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CST Interim / Quarterly Report 2020

Dec 17, 2020

51971_rns_2020-12-17_0b969897-78a2-428e-a2b0-bbe9bda0a5c8.pdf

Interim / Quarterly Report

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

CONSOLIDATED FINANCIAL STATEMENTS AND

REVIEW REPORT OF INDEPENDENT

ACCOUNTANTS

SEPTEMBER 30, 2020 AND 2019

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.

~1~

INDEPENDENT AUDITORS' REVIEW REPORT TRANSLATED FROM CHINESE

PWCR 20002018 To the Board of Directors and Shareholders of Cheng Shin Rubber Ind. Co., Ltd. and subsidiaries

Introduction

We have reviewed the accompanying consolidated balance sheets of Cheng Shin Rubber Ind. Co., Ltd. and subsidiaries as at September 30, 2020 and 2019, and the related consolidated statements of comprehensive income for the three-month and nine-month periods then ended, as well as the consolidated statements of changes in equity and of cash flows for the nine-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 the equity method were not reviewed by independent accountants. Those statements reflect total assets of NT$26,865,721 thousand and NT$29,096,450 thousand, constituting 18% and 17% of the consolidated total assets, and total liabilities of NT$20,417,704 thousand and NT$21,695,887 thousand, constituting 28% and 25% of the consolidated total liabilities as at September 30, 2020 and 2019, respectively, and total net operating revenues of

~2~

NT$4,164,241 thousand, NT$4,293,129 thousand, NT$10,164,747 thousand and NT$11,978,884 thousand, constituting 15%, 16%, 15% and 14% of consolidated total net operating revenue, and total comprehensive loss of NT$343,550 thousand, NT$549,662 thousand, NT$1,578,474 thousand and NT$723,683 thousand, constituting 11%, 32%, 95% and 35% of the consolidated total comprehensive (loss) income for the three-month and nine-month periods then ended, respectively.

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 the 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 September 30, 2020 and 2019, and of its consolidated financial performance for the three-month and nine-month periods then ended and its consolidated cash flows for the nine-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.

Wang, Yu-Juan Zhou, Jian Hong

For and on behalf of PricewaterhouseCoopers, Taiwan November 12, 2020

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 independent auditors’ review report 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.

~3~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2020, DECEMBER 31, 2019 AND SEPTEMBER 30, 2019

(Expressed in thousands of New Taiwan dollars) (The balance sheets as of September 30, 2020 and 2019 are reviewed, not audited)

Assets Notes September30,2020
AMOUNT
%
$ 22,668,172
15
-
-
25,636
-
2,549,939
2
9,231,483
6
44,235
-
14,239,618
9
1,210,949
1
979,696
1
50,949,728
34
58,187
-
167,819
-
89,705,283
60
5,233,282
3
530,862
-
2,243,830
2
904,306
1
98,843,569
66
$ 149,793,297
100
(Continued)		 December31,2019
AMOUNT
%
$ 25,501,222
16
-
-
25,935
-
3,761,453
2
8,938,927
5
54,053
-
17,949,870
11
1,214,726
1
1,483,789
1
58,929,975
36
58,187
-
157,489
-
95,889,585
59
5,518,534
3
550,156
-
1,986,139
1
950,164
1
105,110,254
64
$ 164,040,229
100		 September30,2019 September30,2019
AMOUNT
$ 25,501,222
-
25,935
3,761,453
8,938,927
54,053
17,949,870
1,214,726
1,483,789
58,929,975
58,187
157,489
95,889,585
5,518,534
550,156
1,986,139
950,164
105,110,254
$ 164,040,229		 AMOUNT
$ 24,493,756
2,100
21,323
2,935,216
10,334,274
44,883
17,608,241
1,696,913
1,422,702
58,559,408
58,187
153,814
99,018,243
5,566,634
558,715
1,734,436
947,639
108,037,668
$ 166,597,076		 %
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
1150
Notes receivable, net
1170
Accounts receivable, net
1180
Accounts receivable - related
parties
130X
Inventories
1410
Prepayments
1470
Other current assets
11XX
Current Assets
Non-current assets
1517
Financial assets at fair value
through other comprehensive
income-non-current
1550
Investments accounted for
using the equity method
1600
Property, plant and equipment,
net
1755
Right-of-use assets
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)
6(4)
6(4)
7
6(5)
6(3)
6(6)
6(7)
6(8)
6(9)
6(27)
6(10)		 15
-
-
2
6
-
10
1
1
35
-
-
60
3
-
1
1
65
100

~4~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2020, DECEMBER 31, 2019 AND SEPTEMBER 30, 2019 (Expressed in thousands of New Taiwan dollars) (The balance sheets as of September 30, 2020 and 2019 are reviewed, not audited)

September30,2020 December31,2019 September30,2019
Liabilities andEquity Notes AMOUNT % AMOUNT % AMOUNT %
Current liabilities
2100 Short-term borrowings 6(11) $ 10,596,366 7 $ 16,843,366 10 $ 18,562,642 11
2130 Current contract liabilities 6(21) 956,199 1 935,619 1 2,471,481 2
2150 Notes payable 511,617 - 1,122,276 1 967,866 1
2170 Accounts payable 6,892,469 5 7,793,330 5 7,425,121 4
2200 Other payables 6(12) 4,868,464 3 5,587,574 3 5,459,466 3
2230 Current income tax liabilities 6(27) 1,206,597 1 755,825 - 631,647 -
2280 Current lease liabilities 173,447 - 139,374 - 135,047 -
2300 Other current liabilities 6(13)(14)(15) 10,906,686 7 10,226,810 6 9,142,019 6
21XX Current Liabilities 36,111,845 24 43,404,174 26 44,795,289 27
Non-current liabilities
2530 Corporate bonds payable 6(14) 8,500,000 6 14,500,000 9 14,500,000 9
2540 Long-term borrowings 6(15) and 7 24,409,856 16 23,302,050 14 24,126,175 14
2550 Provisions for liabilities – non-
current 144,895 - 141,841 - 145,058 -
2570 Deferred income tax liabilities 6(27) 1,033,617 1 1,313,834 1 1,353,305 1
2580 Non-current lease liabilities 544,589 - 569,553 - 492,253 -
2600 Other non-current liabilities 6(16) 2,694,605 2 2,838,090 2 2,848,760 2
25XX Non-current liabilities 37,327,562 25 42,665,368 26 43,465,551 26
2XXX Total Liabilities 73,439,407 49 86,069,542 52 88,260,840 53
Equity
Equity attributable to owners of
parent
Share capital 6(17)
3110 Share capital - common stock 32,414,155 22 32,414,155 20 32,414,155 20
Capital surplus 6(18)
3200 Capital surplus 52,576 - 52,576 - 52,576 -
Retained earnings 6(19)
3310 Legal reserve 15,533,661 10 15,186,978 9 15,186,978 9
3320 Special reserve 6,904,245 5 5,200,298 3 5,200,298 3
3350 Unappropriated retained
earnings 28,972,768 19 31,445,921 19 31,004,996 19
Other equity interest 6(20)
3400 Other equity interest ( 8,050,986) ( 5) ( 6,904,245) ( 4) ( 6,090,484) ( 4)
31XX Equity attributable to
owners of the parent 75,826,419 51 77,395,683 47 77,768,519 47
36XX Non-controlling interest 527,471 - 575,004 1 567,717 -
3XXX Total equity 76,353,890 51 77,970,687 48 78,336,236 47
Significant contingent liabilities 9
and unrecognised contract
commitments
Significant events after the
balance sheet date
3X2X Total liabilities and equity $ 149,793,297 100 $ 164,040,229 100 $ 166,597,076 100

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

~5~

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

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share) (Review, not audited)

Three-month periods ended September 30 periods ended September 30 periods ended September 30 Nine-month periods ended September 30 Nine-month periods ended September 30 Nine-month periods ended September 30 Nine-month periods ended September 30
2020 2019 2020 2019
Items Notes AMOUNT % AMOUNT % AMOUNT % AMOUNT %
4000 Sales revenue
 6(21) and 7 $ 27,927,586 100 $ 27,631,531 100 $ 69,506,400 100 $ 82,887,311 100
5000 Operating costs
 6(5) ( 20,197,317) ( 72)( 21,779,155)( 79) ( 53,115,898) ( 76) ( 64,582,614) ( 78)
5900 Net operating margin 7,730,269 28
5,852,376 21
16,390,502 24
18,304,697 22
Operating expenses
 7


6100 Selling expenses ( 1,963,353) ( 7) ( 2,244,742) ( 8 ) ( 5,262,937 ) ( 8) ( 6,171,391) ( 7)
6200 General and administrative expenses ( 961,275) ( 4) ( 888,709) ( 3 ) ( 2,558,530 ) ( 4) ( 2,725,921) ( 3)
6300 Research and development expenses ( 1,204,741) ( 4)( 1,229,326)( 5) ( 3,416,336) ( 5) ( 3,754,368) ( 5)
6000 Total operating expenses ( 4,129,369) ( 15)( 4,362,777)( 16) ( 11,237,803) ( 17) ( 12,651,680) ( 15)
6900 Operating profit 3,600,900 13
1,489,599 5
5,152,699 7
5,653,017 7
Non-operating income and expenses


7100 Interest income
 6(22) 49,055 -
 68,149 -
 198,986 -
 210,933 -
7010 Other income
 6(23) 343,437 1
 139,116 1
 823,132 1
 403,093 1
7020 Other gains and losses
 6(24) and 10 ( 369,335) ( 1) ( 386,153) ( 1 ) ( 1,054,108 ) ( 1) 72,599 -
7050 Finance costs
 6(25) ( 218,689) ( 1) ( 432,510) ( 2 ) ( 871,470 ) ( 1) ( 1,309,098) ( 2)
7060 Share of profit/(loss) of associates and joint ventures accounted
for using the equity method
6(6)		 ( 4) -
 249 -
 12,830 -
 3,700 -
7000 Total non-operating income and expenses ( 195,536) ( 1)( 611,149)( 2) ( 890,630) ( 1) ( 618,773) ( 1)
7900 Profit before income tax 3,405,364 12
 878,450 3
 4,262,069 6
 5,034,244 6
7950 Income tax expense
 6(27) ( 860,696) ( 3)( 580,296)( 2) ( 1,427,895) ( 2) ( 1,968,312) ( 2)
8200 Profit for the period $
2,544,668		 9 $
298,154		 1 $
2,834,174		 4 $
3,065,932		 4

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

~6~

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

THREE-MONTH AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars, except earnings per share) (Review, not audited)

Items Notes Three-month periods Three-month periods ended September 30 ended September 30 Nine-month
2020
AMOUNT




( $ 299)


(
299)		 Nine-month Nine-month Nine-month
2020 2019 2020 2019
AMOUNT





( $ 1,562)


(
1,562)
% % %
Other comprehensive income
Components of other comprehensive income that will not be
reclassified to profit or loss
8316
Unrealized gain(loss) on valuation of entity instruments at fair
value through 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

8399
Income tax relating to the components of other comprehensive
income that will be reclassified to profit or loss

8360
Components of other comprehensive income 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		 6(3)(20)
6(20)
6(20)(27)
6(28)
6(28)


-

-




-




(
3,771 )


-
-

(




-

(
(



606,495
$ 602,724
$ 3,147,392


$ 2,543,639

1,029
$ 2,544,668


$ 3,157,722

10,330)
$ 3,147,392


$

$

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

~7~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019 (Expressed in thousands of New Taiwan dollars)

(Review, not audited)

Notes
Nine-month period ended September 30, 2019
Balance at January 1, 2019
Profit for the period
Other comprehensive loss for the period
6(20)
Total comprehensive income (loss)
Appropriation and distribution of 2018 earnings :
Legal reserve
Special reserve
Cash dividends
6(19)
Balance at September 30, 2019
Nine-month period ended September 30, 2020
Balance at January 1, 2020
Profit for the period
Other comprehensive loss for the period
6(20)
Total comprehensive income (loss)
Appropriation and distribution of 2019 earnings
Legal reserve
Special reserve
Cash dividends
6(19)
Distribute cash dividends to non-controlling interests
Balance at September 30, 2020		 Equityattributable to owne Equityattributable to owne rs of theparent Non-controlling
interest		 Total equity
Share capital -
common stock
$ 32,414,155
-
-
-
-
-
-
$ 32,414,155
$ 32,414,155
-
-
-
-
-
-
-
$ 32,414,155		 Capitalsurplus
Treasury stock
transactions
Gain on sale of
assets
$ 9,772
$ 42,804
-
-
-
-
-
-
-
-
-
-
-
-
$ 9,772
$ 42,804
$ 9,772
$ 42,804
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$ 9,772
$ 42,804		 Retained earnings Otherequityinterest
Financial statements
translation
differences of foreign
operations
Unrealized gains
(losses) from
financial assets
measured at fair
value through other
comprehensive
income
( $ 5,214,518
)
$ 14,220
-
-
(
886,624
)
(
1,562)
(
886,624
)
(
1,562)
-
-
-
-
-
-
( $ 6,103,142
)
$ 12,658
( $ 6,921,515
)
$ 17,270
-
-
(
1,146,442
)
(
299)
(
1,146,442
)
(
299)
-
-
-
-
-
-
-
-
( $ 8,067,957
)
$ 16,971		 Total
Treasury stock
transactions
$ 9,772
-
-
-
-
-
-
$ 9,772
$ 9,772
-
-
-
-
-
-
-
$ 9,772		 Legal reserve
$ 14,834,946
-
-
-
352,032
-
-
$ 15,186,978
$ 15,186,978
-
-
-
346,683
-
-
-
$ 15,533,661		 Special reserve
$ 4,430,061
-
-
-
-
770,237
-
$ 5,200,298
$ 5,200,298
-
-
-
-
1,703,947
-
-
$ 6.904,245		 Unappropriated
retained earnings		 Financial statements
translation
differences of foreign
operations
( $ 5,214,518
)
-
(
886,624
)
(
886,624
)
-
-
-
( $ 6,103,142
)
( $ 6,921,515
)
-
(
1,146,442
)
(
1,146,442
)
-
-
-
-
( $ 8,067,957
)
$ 32,662,342
3,030,480
-
3,030,480
(
352,032 )
(
770,237 )
(
3,565,557)
$ 31,004,996
$ 31,445,921
2,818,893
-
2,818,893
(
346,683 )
(
1,703,947 )
(
3,241,416 )
-
$ 28,972,768		 $ 79,193,782
3,030,480
(
890,186
)
2,140,294
-
-
(
3,565,557
)
$ 77,768,519
$ 77,395,683
2,818,893
(
1,146,741
)
1,672,152
-
-
(
3,241,416
)
-
$ 75,826,419		 $ 624,224
35,452
(
91,959)
(
56,507)
-
-
-
$ 567,717
$ 575,004
15,281
(
27,126)
(
11,845)
-
-
-
35,688
$ 527,471		 $ 79,818,006
3,065,932
(
982,145
)
2,083,787
-
-
(
3,565,557
)
$ 78,336,236
$ 77,970,687
2,834,174
(
1,173,867
)
1,660,307
-
-
(
3,241,416
)
(
35,688
)
$ 76,353,890

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

~8~

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

NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(Review, not audited)

