 178,015 4,523 23,540 6,492 458,151 2,997,573 3,687,845 $ 489,224) ($ 1,481,704) ( 75,529) ( 29,018) ( 20,152) ( 797,053) ( 2,892,680) ($ - $ - - $		- $ - 30,954) ( 5,505) ( 5,909) ( 864) ( 57,298) ( - 100,530) ($ - $ 24,241 4,875 4,724 742 44,545 79,127 $ - $ - - $	- $ 26,221) ( 1,651,377 80,590 4,578 33,636 302,591 2,156,753) ( 110,202) ($ - $ - - - - - - $ - $ - - $	17,963) ($ 1,668,771) ( 2,748,511) ( 104,189) ( 48,908) ( 27,165) ( 928,154) ( 326,314) ( 5,869,975) ($ 538,562 $ 1,439,555 72,259 34,354 16,984 655,369 2,757,083 $ - $ - - $	4,545,795 $ 42,299,536 91,050,521 3,351,937 1,203,789 670,171 24,605,113 10,105,435 177,832,297 $ 13,671,950) ($ 42,670,251) ( 2,330,238) ( 836,800) ( 405,346) ( 17,196,183) ( 77,110,768) ($ 12,651) ($ 1,926) ( 14,577) ($ 100,706,952 $

~28~

Amount of borrowing costs capitalized as part of property, plant and equipment and the range of the interest rates for such capitalization are as follows:

Amount capitalized Range of the interest rates for capitalization		Three-month period ended March 31,2018		Three-month period ended March 31,2017
		19,703 $		43,328 $ 0.35%~4.60%
		0.40%~4.75%

(8) Investment property, net

Three-month period ended March 31, 2018

Cost Land Buildings and structures Accumulated depreciation Buildings and structures Accumulated impairment Land Cost Land Buildings and structures Accumulated depreciation Buildings and structures Accumulated impairment Land	Opening net book amount as at January1 Additions $ 336,339 - $ 478,710 400 815,049 $ 400 $ 151,355) ($ 6,137) ($ 51,038) ($ - $ $612,656 Three-month		Transfer		Exhchange rate differences		Closing net book amount as at March 31
		- $ 908 908 $ - $ - $ period ended
	Opening net book amount as at January1 Additions $ 336,339 - $ 27,766 - 364,105 $ - $ 21,282) ($ 153) ($ 51,038) ($ - $ $291,785		Transfer - $ - - $ - $ - $		Exchange rate differences		Closing net book amount as at March 31
					- $ - - $ - $ - $	336,339 $ 27,766 364,105 $ 21,435) ($ 51,038) ($ 291,632 $

A. Rental income from investment property is shown below:

~29~

Three-month period Three-month period ended March 31, 2018 ended March 31, 2017 Rental income from investment property $ 7,671 $ 2,181

• B. The fair value of the investment property held by the Group as at March 31, 2018, December 31, 2017 and March 31, 2017 was $927,843, $920,819 and $529,829, respectively, which were valued by independent appraisers. Valuations were made using the comparison method which is categorized within Level 3 in the fair value hierarchy.

• C. The Company acquired the land in Shangmei Section, Dacun Township, Changhua County which is farming and pasturable land. The land will be registered under the Company after the classification of the land is changed. Currently, the land is under the name of related party, Mr. /Ms. Chiu. The Company plans to use the land for operational expansion. The Company holds the original ownership certificate of such land and signed a land trust agreement, which requires the nominal holder not to transfer the ownership of the land to others.

(9) Other non-current assets

Land-use right Intangible assets Others	March 31,2018 5,187,670 $ 120,036 810,217 6,117,923 $	December 31,2017 5,198,693 $ 110,233 185,200 5,494,126 $	March 31,2017
			5,038,160 $ 10,882 209,228
			5,258,270 $

The Group signed a contract of land-use right with a term of 34 to 99 years. All rentals had been paid on the contract date. The Group recognized rental expenses of $21,637 and $21,368 for the threemonth periods ended March 31, 2018 and 2017, respectively.

(10) Short-term borrowings

Short-term borrowings
Type of borrowings Bank borrowings Bank unsecured borrowings Type of borrowings Bank borrowings Bank unsecured borrowings Type of borrowings Bank borrowings Bank unsecured borrowings	March 31,2018 19,197,377 $ December 31,2017 18,508,493 $ March 31,2017 15,685,137 $	Interest rate range 0.54%～4.70% Interest rate range 0.70%~4.70% Interest rate range 0.59%~8.10%	Collateral None Collateral
			None Collateral
			None

The abovementioned credit loan includes the guarantee of endorsement provided by the Group.

~30~

(11) Other payables

(11)	Other payables
(12) (13)	Other current liabilities Bonds payable March 31,2018 December 31,2017 Wages and salaries payable 1,031,345 $ 1,329,008 $ Payable on machinery and equipment 1,656,218 2,213,781 Employee bonus payable 190,528 482,544 Compensation due to directors and supervisors 157,204 130,202 Other accrued expenses 1,876,963 1,855,874 Others 1,150,271 1,010,624 6,062,529 $ 7,022,033 $ March 31,2018 December 31,2017 Long-term liabilities due within one year 6,055,024 $ 4,902,300 $ Refund liabilities 2,795 811,749 Advance receipts 154,839 - Others 72,602 222,551 6,285,260 $ 5,936,600 $ March 31,2018 December 31,2017 Bonds payable -issued on 2013 1,900,000 $ 1,900,000 $ Bonds payable -issued on 2014 4,800,000 4,800,000 Bonds payable -issued on 2016 5,000,000 5,000,000 Bonds payable -issued on 2017 7,000,000 7,000,000 18,700,000 18,700,000 Less: Current portion 1,900,000) ( 1,900,000) ( 16,800,000 $ 16,800,000 $		March 31,2017
			999,844 $ 1,086,248 378,289 314,481 2,282,271 1,333,127
			6,394,260 $
			March 31,2017
		7,738,165 $ 1,065,921 - 344,468
		9,148,554 $

• A. In order to fulfil its capital and repay long-term and short-term loans, the Board of Directors of the Company has resolved to issue domestic unsecured bonds (“the bonds”). The bond issuance has been approved by the FSC on August 1, 2017 and completed on August 10, 2017. The bonds were fully issued and total issuance amount was $7 billion with a coupon rate of 1.03%. The issuance period of the bonds is 5 years, which is from August 10, 2017 to August 10, 2022. The terms are as follows:

• (a) Interest accrued/ paid:

~31~

The interest is accrued/ paid at a single rate annually from the issue date.

• (b) Redemption:

  • The principal of the corporate bond will be redeemed at 50% of the total amount after four and five years from the issue date.

• B. In order to fulfil its capital and repay long-term and short-term loans, the Board of Directors of the Company has resolved to issue domestic unsecured bonds (“the bonds”). The bond issuance has been approved by the FSC on September 13, 2016 and completed on September 26, 2016. The bonds were fully issued and total issuance amount was $5 billion with a coupon rate of 0.71%. The issuance period of the bonds is 5 years, which is from September 26, 2016 to September 26, 2021. The terms are as follows:

• (a) Interest accrued/ paid:

The interest is accrued/ paid at a single rate annually from the issue date.

• (b) Redemption:

  • The principal of the corporate bond will be redeemed at 50% of the total amount after four and five years from the issue date.

• C. In order to meet operating capital requirements, repay debts and improve the financial structure, the Board of Directors of the Company has resolved to issue domestic unsecured bonds (“the bonds”). The bond issuance has been approved by FSC on June 6, 2014 and completed on July 18, 2014. The bonds were fully issued and total issuance amount was $4.8 billion with a coupon rate of 1.40%. The issuance period of the bonds is 5 years, which is from July 18, 2014 to July 18, 2019. The terms are as follows:

• (a) Interest accrued/ paid:

The interest is accrued/ paid at a single rate annually from the issue date.

• (b) Redemption:

The corporate bonds will be redeemed in full amount at the maturity date.

• D. In order to fulfil its capital and repay long-term and short-term loans, the Board of Directors of the Company has resolved to issue domestic unsecured bonds (“the bonds”). The bond issuance has been approved by FSC on May 20, 2013 and completed on August 19, 2013. The bonds were fully issued and total issuance amount was $3.8 billion with a coupon rate of 1.55%. The issuance period of the bonds was 5 years, which is from August 19, 2013 to August 19, 2018. The terms are as follows:

• (a) Interest accrued/ paid:

The interest is accrued/ paid at a single rate annually from the issue date.

• (b) Redemption:

The principal of the corporate bond will be redeemed at 50% of the total amount after four and five years from the issue date.

~32~

- (14) Long term borrowings

Long-term borrowings
Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral
Installment-repayment borrowings Unsecured borrowings Other borrowings Unsecured borrowings Type of borrowings Less: Current portion	Principal is repayable in installment until March, 2025. Principal is repayable in November, 2018 at the maturity. Borrowing period and repayment term	0.97%～4.75% 4.75% Interest rate range	None None Collateral
Installment-repayment borrowings Unsecured borrowings Other borrowings Unsecured borrowings	Principal is repayable in installment until September, 2024. Principal is repayable in November, 2018 at the maturity.	0.97%～5.13% 4.75%	None None

Less: Current portion

~33~

Type of borrowings	Borrowing period and repayment term	Interest rate range	Collateral		March 31,2017
Installment-repayment borrowings Unsecured borrowings Other borrowings Unsecured borrowings Less: Current portion	Principal is repayable in installment until September, 2024. Principal is repayable in November, 2018 at the maturity.	0.84%~2.85% 4.75%	None None	30,021,351 $ 99,158 30,120,509 5,838,165) ( 24,282,344 $

• A. Above mentioned borrowings are capital financings through financial institutions and associates.

• B. According to the borrowing contract, the Group shall calculate the financial ratios based on the audited annual financial statements (non-consolidated and consolidated) and the reviewed semiannual consolidated financial statements. The financial ratios shall be maintained as follows: at least 100% for current ratio, no more than 200% for debt-to-equity ratio, at least 150% for debtservice coverage ratio. The financial ratios as assessed in the financial statements have met the abovementioned requirements at December 31, 2017 and 2016.

• C. The currencies and carrying amounts (in thousands of New Taiwan dollars) of the Group’s longterm borrowings denominated in foreign currencies are as follows:

Currency USD RMB THB EUR	March 31,2018 14,941,498 $ 6,065,727 1,876,800 -	December 31,2017 15,347,956 $ 5,651,239 1,835,200 -	March 31,2017
			13,897,787 $ 99,158 1,771,800 252,954

(15) Pensions

• A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Law, covering all regular employees’ service years including commissioned managers prior to the enforcement of the Labor Pension Act on July 1, 2005 and service years thereafter of employees who chose to continue to be subject to the pension mechanism under the Law. Under the defined benefit pension plan, two units are accrued for each year of service for the first 15 years and one unit for each additional year thereafter, subject to a maximum of 45 units. Pension benefits are based on the number of units accrued and the average monthly salaries and wages of the last 6 months prior to retirement. The Company contributes monthly an amount equal to 2% of the employees’ monthly salaries and wages to the retirement fund deposited with Bank of Taiwan, the trustee, under the name of the independent retirement fund committee. Also, the Company would assess the balance in the aforementioned labor

~34~

pension reserve account by December 31, every year. If the account balance is insufficient to pay the pension calculated by the aforementioned method to the employees expected to qualify for retirement in the following year, the Company will make contributions to cover the deficit by next March.

• (b) For the aforementioned pension plan, the Group recognised pension costs of $7,539 and $9,203 for the three-month periods ended March 31, 2018 and 2017, respectively.