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax
Adjustments
Adjustments to reconcile profit (loss)
Depreciation
Depreciation expense on right-of-use assets
Depreciation on investment property
Amortisation expense
Expected credit loss
Share of profit of associates and joint ventures
accounted for using equity method
Net loss (gain) on financial assets or liabilities at fair
value through profit or loss
Loss on disposal of property, plant and equipment
Reversal of impartment loss on non-financal assets
Interest expense
Interest income
Deferred government grants revenue
Unrealized foreign exchange loss (gain) on long-term
foreign currency loans
Disaster loss
Changes in operating assets and liabilities
Changes in operating assets
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 non-current liabilities
Cash inflow generated from operations
Interest received
Dividends received
Interest paid
Income tax paid
Income tax refund received
Net cash flows from operating activities		 Nine-monthperiods ended September 30
Notes
2020
2019
$ 4,262,069
$ 5,034,244
6(7)(26)
8,606,438
9,306,935
6(8)(26)
217,948
187,854
6(9)(26)
17,163
18,185
6(10)(26)
74,304
76,782
12(2)
67,161
13,240
6(6)
(
12,830 ) (
3,700 )
6(2)(24)
147
(
5,360 )
6(7)(24)
31,826
38,311
6(7)
(
1,758 )
-
6(7)(25)
871,470
1,309,098
6(22)
(
198,986 ) (
210,933 )
(
108,893 ) (
103,706 )
638,955
(
120,836 )
6(5)(7)(24) and 10
62,503
-
1,211,514
(
261,673 )
(
359,549 ) (
485,621 )
9,818
3,093
3,699,340
1,753,988
(
1,772 ) (
144,171 )
507,788
193,786
(
9,856 )
172,668
20,580
1,724,410
(
610,659 )
344,451
(
900,861 ) (
1,528,081 )
(
171,524 ) (
157,829 )
89
116,863
(
106,191 )
5,607
6,012
(
150 )
17,822,246
17,277,455
195,291
200,295
2,500
2,500
(
983,934 ) (
1,375,443 )
(
1,321,839 ) (
2,189,492 )
60,547
206,898
15,774,811
14,122,213

(Continued)

~9~

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

NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2020 AND 2019

(Expressed in thousands of New Taiwan dollars)

(Review, not audited)

CASH FLOWS FROM INVESTING ACTIVITIES
Net changes in financial assets at fair value through profit
or loss
Acquisition of property, plant and equipment
Payment for capitalized interests
Proceeds from disposal of property, plant and equipment
Acquisition of investment properties
Acquisition of intangible assets
Decrease (increase) in refundable deposits
Proceeds from disposal of use-of-right assets
Increase in other non-current liabilities
Net cash flows used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in short-term loans
Decrease in short-term loans
Repayments of bonds
Increase in long-term loans
Repayments of long-term loans
Decrease in guarantee deposits received
Repayments of principal portion of lease liabilities
Cash dividends paid
Distribute cash dividends to non-controlling interests
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash
equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period		 Nine-monthperiods ended September 30
Notes
2020
2019
($ 147 )
$ 6,503
6(7)(29)
(
5,265,545 ) (
6,228,300 )
6(7)(25)
(
16,623 ) (
15,575 )
89,307
127,645
6(9)
(
82 )
-
6(10)
(
26,413 ) (
44,587 )
4,768
34,838
18,437
-
87,826
23,469
(
5,108,472 ) (
6,096,007 )
6(11)(30)
12,508,291
17,138,764
6(11)(30)
(
18,175,954 ) (
14,131,150 )
6(14)(30)
(
2,500,000 ) (
4,800,000 )
6(15)(30)
6,933,542
9,350,759
6(15)(30)
(
8,087,345 ) (
14,815,686 )
6(30)
(
6,284 ) (
5,765 )
6(8)(30)
(
137,099 ) (
91,641 )
6(19)(30)
(
3,241,416 ) (
3,565,557 )
6(30)
(
35,688 )
-
(
12,741,953 ) (
10,920,276 )
(
757,436 ) (
421,670 )
(
2,833,050 ) (
3,315,740 )
6(1)
25,501,222
27,809,496
6(1)
$ 22,668,172
$ 24,493,756

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

~10~

CHENG SHIN RUBBER IND. CO., LTD. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NINE-MONTH ENDED SEPTEMBER 30, 2020 AND 2019

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

(Review, not audited)

1. HISTORY AND ORGANISATION

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 AUTHORISATION FOR ISSUANCE OF THE CONSOLIDATED FINANCIAL STATEMENTS AND PROCEDURES FOR AUTHORISATION

These consolidated financial statements were authorised for issuance by the Board of Directors on November 12, 2020.

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 2020 are as follows:

follows:
New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Note：Earlier application from January 1, 2020 is allowed by FSC.
Amendments to IAS 1 and IAS 8, ‘Disclosure initiative-definition of
material’
Amendments to IFRS 3, ‘Definition of a business’
Amendments to IFRS 9 and IAS 39 and IFRS 7, ‘Interest rate
bechmark reform’
Amendment to IFRS 16, ‘Covid-19-related rent concessions’		 January 1, 2020
January 1, 2020
January 1, 2020
June 1, 2020 (Note)

The above standards and interpretations have no significant impact to the Group’s financial condition and financial performance based on the Group’s assessment. (2) Effect of new issuances of or amendments to IFRSs as endorsed by the FSC but not yet adopted by the Group

New standards, interpretations and amendments endorsed by the FSC effective from 2021 are as follows：

the Group
New standards, interpretations and amendments endorsed by the FSC
follows：		 effective from 2021 are a
New Standards,Interpretations and Amendments Effective date by
International Accounting
Standards Board
Amendments to IFRS 4, ‘Extension of the temporary exemption from
applying IFRS 9’		 January 1, 2021

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

~11~

(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 as endorsed by the FSC are as follows:

ndorsed by the FSC are as follows:
New Standards,Interpretations andAmendments
Amendments to IFRS 3, ‘Reference to the conceptual framework’
IFRS 17, ‘Insurance contracts’
Amendments to IFRS 17, ‘Insurance contracts’
Amendments to IAS 1, ‘Classification of liabilities as current or
non-current’
Amendments to IAS 16, ‘Property, plant and equipment: proceeds
before intended use’
Amendments to IAS 37, ‘Onerous contracts — cost of fulfilling
a contract’
Annual improvements to IFRS Standards 2018–2020
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16,
‘Interest Rate Benchmark Reform— Phase 2’
Amendments to IFRS 10 and IAS 28, ‘Sale or contribution of assets
between an investor and its associate or joint venture’		 Effective date by
International Accounting
StandardsBoard
January 1, 2022
To be determined by
International
Accounting Standards
Board
January 1, 2023
January 1, 2023
January 1, 2023
January 1, 2022
January 1, 2022
January 1, 2022
January 1, 2021

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, 2019. 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, 2019.

  • (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.

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

~12~

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.

(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, 2019.

  • B. Subsidiaries included in the consolidated financial statements:

Name of
investor		 Name of
subsidiary		 Main business
activities		 September
30,2020
December
31,2019
September
30,2019

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Ownership (%)		 September
30,2020
December
31,2019
September
30,2019

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Ownership (%)		 Description
Note 6
Note 6
Note 6
Note 6
Note 6
September
30,2020		 December
31,2019
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 Trading
Ltd.
CHENG SHIN
RUBBER USA,
INC.
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.		 Holding
company
Holding
company
Holding
company
Import and
export of tires
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		 100
100
100
100
100
100
100
100
100		 100
100
100
100
100
100
100
100
100

~13~

Name of
investor		 Name of
subsidiary		 Main business
activities		 September
30,2020
December
31,2019
September
30,2019

100
100
100
100
100
100
100
-
-
20
-
-
100
100
100
60
60
60
100
100
100
100
100
100
100
100
100
100
100
100
Ownership (%)		 September
30,2020
December
31,2019
September
30,2019

100
100
100
100
100
100
100
-
-
20
-
-
100
100
100
60
60
60
100
100
100
100
100
100
100
100
100
100
100
100
Ownership (%)		 Description
Note 6
Note 6
Note 5、7
Note 4、7
Note 3
September
30,2020		 December
31,2019
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.
MAXXIS
International
(HK) Ltd.		 PT.MAXXIS
TRADING
INDONESIA
Maxxis Europe
B.V.
MAXXIS RUBBER
JAPAN CO., LTD.
MAXXIS
INTERNATIONAL
MEXICO S. de
R.L. de C.V.
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.
CHENG SHIN
(XIAMEN) INTL
AUTOMOBILE
CULTURE
CENTER CO.,
LTD.		 Large-amount
trading of
vehicles parts
and accessories
Import and
export of tires
Import and
export of tires
Import and
export of tires
Warehouse
logistics and
after-sales
service centre
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
Research,
development,
testing and
exhibition of tires
and automobile
accessory
products and
related products,
and management
of racing tracks		 100
100
100
20
100
60
100
100
100
100		 100
100
-
-
100
60
100
100
100
100

~14~

Name of
investor		 Name of
subsidiary		 Main business
activities		 September
30,2020
December
31,2019
September
30,2019

25
25
25
100
100
100
100
100
100
50
50
50
30
30
30
70
70
70
100
100
100
100
100
100
95
95
95
Ownership (%)		 September
30,2020
December
31,2019
September
30,2019

25
25
25
100
100
100
100
100
100
50
50
50
30
30
30
70
70
70
100
100
100
100
100
100
95
95
95
Ownership (%)		 Description
Note 2
Note 1
Note 1
September
30,2020		 December
31,2019
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.
MAXXIS
Trading Ltd.
CHENG SHIN
RUBBER
(XIAMEN)
IND., 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.
MAXXIS
Holdings (BVI)
Co., Ltd.
CHIN CHOU
CHENG SHIN
ENTERPRISE CO.,
LTD.		 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
Holding
company
Retail of
accessories for
rubber tires		 25
100
100
50
30
70
100
100
95		 25
100
100
50
30
70
100
100
95

~15~

Name of
investor		 Name of
subsidiary		 Main business
activities		 September
30,2020
December
31,2019
September
30,2019

40
40
40
49
49
49
75
75
75
100
100
100
100
100
100
100
100
100
80
-
-
Ownership (%)		 September
30,2020
December
31,2019
September
30,2019

40
40
40
49
49
49
75
75
75
100
100
100
100
100
100
100
100
100
80
-
-
Ownership (%)		 Description
Note 3
Note 2
Note 6
Note 4、7
September
30,2020		 December
31,2019
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
Holdings (BVI)
Co., Ltd.
MAXXIS
Holdings (BVI)
Co., Ltd.
CHENG SHIN
RUBBER USA,
INC.		 CHENG SHIN
PETREL TIRE
(XIAMEN) CO.,
LTD.
CHENG SHIN
LOGISTIC
(XIAMEN) CO.,
LTD.
CHENG SHIN
RUBBER
(ZHANGZHOU)
IND
CO., LTD.
XIAMEN ESTATE
CO., LTD.
MAXXIS
International
(Thailand) Co., Ltd.
Cheng Shin Rubber
(Vietnam) IND Co.,
Ltd.
MAXXIS
INTERNATIONAL
MEXICO S. de
R.L. de C.V.		 Production and
sales of various
types of tires
International
container
transportation
business
Production and
sales of various
types of tires
Construction and
trading of
employees’
housing
Production and
sales of various
types of tires
Production and
sales of various
types of tires
Import and
export of tires		 40
49
75
100
100
100
80		 40
49
75
100
100
100
-

  • 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: In March 2019, the Company established MAXXIS INTERNATIONAL MEXICO S. de R.L. de C.V. in Mexico, and remitted out investment in the amount of MXN 2,093 thousand with the subsidiary, CHENG SHIN RUBBER USA, INC., during the second quarter and third quarter of 2020, and jointly acquired 100% equity interest of MAXXIS INTERNATIONAL MEXICO S. de R.L. de C.V. The subsidiary was included in the consolidated entity in the second quarter of 2020.

  • Note 5: In February 2020, the Company established MAXXIS RUBBER JAPAN CO., LTD. in

~16~

Japan, and remitted out investment in the amount of JPY 50,000 thousand in April 2020, and acquired 100% equity interest. The subsidiary was included in the consolidated entity in the second quarter of 2020. 

  - Note 6: The financial statements of the entity as of September 30, 2020 and 2019, were not reviewed by the independent accountants as the entity did not meet the definition of significant subsidiary.

  - Note 7: The financial statements of the entity as of September 30, 2020, 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) Joint operation and investments accounted for using the equity method joint ventures

  • The Group accounts for its interest in a joint venture using the equity method. When the transaction provides evidence of a reduction in the net realisable value of current assets or an impairment loss, all such losses shall be recognised immediately. When the Group’s share of losses in a joint venture equals or exceeds its interest in the joint venture together with any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.

  • (5) Leasing arrangements (lessee) - right-of-use assets/ lease liabilities

  • For lease modifications that decrease the scope of the lease, the lessee shall decrease the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognise the difference between remeasured lease liability in profit or loss.

  • (6) 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.

  • (7) 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.

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

There have been no significant changes as of September 30, 2020. Please refer to Note 5 in the consolidated financial statements for the year ended December 31, 2019.

~17~

6. DETAILS OF SIGNIFICANT ACCOUNTS

  • (1) Cash and cash equivalents
Cash and cash equivalents
Cash on hand and revolving funds
Checking deposit
Demand deposits
Time deposits

Interest rate range
Time deposits		 September30,2020
6,148
$ 1,927,564
15,616,464
5,117,996
$22,668,172

0.95%~4.25%		 December31,2019
3,285
$ 1,439,563
19,648,228
4,410,146
$25,501,222

1.75%~3.15%		 September30,2019
4,214
$ 1,477,854
16,994,464
6,017,224
$24,493,756
1.76%~4.10%

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.

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

Items September 30, 2020 December 31, 2019 September 30, 2019

Current items:

Financial assets mandatorily measured at fair value through profit or loss Derivative instruments $ - $ - $ 2,100

  • A. The Group recognised net (loss) profit amounting to $0 thousand, $3,884 thousand, ($147) thousand and $5,360 thousand on financial assets mandatorily measured at fair value through profit or loss - derivative instruments for the three-month and the nine-month periods ended September 30, 2020 and 2019, respectively.

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



Contract amount
Derivative instruments
(Notionalprincipal)
Current items:
Forward foreign exchange contracts
USD enchange to NTD
USD 12,000thousand
September		 September 30,2019
Contractperiod
2019/9/12~
2019/11/25

The Group has no derivative instruments transaction on September 30, 2020 and December 31, 2019.

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.

  • C. Information relating to credit risk of financial assets at fair value through profit or loss is provided in Note 12(2).

~18~

(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		 September30,2020
8,665
$ 16,971
25,636
$ 58,187
$		 December31,2019
8,665
$ 17,270
25,935
$ 58,187
$		 September30,2019
8,665
$ 12,658
21,323
$
58,187
$

  • A. The Group has elected to classify equity instruments investment 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 $83,823 thousand, $84,122 thousand and $79,510 thousand as at September 30, 2020, December 31, 2019 and September 30, 2019, respectively.

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

Equity instruments at fair value
through other comprehensive income
Fair value change recognised in other
comprehensive income (loss)
Equity instruments at fair value
through other comprehensive income
Fair value change recognised in other
comprehensive income (loss)		 Three-month period ended
September 30,2020		 Three-month period ended
September 30,2019
3,771)
($ Nine-month period ended
September 30,2020		 1,546
$ Nine-month period ended
September 30,2019
299)
($		 1,562)
($



  • C. Information relating to credit risk of financial assets at fair value through other comprehensive loss/income is provided in Note 12(2).

(4) Notes and accounts receivable

September30,2020 September30,2020 December31,2019 December31,2019 September30,2019 September30,2019
Notes receivable $ 2,559,216
 $ 3,770,730
 $ 2,944,493
Less: Loss allowance ( 9,277)
 ( 9,277)
 ( 9,277)
$ 2,549,939 $ 3,761,453 $ 2,935,216
Accounts receivable $ 9,339,152
 $ 8,980,542
 $ 10,349,034
Less: Loss allowance ( 107,669)
 ( 41,615)
 ( 14,760)
$ 9,231,483 $ 8,938,927 $ 10,334,274
  • A. The ageing analysis of accounts receivable and notes receivable that were past due but not impaired is as follows:

~19~

Without past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 180 days
Without past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 180 days		 September September 30,2020 December 31,2019 31,2019
Accounts
receivable		 Notes receivable Accounts
receivable		 Notes receivable
2,559,216
$ -
-
-
-
2,559,216
$ 30,2019		 7,376,434
$ 1,099,362
282,247
83,960
138,539
8,980,542
$		 3,770,730
$ -
-
-
-
3,770,730
$
Accounts
receivable		 Notes receivable
8,351,865
$ 1,170,338
445,395
157,451
223,985
10,349,034
$		 2,944,493
$ -
-
-
-
2,944,493
$

The above ageing analysis was based on past due date.