• (c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2019 amounts to $35,277.

• B. (a) Effective July 1, 2005, the Company and its domestic subsidiaries have established a defined contribution pension plan (the “New Plan”) under the Labor Pension Act (the “Act”), covering all regular employees with R.O.C. nationality. Under the New Plan, the Company and its domestic subsidiaries contribute monthly an amount based on 6% of the employees’ monthly salaries and wages to the employees’ individual pension accounts at the Bureau of Labor Insurance. The benefits accrued are paid monthly or in lump sum upon termination of employment.

• (b) The pension costs under defined contribution pension plans of the Company and MAXXIS (Taiwan) Trading Co., Ltd for the three-month periods ended March 31, 2018 and 2017, were $35,677 and $30,741, respectively.

• C. (a) The Company’s mainland China subsidiaries have a defined contribution plan. Monthly contributions to an independent fund administered by the government in accordance with the pension regulations in the People’s Republic of China (PRC) are based on certain percentage of employees’ monthly salaries and wages. The contribution percentage for the three-month periods ended March 31, 2018 and 2017 ranged between 14% ~ 20%. Other than the monthly contributions, the Group has no further obligations. The pension costs under defined contribution pension plans of the Group for the three-month periods ended March 31, 2018 and 2017, were $96,598 and $101,089, respectively.

• (b) The subsidiaries, Cheng Shin Rubber USA, Inc., Cheng Shin Rubber CANADA, Inc. and Maxxis Tech center Europe B.V., have a defined contribution plan in accordance with the local regulations, and contributions to endowment insurance and pension reserve are based on employees’ salaries and wages. Other than the annual contribution, the subsidiaries have no further obligations. The pension costs under defined contribution pension plans of the Group for the three-month periods ended March 31, 2018 and 2017, were $3,238 and $3,338, respectively.

• (c) Starting from January 2011, the subsidiary, Maxxis International (Thailand) Co., Ltd., has provision for employees’ pensions based on the actuarial reports. As of March 31, 2018, December 31, 2017 and March 31, 2017, the net liabilities recognised in the balance sheets were $38,855, $36,482 and $31,038, respectively. The subsidiaries established a provident fund in accordance with the Provident Fund Act B.E. 2530 (1987) and has been approved by Ministry of Finance. The fund is contributed by Thailand subsidiaries and employees at 3%~7% of their salaries. Pension was paid from pension fund accounts based on the provident fund act when employees withdrew the fund. The pension costs under defined

~35~

contribution pension plans for the three-month periods ended March 31, 2018 and 2017, were $4,522 and $3,183, respectively.

• (d) According to Indonesian local government’s regulations “ 2015 PP Nomor 60 ” and “2015 PP Nomor 45”, since March 2016, the Group’s subsidiary, PT MAXXIS International Indonesia and PT. MAXXIS TRADING INDONESIA, contributes monthly an amount equal to 3.7% and 2% of the employees’ monthly salaries and wages to the retirement insurance; contributes monthly an amount equal to 2% and 1% to pension, respectively. For the threemonth periods ended March 31, 2018 and 2017, the pension expense accrued in accordance to the aforementioned regulation amounted to $1,009 and $170, respectively.

• (e) According to Indonesian local government’s regulation “Employees Provident Fund and Miscellaneous Provisions Act, 1952” , since June 2015, the Group’s subsidiary, Maxxis Rubber India Private Ltd., established an employees’ provident fund. Employer and employees each contributed 12% of salaries and wages to the provident fund. For the threemonth periods ended March 31, 2018 and 2017, the pension cost accrued in accordance to the aforementioned regulation amounted to $1,859 and $558, respectively.

(16) Share capital

• As of March 31, 2018, both of the Company’s authorized capital and paid-in capital was $32,414,155, and all proceeds from shares issued have been collected.

• (17) Capital surplus

• Pursuant to the R.O.C. Company Act, capital surplus arising from paid-in capital in excess of par value on issuance of common stocks and donations can be used to cover accumulated deficit or to issue new stocks or cash to shareholders in proportion to their share ownership, provided that the Company has no accumulated deficit. Further, the R.O.C. Securities and Exchange Law requires that the amount of capital surplus to be capitalized mentioned above should not exceed 10% of the paid-in capital each year. Capital surplus should not be used to cover accumulated deficit unless the legal reserve is insufficient.

(18) Retained earnings

• A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay taxes and offset prior years’ operating losses and then 10% of the remaining amount shall be set aside as legal reserve. The appropriation of the remaining amount along with the unappropriated earnings shall be proposed by the Board of Directors and resolved by the shareholders. According to the appropriation of earnings proposed by the Board of Directors, at least 10% ~ 80% of the Company’s accumulated distributable earnings shall be appropriated as dividends, and cash dividends shall account for at least 10% of the total dividends distributed.

• B. Where the Company accrues annual net income, no less than 2% of which shall be appropriated as employees’ compensation and no higher than 3% of which shall be appropriated as directors’ and supervisors’ remuneration after offsetting accumulated deficit. The employees’ compensation can be appropriated in the form of share or cash whereas the directors’ and supervisors’ remuneration can only be appropriated in the form of cash. The appropriations require attendance of over two thirds of Board of Directors members and approval of over the half of attendees. The resolution of Board of Directors shall be reported at the shareholders’

~36~

meeting. The recipients of aforementioned employees’ compensation include eligible employees of subordinate companies who meet the requirements set out by the Board of Directors.

• C. Except for covering accumulated deficit or issuing new stocks or cash to shareholders in proportion to their share ownership, the legal reserve shall not be used for any other purpose. The use of legal reserve for the issuance of stocks or cash to shareholders in proportion to their share ownership is permitted, provided that the distribution of the reserve is limited to the portion in excess of 25% of the Company’s paid-in capital.

• D. (a) In accordance with the regulations, the Company shall set aside special reserve from the debit balance on other equity items at the balance sheet date before distributing earnings.When debit balance on other equity items is reversed subsequently, the reversed amountcould be included in the distributable earnings.

• (b) The amounts previously set aside by the Company as special reserve on initial application of IFRSs in accordance with Jin-Guan-Zheng-Fa-Zi Letter No. 1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently.

• E. The distributions of retained earnings for the years ended December 31, 2017 and 2016 were resolved by the Board of Directors on March 20, 2018 and by stockholders in their meeting on June 15, 2017, respectively.

Legal reserve Special reserve Cash dividend		2017	2017	2017		2016	2016	2016
		Amount		Dividend per share(in dollars)		Amount		Dividend per share(in dollars)
		$ 554,179 1,122,239 5,834,548 $7,510,966		$1.8		$ 1,325,090 703,659 9,724,246 $11,752,995		$3.0

As of May 10, 2018, abovementioned retained earnings for the year ended December 31, 2017 was not resolved by stockholders in their meeting.

• F. For the information relating to employees’ remuneration (bonuses) and directors’ and supervisors’ remuneration, please refer to Note 6(24).

~37~

(19) Other equity items

Other equity items
Currency translation At January 1 4,471,654) ($ Effect of retrospective - application and retrospective restatement Valuation adjustment - transfered to retained earnings Currency translation - differences: – Group 983,798 – Tax on group 35,133) ( – Associates 139 – Tax on associates 28) ( At March 31 3,522,878) ($ Currency At January 1 ($ Valuation adjustment – Group Revaluation transfer – Group Currency translation differences: – Group ( – Tax on Group – Associates ( – Tax on associates At March 31 ($								2018
		Currency translation			Unrealized income(loss) on valuation of equity instruments at fair value through profit or loss			Unrealized income(loss) on valuation of equity instruments at fair value through other comprehensive income
					- $ 22,740 27 22,767) ( - - - - - $			- $ 18,853 6,083) ( - - - - - 18,853 $ 2017
						$			18,853 $
									2017
				Currency	translation
			($ ( ( ($		3,358,274) - - 3,902,605) 663,443 534) 91 6,597,879)

~38~

(20) Operating revenue:

Three-month period ended March 31, 2018 Revenue from contracts with customers $ 27,687,137

A. Disaggregation of revenue from contracts with customers

The Group derives revenue from the transfer of goods and services at a point in time in the following and geographical regions:

Types of tire

Three-month period ended March 31,2018 Revenue from external customer contracts Inter-segment revenue Total segment revenue	Taiwan 1,542,858 $ 917,286 2,460,144 $	China 14,326,757 $ 1,439,336 15,766,093 $	US 2,041,528 $ 1,122,271 3,163,799 $	Others 9,775,994 $ 729,340 10,505,334 $	Total
					27,687,137 $ 4,208,233
					31,895,370 $

B. Contract liabilities

The Group has recognised the following revenue-related contract liabilities:

Contract liabilities: Contract liabilities- advance sales receipts Contract liabilities – customer loyalty programmes Total	March 31,2018
	553,175 $ 15,611
	568,786 $

C. Related disclosures for 2017 operating revenue are provided in Note 12(5).

(21) Other income

Other income
Interest income Grant revenue Other income		Three-month period ended March 31,2018		Three-month period ended March 31,2017
		82,248 $ 50,537 60,113 192,898 $		80,329 $ 118,119 60,986 259,434 $

~39~

(22) Other gains and losses

Other gains and losses
Net currency exchange loss Loss on disposal of property, plant and equipment Net gain on financial assets and liabilities at fair value through profit or loss Other expenses	Three-month period ended March 31,2018	Three-month period ended March 31,2017
	167,873) ($ 23,218) ( 750 105,446) ( 295,787) ($	505,746) ($ 5,044) ( - 33,291) ( 544,081) ($

(23) Finance costs

Finance costs
Expenses by nature Three-month period ended March 31,2018 Three-month period ended March 31,2017 Interest expense: Bank borrowings 391,091 $ 198,586 $ Corporate bonds 50,363 31,837 Provisions-discount 2,704 2,914 444,158 233,337 Less: Capitalisation of qualifying assets 19,703) ( 3,846) ( Finance costs 424,455 $ 229,491 $ Three-month period ended March 31,2018 Three-month period ended March 31,2017 Employee benefit expense Wages and salaries 2,969,610 $ 2,765,142 $ Labour and health insurance fees 168,549 173,983 Pension costs 150,442 148,282 Other personel expenses 230,476 232,672 3,519,077 $ 3,320,079 $ Raw materials and supplies used 14,666,860 $ 14,738,867 $ Depreciation charges on property, plant and equipment 2,974,143 $ 2,892,680 $ Depreciation charges on investment property 6,137 $ 153 $ Amortisation charges on intangible assets 10,982 $ 1,408 $		Three-month period ended March 31,2018				Three-month period ended March 31,2017
		$		391,091 50,363 2,704 444,158 19,703) 424,455 Three-month period ended March 31,2018		$		198,586 31,837 2,914 233,337 3,846) 229,491 Three-month period ended March 31,2017 2,765,142 $ 173,983 148,282 232,672 3,320,079 $ 14,738,867 $ 2,892,680 $ 153 $ 1,408 $
		$				$
				2,969,610 $ 168,549 150,442 230,476
				3,519,077 $
				14,666,860 $
				2,974,143 $
				6,137 $
				10,982 $

(24) Expenses by nature

• A. According to the Articles of Incorporation of the Company, a ratio of distributable profit of the current year, after covering accumulated losses, shall be distributed as employees’ compensation and directors’ and supervisors’ remuneration. The ratio shall not be lower than 2% for employees’ compensation and shall not be higher than 3% for directors’ and supervisors’ remuneration.