  • B. As at September 30, 2020, December 31, 2019 and September 30, 2019, accounts receivable and notes receivable were all from contracts with customers. And as at January 1, 2019, the balance of receivables from contracts with customers amounted to $12,608,070 thousand.

  • C. As at September 30, 2020, December 31, 2019 and September 30, 2019, without taking into account any collateral held or other credit enhancements, the maximum exposure to credit risk in respect of the amount that best represents the Group’s notes and accounts receivable was $2,559,216 thousand and $9,339,152 thousand; $3,770,730 thousand and $8,980,542 thousand; $2,944,493 thousand and $10,349,034 thousand, respectively.

  • D. Information relating to credit risk of accounts receivable and notes receivable is provided in Note 12(2).

(5) Inventories

September 30, 2020

12(2).
Inventories		 September30,2020
Raw materials
Work in progress
Finished goods
Buildings and land held for sale
Inventory in transit		 Allowance for
valuation loss
4,250,738
$ -
$ 2,206,218
417)
(
5,053,575
137,031)
(
2,212,989
-
653,546
-
14,377,066
$ 137,448)
($ Cost		 Bookvalue
4,250,738
$ 2,205,801
4,916,544
2,212,989
653,546
14,239,618
$

~20~

Raw materials
Work in progress
Finished goods
Buildings and land held for sale
Inventory in transit
Raw materials
Work in progress
Finished goods
Land in progress
Construction in progress
Inventory in transit		 December31,2019
5,977,629
$ 2,508,792
6,525,220
2,336,891
687,237
18,035,769
$ Cost		 Allowance for
valuation loss
-
$ -
85,899)
(
-
-
85,899)
($ September30,2019		 Bookvalue
5,977,629
$ 2,508,792
6,439,321
2,336,891
687,237
17,949,870
$
Cost
5,219,786
$ 2,653,640
6,306,315
782,050
2,020,855
715,057
17,697,703
$		 Book value
5,219,786
$ 2,653,640
6,216,853
782,050
2,020,855
715,057
17,608,241
$

  • A. On September 26, 2020, a fire damaged a plant located in Xizhou owned by the parent company of the Group. The book value of the inventories damaged by the fire amounted to $10,912 thousand, shown as loss from fire damage under other gains and losses. Information relating to the fire damage is provided in Note 10.

  • B. The cost of inventories recognized as expense for the period:

Three-month period ended Three-month period ended Three-month period ended Three-month period ended
September30,2020 September30,2019
Cost of goods sold $ 20,212,776
 $ 21,810,962
Others ( 15,459)
 ( 31,807)
$ 20,197,317 $ 21,779,155
Nine-month period ended Nine-month period ended
September30,2020 September30,2019
Cost of goods sold $ 52,936,074
 $ 64,623,988
Unallocated overheads 185,460 -
Others ( 5,636)
 ( 41,374)
$ 53,115,898 $ 64,582,614

For the three-month period ended September 30, 2019, the Group reversed a previous inventory write-down 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 the 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 at September 30, 2020, December 31, 2019 and September 30, 2019, the carrying amount of the Group’s individually immaterial joint ventures amounted to $167,819 thousand, $157,489 thousand and $153,814 thousand, respectively.

~21~

Three-month period ended Three-month period ended September 30, 2020 September 30, 2019

September 30,2020 September 30,2019
Share of profit(loss) of associates and joint
ventures accounted for using the equity
method
4)
($ Total comprehensive income
4)
($ Nine-month period ended
September 30,2020
Share of profit of associates and joint
ventures accounted for using the equity
method
12,830
$ Total comprehensive income
12,830
$		 249
$
249
$
Nine-month period ended
September 30,2019
3,700
$
3,700
$
  • B. The recognition of gain on investments accounted for using the equity method was based on financial statements prepared by associates and were not reviewed by independent auditors.

~22~

(7) Poperty, 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 and structures
Machinery
Testing equipment
Transportation equipment
Office equipment
Other facilities
Accumulated impairment
Machinery
Testing equipment
Transportation equipment
Office equipment
Other facilities		 Nine-monthperiod ended September 30,2020

~23~

Nine-month period ended September 30, 2019

Exchange rate
Beginningofperiod Additions Disposals Transfers differences End ofperiod
Cost
Land $ 4,583,467
 $ -
 $ -
 $ -
 $ 37,432
 $ 4,620,899
Buildings and structures 49,684,022 368,900 - 452,051 ( 508,614)
 49,996,359
Machinery 100,304,545 810,622 ( 292,888)
 3,051,777 ( 411,997)
 103,462,059
Testing equipment 3,729,686 48,918 ( 19,696)
 114,098 ( 21,851)
 3,851,155
Transportation equipment 1,369,500 65,464 ( 19,294)
 38,950 ( 27,394)
 1,427,226
Office equipment 954,368 67,881 ( 1,652)
 31,444 ( 9,991)
 1,042,050
Other facilities 31,361,160 1,685,452 ( 322,996)
 882,442 ( 57,759)
 33,548,299
Unfinished construction and
equipment under acceptance 8,005,642 2,679,021 - ( 4,620,147)
 38,280 6,102,796
$ 199,992,390 $ 5,726,258 ($ 656,526) ($ 49,385) ($ 961,894) $ 204,050,843
Accumulated depreciation
Buildings and structures ($ 17,052,347)
 ($ 1,627,106)
 $ -
 $ -
 $ 307,605
 ($ 18,371,848)
Machinery ( 53,074,452)
 ( 4,515,215)
 175,880 ( 12,155)
 149,807 ( 57,276,135)
Testing equipment ( 2,670,049)
 ( 223,142)
 13,518 1,439 28,352 ( 2,849,882)
Transportation equipment ( 998,805)
 ( 85,333)
 16,929 - 21,561 ( 1,045,648)
Office equipment ( 596,140)
 ( 103,506)
 1,574 ( 3)
 7,256 ( 690,819)
Other facilities ( 22,331,442)
 ( 2,752,633)
 282,669 10,719 6,996 ( 24,783,691)
($ 96,723,235) ($ 9,306,935) $ 490,570 $ - $ 521,577 ($ 105,018,023)
Accumulated impairment
Machinery ($ 12,651)
 $ -
 $ -
 $ -
 $ -
 ($ 12,651)
Other facilities ( 1,926)
 - - - - ( 1,926)
($ 14,577) $ - $ - $ - $ - ($ 14,577)
$ 103,254,578 $ 99,018,243

~24~

  • A. On September 26, 2020, a fire damaged a plant located in Xizhou owned by the parent company of the Group. The book value of the buildings and equipment damaged by the fire amounted to $51,591 thousand, shown as loss from fire damage under other gains and losses. Information relating to the fire damage is provided in Note 10.

  • B. 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		 Nine-month period ended
September30,2020
16,623
$ 3.83%~4.68%		 Nine-month period ended
September30,2019
15,575
$
2.20%~7.53%

  • －

  • (8) Leasing arrangements lessee

  • A. The Group leases various assets including land, buildings, business vehicles, multifunction printers. Rental contracts are typically made for periods of 1 to 95 years. Lease terms are negotiated on an individual basis and contain various terms and conditions. The lease agreements do not impose covenants, but leased assets of land may not be used as security for borrowing purposes.

  • B. Short-term leases comprise of forklift trucks and stacking machines. Low-value assets comprise of computers.

  • C. The carrying amount of right-of-use assets and the depreciation expense are as follows:

Land
Buildings and structures
Machinery
Transportation equipment
Office equipment
Other equipment		 September30,2020
Bookvalue
4,585,038
$ 440,816
18,078
155,787
7,557
26,006
5,233,282
$		 December31,2019
Bookvalue
4,882,312
$ 473,987
22,208
98,075
6,257
35,695
5,518,534
$		 September30,2019
Bookvalue
5,004,399
$ 411,598
23,270
91,145
7,208
29,014
5,566,634
$
Three-month period ended
September30,2020
Depreciationexpense
Land
25,165
$ Buildings and structures
22,669
Machinery
766
Transportation equipment
27,178
Office equipment
969
Other equipment
2,881
79,628
$		 Three-month period ended
September30,2019
Depreciationexpense
27,250
$ 24,330
828
12,782
757
4,553
70,500
$

~25~

Land
Buildings and structures
Machinery
Transportation equipment
Office equipment
Other equipment		 Nine-month period ended
September30,2020
Depreciationexpense
78,096
$ 69,707
2,313
55,901
3,010
8,921
217,948
$		 Nine-month period ended
September30,2019
Depreciationexpense
89,322
$ 52,500
2,425
32,829
2,190
8,588
187,854
$

D. For the three-month and the nine-month periods ended September 30, 2020 and 2019, the additions to right-of-use assets amounted to $65,492 thousand, $321,396 thousand, $179,571 thousand and $374,361 thousand, respectively.

  • E. Information on profit or loss in relation to lease contracts is as follows:
$374,361 thousand, respectively.
Information on profit or loss in relation to		 lease contracts is as follows: :
Items affecting profit or loss
Interest expense on lease liabilities
Expense on short-term lease contracts
Expense on leases of low-value assets
Expense on variable lease payments
Items affecting profit or loss
Interest expense on lease liabilities
Expense on short-term lease contracts
Expense on leases of low-value assets
Expense on variable lease payments		 Three-month period ended Three-month period ended
September30,2020
September30,2019
5,053
$ 4,184
$ 4,500
8,650
965
104)
(
60,068
36,989
70,586
$ 49,719
$ Nine-month period ended
Nine-month period ended
September30,2020
September30,2019
10,093
$ 7,680
$ 13,638
22,531
2,811
1,791
166,044
159,469
192,586
$ 191,471
$		 Three-month period ended
September30,2019
49,719
$
Nine-month period ended
September30,2019
7,680
$ 22,531
1,791
159,469
191,471
$

  • F. For the three-month and the nine-month periods ended September 30, 2020 and 2019, the Group’s total cash outflow for leases amounted to $118,757 thousand, $78,368 thousand, $329,685 thousand and $283,112 thousand, respectively.

  • G. Variable lease payments

  • (a) Some of the Group’s lease contracts contain variable lease payment terms that are linked to the stored amount of tires. For the aforementioned lease contracts, up to 40.45% of lease payments are on the basis of variable payment terms and are accrued based on the stored amount of tires. Variable payment terms are used for a variety of reasons. Various lease payments that depend on the stored amount of tires are recognized in profit or loss in the period in which the event or condition that triggers those payments occurs.

  • (b) A 1% increase in the stored amount of tires with such variable lease contracts would increase total lease payments by approximately $1,660 thousand.

~26~

(9) Investment property, net

Investment property, net
Nine-monthperiod ended September 30,2020
Opening net book Exchange Closing net book
amount as at rate amount as at
January1 Additions Transfer differences September30
Cost
Land $ 336,339
 $ 82
 $ -
 $ -
 $ 336,421
Buildings and structures 455,023 - - ( 3,573)
 451,450
$ 791,362 $ 82 $ - ($ 3,573) $ 787,871
Accumulated depreciation
Buildings and structures ($ 190,168) ($ 17,163) $ - $ 1,360 ($ 205,971)
Accumulated impairment
Land ($ 51,038) $ - $ - $ - ($ 51,038)
$ 550,156 $ 530,862
Nine-monthperiod ended September 30,2019
Opening net book Exchange Closing net book
amount as at rate amount as at
January1 Additions Transfer differences September30
Cost
Land $ 336,339
 $ -
 $ -
 $ -
 $ 336,339
Buildings and structures 471,597 - - ( 12,108)
 459,489
$ 807,936 $ - $ - ($ 12,108) $ 795,828
Accumulated depreciation
Buildings and structures ($ 172,654) ($ 18,185) $ - $ 4,764 ($ 186,075)
Accumulated impairment
Land ($ 51,038) $ - $ - $ - ($ 51,038)
$ 584,244 $ 558,715
A. Rental income from investment property and direct operating expenses arising from investment
property are shown below:
Three-month period ended Three-month period ended
September 30,2020 September 30,2019
Rental income from
investment property $ 7,506 $ 7,603
Direct operating expenses
arising from the investment
property that generated rental
income during the period $ 5,718 $ 5,958

~27~

Nine-month period ended Nine-month period ended September 30, 2020 September 30, 2019 Rental income from investment property $ 20,534 $ 22,822 Direct operating expenses arising from the investment property that generated rental income during the period $ 17,163 $ 18,185

  • B. The fair value of the investment property held by the Group as at September 30, 2020, December 31, 2019 and September 30, 2019 was $1,062,073 thousand, $1,066,478 thousand and $912,286 thousand, 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.

(10) Other non-current assets

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.
Other non-current assets		 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.
Other non-current assets		 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.
Other non-current assets		 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.
Other non-current assets
Movements in intangible assets:
September30,2020
December31,2019
September30,2019
Intangible assets
195,844
$ 246,790
$ 256,787
$ Others
708,462
703,374
690,852
904,306
$ 950,164
$ 947,639
$ Opening net
book amount
Exchange
rate
Closing net book
amount as at
at January1
Additions
Reductions
Transfer
differences
September 30
Cost
Computer software
514,464
$ 26,413
$ 12,540)
($ 356)
($ 9,444)
($ 518,537
$ Others
7,762
-
-
-
65)
(
7,697
522,226
$ 26,413
$ 12,540)
($ 356)
($ 9,509)
($ 526,234
$ Accumulated
amortisation
Computer software
273,107)
($ 73,728)
($ 12,540
$ 67
$ 6,725
$ 327,503)
($ Others
2,329)
(
576)
(
-
-
18
2,887)
(
275,436)
($ 74,304)
($ 12,540
$ 67
$ 6,743
$ 330,390)
($ 246,790
$ 195,844
$ Nine-monthperiod ended September30,2020
$
$
Exchange
rate
differences
9,444)
($ 65)
(
9,509)
($ 6,725
$ 18
6,743
$		 518,537
$ 7,697
526,234
$ 327,503)
($ 2,887)
(
330,390)
($ 195,844
$

~28~


(11)


















 Details of amortisation on intangible assets are as follows:
Short-term borrowings
Opening net
book amount
Exchange
rate
Closing net book
amount as at
at January1
Additions
Reductions
Transfer
differences
September 30
Cost
Computer software
420,716
$ 44,587
$ -
$ 52,873
$ 3,966)
($ 514,210
$ Others
-
-
-
8,150
307)
(
7,843
420,716
$ 44,587
$ -
$ 61,023
$ 4,273)
($ 522,053
$ Accumulated
amortisation
Computer software
183,666)
($ 76,171)
($ -
$ 2,394)
($ 878)
($ 263,109)
($ Others
-
611)
(
-
1,630)
(
84
2,157)
(
183,666)
($ 76,782)
($ -
$ 4,024)
($ 794)
($ 265,266)
($ 237,050
$ 256,787
$ Nine-monthperiod ended September30,2019
Three-month period ended Three-month period ended
September 30,2020
September 30,2019
Operating costs
2,634
$ 2,725
$ Selling expenses
1,546
1,917
Administrative expenses
16,551
18,504
Research and development expenses
3,698
4,001
24,429
$ 27,147
$ Nine-month period ended Nine-month period ended
September 30,2020
September 30,2019
Operating costs
7,944
$ 7,698
$ Selling expenses
4,692
4,791
Administrative expenses
50,694
54,471
Research and development expenses
10,974
9,822
74,304
$ 76,782
$ Type ofborrowings
September30,2020
Interestraterange
Collateral
Bank borrowings
Bank unsecured borrowings
10,596,366
$ 0.36%～6.25%
None
Type ofborrowings
December31,2019
Interestraterange
Collateral
Bank borrowings
Bank unsecured borrowings
16,843,366
$ 0.55%～7.95%
None
Type ofborrowings
September30,2019
Interestraterange
Collateral
Bank borrowings
Bank unsecured borrowings
18,562,642
$ 0.55%~7.95%
None		 Nine-monthperiod ended September30,2019 Closing net book
amount as at
September 30

~29~

The abovementioned credit loan includes the guarantee of endorsement provided by the Group. (12) Other payables

(13)
(14)		 Other current liabilities
Bonds payable
September30,2020
December31,2019
September30,2019
Dividend payable
657
$ 657
$ 658
$ Wages and salaries payable
1,384,832
1,432,816
1,431,737
Payable on machinery and
equipment
698,036
1,128,354
1,213,319
Employee compensation payable
177,503
209,476
200,879
Compensation due to
directors and supervisors
51,854
67,093
60,657
Other accrued expenses
1,661,471
1,911,096
1,631,410
Others
894,111
838,082
920,806
4,868,464
$ 5,587,574
$ 5,459,466
$ September30,2020
December31,2019
September30,2019
Long-term liabilities due
within one year
10,580,598
$ 9,900,811
$ 8,767,128
$ Advance receipts
2,636
272
2,522
Refund liabilities
211,116
106,627
176,406
Others
112,336
219,100
195,963
10,906,686
$ 10,226,810
$ 9,142,019
$ September30,2020
December31,2019
September30,2019
Bonds payable
-issued in 2016
2,500,000
$ 5,000,000
$ 5,000,000
$ Bonds payable
-issued in 2017
7,000,000
7,000,000
7,000,000
Bonds payable
-issued in 2018
5,000,000
5,000,000
5,000,000
14,500,000
17,000,000
17,000,000
Less: Current portion
6,000,000)
(
2,500,000)
(
2,500,000)
(
8,500,000
$ 14,500,000
$ 14,500,000
$

  • 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 Taipei Exchange on July 16, 2018 and completed on July 25, 2018. The bonds were fully issued and total issuance amount was $5 billion with a coupon rate of 0.87%. The issuance period of the bonds is 5 years, which is from July 25, 2018 and July 25, 2023. 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.

  • B. In order to fulfil its capital and repay long-term and short-term loans, the Board of Directors of

~30~

the Company has resolved to issue domestic unsecured bonds (“the bonds”). The bond issuance has been approved by the Taipei Exchange 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:

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 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 Taipei Exchange 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.

  • D. 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 was 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.

- (15) Long term borrowings

Long-term borrowings
Type of borrowings Borrowing period
and repayment term		 Interest rate
range
Collateral
0.70%～
4.50%
None
6.65%
None
 September30,2020
28,777,004
$ 213,450
28,990,454
4,580,598)
(
24,409,856
$
Long-term bank
borrowings
Unsecured borrowings
Other borrowings
Unsecured borrowings
Less: Current portion		 Principal is repayable
in installment until June
2027.
Principal is repayable
in November 2022 at
the maturity.

~31~

Type of borrowings Borrowing period
and repayment term		 Interest rate
range
Collateral
1.00%～
4.76%
None
6.65%
None

Interest rate
range
Collateral
0.97%～
4.83%
None
6.65%
None
 December31,2019
Long-term bank
borrowings
Unsecured borrowings
Other borrowings
Unsecured borrowings
Type of borrowings
Less: Current portion		 Principal is repayable
in installment until
November 2026.
Principal is repayable
in November 2022 at
the maturity.
Borrowing period
and repayment term		 30,487,611
$ 215,250
30,702,861
7,400,811)
(
23,302,050
$
September30,2019
Long-term bank
borrowings
Unsecured borrowings
Other borrowings
Unsecured borrowings
Less: Current portion		 Principal is repayable
in installment until
October 2026.
Principal is repayable
in November 2022 at
the maturity.		 30,175,803
$ 217,500
30,393,303
6,267,128)
(
24,126,175
$

  • A. Above mentioned borrowings are capital financings through financial institutions and other related parties.

  • B. According to the borrowing contract, the Group shall calculate the financial ratios based on the audited annual consolidated financial statements and the reviewed semi-annual 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 debt-service coverage ratio. The financial ratios as assessed in the financial statements have met the abovementioned requirements as at June 30, 2020, December 31, 2019 and June 30, 2019.

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

Currency
USD		 September30,2020
15,231,910
$		 December31,2019
16,339,100
$		 September30,2019
16,770,912
$

(16) Pensions

  • A. (a) The Company has a defined benefit pension plan in accordance with the Labor Standards Act, covering all regular employees’ including commissioned managers service years 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 Labor

~32~

Standard Act. 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 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 $5,104 thousand, $6,364 thousand, $15,312 thousand and $19,092 thousand for the three-month and the ninemonth periods ended September 30, 2020 and 2019, respectively.

  • (c) Expected contributions to the defined benefit pension plans of the Group for the year ending December 31, 2020 amount to $23,913 thousand.

  • 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 and the nine-month periods ended September 30, 2020 and 2019 were $38,104 thousand, $38,442 thousand, $118,071 thousand and $114,659 thousand, 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 nine-month periods ended September 30, 2020 and 2019 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 and the nine-month periods ended September 30, 2020 and 2019, were $75,641 thousand, $84,404 thousand, $160,709 thousand and $258,627 thousand, respectively.

  • (b) The subsidiaries, Cheng Shin Rubber USA, Inc., Cheng Shin Rubber CANADA, Inc., Maxxis Tech Center Europe B.V. and Maxxis 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 the defined contribution pension plans of the Group for the three-month and the nine-month periods ended September 30, 2020 and 2019, were $4,222 thousand, $4,016 thousand, $13,790 thousand and $11,459 thousand, 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 September 30, 2020, December 31, 2019 and September 30, 2019, the net liabilities recognised in the balance sheets were $49,147 thousand, $48,126 thousand and $43,816 thousand, respectively. The subsidiaries established a provident fund in accordance with the Provident Fund Act B.E.

~33~

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 contribution pension plans for the three-month and the ninemonth periods ended September 30, 2020 and 2019, were $4,574 thousand, $5,412 thousand, $14,418 thousand and $15,514 thousand, respectively.

  • (d) According to Indonesian local government’s regulations “ 2015 PP Nomor 60 ” and “2015 PP Nomor 45”, the Group’s subsidiaries, PT MAXXIS International Indonesia and PT. MAXXIS TRADING INDONESIA, contribute monthly an amount equal to 3.7% and 2% of the employees’ monthly salaries and wages to the retirement insurance; contribute monthly an amount equal to 2% and 1% to pension, respectively. For the three-month and the nine-month periods ended September 30, 2020 and 2019, the pension expense accrued in accordance to the aforementioned regulation amounted to $2,117 thousand, $1,872 thousand, $6,294 thousand and $5,288 thousand, respectively.

  • (e) According to Indonesian local government’s regulation “Employees Provident Fund and Miscellaneous Provisions Act, 1952”, 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 three-month and the nine-month periods ended September 30, 2020 and 2019, the pension cost accrued in accordance to the aforementioned regulation amounted to $1,703 thousand, $4,004 thousand, $5,514 thousand and $8,446 thousand, respectively.

(17) Share capital

  • As at September 30, 2020, the Company’s authorized capital and paid-in capital were both $32,414,155 thousand, and all proceeds from shares issued have been collected.

  • (18) 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.

(19) Retained earnings

  • A. Under the Company’s Articles of Incorporation, the current year’s earnings, if any, shall first be used to pay all 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 shares 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’ meeting. The recipients of aforementioned employees’ compensation include eligible employees of subordinate companies who meet the requirements set out by the Board of Directors.

~34~

  • 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 amount could 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 Order No. Financial-Supervisory-Securities-Corporate1010012865, dated April 6, 2012, shall be reversed proportionately when the relevant assets are used, disposed of or reclassified subsequently.

  • E. The Company recognized dividends distributed to shareholders amounting to $3,565,557 thousand and $5,834,548 thousand ($1.1 (in dollars) and $1.8 (in dollars) per share) for the years ended December 31, 2019 and 2018, respectively. On June 16, 2020, the shareholders during their meeting resolved that total dividends for the distribution of earnings for the year of 2019 was $3,241,416 thousand at $1.0 (in dollars) per share.

  • F. For the information relating to employees’ remuneration and directors’ and supervisors’ remuneration, please refer to Note 6(26).

(20) Other equity items

Currency
translation
At January 1
6,921,515)
($ Valuation adjustment – Group
-
Currency translation differences:
– Group
1,433,052)
(
– Tax on Group
286,610
At September 30
8,067,957)
($ Currency
translation
At January 1
5,214,518)
($ Valuation adjustment – Group
-
Currency translation differences:
– Group
1,110,780)
(
– Tax on Group
222,156
At September 30
6,103,142)
($		 2020

~35~

(21) Operating revenue

Revenue from contracts with customers
Revenue from contracts with customers		 Three-month period ended
September30,2020
27,927,586
$ Nine-month period ended
September30,2020
69,506,400
$		 Three-month period ended
September30,2019
27,631,531
$ Nine-month period ended
September30,2019
82,887,311
$

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:

Three-monthperiod ended September 30,2020 Three-monthperiod ended September 30,2020 Three-monthperiod ended September 30,2020
Revenue from external
customer contracts
Inter-segment revenue
Total segment revenue		 Taiwan
China
US
Others
1,685,326
$ 14,651,604
$ 2,333,895
$ 9,256,761
$ 1,063,356
2,016,513
1,848,585
468,051
2,748,682
$ 16,668,117
$ 4,182,480
$ 9,724,812
$ Three-monthperiod ended September 30,2019		 Total
27,927,586
$ 5,396,505
33,324,091
$
Revenue from external
customer contracts
Inter-segment revenue
Total segment revenue		 Taiwan
China
US
1,580,622
$ 13,790,302
$ 2,151,210
$ 1,010,150
1,605,527
1,524,622
2,590,772
$ 15,395,829
$ 3,675,832
$ Nine-monthperiod ended September 30,2020		 Others
10,109,397
$ 654,079
10,763,476
$		 Total
27,631,531
$ 4,794,378
32,425,909
$
Revenue from external
customer contracts
Inter-segment revenue
Total segment revenue		 Taiwan
China
US
4,677,541
$ 36,263,554
$ 5,706,622
$ 3,093,068
4,978,567
4,053,669
7,770,609
$ 41,242,121
$ 9,760,291
$ Nine-monthperiod ended September 30,2019		 Others
22,858,683
$ 1,188,344
24,047,027
$		 Total
69,506,400
$ 13,313,648
82,820,048
$
Revenue from external
customer contracts
Inter-segment revenue
Total segment revenue		 Taiwan
4,872,237
$ 3,101,150
7,973,387
$		 China
43,041,017
$ 4,834,519
47,875,536
$		 US
6,473,374
$ 4,391,684
10,865,058
$		 Others
28,500,683
$ 1,864,393
30,365,076
$		 Total
82,887,311
$ 14,192,046
97,079,357
$

B. Contract liabilities

Contract liabilities
The Group has recognised the following revenue-related contract liabilities:
September30,2020 December31,2019
Contract liabilities:
Advance sales receipts $ 932,709
 $ 895,825
Customer loyalty programmes 23,490 39,794
Total $ 956,199 $ 935,619

~36~

Revenue recognized that was included in
period:
Contract liabilities:
Advance sales receipts
Customer loyalty programmes
Total		 the contract liability balance at the beginning of the
September 30,2019
January1,2019
2,430,547
$ 694,413
$ 40,934
52,658
2,471,481
$ 747,071
$
Interest income
Other income
Advance sales receipts
Customer loyalty programmes
Advance sales receipts
Customer loyalty programmes
Interest income from bank deposits
Interest income from bank deposits
Grant revenue
Other income
Grant revenue
Other income		 Three-month period ended Three-month period ended
September30,2020
September30,2019
13,583
$ 1,668
$ -
-
13,583
$ 1,668
$ Nine-month period ended
Nine-month period ended
September30,2020
September30,2019
656,470
$ 516,486
$ 38,763
47,937
695,233
$ 564,423
$ Three-month period ended Three-month period ended
September30,2020
September30,2019
49,055
$ 68,149
$ Nine-month period ended Nine-month period ended
September30,2020
September30,2019
198,986
$ 210,933
$ Three-month period ended Three-month period ended
September30,2020
September30,2019
196,165
$ 67,202
$ 147,272
71,914
343,437
$ 139,116
$ Nine-month period ended Nine-month period ended
September30,2020
September30,2019
486,810
$ 189,362
$ 336,322
213,731
823,132
$ 403,093
$

(22) Interest income

(23) Other income

~37~

(24) Other gains and losses

Other gains and losses
Three-month period ended Three-month period ended
September 30,2020 September 30,2019
Net currency exchange loss ($ 271,664)
 ($ 356,678)
Loss from fire damage ( 62,503)
 -
Loss on disposal of property, plant and
equipment ( 14,026)
 ( 11,826)
Net gain on financial assets and
liabilities at fair value through profit or
loss - 3,884
Other expenses ( 21,142) ( 21,533)
($ 369,335) ($ 386,153)
Nine-month period ended Nine-month period ended
September 30,2020 September 30,2019
Net currency exchange (loss) gain ($ 880,442)
 $ 197,444
Loss from fire damage ( 62,503)
 -
Loss on disposal of property, plant and
equipment ( 31,826)
 ( 38,311)
Net (loss) gain on financial assets and
liabilities at fair value through profit or
loss ( 147)
 5,360
Other expenses ( 79,190) ( 91,894)
($ 1,054,108) $ 72,599
Finance costs
Three-month period ended Three-month period ended
September 30,2020 September 30,2019
Interest expense:
Bank borrowings $ 179,994
 $ 387,914
Corporate bonds 37,842 41,215
Provisions-discount 2,704 2,868
Lease liability-interest expense 5,053 4,184
225,593 436,181
Less: Capitalisation of qualifying assets ( 6,904) ( 3,671)
Finance costs $ 218,689 $ 432,510

(25) Finance costs

~38~

Nine-month period ended Nine-month period ended Nine-month period ended Nine-month period ended
September 30,2020 September 30,2019
Interest expense:
Bank borrowings $ 757,116
 $ 1,159,062
Corporate bonds 112,771 149,468
Provisions-discount 8,113 8,463
Lease liability-interest expense 10,093 7,680
888,093 1,324,673
Add: Reversal of capitalisation of
disqualifying assets		 - 16,581
Less: Capitalisation of qualifying assets ( 16,623) ( 32,156)
Finance costs $ 871,470 $ 1,309,098
Expenses by nature
Three-month period ended Three-month period ended
September 30,2020 September 30,2019
Employee benefit expense
Wages and salaries $ 3,089,728
 $ 3,117,967
Labour and health insurance fees 173,089 168,163
Pension costs 131,465 144,514
Directors’ remuneration 43,044 10,371
Other personnel expenses 202,059 195,475
$ 3,639,385 $ 3,636,490
Raw materials and supplies used $ 12,560,009 $ 14,009,174
Depreciation expense on property, plant
and equipment $ 2,835,245 $ 3,036,092
Depreciation expense on right-of-use
assets $ 79,628 $ 70,500
Depreciation expense on investment
property $ 5,718 $ 5,958
Amortisation expense on intangible assets $ 24,429 $ 27,147

(26) Expenses by nature

~39~

Nine-month period ended Nine-month period ended September 30, 2020 September 30, 2019

Employee benefit expense

Wages and salaries Labour and health insurance fees

Pension costs Directors’ remuneration

Other personnel expenses

Raw materials and supplies used

Depreciation expense on property, plant and equipment

Depreciation expense on right-of-use assets

Depreciation expense on investment property Amortisation expense on intangible assets

8,596,472
$ 510,131
334,108
55,224
541,583
10,037,518
$ 32,736,733
$ 8,606,438
$ 217,948
$ 17,163
$ 74,304
$		 9,404,116
$ 538,629
433,085
55,812
610,568
11,042,210
$
42,701,209
$
9,306,935
$
187,854
$
18,185
$
76,782
$

  • Note: As at September 30, 2020 and 2019, the Company had 28,557 and 28,844 employees, of which 9 and 7 directors were not the Company’s employees, respectively.