• B. For the three-month periods ended March 31, 2018 and 2017, employees’ compensation was

~40~

accrued at $33,699 and $46,317, respectively; while directors’ and supervisors’ remuneration was accrued at $24,954 and $37,795, respectively. The amounts were recognized in salary expenses.

The employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 2% and 1.481% of distributable profit of current year for the three-month period ended March 31, 2017.

For 2017, the employees’ compensation of 2017 as resolved at the meeting of Board of Directors amounting to $145,330 thousand was in agreement with those amounts recognized in the 2017 financial statements. The Board of Directors during its meeting resolved to distribute 1.481% of retained earnings as supervisors’ remuneration for the three-month period ended March 31, 2017 while the amounts recognized in the financial statements based on 1.632% of retained earnings was $118,590 thousand for directors’ and supervisors’ remuneration. The difference in the directors’ and supervisors’ remuneration for the year 2017 was $10,972 thousand. The difference resulted from adjustment of estimated percentage of directors’ and supervisors’ remuneration which had been adjusted in the profit or loss for 2018. The employees’ compensation for 2017 will be distributed in the form of cash. As of May 10, 2018, the employees’ compensation for 2017 has not yet been distributed.

Information about employees’ compensation and directors’ and supervisors’ remuneration of the Company as resolved by the Board of Directors will be posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange.

(25) Income tax

• A. Income tax expense

• (a) Components of income tax expense:

e tax come tax expense ) Components of income tax expense:
Current tax: Current tax on profits for the period Prior year income tax underestimation Total current tax Deferred tax: Origination and reversal of temporary differences Impact of change in tax rate Total deferred tax Income tax expense		Three-month period ended March 31,2018		Three-month period ended March 31,2017
	2,939,105 $ 205,802 3,144,907 508,083) ( 332,336 2,636,824 $			3,695,576 $ 329,328 4,024,904 348,769 234,861 4,373,673 $

(b) The income tax (charge)/credit relating to components of other comprehensive income is as follows:

~41~

Generated during the period : Currency translation differences Impact of change in tax rate Remeasurement of defined benefit obligations Income tax (expense) benefit from other comprehensive income	Three-month period ended March 31,2018		Three-month period ended March 31,2017
	($ 104,782) 69,621 25,893 ($9,268)		$ 663,534 -
			-
			$663,534

• B. The Company’s income tax returns through 2015 have been assessed and approved by the Tax Authority while the income tax returns through 2014 have not been assessed and approved.

• C. Under the amendments to the Income Tax Act which was promulgated by the President of the Republic of China in February, 2018, the Company’s applicable income tax rate was raised from 17% to 20% effective from January 1, 2018. The Group has assessed the impact of the change in income tax rate.

~42~

(26) Earnings per share

(27)	Supplemental cash flow information Investing activities with partial cash payments Amount Weighted average number of ordinary shares outstanding after tax (shares in thousands) Basic earnings per share Profit attributable to ordinary shareholders of the parent 1,214,791 $ 3,241,416 Diluted earnings per share Profit attributable to ordinary shareholders of the parent 1,214,791 3,241,416 Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - 3,341 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 1,214,791 $ 3,244,757 Amount Weighted average number of ordinary shares outstanding after tax (shares in thousands) Basic earnings per share Profit attributable to ordinary shareholders of the parent 1,920,556 $ 3,241,416 Diluted earnings per share Profit attributable to ordinary shareholders of the parent 1,920,556 3,241,416 Assumed conversion of all dilutive potential ordinary shares Employees’ compensation - 5,179 Profit attributable to ordinary shareholders of the parent plus assumed conversion of all dilutive potential ordinary shares 1,920,556 $ 3,246,595 $ Three-monthperiod ended March Three-monthperiod ended March	Three-monthperiod ended March	31,2018
		Amount Weighted average number of ordinary shares outstanding after tax (shares in thousands) 1,214,791 $ 3,241,416 1,214,791 3,241,416 - 3,341 1,214,791 $ 3,244,757 Three-monthperiod ended March	Earnings per share (in dollars)
			0.37 $
			0.37 $
			31,2017
			Earnings per share (in dollars)
			0.59 $
			0.59 $

~43~

Purchase of property, plant and equipment Add: Opening balance of payable on equipment Less: Ending balance of payable on equipment Cash paid during the period	Three-month period ended March 31,2018	Three-month period ended March 31,2017
	3,062,036 $ 2,213,781 1,656,218) ( 3,619,599 $	3,687,845 $ 1,049,387 1,086,248) ( 3,650,984 $

(28) Changes in liabilities from financing activities

January 1, 2018 Changes in cash flow from financing activities Impact of changes in foreign exchange rate March 31, 2018		Short-term borrowings	Long-term borrowings		Bonds payable	Liabilities from financing activities- gross
		18,508,493 $ 466,362 222,522 19,197,377 $	35,661,478 $ 332,082 354,514) ( 35,639,046 $		18,700,000 $ - - 18,700,000 $	72,869,971 $ 798,444 131,992) ( 73,536,423 $

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties

Toyo Tire & Rubber Co., Ltd.

Cheng Shin Holland B.V. New Pacific IND. CD., LTD. MERIDA INDUSTRY CO., LTD.

Maxxis (XiaMen) Trading CO., LTD.

(2) Significant related party transactions

A. Operating revenue

Three-month period ended March 31, 2018 Sales of goods: Associates $ 148,350

Prices and collection terms of abovementioned sales are the same with third parties, and the credit terms are between 60~90 days.

B. Receivables from related parties

~44~

March 31, 2018

March 31, 2017

December 31, 2017

Accounts receivable: Associates $ 99,843 $ 119,288 $ 141,130 C. Loans to / from related parties: shown as long-term borrowings and other current liabilities March 31, 2018 December 31, 2017 March 31, 2017 Payables due to related parties -Associates $ 230,027 $ 225,968 $ 99,158

The Group obtained financing from associates and financial institutions for capital needs. Please refer to Note 6(14) for interest rates, borrowing periods and repayment methods.

(3) Key management compensation

Key management compensation
Short-term employee benefits Post-employment benefits		Three-month period ended March 31,2018 66,034 $ 764 66,798 $	Three-month period ended March 31,2017
			77,917 $ 965 78,882 $

8. PLEDGED ASSETS

The Group’s assets pledged as collateral are as follows:

Pledged asset	March 31,2018	Book value	Book value	Purpose
		December 31,2017 15,070 $ - 15,070 $	March 31,2017 15,153 $ 460 15,613 $
Time deposits (Other current assets) Time deposits (Other non- current assets)	14,738 $ - 14,738 $			Maintenance bond and product liability insurance Maintenance bond and merchandise delivery guarantee

9. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED CONTRACT

COMMITMENTS

(1) Contingencies

None.

(2) Commitments

A. Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:

March 31, 2018 December 31, 2017 March 31, 2017 Property, plant and equipment $ 6,432,719 $ 6,807,845 $ 9,361,168

B. Amount of letter of credit that has been issued but not yet used:

March 31, 2018 December 31, 2017 March 31, 2017 Amount of letter of credit that has been issued but not yet used $ 174,961 $ 141,240 $ 90,494

~45~

10. SIGNIFICANT DISASTER LOSS

None.

11. SIGNIFICANT EVENT AFTER THE BALANCE SHEET DATE

None.

12. OTHERS

(1) Capital management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including ‘current and non-current borrowings’ as shown in the consolidated balance sheet) less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt.

During the three-month period ended March 31, 2018, the Group’s strategy was unchanged from 2017. The gearing ratios at March 31, 2018, December 31, 2017 and March 31, 2017 were as follows:

		March 31,2018		December 31,2017		March 31,2017
Total liabilities	$	95,355,511	$	96,192,952	$	83,866,407
Total equity	$	85,023,847	$	82,891,303	$	86,944,266
Less : Intangible assets	(	120,036)	(	110,233)	(	10,882)
Tangible equity	$	84,903,811	$	82,781,070	$	86,933,384
Debt-equity Ratio		112%		116%		96%

(2) Financial instruments

• A. Financial instruments by category

~46~

Financial assets Financial assets at fair value through profit or loss - current Financial asset measured at fair value through other comprehensive income Non-current financial assets at fair value through other comprehensive income Available-for-sale financial assets - current Available-for-sale financial assets - noncurrent Financial assets at amortised cost/Loans and receivables Cash and cash equivalents Notes receivable, net Accounts receivable Guarantee deposits paid Other financial assets Financial liabilities Financial liabilities at fair value through profit or loss - current Financial liabilities at amortised cost Short-term borrowings Contract liabilities- current Notes payable Accounts payable Other accounts payable Corporate bonds payable (including current portion) Long-term borrowings (including current portion) Guarantee deposits received	March 31,2018 December 31,2017 315 $ - $ 21,435 - 58,187 - - 69,188 - 58,187 29,553,195 30,918,463 2,699,560 2,298,485 11,480,967 9,971,873 102,475 175,988 544,106 556,045 44,460,240 $ 44,048,229 $ - $ 408 $ 19,197,377 18,508,493 568,786 - 817,784 822,160 7,859,432 8,511,030 6,062,529 7,022,033 18,700,000 18,700,000 35,639,046 35,661,478 254,300 251,611 $89,099,254 $89,477,213	March 31,2017
		- $ - - 150,760 58,187 30,578,697 1,217,198 10,953,195 199,206 196,356
		43,353,599 $
		- $ 15,685,137 - 314,544 9,227,979 6,394,260 13,600,000 30,120,509 243,683
		$75,586,112

~47~

• B. Financial risk management policies

• (a) The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programmer focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial position and financial performance.

• (b) Risk management is carried out by a central treasury department (Group treasury) under policies approved by the board of directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The material financing activities are reviewed by the Board of Directors in accordance with procedures required by relevant regulations and internal control system. During the implementation of financing plans, the Board of Directors is assisted in its oversight role by the internal audit department. Internal audit undertakes both regular and exceptional reviews of risk management controls and procedures, and reports the results to the Board of Directors.

• (c) For information of operating derivative instruments to hedge financial risk, please refer to Note 6(2).

• C. Significant financial risks and degrees of financial risks

• (a) Market risk

Foreign exchange risk

• i. The Group operates internationally and is exposed to foreign exchange risk arising from the transactions of the Company and its subsidiaries used in various functional currency. Primarily with respect to the USD and RMB. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities.

• ii. The Group hedges foreign exchange rate by using forward exchange contracts. However, the Group does not adopt hedging accounting. Details of financial assets or liabilities at fair value through profit or loss are provided in Note 6(2).

• iii. The Group’s businesses involve some non-functional currency operations (the Company’s and certain subsidiaries’ functional currency: TWD; other certain subsidiaries’ functional currency: RMB, THB, VND, CAD, IDR, EUR, INR and USD). The information on assets and liabilities denominated in foreign currencies whose values would be materially affected by the exchange rate fluctuations is as follows:

~48~

March 31, 2018

(Foreign currency: functional currency) Financial assets Monetary items USD：NTD RMB：NTD EUR：NTD JPY：NTD GBP：NTD USD：RMB EUR：RMB GBP：RMB RUB：RMB USD：THB EUR：THB USD：VND USD：CAD USD：IDR	Foreign currency amount (thousands) 376,233 $ 139,715 28,780 1,623,391 7,023 124,530 27,802 5,445 432,353 64,886 8,940 15,273 29,510 12,954	29.105 $ 4.647 35.870 0.274 40.790 6.263 7.719 8.778 - 31.016 38.225 25,756.637 1.289 13,664.319 Exchange rate	Book value (TWD in thousands) 10,950,261 $ 649,256 1,032,339 444,809 286,468 3,624,341 997,263 222,109 218,997 1,887,729 320,544 444,521 859,021 377,026		Sensitivityanalysis
				Degree of variation 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	Effect on other Effect on profit comprehensive or loss income 109,503 $ $ - 6,493 - 10,323 - 4,448 - 2,865 - 36,243 - 9,973 - 2,221 - 2,190 - 18,877 - 3,205 - 4,445 - 8,590 - 3,770 -

~49~

(Foreign currency: functional currency) Financial liabilities Monetary items USD：NTD USD：RMB EUR：RMB USD：THB USD：VND USD：CAD USD：IDR USD：INR			March 31,2018	March 31,2018	March 31,2018
	Foreign currency amount (thousands) 20,856 $ 147,509 25,172 92,934 39,927 14,983 196,000 229,800	29.105 $ 6.263 7.719 31.016 25,756.637 1.289 13,664.319 65.083 Exchange rate	Book value (TWD in thousands) 607,014 $ 4,293,126 902,924 2,703,730 1,162,075 436,147 5,704,580 6,688,356	Sensitivityanalysis
				Foreign Degree of currency amount variation (thousands) 1% 6,070 $ 1% 42,931 1% 9,029 1% 27,037 1% 11,621 1% 4,361 1% 57,046 1% 66,884	Exchange rate
					$ - - - - - - - -

~50~

(Foreign currency: functional currency) Financial assets Monetary items USD:TWD RMB:TWD EUR:TWD JPY:TWD GBP:TWD USD:RMB JPY:RMB EUR:RMB GBP:RMB USD:THB EUR:THB USD:VND USD:CAD USD:IDR				December 31,2017	December 31,2017	December 31,2017	Effect on profit or loss Effect on other comprehensive income 116,488 $ - $ 5,310 - 6,904 - 4,254 - 2,571 - 37,272 - 1,133 - 5,884 - 1,425 - 18,093 - 3,025 - 4,245 - 7,434 - 2,040 - Sensitivityanalysis	Effect on profit or loss Effect on other comprehensive income 116,488 $ - $ 5,310 - 6,904 - 4,254 - 2,571 - 37,272 - 1,133 - 5,884 - 1,425 - 18,093 - 3,025 - 4,245 - 7,434 - 2,040 - Sensitivityanalysis
		Foreign currency amount (In thousands)	Exchange rate	Book value (TWD in thousands)
						Degree of variation	Effect on profit or loss
		391,426 $ 116,324 19,411 1,611,207 6,409 125,246 427,796 16,543 3,552 60,771 8,501 14,264 24,989 6,854	29.760 4.565 35.570 0.264 40.110 6.519 0.058 7.792 8.786 32.432 38.764 25,008.403 1.255 13,345.291	11,648,838 $ 531,019 690,449 425,359 257,065 3,727,225 113,268 588,442 142,464 1,809,309 302,511 424,497 743,417 203,975		1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	116,488 $ 5,310 6,904 4,254 2,571 37,272 1,133 5,884 1,425 18,093 3,025 4,245 7,434 2,040	- $ - - - - - - - - - - - - -

~51~

December 31, 2017

Sensitivity analysis

(Foreign currency: functional currency) Financial liabilities Monetary items USD:TWD USD:RMB USD:THB USD:VND EUR:RMB USD:CAD USD:IDR USD:INR	Foreign currency amount (In thousands)	Exchange rate	Book value (TWD in thousands)	Degree of variation	Effect on profit or loss	Effect on other comprehensive income
	25,745 $ 162,212 97,068 46,858 57,885 14,175 176,000 229,800	29.760 6.519 32.432 2,508.403 7.792 1.255 13,345.291 63.658	766,171 $ 4,827,305 2,889,964 1,394,494 2,058,997 421,703 5,237,760 6,838,874	1% 1% 1% 1% 1% 1% 1% 1%	7,662 $ 48,273 28,900 13,945 20,590 4,217 52,378 68,389	- $ - - - - - - -

~52~

March 31, 2017

Sensitivity analysis

(Foreign currency: functional currency) Financial assets Monetary items USD:TWD RMB:TWD EUR:TWD THB:TWD JPY:TWD GBP:TWD USD:RMB JPY:RMB GBP:RMB EUR:RMB INR:RMB USD:THB EUR:THB GBP:THB USD:VND USD:IDR	Foreign currency amount (In thousands)	Exchange rate	Book value (TWD in thousands)	Degree of variation	Effect on profit or loss	Effect on other comprehensive income
	292,933 $ 664,081 13,521 167,235 1,025,148 3,443 115,747 472,939 3,885 14,133 242,735 61,781 118,873 3,209 24,286 23,126	30.330 4.407 32.430 0.886 0.271 37.820 6.882 0.062 8.582 7.359 0.122 34.236 36.607 42.691 25,066.116 13,017.167	8,884,658 $ 2,926,605 438,486 148,170 277,815 130,214 3,510,488 129,223 146,934 458,349 130,507 1,874,009 385,087 121,378 736,594 701,412	1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 1%	88,847 $ 29,266 4,385 1,482 2,778 1,302 35,105 1,292 1,469 4,583 1,305 18,740 3,851 1,214 7,366 7,014	- $ - - - - - - - - - - - - -

~53~

March 31, 2017

Sensitivity analysis

(Foreign currency: functional currency) Financial liabilities Monetary items USD:NTD USD:RMB EUR:RMB USD:THB USD:VND USD:IDR USD:INR	Foreign currency amount (In thousands)	Exchange rate	Book value (TWD in thousands)	Degree of variation	Effect on profit or loss	Effect on other comprehensive income
	36,436 $ 161,177 34,879 218,988 41,625 111,382 180,000	30.330 6.882 7.359 34.236 25,066.116 13,017.167 64.988	1,105,104 $ 4,888,333 1,131,165 6,642,584 1,262,486 3,378,216 5,459,382	1% 1% 1% 1% 1% 1% 1%	11,051 $ 48,883 11,312 66,426 12,625 33,782 54,594	- $ - - - - - -

~54~

• iv. The exchange gain (loss) including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month periods ended March 31, 2018 and 2017 amounted to ($167,873) and ($505,746), respectively.

Price risk

• i. The Group’s equity securities, which are exposed to price risk, are the held financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income and available-for-sale financial assets. To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio. Diversification of the portfolio is to manage.

• ii. Shares issued by the domestic companies. The prices of equity securities would change due to the change of the future value of investee companies. If the prices of these equity securities had increased/decreased by 1% with all other variables held constant, equity investments at fair value through other comprehensive income and gain or loss on the available-for-sale equity investments for the three-month periods ended March 31, 2018 and 2017 would have increased/decreased by $214 thousand and $1,508 thousand, respectively.

• (a) Cash flow and fair value interest rate risk

• i. The Group’s main interest rate risk arises from long-term and short-term borrowings with variable rates, which expose the Group to cash flow interest rate risk. During the threemonth periods ended March 31, 2018 and 2017, the Group’s borrowings at variable rate were denominated in the NTD, USD, THB, RMB, EUR and INR.

• ii. The Group’s borrowings are measured at amortised cost. The rate of borrowings are referred market interest rates and to that extent are also exposed to the risk of future changes in market interest rates.

• iii. At March 31, 2018 and 2017, if interest rates on USD, THB, RMB, EUR and INR - denominated borrowings at that date had been 0.1% higher/lower with all other variables held constant, post-tax profit for the three-month periods ended March 31, 2018 and 2017 would have been $41,084 and $31,432 lower / higher, respectively, mainly as a result of higher/lower interest expense on floating rate borrowings.

• (b) Credit risk

• i. Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. The main factor is that counterparties could not repay in full the accounts receivable based on the agreed terms, and the contract cash flows of financial instruments at fair value through profit or loss and at fair value through other comprehensive income.

• ii. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard receiving and payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors.

~55~

• iii. The Group adopts assumptions under IFRS 9 to assess whether there has been a significant increase in credit risk on that instrument since initial recognition: If the contract payments were past due over 30 days based on the terms, there has been a significant increase in credit risk on that instrument since initial recognition.

• iv. The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable. On March 31, 2018, the provision matrix is as follows:

March 31,2018 Without past due Up to 30 days 31 to 90 days 91 to 180 days Over 181 days	Expected loss rate 0.00% 0.10% 0.79% 2.51% 4.48%	Total book value 9,293,647 $ 1,225,713 462,410 347,579 68,441 11,397,790 $	Loss allowance
			- $ 1,226 3,653 8,724 3,063
			16,666 $

• v. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

At January 1_IAS 39 Adjustments under new standards At January 1_IFRS 9 Provision for impairment Reversal of impairment loss Effect of exchange rate changes At March 31	2018 17,551 $ - 17,551 - 762) ( 123) (	2018
	16,666 $

• vi. Credit risk information of 2017 is provided in Note 12(4).

• (c) Liquidity risk

• i. Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable external regulatory or legal requirements.

• ii. Surplus cash held by the operating entities over and above balance required for working capital management are transferred to the Group treasury. Group treasury invests surplus cash in interest bearing current accounts and time deposits, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts.

• iii. The table below analyses the Group’s non-derivative financial liabilities and net-settled or

~56~

gross-settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date for nonderivative financial liabilities and to the expected maturity date for derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows.

March 31, 2018

Non-derivative

Non-derivative	Non-derivative
Less than 90 days Short-term borrowings 13,243,013 $ Notes and bills payable 8,677,165 Other payables 5,573,068 Guarantee deposits 400 Long-term borrowings 486,496 Bonds payable - financial liabilities December 31, 2017 Non-derivative financial liabilities Less than 90 days		Between 91 and 180 days	Between 181 and 365 days 3,466,744 $ - $ - - 161,006 62,845 - 253,900 3,492,859 32,688,837 - 17,208,300 Over 1year Between 181 and 365 days Over 1year Total 1,875,338 $ - $ 18,966,944 $ - - 9,333,190 211,817 160,878 7,022,033 - 246,979 251,611 2,564,269 34,172,374 37,921,232 2,104,250 17,208,300 19,312,550 - $ - $ 408 $ Between 181 and 365 days Over 1year Total 5,140,469 $ - $ 16,437,711 $ - - 9,542,524 329,168 101,303 6,394,260 - 243,036 243,683 2,475,027 24,794,616 32,164,841 - 11,988,100 14,049,700
		2,923,597 $ 51 265,610 - 1,280,936 2,104,250 Between 91 and 180 days
Short-term borrowings Notes and bills payable Other payables Guarantee deposits Long-term borrowings Bonds payable Derivative financial liabilities: Forward exchange contracts March 31, 2017 Non-derivative financial liabilities	10,166,175 $ 9,333,190 6,642,583 4,358 877,266 - 408 $ Less than 90 days	6,925,431 $ - 6,755 274 307,323 - - $ Between 91 and 180 days	1,875,338 $ - 211,817 - 2,564,269 2,104,250 - $ Between 181 and 365 days	- $ - 160,878 246,979 34,172,374 17,208,300 - $ Over 1year	18,966,944 $ 9,333,190 7,022,033 251,611 37,921,232 19,312,550 408 $ Total
Short-term borrowings Notes and bills payable Other payables Guarantee deposits Long-term borrowings Bonds payable	7,739,108 $ 9,542,524 5,589,060 647 1,364,467 -	3,558,134 $ - 374,729 - 3,530,731 2,061,600	5,140,469 $ - 329,168 - 2,475,027 -	- $ - 101,303 243,036 24,794,616 11,988,100	16,437,711 $ 9,542,524 6,394,260 243,683 32,164,841 14,049,700

~57~

As of March 31, 2018 and 2017, there were no financial derivative liabilities transaction.