  • 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 and the nine-month periods ended September 30, 2020 and 2019, employees’ compensation was accrued at $60,524 thousand, $11,909 thousand, $69,202 thousand and $85,396 thousand, respectively; while directors’ and supervisors’ remuneration was accrued at $39,734 thousand, $7,818 thousand, $45,431 thousand and $56,062 thousand, respectively. The aforementioned amounts were recognized in salary expenses.

The employees’ compensation and directors’ and supervisors’ remuneration were estimated and accrued based on 2% and 1.313% of distributable profit of current year for the nine-month period ended September 30, 2020.

Employees’ compensation and directors’ and supervisors’ remuneration for 2019 amounting to $93,053 thousand and $61,089 thousand, respectively, as resolved at the meeting of Board of Directors were in agreement with those amounts recognised in the 2019 financial statements. The employees’ compensation for 2019 will be distributed in the form of cash. As of November 12, 2020, the employees’ compensation for 2019 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.

~40~

(27) Income tax

A. Income tax expense

  • (a) Components of income tax expense:
ome tax
Income tax expense
(a) Components of income tax expense:
Three-month period endedThree-month period ended
September30,2020 September30,2019
Current tax:
Current tax on profits for the period $ 1,286,924
 $ 1,076,200
Prior year income tax overestimation ( 57,796)
 ( 14,700)
Total current tax 1,229,128 1,061,500
Deferred tax:
Origination and reversal of temporary
differences ( 368,432)
 ( 481,204)
Total deferred tax ( 368,432)
 ( 481,204)
Income tax expense $ 860,696 $ 580,296
Nine-month period ended Nine-month period ended
September30,2020 September30,2019
Current tax:
Current tax on profits for the period $ 1,802,545
 $ 2,019,285
Prior year income tax overestimation ( 123,352)
 ( 76,859)
Total current tax 1,679,193 1,942,426
Deferred tax:
Origination and reversal of temporary
differences ( 251,298)
 25,886
Total current tax ( 251,298)
 25,886
Income tax expense $ 1,427,895 $ 1,968,312
(b) The income tax (charge)/credit relating to components of other comprehensive income is as
follows:
Three-month period ended Three-month period ended
September30,2020 September30,2019
Generated during the period :
Currency translation differences ($ 154,464)
 $ 492,509
Nine-month period ended Nine-month period ended
September30,2020 September30,2019
Generated during the period :
Currency translation differences $ 286,610
$		 222,156

B. The Company’s income tax returns through 2017 have been assessed and approved by the Tax Authority.

~41~

(28) Earnings per share

Earnings per share
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares
Assumed conversion of all
dilutive potential ordinary shares
Employees’ compensation
Assumed conversion of all
dilutive potential ordinary shares
Employees’ compensation		 Three-monthperiod ended September30,2020
Amount
Weighted average
number of ordinary
shares outstanding
Earnings
per share
aftertax
(sharesinthousands)
(indollars)
2,543,639
$ 3,241,416
0.78
$ 2,543,639
3,241,416
2,543,639
$ 3,243,089
0.78
$ -
1,673
Three-monthperiod ended September 30,2019		 Earnings
per share
(indollars)
0.78
$
0.78
$
Amount
Weighted average
number of ordinary
shares outstanding
Earnings
per share
aftertax
(sharesinthousands)
(in dollars)
286,173
$ 3,241,416
0.09
$ 286,173
3,241,416
-
261
286,173
$ 3,241,677
0.09
$

~42~

Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares
Basic earnings per share
Profit attributable to ordinary
shareholders of the parent
Diluted earnings per share
Profit attributable to ordinary
shareholders of the parent
Profit attributable to ordinary
shareholders of the parent plus
assumed conversion of all dilutive
potential ordinary shares
Assumed conversion of all
dilutive potential ordinary shares
Employees’ compensation
Assumed conversion of all
dilutive potential ordinary shares
Employees’ compensation		 Nine-monthperiod ended September30,2020 Nine-monthperiod ended September30,2020
Amount
Weighted average
number of ordinary
shares outstanding
Earnings
per share
aftertax
(sharesinthousands)
(indollars)
2,818,893
$ 3,241,416
0.87
$ 2,818,893
3,241,416
2,818,893
$ 3,244,319
0.87
$ -
2,903
Nine-monthperiod ended September30,2019		 Earnings
per share
(indollars)
0.87
$
0.87
$
Amount
Weighted average
number of ordinary
shares outstanding
Earnings
per share
aftertax
(sharesinthousands)
(in dollars)
3,030,480
$ 3,241,416
0.93
$ 3,030,480
3,241,416
-
2,594
3,030,480
$ 3,244,010
0.93
$

~43~

(29) Supplemental cash flow information

Investing activities with partial cash payments ：

Nine-month period ended Nine-month period ended Nine-month period ended Nine-month period ended Nine-month period ended
September30,2020 September30,2019
Purchase of property, plant and equipment $ 4,851,850
 $ 5,726,258
Add: Opening balance of payable
on equipment 1,128,354 1,730,936
Less: Ending balance of payable
on equipment ( 698,036)
 ( 1,213,319)
Cash paid during the period $ 5,282,168 $ 6,243,875

(30) Changes in liabilities from financing activities

Short-term
Long-term
Bonds
Dividends
Lease
Guarantee
deposits
Liabilities from
financing
borrowings
borrowings
payable
payable
liability
received
activities-gross
At January 1
16,843,366
$ 30,702,861
$ 17,000,000
$ 657
$ 708,927
$ 248,381
$ 65,504,192
$ Changes in cash flow
from financing
activities
5,667,663)
(
1,153,803)
(
2,500,000)
(
3,277,104)
(
137,099)
(
6,284)
(
12,741,953)
(
Interest paid
-
-
-
-
10,093)
(
-
10,093)
(
Additions
-
-
-
3,277,104
172,243
-
3,449,347
Amortisation of interest
expense
-
-
-
-
10,093
-
10,093
Impact of changes in
foreign exchange rate
579,337)
(
558,604)
(
-
-
26,035)
(
-
1,163,976)
(
At September 30
10,596,366
$ 28,990,454
$ 14,500,000
$ 657
$ 718,036
$ 242,097
$ 55,047,610
$ Short-term
Long-term
Bonds
Dividends
Lease
Guarantee
deposits
Liabilities from
financing
borrowings
borrowings
payable
payable
liability
received
activities-gross
At January 1
15,569,136
$ 35,526,041
$ 21,800,000
$ 657
$ 339,938
$ 255,209
$ 73,490,981
$ Changes in cash flow
from financing
activities
3,007,614
5,464,927)
(
4,800,000)
(
3,565,557)
(
91,641)
(
5,765)
(
10,920,276)
(
Interest paid
-
-
-
-
7,680)
(
-
7,680)
(
Additions
-
-
-
3,565,557
371,705
-
3,937,262
Amortisation of interest
expense
-
-
-
-
7,680
-
7,680
Impact of changes in
foreign exchange rate
14,108)
(
332,189
-
1
7,298
-
325,380
At September 30
18,562,642
$ 30,393,303
$ 17,000,000
$ 658
$ 627,300
$ 249,444
$ 66,833,347
$ 2020
2019		 2020
Liabilities from
financing
activities-gross
66,833,347
$

~44~

7. RELATED PARTY TRANSACTIONS

(1) Names of related parties and relationship

Names of related parties Relationship with the Group Associate which invests in subsidiary by using the equity Toyo Tire & Rubber Co., Ltd. method New Pacific IND. CD., LTD. Investee accounted for using the equity method MERIDA INDUSTRY CO., LTD. The Company’s director is the company’s vice chairman Maxxis (XiaMen) Trading CO., LTD. The Company’s director is the company’s representative Jye Luo Memory Co Ltd. The Company’s director is the company’s representative (Note) Luo, Jye Relative of the Company’s director within first degree of relationship Lo, Ming-Ling Spouse of the Company’s director Lo, Ming-I Spouse of the Company’s chairman Lo, Tsai-Jen The Company’s director Luo, Yuan-Yo Relative of the Company’s director within first degree of relationship Lo, Yuan-Long Relative of the Company’s director within first degree of relationship

Note: This company was established on September 24, 2020.

(2) Significant related party transactions

A. Operating revenue

gnificant related party transactions
Operating revenue
Sales of goods:
-Other related parties
Sales of goods:
-Other related parties		 Three-month period ended
September30,2020
68,611
$ Nine-month period ended
September30,2020
183,955
$		 Three-month period ended
September30,2019
74,243
$
Nine-month period ended
September30,2019
210,837
$

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

September 30, 2020 December 31, 2019 September 30, 2019

C. Loans to / from related parties: shown as long-term borrowings
Accounts receivable:
-Other related parties
44,235
$ 54,053
$ September30,2020
December31,2019

Payables due to related parties：
-Other related parties
213,450
$ 215,250
$		 Loans to / from related parties: shown as long-term borrowings
Accounts receivable:
-Other related parties
44,235
$ 54,053
$ September30,2020
December31,2019

Payables due to related parties：
-Other related parties
213,450
$ 215,250
$		 44,883
$
September30,2019

Payables due to related parties：
-Other related parties
September30,2020
213,450
$
217,500
$

The Group obtained financing from other related parties and financial institutions for capital needs. Please refer to Note 6(15) for interest rates, borrowing periods and repayment methods. D. Lease transactions - lessee

(a) The Group leases lands from Luo, Jye, Lo, Ming-Ling, Lo, Ming-I, Lo, Tsai-Jen, Luo, YuanYo and Lo, Yuan-Long. Rental contracts are typically made for periods of 4 to 5 years. Rents

~45~

are prepaid at the beginning of the year. (b) Acquisition of right-of-use assets

(3) (c) Lease liabilities
i. Outstanding balance
ii. Interest expense
Key management compensation
Key management personnel
Key management personnel
Key management personnel
Short-term employee benefits
Post-employment benefits
Short-term employee benefits
Post-employment benefits		 Nine-month period ended
Nine-month period ended
September30,2020
September30,2019
-
$ 5,785
$ September30,2020
December31,2019
September30,2019
41,450
$ 55,136
$ 55,008
$ Nine-month period ended
Nine-month period ended
September30,2020
September30,2019
289
$ 375
$ Three-month period ended
Three-month period ended
September30,2020
September30,2019
77,027
$ 50,878
$ 509
641
77,536
$ 51,519
$ Nine-month period ended
Nine-month period ended
September30,2020
September30,2019
160,269
$ 179,594
$ 1,528
1,921
161,797
$ 181,515
$
$

8. PLEDGED ASSETS

None.

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:

B. Amount of letter of credit that has been issued but not yet used:
September 30,2020
December 31,2019
Property, plant and equipment
3,406,911
$ 2,990,369
$ September30,2020
December31,2019
Amount of letter of credit that
has been issued but not yet used
33,107
$ 45,524
$		 September 30,2019
2,696,308
$
September30,2019
24,781
$

10. SIGNIFICANT DISASTER LOSS

On September 26, 2020, a fire damaged a plant located in Xizhou owned by the Company and destroyed some buildings, equipment and inventories in the plant. The book value of the damaged properties amounted to $62,503 thousand, including buildings and equipment as well as inventories of $51,591 thousand and $10,912 thousand, respectively, which were all recognised as loss from fire damage under

~46~

other gains and losses for the nine-month period ended September 30, 2020. However, the Company has relevant property insurance and has filed a claim to the insurance company. Additionally, the claim settlement amount is still in the process of assessment by the insurance company.

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 nine-month period ended September 30, 2020, the Group’s strategy was unchanged from 2019. The gearing ratios as at September 30, 2020, December 31, 2019 and September 30, 2019 were as follows:

as follows:
September30,2020 December31,2019 September30,2019
Total liabilities $ 73,439,407 $ 86,069,542 $ 88,260,840
Total equity $ 76,353,890
 $ 77,970,687
 $ 78,336,236
Less : Intangible assets ( 195,844)
 ( 246,790)
 ( 256,787)
Tangible equity $ 76,158,046 $ 77,723,897 $ 78,079,449
Debt-equity ratio 96% 111% 113%

~47~

(2) Financial instruments

  • A. Financial instruments by category

September 30, 2020 December 31, 2019 September 30, 2019

Financial assets

nancial instruments
Financial instruments by category
Financial assets		 September30,2020 December31,2019 September30,2019
Financial assets at fair value
through profit or loss - current
Financial assets mandatorily
measured at fair value through
profit or loss
Financial assets at fair value
through other comprehensive
income - current
Designation of equity instrument
Financial assets at fair value
through other comprehensive
income - non-current
Designation of equity instrument
Financial assets at amortised
cost/Loans and receivables
Cash and cash equivalents
Notes receivable, net
Accounts receivable
(including related parties)
Guarantee deposits paid
Other financial assets
Financial liabilities
Financial liabilities at amortised
cost
Short-term borrowings
Notes payable
Accounts payable
Other accounts payables
Corporate bonds payable
(including current portion)
Long-term borrowings
(including current portion)
Guarantee deposits received

Lease liabilities
(including current portion)		 -
$ 25,636
58,187
22,668,172
2,549,939
9,275,718
48,298
8,638
34,634,588
$ 10,596,366
$ 511,617
6,892,469
4,868,464
14,500,000
28,990,454
242,097
$ 66,601,467

718,036
$		 -
$ 25,935
58,187
25,501,222
3,761,453
8,992,980
53,066
374,790
38,767,633
$ 16,843,366
$ 1,122,276
7,793,330
5,587,574
17,000,000
30,702,861
248,381
$79,297,788

708,927
$		 2,100
$ 21,323
58,187
24,493,756
2,935,216
10,379,157
51,330
322,831
38,263,900
$
18,562,642
$ 967,866
7,425,121
5,459,466
17,000,000
30,393,303
249,444
$ 80,057,842
627,300
$

~48~

  • 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. 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.