• (3) Fair value information

• A. The different levels that the inputs to valuation techniques are used to measure fair value of financial and non-financial instruments have been defined as follows:

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. A market is regarded as active where a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. The fair value of the Group’s investment in listed stocks, beneficiary certificates, is included in Level 1.

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The fair value of the Group’s investment in most derivative instruments is included in Level 2.

• Level 3: Unobservable inputs for the asset or liability. The fair value of the Group’s investment in equity investment without active market is included in Level 3.

• B. Fair value information of investment property at cost is provided in Note 6(8).

• C. Financial instruments not measured at fair value

• (a) Except for those listed in the table below, the carrying amounts of cash and cash equivalents, notes receivable, accounts receivable, other receivables, guarantee deposits paid, short-term borrowings, notes payable, accounts payable, other payables and long-term borrowings (including current portion) are approximate to their fair values.

March 31, 2018

Financial liabilities: Bonds payable Financial liabilities: Bonds payable Financial liabilities: Bonds payable	Carrying amount 18,700,000 $		Fair value
		Level 1 Level 2 - $ 18,860,092 $ December 31,2017		Level 3
				- $
	Carrying amount 18,700,000 $		Fair value
		Level 1 Level 2 - $ 18,779,641 $ March 31,2017		Level 3
				- $
	Carrying amount 13,600,000 $		Fair value
		Level 1 - $	Level 2 13,691,232 $	Level 3
				- $

• (b) The methods and assumptions of fair value estimate are as follows: Bonds payable: They are measured at present value, which is calculated based on the cash

~58~

flow expected to be paid and discounted using a market rate prevailing at balance sheet date, the interest rate of par value was equivalent to market interest rate.

• D. The related information on financial and non-financial instruments measured at fair value by level on the basis of the nature, characteristics and risks of the assets and liabilities is as follows:

• (a) The related information of natures of assets and liabilities is as follows:

Level 1 Assets Recurring fair value measurements Financial assets at fair value through profit or loss-derivative instruments - $ Financial assets at fair value through other comprehensive income- equity securities 21,435 Total 21,435 $ Level 1 Assets Recurring fair value measurements Available-for-sale financial assets 69,188 $ Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss - Forward exchange contracts - $ Level 1 Assets Recurring fair value measurements Available-for-sale financial assets 150,760 $	Level 1 Assets Recurring fair value measurements Financial assets at fair value through profit or loss-derivative instruments - $ Financial assets at fair value through other comprehensive income- equity securities 21,435 Total 21,435 $ Level 1 Assets Recurring fair value measurements Available-for-sale financial assets 69,188 $ Liabilities Recurring fair value measurements Financial liabilities at fair value through profit or loss - Forward exchange contracts - $ Level 1 Assets Recurring fair value measurements Available-for-sale financial assets 150,760 $			March 31,2018	March 31,2018
		Level 1		Level 2 Level 3 315 $ $ - - 58,187 315 $ 58,187 $ December 31,2017			Total
		- $ 21,435					315 $ 79,622
		21,435 $					79,937 $
	Level 1 69,188 $ - $						Total
						127,375 $
						408 $
	Level 1 150,760 $		Level 2 - $		Level 3 58,187 $	Total
						208,947 $

• (b) The methods and assumptions the Group used to measure fair value are as follows:

• (i) For Level 1, the Group used market quoted prices as their fair values according to the characteristics of instruments. Listed shares and balanced mutual fund use closing price as their fair values.

• (ii) Except for financial instruments with active markets, the fair value of other financial instruments is measured by using valuation techniques or by reference to counterparty quotes.

• (iii) Level 2: When assessing non-standard and low-complexity financial instruments, for example, debt instruments without active market, interest rate swap contracts, foreign exchange swap contracts and options, the Group adopts valuation technique that is widely

~59~

used by market participants. The inputs used in the valuation method to measure these financial instruments are normally observable in the market.

• E. For the three-months periods ended March 31, 2018 and 2017, there was no transfer between Level 1 and Level 2.

• F. There was no movement in Level 3 for the three-month periods ended March 31, 2018 and 2017.

• (4) Effects on initial application of IFRS 9, ‘Financial instruments’ and the adoption of IAS 39 for the three-month period ended March 31, 2017 Information of IAS 39

• A. The significant accounting policies adopted in the first quarter of 2017 were in agreement with Note 4 in the 2017 financial statements.

• B. The reconciliations of carrying amount of financial assets transferred from December 31, 2017, IAS 39, to January 1, IFRS 9, were as follows:

IAS 39 Transferred into and measured at fair value through profit or loss Transferred into and measured at fair value through other comprehensive income-equity IFRS 9		Measured at fair value through profit or loss		Measured at fair value through other comprehensive income-equity	Available-for sale-equity	Available-for sale-equity		Retained earnings
		- $ 41,670 - 41,670 $		- $ - 85,705 85,705 $	127,375 $ 41,670) ( 85,705) (			- $ 22,740 - 22,740 $
						- $

• (a) Under IAS 39, because the equity instruments, which were classified as: available-for-sale financial assets amounting to $85,705 thousand, respectively, were not held for the purpose of trading, they were reclassified as "financial assets at fair value through other comprehensive income (equity instruments)" amounting to $85,705 thousand.

• (b) Under IAS 39, the equity instruments, which were classified as: available-for-sale financial assets amounting to $41,670 thousand, respectively, were reclassified as "financial assets at fair value through profit or loss (equity instruments)" amounting to $41,670 thousand. Additionally, in the first quarter of 2018, the Group increased retained earnings and decreased other equity in the amounts of $22,740 and $22,740, respectively.

• C. The significant accounts for the year ended December 31, 2017 and for the first quarter of 2017, are as follows:

• (a) Financial assets and liabilities at fair value through profit or loss

Items December 31, 2017 Current items: Financial liabilities held for trading Forward foreign exchange contracts $

408

~60~

• i. The Group recognised net profit amounting to $2,538 thousand on financial assets at fair value through profit or loss for the year ended December 31, 2017. However, the Group has no related transactions in the first quarter of 2017.

• ii.The non-hedging derivative instruments transaction and contract information are as follows :

Types of instrument Current items: Forward foreign exchange contracts USD converted to NTD	December	31,2017
	Contract amount (Notionalprincipal) USD 6 million	Contractperiod
		2017.11.23~ 2018.1.29

The Group entered into forward foreign exchange contracts to sell USD to hedge exchange rate risk of import (export) proceeds. However, these forward foreign exchange contracts are not accounted for under hedge accounting.

• (b)Available-for-sale financial assets

Items Current items: Listed stocks Funds Subtotal Available-for-sale financial assets Valuation adjustment Total Non-current items: Unlisted shares	December 31,2017 8,665 $ 18,930 27,595 41,593 69,188 $ 58,187 $	March 31,2017
		71,655 $ 18,930
		90,585 60,175
		150,760 $
		58,187 $

The Group recognised $3,041 and $9,356 in other comprehensive income for fair value change and reclassified ($12,267) and $0 from equity to profit or loss for the year ended December 31, 2017 and for the first quarter of 2017, respectively.

• D. Credit risk information for the year ended December 2017 and for the first quarter of 2017 are as follows :

• (a) Credit risk refers to the risk of financial loss to the Group arising from default by the clients or counterparties of financial instruments on the contract obligations. According to the Group’s credit policy, each local entity in the Group is responsible for managing and analysing the credit risk for each of their new clients before standard payment and delivery terms and conditions are offered. Internal risk control assesses the credit quality of the customers, taking into account their financial position, past experience and other factors. Credit risk arises from cash and cash equivalents, derivative financial instruments and

~61~

deposits with banks and financial institutions, including outstanding receivables and commitments.

• (b) For the year ended December 31, 2017, no credit limits were exceeded during the reporting periods, and management does not expect any significant losses from non-performance by these counterparties.

• (c) The credit quality of accounts receivable that were neither past due nor impaired was in the following counterparties categories based on the Group’s Credit Quality Control Policy:

	December 31,2017	December 31,2017		March 31,2017
Distributor	$	3,305,277	$	5,338,853
Car assembly factory		4,461,585		3,891,603
Others		283,334		310,329
	$	8,050,196	$	9,540,785
The ageing analysis of	accounts receivable that were past due		but	not impaired is as follows:
		December 31,2017		March 31,2017
Up to 30 days	$	1,297,167	$	803,433
31 to 90 days		377,313		331,541
91 to 180 days		102,816		134,335
Over 181 days		42,644		14,932
	$	1,819,940	$	1,284,241

• (d) The ageing analysis of accounts receivable that were past due but not impaired is as follows:

The above ageing analysis was based on past due date.

• (e) Movement analysis of financial assets that were impaired is as follows:

• i. As of December 31, 2017 and March 31, 2017, the Group’s accounts receivable that were impaired amounted to $17,551 and $12,961, respectively.

• ii. Movements in the provision for impairment of accounts receivable are as follows:

At January 1 Provision for impairment Effect of exchange rate changes At March 31	Individualprovision Group provision Total - $ 12,944 $ 12,944 $ - 93 93 - 76) ( 76) ( - $ 12,961 $ 12,961 $ Three-monthperiod ended March 31,2017	Individualprovision Group provision Total - $ 12,944 $ 12,944 $ - 93 93 - 76) ( 76) ( - $ 12,961 $ 12,961 $ Three-monthperiod ended March 31,2017	Individualprovision Group provision Total - $ 12,944 $ 12,944 $ - 93 93 - 76) ( 76) ( - $ 12,961 $ 12,961 $ Three-monthperiod ended March 31,2017
	Individualprovision - $ - - - $	Group provision 12,944 $ 93 76) (
		12,961 $	12,961 $

• (5) Effects of initial application of IFRS 15

• A. The significant accounting policies adopted in the first quarter of 2017 were in agreement with Note 4 in the 2017 financial statements.

• B. The effects and description of current balance sheets items if the Group continues adopting above accounting policies are as follows:

~62~

March 31, 2018

		March 31,2018
Contract liabilities Other current liabilities - deferred revenue - Advance sales receipts Balance sheet items	Balance by usingIFRS 15 568,786 $ - -	Balance by using previous accounting policies - $ 15,611 553,175	Effects from changes in accounting policy
			568,786 $ 15,611) ( 553,175) (

Note: Statement of comprehensive income was not effected.

13. SUPPLEMENTARY DISCLOSURES

(1) Significant transactions information

• A. Loans to others: please refer to table 1.

• B. Provision of endorsements and guarantees to others: please refer to table 2.

• C. Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures): please refer to table 3.

• D. Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company’s paid-in capital: please refer to table 4.

• E. Acquisition of real estate reaching $300 million or 20% of paid-in capital or more: None.

• F. Disposal of real estate reaching $300 million or 20% of paid-in capital or more: None.

• G. Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more: please refer to table 5.

• H. Receivables from related parties reaching $100 million or 20% of paid-in capital or more: please refer to table 6.

• I. Trading in derivative instruments undertaken during the reporting periods: please refer to Notes 6(2),6(22) and 12(2),12(3), 12(4).

• J. Significant inter-company transactions during the reporting periods: please refer to table 7.

• (2) Information on investees

Names, locations and other information of investee companies (not including investees in Mainland China) ： please refer to table 8.

(3) Information on investments in Mainland China

• A. Basic information: please refer to table 9.

• B. Ceiling on investments in Mainland China: please refer to table 9.

• Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area:

• Significant transactions, either directly or indirectly through a third area, with investee companies in the Mainland Area for the three-month period ended March 31, 2018: please refer to tables 5,6 and 7.

14. SEGMENT INFORMATION

• (1) General information

Management has determined the reportable operating segments based on the reports reviewed by

~63~

the Chief Operating Decision-Maker that are used to make strategic decisions. Business organization is divided into Cheng Shin (Taiwan), MAXXIS (Taiwan) Trading, Cheng Shin (Xiamen), Cheng Shin (China), Petrel (Xiamen), Cheng Shin (Thailand) and other segments based on the nature of each company. The Group’s revenue is mainly from manufacturing and sales of bicycle tires, electrical vehicle tires, reclaimed rubber, etc.

(1) Measurement of segment information

The Group’s segment profit (loss) is measured with the profit (loss) before tax, which is used as a basis for the Group in assessing the performance of the operating segments. The accounting policies of the operating segments are in agreement with the significant accounting policies summarized in Note 4.

(2) Information about segment profit or loss, assets and liabilities

The segment information provided to the Chief Operating Decision-Maker for the reportable segments for the three-month periods ended March 31, 2018 and 2017 is as follows:

Three-month period ended March 31, 2018

Revenue Revenue from external customers Revenue from inter -segment revenue Total segment revenue Segment income	CHENG SHIN RUBBER IND. CO., LTD. and MAXXIS (Taiwan) Trading CO.,LTD.	CHENG SHIN RUBBER IND. CO., LTD. and MAXXIS (Taiwan) Trading CO.,LTD.		CHENG SHIN RUBBER (XIAMEN) IND.,LTD	CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. and CHENG SHIN PETREL TIRE (XIAMEN) CO.,LTD.	CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. and CHENG SHIN PETREL TIRE (XIAMEN) CO.,LTD.	MAXXIS INTERNATIONAL (THAILAND) CO.,LTD.		All other segments 5,456,220 $ 927,829 6,384,049 $ 810,284 $	Total
		3,550,382 $ 2,149,682 5,700,064 $ 503,959 $	4,144,234 $ 350,893 4,495,127 $ 26,535) ($			9,429,169 $ 124,771 9,553,940 $ 844,918 $	2,962,787 $ 519,082 3,481,869 $ 33,076) ($			25,542,792 $ 4,072,257
										29,615,049 $
										2,099,550 $

Three-month period ended March 31, 2017

Revenue Revenue from external customers Revenue from inter -segment revenue Total segment revenue Segment income		CHENG SHIN RUBBER IND. CO.,LTD.	CHENG SHIN RUBBER (XIAMEN) IND., LTD	CHENG SHIN RUBBER (XIAMEN) IND., LTD		CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. and CHENG SHIN PETREL TIRE (XIAMEN) CO.,LTD.	MAXXIS INTERNATIONAL (THAILAND) CO.,LTD.	MAXXIS INTERNATIONAL (THAILAND) CO.,LTD.		All other segments 6,257,691 $ 1,076,486 7,334,177 $ 1,087,913 $	Total
		3,105,407 $ 2,193,772 5,299,179 $ 444,264 $		4,630,360 $ 373,532 5,003,892 $ 262,952 $		8,835,840 $ 160,392 8,996,232 $ 574,012 $		3,655,504 $ 354,564 4,010,068 $ 107,321 $			26,484,802 $ 4,158,746
											30,643,548 $
											2,476,462 $

~64~

(3) Reconciliation for segment income (loss)

• A. A reconciliation of income after adjustment and total segment income from continuing operations is provided as follows:

Adjusted revenue from reportable segments Adjusted revenue from other operating segments Total operating segments Elimination of inter-segment revenue Total consolidated operating revenue		Three-monthperiods ended March 31	Three-monthperiods ended March 31	Three-monthperiods ended March 31
		2018		2017
	29,615,049 $ 2,280,321 31,895,370 4,208,233) ( 27,687,138 $		30,643,548 $ 2,317,714 32,961,262 4,320,010) ( 28,641,252 $

• B. A reconciliation of adjusted current income before tax and the income before tax from continuing operations is provided as follows:

Adjusted income from reportable segments before income tax Adjusted (loss)income from other operating segments before income tax Total operating segments Income from elimination of inter-segment revenue Income from continuing operations before income tax
		2018
	2,099,550 $ 174,773) ( 1,924,777 2,504 1,927,281 $			2,476,462 $ 180,934 2,657,396 22,666 2,680,062 $

~65~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Table 1

Loans to others

Three-month period ended March 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Maximum outstanding balance during the three-month period ended March 31,2018 Balance at March 31,2018 Actual amount drawn down No. （Note 1） Creditor Borrower General ledger account Is a related party Interest rate Nature of loan Amount of transactions with the borrower Reason for short-term financing Allowance for doubtful accounts	Collateral	Limit on loans granted to a singleparty （Note 2）	Ceiling on total loans granted （Note 3）	Footnote
	Item Value
1 XIAMEN CHENG SHIN ENTERPRISE CO., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. Other receivables Yes 3,600,060 $ 3,600,060 $ 3,266,249 $ 3.446%~4.75% Note 4 - $ Operating capital - $ 1 XIAMEN CHENG SHIN ENTERPRISE CO., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. Other receivables Yes 1,857,600 1,857,600 1,602,180 4.75% Note 4 - Operating capital - 1 XIAMEN CHENG SHIN ENTERPRISE CO., LTD. CHENG SHIN (XIAMEN) INTL AUTOMOBILE CULTURE CENTER CO., LTD. Other receivables Yes 232,200 232,200 157,896 6.65% Note 4 - Operating capital - 2 CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. CHENG SHIN (XIAMEN) INTL AUTOMOBILE CULTURE CENTER CO., LTD. Other receivables Yes 1,857,600 1,857,600 1,764,720 4.75% Note 4 - Operating capital - 2 CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. Other receivables Yes 928,800 928,800 236,844 4.75% Note 4 - Operating capital - 2 CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. XIAMEN ESATE CO., LTD. Other receivables Yes 464,400 464,400 371,520 4.75% Note 4 - Operating capital - 3 CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. Other receivables Yes 2,763,600 1,857,600 1,346,760 4.75% Note 4 - Operating capital - 4 CHENG SHIN LOGISTIC (XIAMEN) IND., LTD. CHIN CHOU CHENG SHIN ENTERPRISE CO., LTD Other receivables Yes 9,288 9,288 4,644 4.35% Note 4 - Operating capital -	None - $ None - None - None - None - None - None - None -	4,829,737 $ 4,829,737 4,829,737 7,740,196 7,740,196 7,740,196 14,099,591 187,678	8,049,561 $ 8,049,561 8,049,561 12,900,327 12,900,327 12,900,327 23,499,318 312,796	Note 6 Note 6 Note 6 Note 6 Note 6 Note 6 Note 6 Note 6

Note 1: The numbers filled in for the loans provided by the Company or subsidiaries are as follows:

(1) The Company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Limit on loans granted by CHENG SHIN RUBBER (XIAMEN) IND., LTD. , CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. and CHEN SHIN LOGISTIC (XIAMEN) CO., LTD to a single party is 60% of the net assets of CHENG SHIN RUBBER (XIAMEN) IN SHIN ENTERPRISE CO., LTD.

Note 3: Limit on loans granted by CHENG SHIN RUBBER (XIAMEN) IND., LTD., CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. and CHEN SHIN LOGISTIC (XIAMEN) CO., LTD to a single party is 100% of the net assets of CHENG SHIN RUBBER (XIAMEN) IN SHIN ENTERPRISE CO., LTD.

Note 4: Fill in purpose of loan when nature of loan is for short-term financing. The transaction was completed through the trust loans signed with financial institutions in Mainland China.

Note 5: The amount of ending balance was equal to the limit on loans as approved by the Board of Directors.

Note 6: The transactions were eliminated when preparing the consolidated financial statements.

Table 1 page 1

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Provision of endorsements and guarantees to others

Three-month period ended March 31, 2018

Number （Note 1） Endorser/ guarantor	Partybeingendorsed/guaranteed	Limit on endorsements/ guarantees provided for a singleparty	Maximum outstanding endorsement/ guarantee amount as of March 31,2018	Outstanding endorsement/ guarantee amount at March 31,2018	Actual amount drawn down	Amount of endorsements / guarantees secured with collateral	Ratio of accumulated endorsement/ guarantee amount to net asset value of the endorser/ guarantor company	Ceiling on total amount of endorsements/ guarantees provided	Provision of endorsements/ guarantees by parent company to subsidiary	Provision of endorsements/ guarantees by subsidiary to parent company	Provision of endorsements/ guarantees to the party in Mainland China	Footnote
	Companyname Relationship with the endorser/ guarantor
0 Cheng Shin Rubber Ind. Co., Ltd. 0 Cheng Shin Rubber Ind. Co., Ltd. 0 Cheng Shin Rubber Ind. Co., Ltd. 0 Cheng Shin Rubber Ind. Co., Ltd. 0 Cheng Shin Rubber Ind. Co., Ltd. 0 Cheng Shin Rubber Ind. Co., Ltd. 1 CHENG SHIN RUBBER (XIAMEN) IND., LTD.	MAXXIS International (Thailand) Co., Ltd. Sub- subsidiary Cheng Shin Rubber (Vietnam) IND Co., Ltd. Sub- subsidiary CHENG SHIN TIRE & RUBBER (CHONGQING) CO., LTD. Sub- subsidiary CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. Sub- subsidiary Maxxis Rubber India Private Limited Subsidiary PT MAXXIS International Indonesia. Subsidiary XIAMEN ESATE CO., LTD. Note 3 (1)	42,194,334 $ 42,194,334 $ 42,194,334 $ 42,194,334 $ 42,194,334 $ 42,194,334 $ 18,799,454	5,226,300 $ 292,250 2,338,000 438,375 7,190,475 7,949,200 2,554,200	4,786,100 $ 291,050 2,037,350 436,575 7,158,215 7,916,560 2,554,200	3,905,150 $ 58,210 315,304 436,575 5,693,529 5,704,580 1,046,760	- $ - - - - - -	5.67 0.34 2.41 0.52 8.48 9.38 10.87	59,072,068 $ 59,072,068 $ 59,072,068 $ 59,072,068 $ 59,072,068 $ 59,072,068 $ 23,499,318	Y Y Y Y Y Y N	N N N N N N N	N N Y Y N N Y	Note 2 , Note 5 Note 2 , Note 5 Note 2 , Note 5 Note 2 , Note 5 Note 2 , Note 5 Note 2 , Note 5 Note 4 , Note 5

Note 1: The numbers filled in for the endorsements/guarantees provided by the Company or subsidiaries are as follows:

(1) The Company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

• Note 2: Ceiling on the Company's total endorsements/guarantees to others is 70% of the Company's current net assets.

Limit on the Company's endorsements/guarantees to a single party is 20% of the Company's net assets.

Limit on the Company's endorsements/guarantees to a foreign single affiliate company is 50% of the Company's net assets.

$	59,072,068
$	16,877,734
$	42,194,334

Note 3: Relationship between the endorser/guarantor and the Company is classified into the following two categories:

(1) The endorser/guarantor parent company owns directly more than 50% voting shares of the endorsed/guaranteed subsidiary.

(2) The endorser/guarantor parent company and its subsidiaries jointly own more than 50% voting shares of the endorsed/guaranteed company. Note 4:Limit on the Company's endorsements/gurantees provided to others is 100% of the Company's net assets. Limit on total endorsements provided to a single party is 80% of the Company's net assets.