  • 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, JPY, MXN 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:

~49~

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD：TWD
RMB：TWD
EUR：TWD
JPY：TWD
USD：RMB
EUR：RMB
GBP：RMB
RUB：RMB
USD：THB
EUR：THB
USD：VND
USD：CAD		 September 30,2020 September 30,2020
Foreign
currency amount
(thousands)
282,768
$ 151,167
11,557
621,869
63,108
18,360
3,326
690,313
54,055
3,763
21,847
23,768		 Exchange rate
29.100
4.269
34.150
0.276
6.817
8.000
8.737
0.088
31.487
36.951
25,752.212
1.340		 Book value
(TWD
in thousands)
8,228,549
$ 645,332
394,672
171,636
1,836,555
627,031
124,054
259,331
1,572,676
128,479
635,748
691,763		 Sensitivityanalysis
Degree of
variation
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%		 Effect on
profit or loss
82,285
$ 6,453
3,947
1,716
18,366
6,270
1,241
2,593
15,727
1,285
6,357
6,918		 Effect on other
comprehensive
income
-
$ -
-
-
-
-
-
-
-
-
-
-












~50~

(Foreign currency:
functional currency)
Financial liabilities
Monetary items
USD：TWD
USD：RMB
EUR：RMB
USD：THB
USD：VND
USD：CAD
USD：IDR
USD：INR		 September 30,2020 September 30,2020
Foreign
currency amount
(thousands)
18,068
$ 50,406
5,330
20,373
40,793
9,534
299,761
230,620		 Exchange rate
29.100
6.817
8.000
31.487
25,752.212
1.340
14,696.970
73.727		 Book value
(TWD
in thousands)
525,779
$ 1,466,904
182,030
592,732
1,187,076
277,485
8,723,045
6,711,053		 Sensitivityanalysis
Degree of
variation
1%
1%
1%
1%
1%
1%
1%
1%		 Effect on
profit or loss
5,258
$ 14,669
1,820
5,927
11,871
2,775
87,230
67,111		 Effect on other
comprehensive
income
-
$ -
-
-
-
-
-








~51~

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD：TWD
RMB：TWD
EUR：TWD
JPY：TWD
GBP：TWD
USD：RMB
EUR：RMB
JPY：RMB
GBP：RMB
RUB：RMB
USD：THB
EUR：THB
USD：VND
USD：CAD
USD：IDR		 December31,2019 December31,2019 December31,2019 December31,2019
Foreign
currency amount
(thousands)
151,203
$ 726,287
36,518
1,566,266
3,299
93,667
19,541
477,392
3,677
343,160
53,836
13,078
28,935
21,544
21,258		 Exchangerate
29.980
4.305
33.590
0.276
39.360
6.964
7.803
0.064
9.143
0.112
29.689
33.264
25,623.932
1.305
13,752.294		 Book value
(TWD
inthousands)
4,533,066
$ 3,126,666
1,226,640
432,289
129,849
2,808,139
656,420
131,531
144,729
165,458
1,614,320
439,377
867,471
645,743
637,315		 Sensitivity analysis
Degree of
variation
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%		 Effect on
profit or loss
45,331
$ 31,267
12,266
4,323
1,298
28,081
6,564
1,315
1,447
1,655
16,143
4,394
8,675
6,457
6,373		 Effect on other
comprehensive
income
-
$ -
-
-
-
-
-
-
-
-
-
-
-
-
-















~52~

(Foreign currency:
functional currency)
Financial liabilities
Monetary items
USD：TWD
USD：RMB
EUR：RMB
USD：THB
USD：VND
USD：CAD
USD：IDR
USD：INR		 December31,2019 December31,2019 December31,2019 December31,2019
Foreign
currency amount
(thousands)
16,513
$ 89,815
7,416
38,456
36,809
6,988
311,695
233,647		 Exchange
rate
29.980
6.964
7.803
29.689
25,623.932
1.305
13,752.294
71.043		 Book value
(TWD
inthousands)
495,060
$ 2,692,655
249,118
1,153,137
1,103,534
209,453
9,344,616
7,004,771		 Sensitivity analysis
Degree of
variation
1%
1%
1%
1%
1%
1%
1%
1%		 Effect on
profit or loss
4,951
$ 26,927
2,491
11,531
11,035
2,095
93,446
70,048		 Effect on other
comprehensive
income
-
$ -
-
-
-
-
-
-








~53~

September 30, 2019

(Foreign currency:
functional currency)
Financial assets
Monetary items
USD：TWD
RMB：TWD
EUR：TWD
JPY：TWD
GBP：TWD
USD：RMB
EUR：RMB
GBP：RMB
RUB：RMB
USD：THB
EUR：THB
USD：VND
USD：CAD
USD：IDR		 Foreign
currency amount
(thousands)
147,020
$ 31.040
743,902
4.350
30,228
33.950
1,257,213
0.288
7,414
38.200
77,675
7.136
24,817
7.805
5,719
8.782
563,054
0.110
59,582
30.416
17,996
33.268
27,800
25,442.623
18,566
1.324
29,062
13,919.283
Exchangerate		 Book value
(TWD
inthousands)
4,563,501
$ 3,235,974
1,026,241
362,077
283,215
2,411,156
842,581
218,476
269,421
1,850,303
611,263
862,912
576,138
902,085		 Sensitivity analysis Sensitivity analysis
Degree of
variation
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%
1%		 Effect on profit
or loss
45,635
$ 32,360
10,262
3,621
2,832
24,112
8,426
2,185
2,694
18,503
6,113
8,629
5,761
9,021		 Effect on other
comprehensive
income
-
$ -
-
-
-
-
-
-
-
-
-
-
-
-














~54~

September 30, 2019

(Foreign currency:
functional currency)
Financial liabilities
Monetary items
USD：TWD
USD：RMB
EUR：RMB
USD：THB
USD：VND
USD：CAD
USD：IDR
USD：INR		 Foreign
currency amount
(thousands)
18,461
$ 31.040
79,143
7.136
12,060
7.805
64,021
30.416
32,860
25,442.623
14,237
1.324
310,315
13,919.283
232,078
70.771
Exchange rate		 Book value
(TWD
inthousands)
573,029
$ 2,456,725
409,458
1,988,155
1,019,974
441,801
9,632,178
7,203,738		 Sensitivity analysis Sensitivity analysis
Degree of
variation
1%
1%
1%
1%
1%
1%
1%
1%		 Effect on profit
or loss
5,730
$ 24,567
4,095
19,882
10,200
4,418
96,322
72,037		 Effect on other
comprehensive
income
-
$ -
-
-
-
-
-
-








~55~

  • iv. The exchange (loss) gain including realized and unrealized arising from significant foreign exchange variation on the monetary items held by the Group for the three-month and nine-month periods ended September 30, 2020 and 2019 amounted to ($271,664) thousand, ($356,678) thousand, ($880,442) thousand and $197,444 thousand, 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 and financial assets at fair value through other comprehensive income. The Group diversifies its portfolio to manage its price risk arising from investments in equity securities.

  • 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 for the ninemonth periods ended September 30, 2020 and 2019 would have increased/decreased by $838 thousand and $795 thousand, respectively.

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 ninemonth periods ended September 30, 2020 and 2019, the Group’s borrowings at variable rate were denominated in the TWD, 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.As at September 30, 2020 and 2019, 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 nine-month periods ended September 30, 2020 and 2019 would have been $23,937 thousand and $37,020 thousand higher/lower, 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.

  • iii.The Group adopts the assumptions under IFRS 9, the default occurs when the contract payments are past due over 30 days.

  • iv.The Group adopts following 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.

  • v. The following indicators are used to determine whether the credit impairment of debt instruments has occurred:

  • (i) It becomes probable that the issuer will enter bankruptcy or other financial

~56~

reorganization due to their financial difficulties;

  • (ii) The disappearance of an active market for that financial asset because of financial difficulties;

  • (iii) Default or delinquency in interest or principal repayments;

  • (iv) Adverse changes in national or regional economic conditions that are expected to cause a default.

  • vi. The Group wrote-off the financial assets, which cannot be reasonably expected to be recovered, after initiating recourse procedures. However, the Group will continue executing the recourse procedures to secure their rights. As at September 30, 2020, December 31, 2019 and September 30, 2019, the Group has no written-off financial assets that are still under recourse procedures.

  • vii. The Group used the forecastability to adjust historical and timely information to assess the default possibility of accounts receivable; accounts receivable that are significantly past due are assessed individually for their expected credit losses. As at September 30, 2020, December 31, 2019 and September 30, 2019, the provision matrix is as follows:

September30,2020
Without past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 180 days
Individual
December31,2019
Without past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 180 days
Individual
September30,2019
Without past due
Up to 30 days
31 to 90 days
91 to 180 days
Over 180 days		 Expectedlossrate
0.00%
1.87%
4.65%
9.53%
18.98%
98.51%
Expectedlossrate
0.00%
0.32%
0.98%
1.95%
5.81%
100.00%
Expectedlossrate
0.00%
0.04%
0.71%
1.45%
3.96%		 Totalbookvalue
7,978,119
$ 968,095
183,671
80,664
67,080
61,523
9,339,152
$ Totalbookvalue
7,376,434
$ 1,099,362
282,247
83,960
111,310
27,229
8,980,542
$ Totalbookvalue
8,351,865
$ 1,170,338
445,395
157,451
223,985
10,349,034
$		 Loss allowance
-
$ 18,103
8,543
7,685
12,732
60,606
107,669
$
Loss allowance
-
$ 3,518
2,766
1,635
6,467
27,229
41,615
$
Loss allowance
-
$ 445
3,162
2,283
8,870
14,760
$
  • viii. Movements in relation to the group applying the simplified approach to provide loss allowance for accounts receivable are as follows:

~57~

2020 2019
At January 1 $ 41,615
 $ 15,343
Provision for impairment 67,817 13,861
Reversal of impairment loss ( 656)
 ( 621)
Write-offs ( 939)
 ( 13,861)
Effect of exchange rate changes ( 168)
 38
At September 30 $ 107,669 $ 14,760

  • (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 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.

September 30, 2020

Short-term borrowings
Notes and accounts payable
Other payables
Lease liability
Guarantee deposits received
Long-term borrowings
Bonds payable
December 31, 2019
Short-term borrowings
Notes and accounts payable
Other payables
Lease liability
Guarantee deposits received
Long-term borrowings
Bonds payable
Non-derivative financial liabilities
Non-derivative financial liabilities		 Less than
Between 91
Between 181
90 days
and 180 days
and 365 days
8,602,854
$ 1,549,464
$ 493,157
$ 7,330,227
-
38,421
4,612,162
110,463
76,075
38,027
44,925
90,495
-
-
370
660,589
1,353,784
2,865,558
-
-
6,089,850
Less than
Between 91
Between 181
90 days
and 180 days
and 365 days
12,271,246
$ 3,162,609
$ 1,562,289
$ 8,868,422
1,268
35,694
5,355,433
6,127
118,084
44,142
32,667
62,565
373
-
-
1,578,812
1,700,671
4,712,180
-
-
2,651,100		 -
$ 10,645,475
$ 35,438
7,404,086
69,764
4,868,464
544,589
718,036
241,727
242,097
25,131,776
30,011,707
8,601,300
14,691,150
-
$ 16,996,144
$ 10,222
8,915,606
107,930
5,587,574
569,553
708,927
248,008
248,381
24,222,151
32,213,814
14,734,650
17,385,750
Over 1year
Total
Over 1year
Total

~58~

September 30, 2019

September 30, 2019
Non-derivative financial liabilities Less than
Between 91
Between 181
90days
and 180days
and365days
11,242,949
$ 5,038,118
$ 2,522,939
$ 8,345,310
-
36,067
5,156,678
107,057
83,196
26,569
77,049
31,429
3,287
-
-
839,573
1,741,359
4,362,223
-
-
2,651,100		 -
$ 18,804,006
$ 11,610
8,392,987
112,535
5,459,466
492,253
627,300
246,157
249,444
24,989,337
31,932,492
14,734,650
17,385,750
Over 1year
Total
Short-term borrowings
Notes and accounts payable
Other payables
Lease liability
Guarantee deposits received
Long-term borrowings
Bonds payable

  • (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(9).

  • 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, long-term borrowings (including current portion) and guarantee deposits received are approximate to their fair values.

Financial liabilities:
Bonds payable
Financial liabilities:
Bonds payable		 September30,2020 September30,2020
Carrying amount
14,500,000
$		 Fairvalue
Level 1
Level 2
-
$ 14,516,428
$ December31,2019		 Level3
-
$
Carrying amount
17,000,000
$		 Fairvalue
Level 1
-
$		 Level 2
17,050,741
$		 Level3
-
$

~59~

September 30, 2019

Financial liabilities:
Bonds payable		 Carrying amount
17,000,000
$		 Fairvalue
Level 1
-
$		 Level 2
17,015,443
$		 Level3
-
$
  • (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 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:

Assets
Recurring fair value measurements
Financial assets at fair value
through other comprehensive
income
- Equity securities
Assets
Recurring fair value measurements
Financial assets at fair value
through other comprehensive
income
- Equity securities		 September 30,2020
Level 1
25,636
$		 Level 2
-
$ December		 Level3
58,187
$ 31,2019		 Total
83,823
$
Level 1
25,935
$		 Level 2
-
$		 Level3
58,187
$		 Total
84,122
$

~60~

Assets
Recurring fair value measurements
Financial assets at fair value
through profit or loss
- Forward exchange contracts
Financial assets at fair value
through other comprehensive
income
- Equity securities		 September 30,2019
Level 1
-
$ 21,323
21,323
$		 Level 2
2,100
$ -
2,100
$		 Level3
-
$ 58,187
58,187
$		 Total
2,100
$ 79,510
81,610
$		 
  - (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 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 nine-month periods ended September 30, 2020 and 2019, there was no transfer between Level 1 and Level 2.

  • F. There was no movement in Level 3 for the nine-month periods ended September 30, 2020 and 2019.

  • (4) Assessment of impact of the COVID-19

Regarding the assessment of impact of the COVID-19, the Group was affected by the COVID-19 pandemic. Since early 2020, production of some of the Group’s factories had stopped and orders had been delayed. However, all factories have resumed operations in the second quarter of 2020. Additionally, although the Group’s sales orders from some areas have declined because of the COVID-19 pandemic, overall business and finance were not significantly affected based on the Group’s assessment.

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

~61~

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(24) and 12(2), 12(3).

  • 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.

  • C. 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 nine-month period ended September 30, 2020: please refer to tables 5, 6 and 7.

(4) Major shareholders information

Major shareholders information: Please refer to table 10.

14. SEGMENT INFORMATION

(1) General information

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

(2) 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.

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

The segment information provided to the Chief Operating Decision-Maker for the reportable segments is as follows:

~62~

Three-month period ended September 30, 2020

Revenue
Revenue from external
customers
Revenue from inter
-segment revenue
Total segment revenue
Segment income
Revenue
Revenue from external
customers
Revenue from inter
-segment revenue
Total segment revenue
Segment income (loss)
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
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.		 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.		 MAXXIS
INTERNATIONAL
(THAILAND)
CO.,LTD.		 Total
3,699,803
$ 2,675,064
6,374,867
$ 811,377
$ CHENG SHIN
RUBBER IND.
CO., LTD. and
MAXXIS
(Taiwan) Trading
CO.,LTD.		 3,699,803
$ 2,675,064
6,374,867
$ 811,377
$		 24,950,712
$ 5,218,857
30,169,569
$
3,951,432
$
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.		 All other
segments
5,413,512
$ 1,210,656
6,624,168
$ 790,495
$ 2020		 Total
3,503,332
$ 2,417,142
5,920,474
$ 145,572
$ CHENG SHIN
RUBBER IND.
CO., LTD. and
MAXXIS (Taiwan)
TradingCO.,LTD.		 3,503,332
$ 2,417,142
5,920,474
$ 145,572
$		 4,096,945
$ 8,518,373
$ 3,041,456
$ 356,474
232,423
403,295
4,453,419
$ 8,750,796
$ 3,444,751
$ 85,966
$ 680,138
$ 111,843)
($ Nine-monthperiod endedSeptember30,		 24,573,618
$ 4,619,990
29,193,608
$
1,590,328
$

CHENG SHIN
RUBBER
(XIAMEN)
IND.,LTD.		 CHENG SHIN
TIRE & RUBBER
(CHINA) CO.,
LTD. and CHENG
SHIN PETREL
TIRE (XIAMEN)
CO.,LTD.		 MAXXIS
INTERNATION
AL (THAILAND)
CO.,LTD.		 All other
segments		 Total
62,220,192
$ 12,794,650
75,014,842
$ 6,143,404
$
9,874,481
$ 6,567,308		 10,917,230
$ 976,004
11,893,234
$ 290,078
$		 21,046,245
$ 443,535
21,489,780
$ 1,623,274
$		 6,848,875
$ 1,004,878		 3,533,361
$ 3,802,925
17,336,286
$ 2,821,583
$
6,441,789
$		 7,853,753
$
1,274,921
$		 133,548
$

~63~

Nine-month period ended September 30, 2019

Revenue
Revenue from external
customers
Revenue from inter
-segment revenue
Total segment revenue
Segment income (loss)		 CHENG SHIN
RUBBER IND.
CO., LTD. and
MAXXIS (Taiwan)
TradingCO.,LTD.		 CHENG SHIN
RUBBER IND.
CO., LTD. and
MAXXIS (Taiwan)
TradingCO.,LTD.		 CHENG SHIN
RUBBER
(XIAMEN)
IND.,LTD.		 CHENG SHIN
TIRE & RUBBER
(CHINA) CO.,
LTD. and CHENG
SHIN PETREL
TIRE (XIAMEN)
CO.,LTD.		 MAXXIS
INTERNATION
AL (THAILAND)
CO.,LTD.		 All other
segments
15,790,170
$ 3,447,800
19,237,970
$ 2,406,189
$		 Total
10,767,720
$ 7,271,525
18,039,245
$ 1,402,605
$		 12,266,502
$ 1,130,351
13,396,853
$ 195,355
$		 26,214,809
$ 632,701
26,847,510
$ 2,448,381
$		 9,145,303
$ 1,227,146
10,372,449
$ 142,387)
($		 74,184,504
$ 13,709,523
87,894,027
$
6,310,143
$

(4) Reconciliation for segment income (loss)

  • A. A reconciliation of income after adjustment and total segment income from continuing operations is provided as follows:
is provided as follows:
Three-month period ended Three-month period ended
September 30,2020 September 30,2019
Adjusted revenue from reportable segments $ 30,169,569
 $ 29,193,608
Adjusted revenue from other operating segments 3,154,522 3,232,301
Total operating segments 33,324,091 32,425,909
Elimination of inter-segment revenue ( 5,396,505) ( 4,794,378)
Total consolidated operating revenue $ 27,927,586 $ 27,631,531
Nine-month period ended Nine-month period ended
September 30,2020 September 30,2019
Adjusted revenue from reportable segments $ 75,014,842
 $ 87,894,027
Adjusted revenue from other operating segments 7,805,206 9,185,330
Total operating segments 82,820,048 97,079,357
Elimination of inter-segment revenue ( 13,313,648) ( 14,192,046)
Total consolidated operating revenue $ 69,506,400 $ 82,887,311
  • B. A reconciliation of adjusted current income before tax and the income before tax from continuing operations is provided as follows:

~64~

Three-month period ended Three-month period ended September 30, 2020 September 30, 2019

September 30,2020 September 30,2019
Adjusted income from reportable segments
before income tax $ 3,951,432
 $ 1,590,328
Adjusted loss from other operating segments
before income tax ( 520,490) ( 726,820)
Total operating segments 3,430,942 863,508
Income from elimination of inter-segment
revenue ( 25,578) 14,942
Income from continuing operations before
income tax $ 3,405,364 $ 878,450
Nine-month period ended Nine-month period ended
September 30,2020 September 30,2019
Adjusted income from reportable segments
before income tax $ 6,143,404
 $ 6,310,143
Adjusted loss from other operating segments
before income tax ( 1,869,534) ( 1,320,691)
Total operating segments 4,273,870 4,989,452
Income from elimination of inter-segment
revenue ( 11,801) 44,792
Income from continuing operations
before income tax $ 4,262,069 $ 5,034,244

~65~

CHENG SHIN RUBBER IND. CO., LTD.

Loans to others

Table 1

Nine-month period ended September 30, 2020

Expressed in thousands of NTD (Except as otherwise indicated)

Maximum
outstanding
balance during
the nine–month
period ended
September 30,
2020
Balance at
September 30,
2020
（Note 5）
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
3,440,000
$ 3,415,200
$ 2,591,283
$ 3.85%~4.75%
Note 4
-
$ Operating
capital
-
$ 1
XIAMEN CHENG SHIN
ENTERPRISE CO., LTD.
CHENG SHIN RUBBER
(XIAMEN) IND., LTD.
Other
receivables
Yes
3,459,200
2,561,400
2,249,763
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
864,800
554,970
371,403
4.85%
Note 4
-
Operating
capital
-
2
CHENG SHIN PETREL
TIRE (XIAMEN) CO.,
LTD.
CHENG SHIN RUBBER
(ZHANGZHOU) IND
CO., LTD.
Other
receivables
Yes
3,870,000
3,482,100
1,694,793
3.85%~4.75%
Note 4
-
Operating
capital
-
2
CHENG SHIN PETREL
TIRE (XIAMEN) CO.,
LTD.
CHENG SHIN RUBBER
(XIAMEN) IND., LTD.
Other
receivables
Yes
1,075,000
1,067,250
106,725
4.75%
Note 4
-
Operating
capital
-
3
CHENG SHIN RUBBER
(XIAMEN) IND., LTD.
CHENG SHIN RUBBER
(ZHANGZHOU) IND
CO., LTD.
Other
receivables
Yes
423,500
407,400
133,860
2.90063%
~3.113%
Note 4
-
Operating
capital
-
4
CHENG SHIN LOGISTIC
(XIAMEN) IND., LTD.
CHIN CHOU CHENG SHIN
ENTERPRISE CO., LTD
Other
receivables
Yes
8,648
8,538
8,538
3.85%
Note 4
-
Operating
capital
-		 None
-
$ None
-
None
-
None
-
None
-
None
-
None
-		 4,682,976
$ 4,682,976
4,682,976
7,387,697
7,387,697
13,620,716
24,301		 7,804,960
$ 7,804,960
7,804,960
12,312,829
12,312,829
22,701,193
97,204		 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. and XIAMEN CHENG SHIN ENTERPRISE CO., LTD. to a single party is 60% of above companies’ net assets. Limit on loans granted by CHEN SHIN LOGISTIC (XIAMEN) CO., LTD. to a single party is 10% of above company’ net assets.

Note 3: Limit on loans granted by CHENG SHIN RUBBER (XIAMEN) IND., LTD., CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD. and XIAMEN CHENG SHIN ENTERPRISE CO., LTD. to others is 100% of above companies’ net assets. Limit on loans granted by CHEN SHIN LOGISTIC (XIAMEN) CO., LTD. to others is 40% of above company’ net assets.

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.

Provision of endorsements and guarantees to others Nine-month period ended September 30, 2020

Table 2

Expressed in thousands of NTD (Except as otherwise indicated)

Number
（Note 1）		 Endorser/
guarantor		 Partybeingendorsed/guaranteed Partybeingendorsed/guaranteed Limit on
endorsements/
guarantees
provided for a
singleparty		 Maximum
outstanding
endorsement/
guarantee amount
as of September
30, 2020		 Outstanding
endorsement/
guarantee amount
at September 30,
2020		 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
0
0
1		 Cheng Shin Rubber Ind. Co., Ltd.
Cheng Shin Rubber Ind. Co., Ltd.
Cheng Shin Rubber Ind. Co., Ltd.
CHENG SHIN RUBBER
(XIAMEN) IND., LTD.		 MAXXIS International
(Thailand) Co., Ltd.
Maxxis Rubber India Private
Limited
PT MAXXIS International
Indonesia
XIAMEN ESATE CO., LTD.		 Sub-
subsidiary
Subsidiary
Subsidiary
Note 3 (1)		 37,913,210
$ 37,913,210
37,913,210
18,160,954		 3,307,750
$ 8,832,445
11,304,150
1,945,800		 1,848,400
$ 8,714,548
10,796,100
-		 581,137
$ 7,276,154
8,457,430
-		 -
$ -
-
-		 2.44
11.49
14.24
-		 53,078,493
$ 53,078,493
53,078,493
22,701,193		 Y
Y
Y
N		 N
N
N
N		 N
N
N
Y		 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. Note 3: Relationship between the endorser/guarantor and the Company is classified into the following two categories:

$ 53,078,493
$ 15,165,284
$ 37,913,210

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

(2) The endorser/guarantor parent company owns directly and indiectly 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 September 30, 2020.

Table 2, page 1

CHENG SHIN RUBBER IND. CO., LTD.

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

September 30, 2020

Table 3

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 September 30,2020 As of September 30,2020 As of September 30,2020 Footnote
Number of
shares/units		 Bookvalue Ownership
(%)		 Fairvalue
Cheng Shin Rubber Ind. Co., Ltd.
Cheng Shin Rubber Ind. Co., Ltd.		 Other ordinary shares
Other ordinary shares		 -
-		 Current financial assets at fair value through
other comprehensive income
Non-current financial assets at fair value
through other comprehensive income		 -
-		 25,636
$ 58,187		 -
-		 25,636
$ 58,187		 Note 2
Note 2

Note 1: Marketable securities in the table refer to stocks, bonds, beneficiary certificates and other related derivative securities within the scope of IFRS 9, ‘Financial instruments’. Note 2: Other marketable securities do not exceed 5% of the account.

Table 3, page 1

Table 4

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 Nine-month period ended September 30, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Investor Marketable
securities
（Note1）		 General
ledger
account		 Counterparty
（Note2）		 Relationship
with
the investor
（Note2）		 Balance as at
January1,2020		 Balance as at
January1,2020		 Addition
（Note 3）		 Addition
（Note 3）		 Disposal
（Note 3）		 Disposal
（Note 3）		 Balance as at September 30,2020 Balance as at September 30,2020
Number of
shares		 Amount Number of
shares		 Amount Number of
shares		 Selling price Bookvalue Gain (loss) on
disposal		 Number of
shares		 Amount
CHENG
SHIN
RUBBER
IND. CO.,
LTD.
CHENG
SHIN
RUBBER
IND. CO.,
LTD.		 PT MAXXIS
International
Indonesia
Maxxis
Rubber India
Private
Limited		 Investments
accounted for
using the
equity method
Investments
accounted for
using the
equity method		 PT MAXXIS
International
Indonesia
Maxxis Rubber
India Private
Limited		 Subsidiary
Subsidiary		 79,997,000
649,994,730		 $ 2,461,355
$ 3,124,651		 29,998,875
224,998,176		 $ 910,166
$ 902,893		 -
-		 $ -
-		 $ -
-		 $ -
-		 109,995,875
874,992,906		 $ 3,371,521
$ 4,027,544

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 using 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.

Table 4, page 1

CHENG SHIN RUBBER IND. CO., LTD.

Purchases or sales of goods from or to related parties reaching $100 million or 20% of paid-in capital or more Nine-month period ended September 30, 2020

Table 5
Table 5
Purchaser/seller		 Counterparty Relationship with
the counterparty		 Transaction Differences in transaction
terms compared to third party
transactions(Note 1)		 Balance
Percentage of
total
notes/accounts
receivable
(payable) (%)
Notes/accounts receivable
(payable)
Footnote
(Note 2)
(Except as otherwise indicated)
Expressed in thousands of NTD
Purchases
(sales)
Amount
Percentage
of total
purchases
(sales) (%)
Credit term		 Unitprice
Credit term
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.
CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD.
CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD.
CHENG SHIN TOYO (KUNSHAN) MACHINERY CO.,
LTD.
CHENG SHIN TIRE & RUBBER (CHONGQING) CO.,
LTD.
MAXXIS International (Thailand) Co., Ltd.
PT MAXXIS International Indonesia		 CHENG SHIN RUBBER USA, INC.
CHENG SHIN RUBBER CANADA, INC.
Cheng Shin Rubber (Vietnam) IND Co., Ltd.
Maxxis (Taiwan) Trading Co., LTD.
TIANJIN TAFENG RUBBER IND 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 (ZHANGZHOU) IND CO.,
LTD.
CHENG SHIN RUBBER (XIAMEN) IND., LTD.
CHENG SHIN RUBBER CANADA, INC.
Toyo Tire & Rubber Co., Ltd.
CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD.
CHENG SHIN RUBBER USA, INC.
Cheng Shin Rubber (Vietnam) IND Co., Ltd.		 Subsidiary
Subsidiary
Sub-subsidiary
Subsidiary
Same ultimate
parent
Same ultimate
parent
Same ultimate
parent
Same ultimate
parent
Same ultimate
parent
Same ultimate
parent
Same ultimate
parent
Associate
Same ultimate
parent
Same ultimate
parent
Same ultimate
parent		 (sales)
3,073,792)
($ 23.21)
(
Collect within 60 days after
shipment of goods
(sales)
474,330)
(
3.58)
(
Collect within 90 days after
shipment of goods
(sales)
122,245)
(
0.92)
(
Collect within 60 days after
shipment of goods
(sales)
2,783,147)
(
21.01)
(
Collect within 30 days
(sales)
127,181)
(
1.07)
(
Collect within 60~90 days after
shipment of goods
(sales)
619,581)
(
5.21)
(
Collect within 60~90 days after
shipment of goods
(sales)
1,371,567)
(
48.05)
(
Collect within 60~90 days after
shipment of goods
(sales)
296,221)
(
10.38)
(
Collect within 60~90 days after
shipment of goods
(sales)
139,032)
(
4.87)
(
Collect within 60~90 days after
shipment of goods
(sales)
747,978)
(
10.59)
(
Collect within 60~90 days after
shipment of goods
(sales)
137,553)
(
1.02)
(
Collect within 60~90 days after
shipment of goods
(sales)
106,622)
(
61.29)
(
Collect within 60~90 days after
shipment of goods
(sales)
880,033)
(
25.31)
(
Collect within 60~90 days after
shipment of goods
(sales)
918,619)
(
11.70)
(
Collect within 60~90 days after
shipment of goods
(sales)
206,066)
(
29.45)
(
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
Same
Same
Same
Same
Same
Same
Same
Same
Same
Same
Same
Same		 976,183
$ 33.13
Note 4
197,161
6.69
Note 4
13,071
0.44
Note 4
321,639
10.92
Note 4
37,795
1.75
Note 4
315,135
14.62
Note 4
434,934
41.40
Note 4
85,677
8.15
Note 4
48,453
4.61
Note 4
236,669
48.76
Note 4
82,890
2.76
Note 4
13,423
47.39
252,903
32.89
Note 4
255,803
14.07
Note 4
71,676
33.75
Note 4

Note 1: If terms of related-party transactions are different from third-party transactions, explain the differences and reasons in the ‘Unit price’ and ‘Credit term’ columns. Note 2: In case related-party transaction terms involve advance receipts (prepayments) transactions, explain in the footnote the reasons, contractual provisions, related amounts, and differences in types of transactions compared to third-party transactions.

Note 3: Paid-in capital referred to herein is the paid-in capital of parent company.

Note 4: The transactions were eliminated when preparing the consolidated financial statements.

Table 5, page 1

CHENG SHIN RUBBER IND. CO., LTD.

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

September 30, 2020

Table 6

Expressed in thousands of NTD (Except as otherwise indicated)

Overdue receivables

Overdue receivables
Creditor Counterparty Relationship with the
counterparty		 Balance as at
September 30,2020		 Turnover
rate		 Amount Action taken Amount collected
subsequent to the
balance sheet date
(Note 1)		 Allowance for
doubtful
accounts
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.
CHENG SHIN TIRE & RUBBER
(CHONGQING) CO., LTD.
CHENG SHIN RUBBER
(ZHANGZHOU) IND 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.
PT MAXXIS International Indonesia
CHENG SHIN TIRE & RUBBER (CHINA)
CO., LTD.
CHENG SHIN RUBBER (XIAMEN) IND.,
LTD.
CHENG SHIN TIRE & RUBBER (CHINA)
CO., LTD.
CHENG SHIN RUBBER (XIAMEN) IND.,
LTD.
CHENG SHIN RUBBER USA, INC.		 Subsidiary (Note 5)
Subsidiary (Note 5)
Sub-subsidiary (Note 5)
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)		 976,406
197,291
137,216
323,631
135,356
315,135
437,455
252,903
236,818
255,803		 Note 4
Note 4
Note 3
Note 4
Note 3
2.13
Note 4
6.72
Note 4
4.08		 -
-
-
-
-
-
-
-
-
-		 -
-
-
-
-
-
-
-
-
-		 434,804
65,161
3,720
321,723
14,243
92,472
206,979
249,857
109,835
127,574		 -
-
-
-
-
-
-
-
-
-

Note 1: Subsequent collection is the amount collected as of November 4, 2020.