• Note 5: Outstanding endorsement/guarantee amount and draw down amount are translated at the spot exchange rates prevailing at March 31, 2017.

Table 2 page 1

Table 3

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Holding of marketable securities at the end of the period (not including subsidiaries, associates and joint ventures)

Three-month period ended March 31, 2018

Expressed in thousands of NTD

(Except as otherwise indicated)

Securities held by Marketable securities(Note 1) Relationship with the securities issuer General ledger account		As of Marchr31,2018	As of Marchr31,2018	Footnote
	Number of shares/units	Bookvalue	Ownership (%) Fairvalue
Cheng Shin Rubber Ind. Co., Ltd. Other ordinary shares - Current financial assets at fair value through other comprehensive income Cheng Shin Rubber Ind. Co., Ltd. Other ordinary shares - Non-current financial assets at fair value through other comprehensive income	- -	21,435 58,187	- 21,435 - 58,187	Note 2 Note 2

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities. Note 2: Other marketable securities do not exceed 5% of the account.

Table 3 page 1

CHENG SHIN RUBBER IND. CO., LTD.

Acquisition or sale of the same security with the accumulated cost exceeding $300 million or 20% of the Company's paid-in capital

Three-month period ended March 31, 2018

Table 4

Expressed in thousands of NTD (Except as otherwise indicated)

Relationship Balance as at Addition Disposal Marketable with January 1, 2018 （ Note 3 ） （ Note 3 ） Balance as at March 31, 2018 securities General Counterparty the investor Number of Number of Number of Gain (loss) on Number of Investor （ Note 1 ） ledger account （ Note 2 ） （ Note 2 ） shares Amount shares Amount shares Selling price Book value disposal shares Amount Cheng Shin Maxxis Investments Maxxis Subsidiary 549,995,541 $ 2,049,105 99,999,189 $ 450,690 - $ - $ - $ - 649,994,730 $ 2,134,085 Rubber Ind. Rubber India accounted for Rubber India Co., Ltd. Private using equity Private Limited method Limited

• Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities.

• Note 2: Fill in the columns the counterparty and relationship if securities are accounted for under the equity method; otherwise leave the columns blank.

Note 3: Aggregate purchases and sales amounts should be calculated separately at their market values to verify whether they individually reach NT$300 million or 20% of paid-in capital or more. Note 4: Paid-in capital referred to herein is the paid-in capital of parent company. In the case that shares were issued with no par value or a par value other than NT$10 per share, the 20 % of paid-in capital shall be replaced by 10% of equity attributable to owners of the parent in the calculation.

Note 5: Gain and loss on investment accounted for using equity method was included in the balance as at March 31, 2018.

Table 4 page 1

CHENG SHIN RUBBER IND. CO., LTD.

Table 5

Expressed in thousands of NTD

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more

Three-month period ended March 31, 2018

(Except as otherwise indicated)

Purchaser/seller	Counterparty	Relationship with the counterparty			Transaction		Differences in transaction terms compared to third party transactions(Note 1)	Differences in transaction terms compared to third party transactions(Note 1)	Notes/accounts receivable (payable)	Notes/accounts receivable (payable)	Footnote (Note 2)
			Purchases (sales)	Amount	Percentage of total purchases (sales)	Credit term	Unitprice	Credit term	Balance	Percentage of total notes/accounts receivable (payable)
Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. CHENG SHIN RUBBER (XIAMEN) IND., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. MAXXIS International (Thailand) Co., Ltd. MAXXIS International (Thailand) Co., Ltd.	CHENG SHIN RUBBER USA, INC. CHENG SHIN RUBBER CANADA, INC. MAXXIS International (Thailand) Co., Ltd. Maxxis(Taiwan) Trading Co., LTD. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. CHENG SHIN RUBBER USA, INC. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD.	Subsidiary Subsidiary Sub-subsidiary Subsidiary Same ultimate parent Same ultimate parent Same ultimate parent Same ultimate parent Same ultimate parent	(sales) (sales) (sales) (sales) (sales) (sales) (sales) (sales) (sales)	754,588) ($ 348,335) ( 136,237) ( 852,108) ( 191,395) ( 417,386) ( 139,719) ( 292,202) ( 160,676) (	15.93) ( 7.36) ( 2.88) ( 17.99) ( 4.26) ( 42.68) ( 14.29) ( 8.39) ( 4.61) (	Collect within 90 days after shipment of goods Collect within 90 days after shipment of goods Collect within 60 days after shipment of goods Collect within 30 days Collect within 60~90 days after shipment of goods Collect within 60~90 days after shipment of goods Collect within 60~90 days after shipment of goods Collect within 60~90 days after shipment of goods Collect within 60~90 days after shipment of goods	Same Same Same Same Same Same Same Same Same	Same Same Same Same Same Same Same Same Same	500,658 $ 373,269 109,624 380,886 251,881 340,831 130,223 130,223 218,980	17.11% 12.75% 3.75% 13.01% 12.03% 35.71% 13.65% 13.65% 7.93%	Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4 Note 4

Table 5 page 1

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Table 6

Receivables from related parties reaching NT$100 million or 20% of paid-in capital or more

Three-month period ended March 31, 2018

Expressed in thousands of NTD (Except as otherwise indicated)

Creditor	Counterparty	Relationship with the counterparty	Balance as at March 31,2018	Turnover rate	Overdue	receivables	Amount collected subsequent to the balance sheet date (Note 1)	Allowance for doubtful accounts
					Amount	Action taken
Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. CHENG SHIN RUBBER (XIAMEN) IND., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. MAXXIS International (Thailand) Co., Ltd. MAXXIS International (Thailand) Co.,Ltd	CHENG SHIN RUBBER USA, INC. CHENG SHIN RUBBER CANADA, INC. MAXXIS International (Thailand) Co., Ltd. Cheng Shin Rubber (Vietnam) IND Co., Ltd. Maxxis(Taiwan) Trading Co., LTD. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD CHENG SHIN RUBBER USA, INC. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD.	Subsidiary (Note 5) Subsidiary (Note 5) Sub-subsidiary (Note 5) Sub-subsidiary (Note 5) Subsidiary (Note 5) Same ultimate parent (Note 5) Same ultimate parent (Note 5) Same ultimate parent (Note 5) Same ultimate parent (Note 5) Same ultimate parent (Note 5)	500,996 $ 373,515 252,537 187,430 380,905 251,881 342,827 130,223 218,980 160,551	Note4 Note 4 Note 3 Note 3 Note 4 0.72 Note 4 1.19 1.32 1.58	- - - - - - - - - -	- - - - - - - - - -	213,906 $ 113,075 25,860 19,195 380,905 37 331,401 48,079 91,562 22,117	- - - - - - - - - -

Note 1: Subsequent collection is the amount collected as of May 4, 2018.

Note 2: Paid-in capital referred to herein is the paid-in capital of parent company.

Note 3: The amount comprises accounts receivable, commission receivable, endorsements/guarantees receivable, patent royalties receivable, royalties receivable for trademark and other receivables and thus, the turnover rate is not calculated Note 4: The amount comprises accounts receivable and other receivables and thus, the turnover rate is not calculated.

Note 5: The transactions were eliminated when preparing the consolidated financial statements.

Table 6 page 1

CHENG SHIN RUBBER IND. CO., LTD.

Significant inter-company transactions during the reporting periods

Three-month period March 31, 2018

Table 7 Number (Note 1)	Companyname	Counterparty	Relationship (Note 2)		(Except as otherwise indicated) Expressed in thousands of NTD Transaction	(Except as otherwise indicated) Expressed in thousands of NTD Transaction	(Except as otherwise indicated) Expressed in thousands of NTD Transaction
				General ledgeraccount	Amount (Note4)	Transactionterms	Percentage of consolidated total operating revenues or totalassets (Note 3)
0 0 0 0 0 0 1 1 2 2 2 2 3 3 3 4 4	Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. XIAMEN CHENG SHIN ENTERPRISE CO., LTD. CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. MAXXIS International (Thailand) Co., Ltd. MAXXIS International (Thailand) Co., Ltd.	CHENG SHIN RUBBER USA, INC. CHENG SHIN RUBBER USA, INC. CHENG SHIN RUBBER CANADA, INC. CHENG SHIN RUBBER CANADA, INC. Maxxis(Taiwan) Trading Co., LTD. Maxxis(Taiwan) Trading Co., LTD. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD. XIAMEN ESTATE CO., LTD. CHENG SHIN RUBBER USA, INC. CHENG SHIN RUBBER USA, INC.	1 1 1 1 1 1 3 3 3 3 3 3 3 3 3 3 3	Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Accounts receivable Other receivables Sales Accounts receivable Other receivables Other receivables Other receivables Other receivables Other receivables Sales Accounts receivable	754,588 $ 500,658 348,335 373,269 852,108 380,886 251,881 1,346,760 417,386 340,831 3,266,249 1,602,180 236,844 1,764,720 371,520 292,202 218,980	Collect within 90 days after shipment of goods Collect within 90 days after shipment of goods Collect within 90 days after shipment of goods Collect within 90 days after shipment of goods The term is 30 days after monthly billing. The term is 30 days after monthly billing. Collect within 60~90 days after shipment of goods Pay interest quarterly Collect within 60~90 days after shipment of goods Collect within 60~90 days after shipment of goods Pay interest quarterly Pay interest quarterly Pay interest quarterly Pay interest quarterly Pay interest quarterly Collect within 60~90 days after shipment of goods Collect within 60~90 days after shipment of goods	2.73% 0.28% 1.26% 0.21% 3.08% 0.21% 0.14% 0.75% 1.51% 0.19% 1.81% 0.89% 0.13% 0.98% 0.21% 1.06% 0.12%

Note 1: The numbers filled in for the transaction company in respect of inter-company transactions are as follows:

(1) Parent company is ‘0’.

(2) The subsidiaries are numbered in order starting from ‘1’.

Note 2: Relationship between transaction company and counterparty is classified into the following three categories:

(1) Parent company to subsidiary.

(2) Subsidiary to parent company.

(3) Subsidiary to subsidiary.

Note 3: Regarding percentage of transaction amount to consolidated total operating revenues or total assets, it is computed based on period-end balance of transaction to consolidated total assets for balance sheet accounts and based on accumulated transaction amount for the period to consolidated total operating revenues for income statement accounts.

Note 4: Transaction amounts account for at least NT$200 million.