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

Nine-month period ended September 30, 2020

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

Number
(Note 1)		 Companyname Counterparty Relationship
(Note 2)		 Transaction
General ledger account Amount(Note 4) Transaction terms Percentage of
consolidated total
operatingrevenues or
0
0
0
0
0
1
1
2
2
2
2
2
2
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 (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.
XIAMEN CHENG SHIN ENTERPRISE CO., LTD.
XIAMEN CHENG SHIN ENTERPRISE CO., LTD.
CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD.
CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD.
CHENG SHIN RUBBER (ZHANGZHOU) IND CO., LTD.		 CHENG SHIN RUBBER USA, INC.
CHENG SHIN RUBBER USA, 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 TIRE & RUBBER (CHINA) CO., LTD.
CHENG SHIN RUBBER (XIAMEN) IND., LTD.
CHENG SHIN RUBBER (XIAMEN) IND., LTD.
CHENG SHIN PETREL TIRE (XIAMEN) CO., LTD.
CHENG SHIN RUBBER (ZHANGZHOU) IND CO.,
LTD.
CHENG SHIN RUBBER (XIAMEN) IND., LTD.
CHENG SHIN (XIAMEN) INTL AUTOMOBILE
CULTURE CENTER CO., LTD
CHENG SHIN RUBBER (ZHANGZHOU) IND CO.,
LTD.
CHENG SHIN RUBBER (XIAMEN) IND., LTD.
CHENG SHIN RUBBER (XIAMEN) IND., LTD.		 1
1
1
1
1
3
3
3
3
3
3
3
3
3
3
3		 Sales
Accounts receivable
Sales
Sales
Accounts receivable
Sales
Accounts receivable
Sales
Accounts receivable
Sales
Other receivables
Other receivables
Other receivables
Other receivables
Sales
Accounts receivable		 3,073,792
976,183
474,330
2,783,147
321,639
619,581
315,135
1,371,567
434,934
296,221
2,591,283
2,249,763
371,403
1,694,793
747,978
236,669		 Collect within 60 days after
shipment of goods
Collect within 60 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
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
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		 4.42%
0.65%
0.68%
4.00%
0.21%
0.89%
0.21%
1.97%
0.29%
0.43%
1.73%
1.50%
0.25%
1.13%
1.08%
0.16%

Table 7, page 1

Significant inter-company transactions during the reporting periods

Table 7

Expressed in thousands of NTD (Except as otherwise indicated)

CHENG SHIN RUBBER IND. CO., LTD.

Nine-month period ended September 30, 2020

Number
(Note 1)		 Companyname Counterparty Relationship
(Note 2)		 Transaction
General ledger account Amount(Note 4) Transaction terms Percentage of
consolidated total
operatingrevenues or
5
CHENG SHIN TIRE & RUBBER (CHONGQING) CO.,
LTD.
CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD.
5
CHENG SHIN TIRE & RUBBER (CHONGQING) CO.,
LTD.
CHENG SHIN TIRE & RUBBER (CHINA) CO., LTD.
6
MAXXIS International (Thailand) Co., Ltd.
CHENG SHIN RUBBER USA, INC.
6
MAXXIS International (Thailand) Co., Ltd.
CHENG SHIN RUBBER USA, INC.
7
PT MAXXIS International Indonesia
Cheng Shin Rubber (Vietnam) IND Co., Ltd.
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.		 3
3
3
3
3		 Sales
Accounts receivable
Sales
Accounts receivable
Sales		 880,033
252,903
918,619
255,803
206,066		 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		 1.27%
0.17%
1.32%
0.17%
0.30%

(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 year to consolidated total operating revenues for income statement accounts. Note 4: Transaction amounts account for at least NT$200 million.

Table 7, page 2

CHENG SHIN RUBBER IND. CO., LTD.

Information on investees

Table 8

Expressed in thousands of NTD

(Except as otherwise indicated)

Nine-month period ended September 30, 2020

(Except as otherwise indicated)
Investor Investee Location Main business
activities		 Initial investment amount Shares held as at September 30,2020 Net profit (loss)
of the investee for
the nine-month
period ended
September 30,
2020		 Investment
income(loss)
recognised by the
Company for the
nine-month period
ended September 30,
2020
(Note 1)
Footnote
Balance
as at September
30,2020
Balance
as at December
31,2019		 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.
Cheng Shin Rubber Ind. Co., Ltd.
Cheng Shin Rubber Ind. Co., Ltd.
MAXXIS International Co., 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.
PT MAXXIS International Indonesia
Maxxis Rubber India Private Limited
Maxxis (Taiwan) Trading Co., LTD.
PT MAXXIS TRADING INDONESIA
Maxxis Europe B.V.
MAXXIS RUBBER JAPAN CO., LTD.
MAXXIS INTERNATIONAL
MEXICO S. de R.L. de C.V.
MAXXIS International (HK) Ltd.		 Cayman Islands
British Virgin Islands
British Virgin Islands
U.S.A
Canada
Taiwan
Netherlands
Indonesia
India
Taiwan
Indonesia
Netherlands
Japan
Mexico
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
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
Import and export of tires
Import and export of tires
Import and export of tires
Holding company		 912,218
$ 912,218
$ 2,103,073
2,103,073
7,669,780
7,669,780
551,820
551,820
32,950
32,950
50,001
50,001
41,260
41,260
3,371,521
2,461,355
4,027,544
3,124,651
100,000
100,000
30,235
30,235
17,700
17,700
13,820
-
593
-
-
-		 35,050,000
100.00
40,260,615
$ 72,900,000
100.00
25,283,427
237,811,720
100.00
10,092,047
1,800,000
100.00
2,637,515
1,000,000
100.00
654,850
5,000,000
50.00
167,819
1,000,000
100.00
65,702
109,995,875
100.00
-
874,992,906
100.00
-
10,000,000
100.00
345,447
9,990
100.00
27,918
500,000
100.00
10,047
5,000
100.00
13,780
-
20.00
304
226,801,983
100.00
32,161,025		 1,790,989
$ 1,624,434
705,052
138,400
19,180
25,660
3,867)
(
1,267,535)
(
874,082)
(
161,803
4,095
3,696)
(
-
1,289)
(
1,725,520		 1,796,005
$ Subsidiary
Note 3
1,619,862
Subsidiary
Note 3
686,337
Subsidiary
Note 3
138,393
Subsidiary
Note 3
19,180
Subsidiary
Note 3
12,830
Note 2
3,867)
(
Subsidiary
Note 3
1,269,838)
(
Subsidiary
Note 3, Note 5
874,082)
(
Subsidiary
Note 3, Note 5
161,803
Subsidiary
Note 3
4,095
Subsidiary
Note 3
3,696)
(
Subsidiary
Note 3
-
Subsidiary
Note 3
258)
(
Note 3, Note 4
1,725,520
Sub-subsidiary
Note 3

Table 8, page 1

CHENG SHIN RUBBER IND. CO., LTD.

Table 8

Expressed in thousands of NTD (Except as otherwise indicated)

Information on investees

Nine-month period ended September 30, 2020

(Except as otherwise indicated)
Investor Investee Location Main business
activities		 Initial investment amount Shares held as at September 30,2020 Net profit (loss)
of the investee for
the nine-month
period ended
September 30,
2020		 Investment
income(loss)
recognised by the
Company for the
nine-month period
ended September 30,
2020
(Note 1)
Footnote
Balance
as at September
30,2020
Balance
as at December
31,2019		 Number of shares
Ownership
(%)
Book value
CST Trading Ltd.
MAXXIS Trading Ltd.
MAXXIS Holdings (BVI) Co., Ltd.
MAXXIS Holdings (BVI) Co., Ltd.
CHENG SHIN RUBBER USA, INC.		 Cheng Shin International (HK) Ltd.
MAXXIS Holdings (BVI) Co., Ltd.
MAXXIS International (Thailand) Co.,
Ltd.
Cheng Shin Rubber (Vietnam) IND Co.,
Ltd.
MAXXIS INTERNATIONAL
MEXICO S. de R.L. de C.V.		 Hong Kong
British Virgin Islands
Thailand
Vietnam
Mexico		 Holding company
Holding company
Production and sales of truck
and automobile tires
Production and sales of
various types of tires
Import and export of tires		 -
-
7,669,780
7,669,780
5,724,372
5,724,372
1,945,408
1,945,408
2,328
-		 246,767,840
100.00
25,104,925
237,811,720
100.00
10,493,174
65,000,000
100.00
7,081,693
62,000,000
100.00
3,408,521
-
80.00
1,218		 1,628,159
705,189
133,548
571,755
1,289)
(		 1,628,159
Sub-subsidiary
Note 3
705,189
Sub-subsidiary
Note 3
115,062
Sub-subsidiary
Note 3
571,525
Sub-subsidiary
Note 3
1,031)
(
Note 3, Note 4

Note 1: Including investment income (loss) used to offset against sidestream and upstream transactions.

Note 2: Investee companies are accounted for using the equity method.

Note 3: The transactions were eliminated when preparing the consolidated financial statements. Note 4: The Company comprehensively holds 100% of share ownership in the investee, of which 20% is directly held and 80% is indirectly held through CHENG SHIN RUBBER USA, INC. Note 5: The Company continuously provides financial support the investees accounted for using the equity method, and transferred the credit balance of long-term investments to ‘other non-current liabilities’. The transactions were eliminated when preparing the consolidated financial statements.

Table 8, page 2

CHENG SHIN RUBBER IND. CO., LTD.

Information on investments in Mainland China Nine-month period ended September 30, 2020

Investee in
Mainland China
Table 9		 Main business
activities		 Paid-in capital Investment
method(Note 1)		 Accumulated
amount of
remittance from
Taiwan to
Mainland China
as of January 1,
2020		 Amount remitted from Taiwan to
Mainland China/ Amount remitted
back to Taiwan for nine-month
period ended September 30, 2020		 Amount remitted from Taiwan to
Mainland China/ Amount remitted
back to Taiwan for nine-month
period ended September 30, 2020		 Accumulated
amount of
remittance from
Taiwan to
Mainland China as
of September 30,
2020
 Net income of
investee as of
September 30,
2020		 Ownership
held by the
Company
(direct or
indirect)		 Investment
income (loss)
recognised by
the Company for
nine-month
period ended
September 30,
2020 ,(Note 2)		 Book value of
investments in
Mainland China
as of September
30, 2020		 Expressed in thousands of NTD
(Except as otherwise indicated)
Accumulated
amount of
investment income
remitted back to
Taiwan as of
September 30,
2020
Footnote		 Expressed in thousands of NTD
(Except as otherwise indicated)
Accumulated
amount of
investment income
remitted back to
Taiwan as of
September 30,
2020
Footnote
Remitted to
Mainland China		 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
Warehouse logistics and after-
sales service centre
A. Radial tire and other various
tire products
B. Reclaimed rubber and other
rubber products
C. Plastic machinery, molds and
its accessory products		 5,092,500
$ 6,547,500
247,350
2,910,000
21,345
523,800
3,783,000		 2
2
2
2
2
2
2		 910,834
$ 2,385,506
68,602
-
-
-
-		 -
$ -
-
-
-
-
-		 -
$ -
-
-
-
-
-		 910,834
$ 2,385,506
68,602
-
-
-
-		 1,065,253
$ 1,497,560
15,063
382,966
2,555
41,101)
(
181,893		 100.00
100.00
50.00
100.00
100.00
100.00
100.00		 1,069,745
$ 1,501,493
7,532
383,240
2,555
41,101)
(
181,895		 22,701,193
$ 23,271,570
298,164
5,213,118
39,864
720,813
12,324,424		 18,878,845
$ 22,289,125
478,714
1,422,083
-
757,407
4,185,883		 (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

Table 9

CHENG SHIN RUBBER IND. CO., LTD. Information on investments in Mainland China Nine-month period ended September 30, 2020

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,
2020		 Amount remitted from Taiwan to
Mainland China/ Amount remitted
back to Taiwan for nine-month
period ended September 30, 2020		 Amount remitted from Taiwan to
Mainland China/ Amount remitted
back to Taiwan for nine-month
period ended September 30, 2020		 Accumulated
amount of
remittance from
Taiwan to
Mainland China as
of September 30,
2020
 Net income of
investee as of
September 30,
2020		 Ownership
held by the
Company
(direct or
indirect)		 Investment
income (loss)
recognised by
the Company for
nine-month
period ended
September 30,
2020 ,(Note 2)		 Book value of
investments in
Mainland China
as of September
30, 2020		 Accumulated
amount of
investment income
remitted back to
Taiwan as of
September 30,
2020		 Footnote
Remitted to
Mainland China		 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.
XIAMEN ESATE CO.,
LTD.		 A. Radial tire and other various
tire products
B. Reclaimed rubber 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
Construction and trading of
employees’ housing		 1,309,500
$ 582,000
149,415
61,524
4,055,550
1,622,220		 2
2
2
2
2
2		 -
$ -
-
-
-
-		 -
$ -
-
-
-
-		 -
$ -
-
-
-
-		 -
$ -
-
-
-
-		 492,004
$ 75,136)
(
11,913)
(
16,364
973,907
1,615		 100.00
100.00
95.00
49.00
100.00
100.00		 492,526
$ 75,136)
(
11,317)
(
8,018
973,907
1,615		 7,804,960
$ 81,134
99,946
119,075
6,293,120
1,957,142		 5,668,834
$ -
-
-
678,578
-		 (Note 2、6、
7)
(Note 6)
(Note 6、7)
(Note 6、7)
(Note 5、6、
7)
(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.

(3) Others 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 29.10: USD 1 and NTD 4.269: RMB 1 prevailing on September 30, 2020. 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 2

CHENG SHIN RUBBER IND. CO., LTD.

Ceiling on investments in Mainland China

Table 9

Nine-month period ended September 30, 2020

Expressed in thousands of NTD

(Except as otherwise indicated)

Companyname Accumulated amount of remittance from Taiwan to Mainland China as
ofSeptember30,2020 (Note 1)		 Investment amount approved by the Investment
Commission of the Ministry of Economic Affairs
(MOEA) (Note 1)		 Ceiling on investments in Mainland China imposed by the
InvestmentCommission of MOEA(Note 2)
Cheng Shin Rubber Ind. Co., Ltd. $ 3,576,390 $ 19,581,390 $ -

Note 1: Accumulated amount of remittance from Taiwan to Mainland China as of September 30, 2020 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 3

Table 10

CHENG SHIN RUBBER IND. CO., LTD.

Major shareholders information

September 30, 2020

Name of major shareholders Shares Shares
Number of shares held Ownership (%)
Luo, Ming-Han
Lo, Tsai-Jen, the representative of preparatory office of Jye Luo Memory Co Ltd.
Luo, Jye		 370,176,378
324,430,630
224,163,978		 11.42
10.00
6.91
  • Note 1: The major shareholders information was from the data that the Company issued common shares (including treasury shares) and preference shares in dematerialised form which were registered and held by the shareholders above 5% on the last operating date of each quarter and was calculated by Taiwan Depository & Clearing Corporation.

The share capital which was recorded in the financial statements may differ from the actual number of shares issued in dematerialised form because of a differenent calculation basis.

Note 2: If the aforementioned data contains shares which were kept at the trust by the shareholders, the data disclosed was the settlor’s separate account for the fund set by the trustee. As for the shareholder who reports share equity as an insider whose shareholding ratio is greater than 10% in accordance with Securities and Exchange Act, the shareholding ratio including the self-owned shares and trusted shares, at the same time, persons who have power to decide how to allocate the trust assets. For the information of reported share equity of insider, please refer to Market Observation Post System.

Table 10, page 1

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