Table 7 page 1

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Table 8

Expressed in thousands of NTD (Except as otherwise indicated)

Information on investees

Three-month period March 31, 2018

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at March 31,2018	Shares held as at March 31,2018	Shares held as at March 31,2018	Net profit (loss) of the investee for the three-month period ended March 31,2018	Investment income(loss) recognised by the Company for the three-month period ended March 31, 2018(Note 1)	Footnote
				Balance as at March 31, 2018	Balance as at December 31,2017	Number of shares	Ownership (%)	Book value
Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. Cheng Shin Rubber Ind. Co., Ltd. MAXXIS International Co., Ltd. CST Trading Ltd.	MAXXIS International Co., Ltd. CST Trading Ltd. MAXXIS Trading Ltd. CHENG SHIN RUBBER USA, INC. CHENG SHIN RUBBER CANADA, INC. NEW PACIFIC INDUSTRY COMPANY LIMITED MAXXIS Tech Center Europe B.V. Cheng Shin Holland B.V. PT MAXXIS INTERNATIONAL INDONESIA Maxxis Rubber India Private Limited Maxxis(Taiwan) Trading Co., LTD. PT MAXXIS TRADING INDONESIA MAXXIS International (HK) Ltd. Cheng Shin International (HK) Ltd.	Cayman Islands British Virgin Islands British Virgin Islands U.S.A Canada Taiwan Netherlands Netherlands Indonesia India Taiwan India Hong Kong Hong Kong	Holding company Holding company Holding company Import and export of tires Import and export of tires Processing and sales of various anti-vibration rubber and hardware Technical centre Import and export of tires Production and sales of various types of tires Production and sales of various types of tires Wholesale and retail of tires Large-amount trading of vehicles parts and accessories Holding company Holding company	912,218 $ 2,103,073 7,669,780 551,820 32,950 50,001 41,260 23,162 2,461,355 3,124,651 100,000 30,235 - -	912,218 $ 2,103,073 7,669,780 551,820 32,950 50,001 41,260 23,162 2,461,355 2,673,961 100,000 30,235 - -	35,050,000 72,900,000 237,811,720 1,800,000 1,000,000 5,000,000 1,000,000 9,708 79,997,000 649,994,730 10,000,000 9,990 226,801,983 246,767,840	100.00 100.00 100.00 100.00 100.00 50.00 100.00 30.00 100.00 100.00 100.00 100.00 100.00 100.00	42,547,971 $ 26,484,399 10,024,935 2,430,042 714,212 150,960 50,392 16,811 1,606,341 2,134,085 476,748 28,710 33,316,750 26,326,488	344,185 $ 845,609 87,555 32,602 6,776) ( 10,313) ( - 25,731) ( 25,731) ( 278,308) ( 51,867 88 301,235 848,428	346,956 $ 851,982 111,128 87,563 32,602 3,388) ( 10,313) ( - 25,731) ( 278,308) ( 51,867 88 301,235 848,428	Subsidiary Note 3 Subsidiary Note 3 Subsidiary Note 3 Subsidiary Note 3 Subsidiary Note 3 Note 2 Subsidiary Note 3 Note 2 Subsidiary Note 3 Subsidiary Note 3 Subsidiary Note 3 Subsidiary Note 3 Sub-subsidiary Note 3 Sub-subsidiary Note 3

Table 8 page 1

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Table 8

Expressed in thousands of NTD (Except as otherwise indicated)

Information on investees

Three-month period March 31, 2018

Investor	Investee	Location	Main business activities	Initial investment amount	Initial investment amount	Shares held as at March 31,2018	Shares held as at March 31,2018	Shares held as at March 31,2018	Net profit (loss) of the investee for the three-month period ended March 31,2018	Investment income(loss) recognised by the Company for the three-month period ended March 31, 2018(Note 1)	Footnote
				Balance as at March 31, 2018	Balance as at December 31,2017	Number of shares	Ownership (%)	Book value
MAXXIS Trading Ltd. MAXXIS Holdings (BVI) Co., Ltd. MAXXIS Holdings (BVI) Co., Ltd.	MAXXIS Holdings (BVI) Co., Ltd. MAXXIS International (Thailand) Co., Ltd. Cheng Shin Rubber (Vietnam) IND Co., Ltd.	British Virgin Islands Thailand Vietnam	Import and export of tires Production and sales of truck and automobile tires Production and sales of various types of tires	7,669,780 5,724,372 1,945,408	7,669,780 5,724,372 1,945,408	237,811,720 65,000,000 62,000,000	100.00 100.00 100.00	10,505,743 7,915,814 2,586,956	117,369 33,076) ( 150,513	117,369 43,224) ( 154,473	Sub-subsidiary Note 3 Sub-subsidiary Note 3 Sub-subsidiary Note 3

Note 1: Including investment income (loss) used to offset against sidestream and upstream transactions. Note 2: Investee companies are accounted for under the equity method.

Note 3: The transactions were eliminated when preparing the consolidated financial statements.

Table 8 page 2

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China

Three-month period ended March 31, 2018

Table 9

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method(Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2018	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2018	Net income of investee as of March 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the three-month period ended March 31,2018	Book value of investments in Mainland China as of March 31, 2018	Accumulated amount of investment income remitted back to Taiwan as of March 31,2018	Footnote
					Remitted to MainlandChina	Remitted back to Taiwan
CHENG SHIN RUBBER (XIAMEN) IND., LTD. CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD. CHENG SHIN TOYO (KUNSHAN) MACHINERY CO., LTD. CHENG SHIN TIRE & RUBBER (CHONGQING) CO., LTD. KUNSHAN MAXXIS TIRE CO., LTD TIANJIN TAFENG RUBBER IND CO., LTD. CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD.	A. Cover and tubes of tires and cover and tubes of bicycle tires B. Reclaimed rubber, adhesive, tape and other rubber products C. Plastic machinery, molds and its accessory products A. Cover and tubes of tires and cover and tubes of bicycle tires B. Reclaimed rubber, adhesive, tape and other rubber products C. Plastic machinery, molds and its accessory products Plastic machinery, molds and its accessory products A. Cover and tubes of tires and cover and tubes of bicycle tires B. Reclaimed rubber, adhesive, tape and other rubber products C. Plastic machinery, molds and its accessory products Retail of accessories for rubber tires A. Cover and tubes of tires and cover and tubes of bicycle tires B. Reclaimed rubber, adhesive, tape and other rubber products C. Plastic machinery, molds and its accessory products A. Radial tire and other various tire products B. Reclaimed rubber, adhesive, tape and other rubber products C. Plastic machinery, molds and its accessory products	5,093,375 $ 6,548,625 247,393 2,910,500 23,235 523,890 3,783,650	2 2 2 2 2 2 2	910,834 $ 2,385,506 68,602 - - - -	- $ - - - - - -	- $ - - - - - -	910,834 $ 2,385,506 68,602 - - - -	172,770 $ 745,988 10,087 316,202 233) ( 65,991) ( 184,781	100.00 100.00 50.00 100.00 100.00 100.00 100.00	175,438 $ 747,268 5,044 324,220 233) ( 65,991) ( 184,776	8,049,561 $ 377,162 138,147 153,270 5,561,224 1,467,188 23,499,318	4,707,620 $ - - - 452,779 - 16,957,236	(Note 2、3、 5、6、7) (Note 2、4、 6、8) (Note 6、8) (Note 2、4、 6、8) (Note 6、8) (Note 6、7) (Note 2、3、 6、7)

Table 9 page 1

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China

Three-month period ended March 31, 2018

Table 9

Expressed in thousands of NTD (Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method(Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2018	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2018	Net income of investee as of March 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the three-month period ended March 31,2018	Book value of investments in Mainland China as of March 31, 2018	Accumulated amount of investment income remitted back to Taiwan as of March 31,2018	Footnote
					Remitted to MainlandChina	Remitted back to Taiwan
XIAMEN CHENG SHIN ENTERPRISE CO., LTD. CHENG SHIN (XIAMEN) INTL AUTOMOBILE CULTURE CENTER CO., LTD CHIN CHOU CHENG SHIN ENTERPRISE CO., LTD. CHENG SHIN LOGISTIC (XIAMEN) CO., LTD. CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD.	A. Radial tire and other various tire products B. Reclaimed rubber, adhesive, tape and other rubber products C. Plastic machinery, molds and its accessory products A. Research, development and testing of tires and automobiles accessory products and display of related products B. Management of racing tracks Distribution of rubber and components of tires International container transportation business A. Tires and tubes B. Reclaimed rubber, adhesive, tape and other rubber products C. Plastic machinery, molds and its accessory products	1,309,725 $ 582,100 162,645 66,972 4,414,650	2 2 2 2 2	- $ - - - -	- $ - - - -	- $ - - - -	- $ - - - -	102,041 $ 20,104) ( 3,243) ( 5,479 186,145	100.00 100.00 95.00 49.00 100.00	102,150 $ 20,104) ( 3,081) ( 2,685 186,145	24,161,878 $ 358,378 6,214,433 22,249 1,561,905	17,466,059 $ 368,346 753,758 - 757,407	(Note 2、6、 7) (Note 6) (Note 6、7) (Note 6、7) (Note 5、6、 7)

Table 9 page 2

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Information on investments in Mainland China

Three-month period ended March 31, 2018

Table 9

Expressed in thousands of NTD

(Except as otherwise indicated)

Investee in Mainland China	Main business activities	Paid-in capital	Investment method(Note 1)	Accumulated amount of remittance from Taiwan to Mainland China as of January 1, 2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2018	Amount remitted from Taiwan to Mainland China/ Amount remitted back to Taiwan for the three-month period ended March 31,2018	Accumulated amount of remittance from Taiwan to Mainland China as of March 31, 2018	Net income of investee as of March 31, 2018	Ownership held by the Company (direct or indirect)	Investment income (loss) recognised by the Company for the three-month period ended March 31,2018	Book value of investments in Mainland China as of March 31, 2018	Accumulated amount of investment income remitted back to Taiwan as of March 31,2018	Footnote
					Remitted to MainlandChina	Remitted back to Taiwan
XIAMEN ESATE CO., LTD.	Construction and trading of employees’ housing	1,533,510 $	2	- $	- $	- $	- $	10,068) ($	100.00	10,068) ($	12,911,922 $	3,597,249 $	(Note 6、7)

Note 1: Investment methods are classified into the following three categories:

(1) Directly invest in a company in Mainland China.

(2) Through investing in an existing company in the third area, which then invested in the investee in Mainland China.

Note 2: Including investment income (loss) used to offset against sidestream and upstream transactions.

Note 3: The Company and Cheng Shin Rubber (Xiamen) Ind., Ltd. directly and indirectly holds 60% and 40% of the share ownership in Cheng Shin Petrel Tire (Xiamen) Co., Ltd., respectively.

Note 4: The Company and Cheng Shin Tire & Rubber (China) Co., Ltd. directly and indirectly holds 30% and 70% of share ownership in Cheng Shin Tire & Rubber (Chongqing) Co., Ltd., respectively.

Note 5: Cheng Shin Rubber (Xiamen) Ind., Ltd. and MAXXIS International (HK) Ltd. directly and indirectly holds 75% and 25% of share ownership in Cheng Shin Rubber (Zhangzhou) Ind Co., Ltd, respectively.

Note 6: Paid-in capital was converted at the exchange rate of NTD 29.105: USD 1 and NTD 4.647: RMB 1 prevailing on March 31, 2018.

Note 7: Investment income (loss) was recognised based on the financial statements that are reviewed and attested by international accounting firm which has cooperative relationship with accounting firm in R.O.C. Note 8: Investment income (loss) was recognised based on the financial statements that are reviewed and attested by R.O.C. parent company's CPA.

Table 9 page 3

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES

Table 9

Ceiling on investments in Mainland China

Three-month period ended Marchr 31, 2018

Expressed in thousands of NTD

(Except as otherwise indicated)

Investment amount approved by the

Accumulated amount of remittance from Taiwan to Mainland Investment Commission of the Ministry of Ceiling on investments in Mainland China imposed by the Company name China as of March 31, 2018 (Note 1) Economic Affairs (MOEA) (Note 1) Investment Commission of MOEA (Note 2) Cheng Shin Rubber Ind. Co., Ltd. $ 3,577,005 $ 19,584,755 $ -

Note 1: Accumulated amount of remittance from Taiwan to Mainland China as of December 31, 2018 was USD$122,900 thousand and the total investment amount approved by the Investment Commission, MOEA, was USD$672,900 thousand.

Note 2: According to 'Regulations Governing the Permission of Investment or Technical Cooperation in Mainland Area', the Company acquired the operations headquarters certification issued by the Industrial Development Bureau, Ministry of Economic Affairs, R.O.C. and thus, the investments amount in Mainland China is unlimited.

Table 9 page 4